Business Banking

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The new EU wide Open Banking reforms are scheduled to take effect from 14 September 2019.   

This is especially significant for users of cloud accounting software.   

Open Banking was designed to encourage competition and to make your bank data available to you free of charge.  It would appear to have succeeded in both of these aims.

 

Bank Feeds

Cloud accounting software typically connects users to their bank accounts and downloads transaction data using what is termed a “bank feed”.   There are currently two different types of feeds – “Direct Feeds” and “Yodlee Feeds” -  but the new standards mean that only the newer Direct Feeds will be available from September.  Most banks currently use Yodlee feeds and so you will need to move over to the newer version to continue to receive your bank data – but you can of course only do this when your bank makes these available.   Most will achieve the September date, but some may not.

Fortunately, the changeover process should be a simple one taking less than 5 minutes and software such as Xero will have a menu driven process to make the change.  You will just need to be wary of duplicating data that has already been downloaded, but this should not be a major issue.  One change you will see though is that in order to comply with the regulations your software will require you to re-authenticate your bank connection every 90 days.  Yes, a little irritating but the regulations are designed to protect your bank account.

For an up to date list of which feeds are available from each bank you may wish to review the listing at Banks and Feeds

 

Challenger Banks

Whilst discussing bank accounts – are you aware that there is a great deal more competition in this area now?  No longer is it just a choice of one of the High Street banks.   There are new business account offerings from at least four of the so-called “Challenger Banks”

 

Starling Bank              https://www.starlingbank.com

Tide                            https://www.tide.co

Revolut                       https://www.revolut.com/business-accounts-made-easy

Monzo                        https://monzo.com/business/

 

Application To Opening Time ... 20 Minutes !

These accounts already have the new Direct Feeds and they integrate beautifully with Xero giving you real time updates in Xero as money moves into and out of your bank account.  I also would also love to know if anyone can open an account and deposit money in less than the 20 minutes it took me with StarlingBank!   There are many digital sources of identity data and Starling use these very effectively to verify you in a matter of minutes.    The time and the process steps to open an account with the High Street Banks has always been a source of frustration and dare I say irritation, so I hope they will respond to the new competition and catch up here very soon.

 

Horses For Courses

Banks. rather like anything else in the market place, have their own strengths and weaknesses and you should find an account that meets the needs of your business as closely as possible.  For example, a business that relies on a branch network for cash and daily banking will probably not benefit from the new internet only offerings.  But if you have a lot of foreign currency dealings then the account offered by Revolut may save you a good deal of money and time.  The real game changing feature for me with the Revolut account though is the ability to upload a payment data file to pay all of your suppliers in one file upload.  Yes, the High Street banks offer this too but in my experience the cost of this functionality precludes it use for many small businesses.

 

Banking may never be the same ….. surely a good thing ?

 

 

I hope that you have found this blog both useful and informative.  If I can assist you with your business accounting and use of Xero in particular then please do get in touch.

Thank you for reading

Ian Jarvis

ian.jarvis@vertisaccounting.co.uk