On 14th September, new EU legislation came into effect surrounding ‘Open Banking’. The new standards mean existing bank feeds within some accounting packages are no longer available. This change affects any accounting packages which make use of Bank Feeds. Most notably Xero, QuickBooks Online and Sage One, but other packages will also be affected.
What is Open Banking?
Open Banking is a global term for improvements in your ability to share your financial data with authorised providers securely and electronically. Information such as your spending habits, regular payments and companies you use (basically your bank, credit card or savings statements), will be included.
Developers of mobile and web applications, can ‘plugin’ to your current account data in a secure and standardised way if you permit them to do so.
Why would you want to use Open Banking?
You may ask yourself “why would I want this?” The changes are hoped to bring more competition and innovation to financial services and to open this platform to app developers outside the standard banking sector. In turn, this should lead to an improvement in the apps and products available to assist people with managing their money. For example, individuals could connect their bank account to an app on their phone, or a website which helps to analyse spending for budgeting purposes or to help save for a holiday.
What are the benefits of moving to Open Banking?
There are many benefits in moving to Open Banking bank feeds, including:
• Added security –through ‘PSD2 secure customer authentication’. Open Banking allows you to share data and financial information without handing over any passwords or login details to third parties. The request is authorised within your normal online banking system.
• Automatic ‘direct’ bank feeds which update more regularly, which do not require manual refreshing or log in each time they are refreshed. Once granted, the authority lasts for 90 days or can be revoked by the account holder at any point.
• The new bank feeds are free
If you would like to discuss the benefits of Open Banking bank feeds in more detail, you can contact us using the form at the bottom of this article.
How does this affect my bank feeds?
As a result of these changes, the connection between your bank and your accounting package may change.
If you already have a direct bank feed (e.g. with HSBC or NatWest) you may not need to do anything. System providers have been notifying businesses that have an affected bank feed via email. If you have received an email, you will likely need to update your bank feed.
While many of bank feeds will be replaced by new direct feeds using Open Banking, some feeds will not change at all. Others will be made available at a later date, so some customers won’t have a feed to connect to straight away.
The most significant changes are likely to be if you are currently connected to a Barclays bank feed, or a UK or EU feed set up using Yodlee. These feeds will no longer be available under the new requirements so will need to be changed to a new feed which is compatible with Open Banking.
Measures have been taken to make updating to Open Banking as straight forward as possible. However, if you need any help or would like to discuss your options, feel free to get in touch using the form below. We can set up a call with one of our experts to guide you through the process.
Updating your bank feed
You will see notifications in your accounting system if your bank feed has stopped working. If a new bank feed is available for your bank account, your system provider will notify you. You will be asked to update your existing bank-feed to an Open Banking feed.
Both Xero and QuickBooks have issued guidance on how to do this. Sage has stated that the bank-feeds within Sage One will transfer to open-banking feeds as and when they become available.
You can update your bank feed from the main dashboard within Xero and QuickBooks. To do this, you will need to follow the prompt to update the feeds; this will take you to your normal online banking login.
You will be transferred to your bank. You will then need to enter your online banking login details, including your bank’s multifactor authentication as normal. You will then be asked to select which accounts to share with your provider. Your bank will then redirect you back to your service provider to complete the setup process.
Once set up, your accounting system will ask you to enter a date that you would like to start importing transactions. If you already had a bank feed, a date may already be recommended based on your statement history.
Using the recommended date should mean no transactions are duplicated or missed. However, we would advise checking your statement balance ties up with your actual bank statements after the news feed is set up.
What if my Bank Isn’t Ready for Open Banking?
If your bank isn’t ready yet, you’ll see a notification on the dashboard of your accountancy package. You will need to either manually import bank statements via CSV until a feed becomes available. Alternatively, you can wait until an Open Banking feed becomes available and then backdate the import of transactions.
This post was written by Lee Sharman, at Price Bailey. If you would like more information on this article, please contact Lee using the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.