Why open banking is the key to digitalising accountancy

Mike Panzeri, General Manager UK, Moss


Open banking is one of the most exciting financial developments to occur in recent years, promising to transform the way businesses and consumers interact with financial products and services since its inception back in 2018. In simple terms, open banking enables trusted third parties to access the financial data from a bank account via secured connections. There are many benefits that open banking gives rise to, but these fall into two main categories.

The most common application of open banking data are apps that connect to multiple bank accounts to create a single view of a person’s financial position. A less common but more powerful application is using this data to approve credit loans more quickly and with higher limits, thanks to the improved visibility of an applicant’s finances.

The second is within payments; open banking facilitates faster and more secure payments than traditional card and bank methods by enabling users to pay merchants and service providers directly from their bank account — and the payments are settled instantaneously.

Going one step further is the concept of ‘open finance,’ which extends the data-sharing concept of open banking to a wider range of financial services. Here, organisations collaboratively share data with licensed fintech players and new market entrants to cover services such as pensions, mortgages, asset management and unsecured lending.

Research reports that improving customer services and launching new digital services were amongst the most critical objectives of open banking, according to 36% of financial service experts. As open banking continues to drive innovation across financial services globally, accountancy is one sector that could see significant change.

So what are the meaningful ways that open banking could help revolutionise accountancy?


Accountancy – an industry undergoing major innovation

Over the last decade, accountancy has faced a wave of innovation with a shift towards accounting software, and has had to reinvent itself to become more strategic advisors to its clients. At the same time, accountants are guardians of compliance, and have faced additional hurdles in quickly changing their clients’ processes without upending their responsibilities.

The growth in digital or cloud-based accounting solutions presented the next sequence of process enhancements, generating greater efficiencies, increased productivity and reduced errors for accounting professionals. And for those ramping up digitalisation efforts, 64% cite increased efficiency as amongst the top influencing factors.

Accountants have been exposed to a quickly growing number of solutions, including accounting software, receipt tracking and tools to make payments. However, these tools have over time grown into non-cohesive solutions for various processes. Though these tools grant users more accessible data, that data is frequently flawed and dependent on manual extraction, or Optical Character Recognition (OCR) reading and processing, which often produces varied results. Ironically, this often hampers the improved efficiency they are striving for, despite having now digitised their processes.

Here is where new technological innovations, such as open banking, can show real value in the industry. Where accountants are now grappling with multiple disjointed digital solutions, they need a single, automated platform which can map their entire company’s spend process in one place. Open banking, by creating access to the most accurate data direct from customers’ bank accounts, helps facilitate this.


A new future on the horizon for accounting and spend management

Propelled by a combination of government regulation and market competition, open financial data has levelled the playing field amongst financial services. Fintechs and other start-ups can now access data they were previously not privy to, as the emphasis on driving innovation increases.

With this, a plethora of new and transformative financial solutions have entered the market – not least within accounting, which is currently experiencing an influx of cloud-based solutions promising a variety of benefits.

For SMEs experiencing high growth, the need for a consolidated tech stack is thus becoming more clear-cut, and so too is the need for an all-in-one solution providing flawless finance.


Smarter, faster and more secure payments through seamless data

To expand the earlier point around the benefits of open banking and payments, spend management is one area that has been improved significantly. Open banking means that payments can now be integrated with existing accounting processes, such as accounts payable, accounts receivable, expense management and payroll, resulting in a seamless experience tracking and processing transactions across the company.

At the same time, by providing finance teams with data from their customers, the use of credit cards and financial loans can be approved more easily via the increased visibility open banking enables. Finance professionals can therefore streamline the business spend management process by readily establishing and configuring numerous spending policies, personalised approval systems, automatic receipt collection/allocation, as well as real-time payment data classification all via one dedicated hub.

With all the benefits open banking offers, it is now down to individual finance teams to opt-in and embrace the opportunities ahead to simplify financial data management in their business processes and provide increasingly unique customer experiences. Moreover, in an increasingly competitive marketplace, accountants must consider how they can leverage the power of open banking applications if they are to retain existing customers and gain new ones.









Explore more