Open Banking in Accounting - All You Need to Know

A Guide to Open Banking for Accounting Firms

Open banking is a step change for the accounting and financial professions. It’s a shift in how companies approach payments, finances, customers, accounting, and so much more. Yet, the technology remains murky – what is it, how does open banking fit into the accounting portfolio, and how can accountants help clients navigate this change?

What Accountants Need to Know About Open API Banking

What is open banking?

Open banking payments are aptly named to describe their process whereby third-party financial services provide open access to transactions, banking processes, and financial data from banks and non-banks. Open API banking uses application programming interfaces, APIs, to connect service providers to institutions and, as complex as the technology sounds, to simplify financial transactions for open banking providers. 

It also opens up a world of new opportunities, types of financial transactions, fintech offerings, and services previously available only to traditional financial institutions, such as banks. 

Using APIs, solutions such as UNIPaaS make it easy for businesses to integrate their financial transactions across multiple applications, reducing the admin burden and streamlining financial processes and systems.

The API open banking technology also plays a significant role in helping small to medium enterprises (SMEs) mitigate the complexities surrounding payments and cash flow and provides payment platforms with fresh ways of supporting SMEs in achieving their business and financial goals. According to the UNIPaaS Insight Report, open banking solutions can empower platforms to meet the accelerating demand for embedded finance and open banking-based solutions.

Consumer priorities for open banking in accountancy

The Impact Report found that around 73% of SMEs felt that their accountants played a key role in their adopting cloud accounting and investing in accounting services that would support collaboration and admin. They believe that accountants, and cloud accounting services, are central to helping them manage late payments, reduce costs, and feel more productive and profitable.

Considering that there are now, after four years of growing adoption, more than seven million open banking users, accountants need to recognise their value in this space. Their skill sets are uniquely relevant to ensuring that SMEs and entrepreneurs are well served in their choice of payment platform and process, as they provide financial acumen and risk awareness. Accountants should be on the front line when it comes to advising clients on the benefits and best choice of technology, how to make the most out of technology, and identifying whether or not solutions can meet specific SME requirements.

The accountant checklist: navigating the sea of open banking solutions

There are several factors that accountants should consider as we move into another year of open banking innovation and financial transformation:

  • Accountants need to investigate the use cases and the solutions to provide customers with solid advice and support that will help them fine-tune their choices and mitigate the risks.
  • Understanding the technology goes beyond just providing advice to clients – as the technology continues to evolve, it is very likely that it will encroach on areas that are traditionally considered to belong to the accountant, so an in-depth understanding of the tech and how to use it will only stand to benefit those that pay attention. It will, ultimately prove to be a competitive advantage.
  • Cloud accounting software remains one of the most common use cases where accountants can access open banking feeds through well-known platforms. This area is seeing significant changes around authentication and security that will potentially see greater adoption.
  • How SMEs pay their suppliers, how they interact with their customers, and how they access finance are constantly changing. It is very likely that SMEs will move away from the more traditional payment methods and start using tools that allow them to manage payments and customers within payment platforms. Accountants that can leverage this and provide support and expertise will become invaluable to the SME.
  • Refine audit and accounting workflows using open banking API’s to aggregate data across multiple platforms, run verifications, match transactions, and more. Open banking solutions that offer various payment options and functionalities will soon become an accounting stalwart and form an essential part of the accounting toolbox.
  • It reshapes efficiencies - a recent report by Open Banking found that cloud accounting can fundamentally change the ways in which SMEs manage their businesses. 

How to market your services to clients using open banking

Accountants will capture the immediate attention of the flustered SME by showcasing the benefits of open banking to their enterprise, and how open banking helps them improve financial management and cash flow visibility. With the right solution, accountants can use open banking API’s to automate data entry, improve cash flow control, manage payroll and reconciliations, reduce their reliance on manual processing, speed up time to payment, and engage directly with financial institutions to resolve problems.

It is a remarkably intelligent technology that can transform how accountants engage with their skill sets and support their clients. Over the next year, innovations within this space, such as variable recurring payments, will shake up the landscape even more, allowing SMEs to replace the limitations of direct debits with transactions with different amounts. It has the potential to streamline transactions and reduce costs while giving SMEs greater control.

Moving forward, accountants should pay attention to the changes that are taking place in the market and to the innovations that are reshaping open banking as a whole. This will help them provide better services to their customers and potentially help them develop critical skill sets that will give them the edge at a time when disruption and change are guaranteed. While the evolutions and innovations in this space are still at an early stage right now, there are solutions that show promise. 

UNIPaaS: A cutting-edge payment processing solution

UNIPaaS has developed an own-branded solution that provides accountants with a remarkable toolset alongside peace of mind and robust support for payment platforms. Currently in use by successful payment platforms that include IRIS, Nomisma and Capium and many others, the UNIPaaS offering brings fresh capabilities to accountants and customers alike.