What is Open Banking in finance?
We often overlook how fortunate we are to live in a time of transparent banking, so that transaction data is easily accessible for finance professionals.
The introduction of Open Banking in Australia brought about a significant shift in how financial professionals handle bank-approved transactional data.
In this article, we’ll look at what Open Banking is. We'll uncover various Open Banking benefits for finance teams and how integrated bank feeds, as part of cloud accounting software, streamlines productivity.
What is Open Banking?
Open Banking was implemented as part of a broader global trend towards using consumer data to increase competition, innovation and consumer choice.
After a review by the Australian Government in 2017, an Open Banking regime was announced and committed to in a phased approach. The Consumer Data Right (CDR) officially launched a pilot program for open banking in Australia on 1 July 2020. Since then, the scope has expanded to gradually widen the availability of Open Banking services within other financial service providers.
Open Banking regulations are due to arrive in New Zealand in mid-2024. Consumer Data Right in New Zealand has introduced a draft law called the Customer and Product Data Bill. Once active, this will give customers greater access to and control over their data in future.
The advantages of Open Banking
Finance teams can use Open Banking, which will improve their business in many ways.
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Removing information gaps and errors: With Open Banking APIs in place, every Australian business today will have a more consistent, structured manner of accessing financial data. This reduces the potential for human error or information gaps, meaning finance professionals can conduct more detailed analysis and reporting.
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Minimising security concerns: Open Banking in Australia and New Zealand is carefully registered by respective governments. This gives organisations complete visibility on who they can consent to share their account information with and for what purpose. This secure access safeguards businesses with layers of encryption software, whereas in times gone by, they were vulnerable to potential cybercriminals.
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Stopping the need for handling paper: Financial services industry professionals don't need to rely on paper documents from their financial institutions to gain access to their bank feed data.
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Greater flexibility to switch accounting software: Open Banking is finance software agnostic, meaning that the process of asking for permission is streamlined regardless of your organisation’s accounting software. Before Open Banking regulatory compliance, organisations would need to sign up for bank data manually when switching their accounting software. This process could be very time-consuming and painful.
Read our advantages and disadvantages of cloud accounting software.
What is a bank feed?
An integrated bank feed is a digital link between bank accounts and your cloud accounting software, such as Access Financials. Integrated bank feeds automatically import client bank transactions daily into your general ledger.
Thanks to Open Banking, finance professionals can overcome many of the issues they used to face when importing bank account data into their cloud accounting software.
The benefits of Open Banking bank feeds
Open Banking in finance has been a transformative experience. The role of APIs unlocking a deeper level of productivity and client satisfaction that would have once been unimaginable.
In this section, we'll explore the advantages of Open Banking and bank feed integration:
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Instant access to live bank feed data: With integrated bank feeds, you'll know as soon as an online banking transaction occurs. It will be instantaneously reflected within your cloud accounting software, providing real-time cash management.
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Simplifying admin: Integrated bank feeds automatically import transactions into cloud accounting software. This reduces the need for accountants to manually enter any data, saving valuable time and reducing the risk of human error.
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Encouraging greater productivity: Finance professionals no longer need to upload bank statements or complete manual application processes to set up bank feeds, improving overall activity.
In Summary
We hope that our guide to Open Banking technology in Australia and New Zealand has been helpful for you. We hope you have insight into the numerous business advantages it has right now, as well as an idea of future benefits.
Implementing Open Banking in our region has resulted in cloud accounting software innovations, such as integrated, secure and automatic bank feeds to streamline financial processes.
Open Banking is made easy with Access Financials
One of Access Financials’ core features is automatic bank reconciliation, empowering finance professionals with secure open banking integrations and automatic transaction matching.
Developed by finance experts, Access Financials offers peace of mind. It complies with all relevant regulations, including Open Banking, to securely feed transactions from your bank to our cloud accounting software.
Download our brochure or watch our 4-minute demo for more about our smart, integrated and scalable approach to business financial management.
Open Banking References
