New rules for Open Banking, which came into effect on 14 September 2019, have changed the way some banks connect to third-party providers.
What is Open Banking and PSD2?
Open Banking is the secure way to give providers /companies access to your financial information. It was designed to give you greater control of your data and how it is used.
The Open Banking initiative runs alongside Europe’s Second Payment Services Directive (PSD2), a set of regulations that aim to make online transactions more secure.
What will the changes mean for my cloud accounting?
Faster access to bank and payment information to support faster and better decision making
Improved sharing of data between banks and applications such as online accounting records (with the account-holder’s authorisation) and automatic transfer of data where you want to share it
More historical data can be shared (e.g. bank transactions for up to 7 years instead of 3 or 6 months as previously)
It will be much easier to bring together information from different banks if your accounts are not all with the same provider, and more data from credit cards, savings accounts etc will be available for easy access rather than just specified business current accounts
Screen-scraping as a method of extracting data is replaced by a more secure process using Application Programming Interfaces (APIs)
Bank feeds are being replaced by new direct feeds using Open Banking which gives a more stable connection and improves security – if you are using bank feeds for cloud accounting software, you may be required to re-connect your feeds as existing/previous connections will have ceased to work. However, The FCA (Financial Conduct Authority) have provided a six-month adjustment period meaning most customers can continue to use their existing bank feeds. The adjustment period is in place until 14 March 2020
Strong customer authentication increases security of access to your data – however, some of the rules about compulsory use of second-stage authentication have been deferred
Payment initiation from within the accounting software will allow a smoother payment handling process
There will be the potential to link bank data into cashflows, forecasts and credit applications which will allow very fast approval and transfer of funds (where appropriate).
Contacting the cloud team
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