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).

Useful resources

Contacting the cloud team

If you would like further information or have any questions about Open Banking and cloud accounting, please contact Margaret Middlemass by calling 0113 297 6755 or email m.middlemass@sagars.co.uk.

Meet the cloud team

James Hunt
James Hunt
Senior Manager

A qualified Chartered Accountant and Chartered Taxation Adviser, James manages a mixed portfolio of business clients including, providing solutions to clients’ challenges and supporting them to achieve their goals across audit, accountancy, taxation and business advisory services.

Margaret Middlemass
Margaret Middlemass
Senior Manager

A cloud accounting expert, Margaret specialises in providing audit, accounting and tax advice to smaller limited companies, unincorporated businesses and sole traders across a range of industries.

Sarah Durkan
Sarah Durkan
Senior Manager

An experienced and qualified accountant, Sarah provides accounting, taxation and business advisory services to owner-managers of small and medium sized companies and solicitors practices. She is particularly experienced in providing monthly management accounts and cash flow forecasts to clients, whilst supporting them with a range of business management challenges.

Richard Carrick
Richard Carrick
Manager

Rich is experienced in supporting high profile and owner managed businesses across a wide variety of sectors, providing tech, business management, accounting, audit and taxation advice to help his clients achieve their goals.