Welcome to Open Banking, a revolutionary system designed to empower financial reporting decision-making with secure and direct access to a variety of bank data.

Here, I’ve compiled the top 10 things I believe every accountant and bookkeeper should know to effectively navigate and leverage Open Banking for their practices.

As an accountant or bookkeeper, Open Banking means you can work smarter, not harder when accessing clients financial data.

Open Banking, provides access to a wealth of near real-time financial data through secure, standardised interfaces that streamline the data retrieval process, enhance accuracy, and reduce the time spent on data reconciliation.

With Open Banking, you can offer more proactive, strategic advice based on a comprehensive view of your clients’ financial situations, thus enhancing client trust and satisfaction. Embracing Open Banking can therefore significantly elevate the quality and scope of your financial services, making it an indispensable tool in your professional arsenal.

Let’s dig into the top 10 things I think you need to know about Open Banking.

 

1. What is Open Banking?

Open Banking is part of the Consumer Data Right (CDR), a Commonwealth government initiative designed to empower Australian consumers (individuals and businesses) to make better financial decisions, through greater access to their data. Under the CDR, consumers can securely share their financial data with accountants, bookkeepers, and other “Trusted Advisers”. The system enhances transparency and control over personal financial information held by banks and other institutions.

 

2. All banks and account types are covered

Open Banking compels effectively all Australian banks to share data when instructed to do so by their customer. This data includes transactions from all kinds of accounts, including credit cards, term deposits, and loans, ensuring comprehensive data accessibility.

 

3. All clients types are enabled

Open Banking supports data access for a diverse range of client types including individuals, businesses of all sizes, Self-Managed Super Funds (SMSFs), and trust accounts. This makes it a versatile tool for handling various client needs.

 

4. Historical Data included

A crucial feature of Open Banking is the availability of historical bank data dating back to January 2017. This access is essential for thorough financial analysis and retrospective auditing.

 

5. Online and Instant Consent

The era of cumbersome paper forms to establish bank data feeds and the like is over. Open Banking allows clients to provide secure, instant online consent for sharing their data, enabling accountants and bookkeepers to access this information within minutes.

 

6. No bank charges

Banks are prohibited from charging clients for access to their Open Banking data. This makes it a cost-effective solution for both clients and financial advisers.

 

7. Official Bank Data

The data available through Open Banking is directly sourced from the banks under strict rules governing security, accuracy, and completeness. Consumers, and their Trusted Advisers, can be confident to rely on Open Banking data when preparing their financial reports.

 

8. Designed with Financial Professionals in Mind

Open Banking explicitly acknowledges the role of accountants and bookkeepers by facilitating data sharing through ‘Trusted Adviser’ sharing provisions. This special provision in the regulations highlights just how vital accountants and bookkeepers are to enabling Australian consumers to make better financial decisions based on better financial data.

 

9. Accuracy and Reliability Depend on the Provider

While Open Banking itself offers significant advantages, the accuracy and reliability of the data can vary depending on the Open Banking provider, who acts as an intermediary between the bank and the consumer and their adviser. While all such intermediaries must be Accredited Data Recipients (ADRs) under the CDR regulations, different ADRs may have different systems and processes for the delivery of data to Advisers. It’s critical to choose an ADR that understands what accountants and bookkeepers need to do their work accurately and efficiently.

 

10. The Nominated Representative Challenge

In order to approve data sharing for their accounts, account holders must have the relevant authority for those accounts. This is not a problem where the accounts are held by an individual, but can be more tricky in the case of a company, partnership or trust. It is therefore advisable for business clients, SMSFs etc to ensure they have the correct “Nominated Representatives” on file with their banks. These nominated representatives will then have the power to consent to data sharing under Open Banking.

 

Embrace the Future of Accounting

Open Banking represents a significant shift in how financial data is managed and utilized in the accounting and bookkeeping professions.

By understanding and embracing these top 10 facets, you can significantly enhance your practice’s efficiency, data reliability, and client satisfaction.

Let’s navigate this innovative landscape together, leveraging Open Banking to its fullest potential for superior financial management and decision-making.