In 2005, an $11 million spreadsheet error led to this statement from Kodak’s spokesman Gerard Meuchner, “there were too many zeros… (added to the employee’s accrued severance).”
If you’ve had a ‘too many zeros’ Kodak moment before, you probably don’t need Gerard to tell you how manual processes within accounting are error-prone.
For many SMEs, freelance and shift workers, dealing with spreadsheets (with plenty of zeros) during tax filing is comparable to listening to a nosy neighbour running fingernails on a chalkboard.
This is one of the accounting pain points Open Banking is removing.
How Accounting Fintechs are using Open Banking
UK’s personal tax app, untied, has connected its platform to Open Banking account aggregation services, which allows their customers to import bank transaction data without flip-flopping between untied and their bank app.
The data is analysed and categorised, with tax returns filed with the UK’s tax agency, HMRC automatically. untied then plugs in another Open Banking feature: Payment Initiation Services (PIS), enabling account-to-account payments from bank accounts to HMRC accounts without leaving untied.
This open banking use case reduces customers’ direct interaction with their bank app, a trend you’ll continue to see as Open Banking adoption grows.
Bringing the power of Open Banking to freelancers.
Freelancers using one account for both personal and business payments usually have a hard time tracking business expenses for tax. Accountable lightens that load.
Typically, a freelance worker would use Accountable to invoice clients manually and that’s where the story ended. But using Open Banking Account Information Services (AIS), Accountable can now connect to a freelancer’s bank account, import transaction data, identify their business payments and classify them as expenses, then reconcile them with the invoices sent through the platform.
As a value add, Accountable layers on tax optimisation tips and VAT returns generation; pairing these with a marketplace of Belgium-based accountants.
This is the second industry I’ve seen this pattern of layering Open Banking data with existing data sets and human specialists to create value for users. It might be a framework that companies can use to identify areas to leverage Open Banking in their businesses. See how Conquest has followed the same route in the financial planning space…
The combined power of Open Banking data access and payments will (is) changing how the accounting industry operates. Those open to innovation will stand out in the eyes of customers as they continue to create new value at no extra cost while simplifying complex customer experiences. This is happening both in B2B and B2C accounting solutions. Check out the Use Case Directory for more examples of Open Banking at work.