Accountants: the bank managers of the future?
11 February 2020: the soaring popularity of cloud software and a raft of new financial tools have added an extra dimension to how accountants can operate in today’s market. With traditional banks struggling to keep pace, will accountants step in to become the trusted advice provider for UK SMEs? Mark Taylor reports.
It was the intention of regulators to generate competition within the banking sector by introducing a range of new laws that forced incumbents to allow access to customer data.
But numerous challenger banks have struggled to break through, and traditional lenders are finding it difficult to evolve. It could be argued that the greatest beneficiaries of the new playing field are accountants.
The soaring popularity of cloud accounting software and a raft of new financial tools that have emerged in the wake of new payment services regulations, Open Banking and Making Tax Digital, have added an extra dimension to how accountants can operate in today’s market.
Open Application Programming Interfaces (APIs), data access and system integrations have enabled accounting platforms to offer bank-like interfaces and inventory management platforms, transforming the range and depth of information accountants have at their disposal.
Banks are no longer the gatekeepers of account information, merely a pipeline by which others can access the data. This has allowed cloud accounting vendors to offer solutions that enable accountants to become the first port of call for SMEs who require financial advice.
To use one example, Xero has morphed from a pure accounting platform to a hybrid service that links banking, accounting and financing.
The latest generation of accounting software vendors are using AI to power cashflow forecasting, at one time the sole domain of a bank. The makers of these tools recognise that most SMEs want, at a basic level, rapid cashflow information, the need to make payments and the need to access capital.
Traditional lenders are also still dealing with legacy issues from the 2008 financial crisis, such as branch closures and perpetually low interest rates, with the knock-on being felt by small businesses struggling to secure credit.
This has played into the hands of tech-savvy accountants who can direct their businesses or clients towards services with intelligent dashboards that show invoice finance in real-time, or can even tap into new digital lenders with integrated funding solutions.
In recent years, Santander and the Royal Bank of Scotland have snapped up nimble micro-accounting companies, perhaps realising faster than some of their high street peers that the SME market has been long underserved. Despite this, there is a growing acceptance that accountants are increasingly filling in the knowledge gaps and becoming the trusted advice providers to UK SMEs helped, at least in part, by technology.
“I don't believe accountants are taking on more responsibility because clients are demanding it,” said Adriana Amato, Head of Growth at accounting advice fintech firm Capitalise. “Rather, automation in accounting technology has augmented the work of accountants by allowing additional time and/or insight into their clients businesses. The offshoot of this is that there is now additional technology which allows them to address the biggest challenges that their clients face.”
The team delivering the Open Banking initiative believe 2020 will see an uptick in accounting providers releasing new products as the first cycle of testing and development comes to an end.
As the worlds of banking and accounting continue to meld through APIs, for accountants faced with this dizzying new array of options, a thorough understanding of what technology is best for their clients’ needs will be of central importance, experts believe.
“There is already a close linkage between fintech and cloud accounting software, and accountants use a variety of different apps to suit the needs of their clients,” said Kirstin Gillon, ICAEW Technical Manager, Tech Faculty.
“The key for accountants is to focus on the value that they are bringing to their clients – whether that is as trusted advisors or compliance experts – and deploy the right tech to deliver that.”