#TechTips – Betamax and Bank Feeds

The cloud has been billowing in our skies for the better part of a decade now. Visions of bank feeds and seemless integrations have beckoned us to journey towards the mythical land of Paperless Office, just outside of the famed Shangra-La and not too far from Atlantis.

Leaving the sarcasm aside, the bank feeds and their attendant bank rules have been one of the most compelling features of the cloud accounting apps. And yes, QuickBooks Desktop, that venerable software that we love and our clients hate, did have a primative version of bank feeds for years, but now, in the cloud, the workflow makes the work flow, better.

Having a bank feed means books can be updated each day, providing small businesses with an actual shot of having some semblance of internal control, let alone timely financial statements.

The technology is great.

When it works.

As with most things technological, when it breaks down, people tend to blame the thing itself, and sometimes the practitioner who recommended (if that happens to you, time to get a new client – just sayin’).

The heart of the matter though is that it isn’t the general ledger software, or the 3rd party data aggregator. The real villain(s) here are the banks. Because of course they are.

Having been thoroughly in the cloud for coming up on 5 years, I’ve had experience with how several banks handle the cloud and feeds with QBO and Xero. Banks such as Wells Fargo, Capital One, and soon, Bank of America, have direct feed relationships with Xero. Other banks such as PNC, M&T, BB&T have an intermediary, usually a company called, “Yodlee” (no, that’s not a joke, it’s actually a long established player in this space.) wherein the 3rd party will login to the bank, ‘scrape’ the transactional data and feed that into Xero, or QBO.

QBO has more direct feed relationships than Xero, but that is changing, and it really doesn’t matter.

The issue is that each bank has their own standards and procedures for how they handle bank feeds, and they periodically change those standards. When those standards change, the feeds break. Most times, it’s easy enough to re-establish them, but not always.

In July of 2019, BB&T, M&T, Bank of America, PNC, and Capital One all decided to reset their security policies at roughly the same time. Let me tell you how fun it was to manage my inbox and phone that day. (It wasn’t. It really wasn’t.) By the end of the following day, most of the feeds had been reset, except for PNC which really is averse to having anyone (or any app) sync in for their data, and Capital One which has great marketing, but not the greatest U/X.

The point of all this is that our job, as accountants, is to ensure the smooth running of our nation’s commerce. It’s in our code of conduct, our charge to the public. The future of our profession is using cloud based ledgers and bank feeds to secure the entire chain of a transaction from inception to reconciliation.

To that end, it’s time to have some entity, perhaps NIST, put forth a security protocol for all the banks, software providers, and other participants to adopt. It’s no longer a mere annoyance to deal with each bank’s approach to these feeds, it’s a threat to our nation’s commerce.

We’ll close with this whopper of a logic bomb:
A couple months ago, a client who has been with ‘Goliath National Bank’ and quite unhappy with said bank’s service, went shopping for other banks. They looked at Hyper Local Bank who proceeded to sing a smooth song of enticement. When asked about bank feeds, they said, “We value our clients’ security, therefore we don’t have bank feeds, our clients manually reconcile their accounts each morning.”

My reply to said client went like this, “Hyper Local Bank doesn’t offer bank feeds because they value your security. Goliath National Bank does offer bank feeds because they ‘don’t’ value your security? Does that argument really make sense? Further, you clear 1,000 transactions each month. Do you really want to pay me to process that much volume, manually, or would you prefer to let the robots do what they were designed to do?”

Ultimately that hyper local bank was bought out by a larger bank that did offer feeds…

Bank feeds are the future and this toothpaste is not going back into the tube.

It’s time for a national standard.

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