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Hot Topic Scrutiny Week
Hot Topic Scrutiny Week
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As Xero shares tumble 10%, Drury and MYOB trade blows over 'bank feed screen scraping'

Chris Keall
Wed, 01 May 2013

Rod Drury has taken exception to a front-foot MYOB press release sent to media this afternoon (see RAW DATA, below), which he took as a thinly veiled attack on his company.

"It's very mischievous and misleading," the Xero boss told NBR Online.

"Most of our Australian and New Zealand bank feeds are direct and Xero expects to pass BankLink this year in the number of transactions processed.. In primarily the USA we use Yodlee which is used by nine of the 10 biggest banks. ANZ Bank use Yodlee themselves."

Xero is working with many of the major banks on next generation web services and banks have not raised any concerns with the company, Drury says.
 
"Small business customers should be more concerned with the 600 million-plus of debt MYOB is carrying as it has failed to transition its services to the cloud."
 
A visitor from Mars could be forgiven for thinking there was an element of utu in MYOB's comments this afternoon, given Drury's recent sharp critique of MYOB and promotion of Australian media rumours of an IPO.
 
Xero shares [NZX:XRO] tumbled 10.74% to $13.308 today (for a market cap of $1.56 billion) - but the fall could just as easily be read as profit-taking after the stock's recent big run-up (see chart above right) as a reaction to its Australian competitor's jabs.
 
Why  the fuss about bank feeds to begin with?
 
Cloud computing commentator Ben Kepes explains, "Automatic bank feeds (the ability for a small business to have all it’s transactions show up within its accounting application every morning) are, at least from a technical perspective, a fairly logical and simple piece of functionality – in this day of widespread use of APIs, most tech-savvy folks would take this sort of thing for granted. The reality however is somewhat different – banks are risk averse and tied up in a sizeable compliance burden – letting someone integrate with your core system, even on a read-only basis, is a hard pill for a bank to swallow.

"It is for this reason that when Xero launched in its home territory of New Zealand, the deal it had secured with a number of local banks for auotmed bank feeds was just so game changing.

"Bank feeds are supremely useful, and by spending time negotiating the deal, Xero had given itself an awesome launching point.

"The global reality, however is somewhat different, and it’s fair to say that Xero didn’t have the same success convincing banks outside of NZ to come on board.

"Hence their decision a few years ago to use the Yodlee platform to run their bank feeds. This was a logical decision."

However, there's a wrinkle: By using Yodlee, a customer is potentially in breach of their banking terms and conditions, Kepes says. He elaborates here.

 

RAW DATA: MYOB statement

MYOB warns “screen-scraped” bank feeds are unreliable and inaccurate

Many business owners use cloud accounting solutions and benefit from daily bank-feeds, a feature where bank transactions are automatically imported and matched to the correct accounts in their accounting software. Bank feeds remove both the tedious task of data entry and the challenge of correctly allocating numerous transactions in the bank reconciliation process. However MYOB warns bank feeds services from some software providers may be unreliable and inaccurate.

MYOB General Manager, User Experience and Design, Ben Ross, says the company is committed to providing reliable, accurate data and maintaining rigorous standards of security when managing financial data.

“At MYOB, we understand that reliable access to accurate data is absolutely fundamental for our customers. Automatically importing transaction details into MYOB accounting solutions significantly reduces manual data entry, improves accuracy and saves both time and money,” he says.

Mr Ross explains that it is important for business owners to understand exactly how their accounting software accesses their sensitive banking information, and whether that access is authorised by their banks online terms and conditions.

“There are several ways that accounting service providers can access aggregated bank transaction data and unfortunately some software providers play fast and loose with data quality and customer security,” he says.

MYOB uses a bank-authorised data collection system provided by BankLink for its LiveAccounts and AccountRight Live products. In this process, BankLink supplies secure bank transaction data via direct feeds from financial institutions without needing to disclose logon details. The data is supplied in a secure, ‘read only’ format. The entire process complies with the stringent Payment Card Industry Data Security Standard for the safe handling of transaction data and meets the requirements of more than 100 financial institutions.

“MYOB chose to work with BankLink for its proven reliability, security and coverage of feeds from financial institutions across Australia. BankLink has a team of data accuracy specialists reviewing bank data feeds using processes they have refined over their 25 years of providing this service. For this reason, BankLink feeds are 99.9999% accurate and in some cases, more reliable than the bank’s own raw feeds,” says Mr Ross.

BankLink applies a series of proprietary, data validation routines to all bank transactions that identify and correct any anomalies in the data. This sophisticated error detection system results in a significant increase in data accuracy. Furthermore, BankLink’s direct contractual relationship with the banks means that they have protocols in place to fix any errors promptly without any interruption to service.

Some cloud accounting providers use a method commonly called “screen-scraping”. This process requires a business owner to disclose their internet banking username and password to a third party ‘screen-scraper’. This third party then automatically logs in to the business’s internet banking account at regular intervals, copies their transactions and supplies them to their accounting services provider.

The screen-scraping process may contravene internet banking terms and conditions.

“Most online banking terms and conditions forbid the disclosure of login and password details to any party, and exclude the bank from liability for any fraud which may then occur on the account – whether or not the fraud is related to the actions of the screen-scraper. We caution users of other software against passing on their online banking credentials through to third parties in return for bank feeds that are insecure and contain inaccuracies,” says Mr Ross.

Along with the potential security risks, screen-scraping can also be unreliable as the third party isn’t working directly with the banks. Not surprisingly, this lack of reliability can lead to frustration for accountants, bookkeepers and business owners.

“The concern for business owners is in the accuracy of their business financials.  Even if only two in every hundred transactions are wrong, how do you know which two?  That adds in a whole lot of extra work that undermines the original time saving benefit of the bank feed system.”

According to Debbie Vihi, owner of Mobile Bookkeeping Services, the bank feeds associated with some cloud accounting packages that use a third party or ‘screen scraping’ can be both unreliable and inaccurate. This makes it time consuming to reconcile a client’s banks accounts.

“I was reconciling a client’s accounts when I noticed that the software had duplicated transactions. The client often had a lot of similar amounts coming out of their bank account so the double ups were not picked up — they were mainly related to credit cards,” she says.

“What was usually a five minute job turned out to be quite time consuming. I had to take a million steps backwards and had to manually tick the statements off against the correct transactions,” says Ms Vihi.

Fortunately for accountants, bookkeepers and business owners who want to enjoy the time and cost benefits of bank feeds, MYOB’s provider BankLink offers both an accurate and more reliable alternative to screen-scraping.

“For anyone using cloud accounting, accurate bank feeds can be a real time-saver, inaccurate bank feeds can be a nightmare. To ensure you are getting accurate, reliable data in a way that doesn’t contravene your bank’s terms and conditions, it’s important to understand how your cloud accounting provider obtains its bank feeds. Users should check that they haven’t inadvertently supplied a third party with their banking login in details and ask their provider what industry standards their third party supplier complies with,” says Mr Ross.

Chris Keall
Wed, 01 May 2013
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As Xero shares tumble 10%, Drury and MYOB trade blows over 'bank feed screen scraping'
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