What Is Open Banking?

Open Banking was introduced to encourage competition in banking — giving everyone more choice, and greater control of their data. As a result, businesses can share their bank transaction data securely and electronically with companies, including Xero. No more drudgery filling in forms manually and waiting weeks for a connection. 

Open banking allows the automatic bank feeds are the connections that allow your accounting software to download transactions from your bank. We think bank feeds have been one of the best innovations in the accounting software journey. Without bank feeds we have to manually import the data from your bank statements which is time consuming and means the data is slower to show on the accounting system than the automatic bank feeds. Automatic bank feeds give you a better visibility of cash flow enabling businesses to make better informed decisions (as well as see anything untoward as happened to our client recently, querying unusual transactions which turned out to be fraud. Luckily, as we have an automatic bank feed it was caught quickly.) It is also allows businesses to be MTD (Making Tax Digital) compliant.  

We love Xero’s automatic bank feeds but have come across problems with missing transactions in recent months. Xero have now recently released information explaining why the automatic bank feeds are not as reliable as they were. We have put extra checks in place to ensure accuracy however this feels like a step backwards.

This is not just a Xero problem as you will see below, the banks have to have reliable software ion place to be able to provide a stable feed.

Xero Announcement

"As a result of Open Banking, banks now have APIs (Application Programming Interface – it allows Xero to talk to your bank) available for regulated software providers like Xero, which allows us to access transaction data on behalf of customers, with their consent. This speeds up the process to connect your bank account to your Xero subscription, and means we can provide bank feeds at no extra cost. 

However, some of the technology powering those bank feeds is complex, and recently we have had some issues which have impacted the reliability of our UK bank feeds. 

We obviously want to fix this, and fast. We have a lot of people working on this here in the UK, alongside our banking partners, integration partners, and colleagues at Xero HQ. Today, I wanted to share an update on our progress and a bit of context around why, on certain occasions, we still face some challenges in this area.

A new way to connect with UK banks

As a result of Open Banking, banks now have APIs available for regulated software providers like Xero, which allows us to access transaction data on behalf of customers, with their consent. This speeds up the process to connect your bank account to your Xero subscription, and means we can provide bank feeds at no extra cost. 

However, the change meant we needed to build connections to those APIs in a way that kept our customers’ data secure. Given the high number of banks in the UK, this has meant that most companies like Xero who wanted to take advantage of Open Banking APIs chose a third-party integrator — companies who specialise in individual bank integrations.

We initially selected OpenWrks as a technical service provider to build those connections, and help Xero access the APIs of banks across the UK. This required us to migrate to the OpenWrks platform. However, shortly thereafter, OpenWrks was acquired by Tink, which meant we needed to conduct a second large-scale migration only nine months later.

As with any technology migration, issues do crop up, and this one was no different. We’re genuinely sorry for any problems this may have caused and thank you for your candid feedback and patience. 

The good news is that the migration to Tink is now complete after six months, and we are very confident that the technology is robust. We have more than 70 banks connected to Xero and we will continue adding more bank feeds all the time, which we will keep you posted on.

The ongoing challenges we face (and will always face)

While we are very confident when it comes to the migration to Tink and the stability of that connection, the reality is that both Tink and Xero also depend on the quality of individual banks’ APIs. 

In many cases, some banks have taken their APIs very seriously and have invested in them. In other cases, banks are still facing their own technology or investment issues. We have no control over those banks or their timelines for fixing any issues on their side, such as bugs or broken connections. 

We know it’s frustrating, and while we’re working tirelessly with the banks to resolve issues as quickly as possible, it’s often out of our hands. We need all banks to take Open Banking and the quality of their feeds seriously. As part of this work, we are fighting hard for changes that will benefit our customers. 

Last year, alongside industry bodies and other software providers, we asked the Financial Conduct Authority (FCA) to scrap the 90-day re-authentication rule. The good news is that the steps to re-authenticate will become a little easier. The Open Banking Implementation Entity is now scoping these changes, so we’ll keep you updated. 

We’ll get this right

Our work on this continues. It’s a massive priority for us and we’re putting all our resources into it, working with Tink and banks across the UK to improve Xero’s bank feed connections. 

We want you to have a seamless reconciliation experience, but we have to acknowledge that there may be ongoing issues connecting to some banks’ APIs. Please know that we’re working tirelessly on this — we’re pushing our banking partners on your behalf and supporting a technical fix in the areas we can control. 

In the meantime, please get help from Xero Support or submit a ticket when you experience issues, so we can investigate the root cause, provide feedback to our banking partners on the scale of these issues, and fight on your behalf. You can also check out our Xero bank feed status page (click on the link) for updates on known delays, and information on when Xero, Tink or our banking partners expect to implement a fix. 

To customers in Ireland

Since Brexit, our UK FCA licence could no longer be ‘passported’ to other EU countries, and we were forced to turn off our bank feeds in Ireland — which we’re truly sorry about. 

This means our Irish bank feed issues have not been technical, but related to financial authority regulations in Europe. To fix this, we have incorporated a company in the EU and are just awaiting final approval from the regulator to restore bank feeds for our Irish customers as soon as possible. 

We are pushing the regulator for exact timings, but we’re very hopeful this will happen in the first half of this year. We’ll communicate further on this very soon.

Thank you for your ongoing patience and I hope this provides you with some context around the ongoing challenges with our bank feeds. I have no doubt that in time, the long-term goal of Open Banking — to give consumers ownership and control of their data — will become a reality."

Going Forward

If you need any help with Xero bank feeds or any other part of Xero, we offer one off consultations, contact us for a no obligation quote by clicking here.