The untold truth on accounting bank feeds

Accounting bank feeds – a feature where your bank transactions are synced with your cloud accounting software – may be the best thing to happen since sliced bread.

This handy feature allows you to tally your financial books with what is really happening with your money in the bank. Who doesn’t love this scenario?

Picture this: You pay your supplier $200 on Monday through online banking or through your credit card, then you log in to your online accounting software on Tuesday, and hey presto… that $200 bank transaction has been fed into your software for you to easily allocate.

If you need more explanation, here is a video:

Hang on a minute.

Are you wondering, “If my bank transactions are transferred into my software automatically, how exactly does my software get access to my personal banking data?”

Good question. You voluntarily gave permission for your software provider to access it.

Question of security

So, is your accounting software provider using  a safe and secure process?

There are two ways they can access your data:

• Your accounting software provider integrates a direct feed of your bank transactions from each of your banks into your software without needing your bank username and password.
• Your accounting software provider uses a third party to access your transactions using your bank username and password and  passes it back to your software provider

So, how your bank data is accessed is where these two methods differ.  MYOB uses the first option because we believe it is the safest way to handle our clients’ financial data.

The second method, commonly called screen scraping, has certainly copped a lot of flak. How screen scraping works is that you will need to provide your bank login details such as your username and password to the third party.

Using your username and password, they will access your bank account and take a snapshot of your transactions. They will then produce the bank feeds that will be fed to your accounting software.

Although third party companies that do screen scraping take security seriously, the consequence of any security breach can be disastrous.

If there is a breach, this is where it gets tricky for you. First of all, remember that you have voluntarily given your username and password to another party who is not your bank.

Now, banks have terms and conditions whereby, if you give out your details (including username and password) to a third party, and a security breach or error happens which results in you losing money because of it, then the bank is not liable for your loss.

See, this is where bank feeds can be a grey area. By using this method you could very well be violating your banks’ terms and conditions, renouncing your right to protection from banking fraud. Always check if you will break your internet banking agreement before you hand over your login credentials.

Personally, I do not share my bank login details with anyone – not even my husband. I always take precaution when doing online banking. I only log in from bank pages. I check that the URL has a padlock icon, which means the domain owner is verified and authentic and the transaction is secure. I change my password from time to time. And so on.

So, why should you trust MYOB?

With MYOB’s AccountRight Live, we do bank feeds differently. We will NEVER ask for your username and password for any of your banks and financial institutions.

This is because we work with BankLink, which has direct relationship with hundreds of banks across Australia, New Zealand and UK. This means financial institutions are aware BankLink is accessing their data, and BankLink needs to comply with the bank’s terms and conditions.

Here is how BankLink does the job:

• BankLink requires written permission from you to set up your bank feeds
• Once it has consent, it will access transaction data from your bank in a “Read Only” format. This means BankLink cannot do anything to your bank transaction data. You retain full control of it
• Once the data is fed into your software as bank feeds, you can set rules for recurring transactions to reduce data entry
• Once your bank transactions have been matched to your accounts in your software, you will need to complete bank reconciliation. This gives you the opportunity to review your entries and retain control over your accounting data

Check out our FAQ on Bank Feeds and the list of financial institutions participating.

In a world where dollars and cents translate to mere bytes on a computer screen, you cannot afford to be complacent about your bank details. In fact, nowadays you can probably Google a person’s whole life and feel like you know everything about them within hours. Sadly, this is the world we live in now. So do your research with bank feeds and make sure you make the most secure choice.