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SMSFs, make way for Open Banking

May 16, 2023, 09:26 AM
Andy Forbes - SuperConcepts

By Andy Forbes 
Chief Technology Officer 

Open Banking

Open Banking data feeds – what, how and why

The administration and compliance of Self-Managed Superannuation Funds (SMSFs) requires a significant amount of data entry into specialist accounting software such as SuperMate.  Information on bank account transactions, balances, investment decisions, holdings and trades can be very time consuming for your accountant or fund administrator to transcribe.

One of the best ways to reduce this data entry effort is with the establishment of data feeds.  Whilst it might sound daunting, technical and convoluted – a data feed is simply a constantly updated stream of information. It's a way for different software applications to share and exchange data automatically without needing to manually input or retrieve it from a website or database.

There are a number of data feeds currently available to SMSFs that enable automatic import and export of data, such as member details, contribution transactions and pension payments, into an SMSF administration software which saves time and reduces the risk of manual errors.

For example, within the SuperConcepts ecosystem we support over 260 data feed connections that process over a million data elements every week. It’s staggering to imagine how long it would take to manually handle that data. 

Data feeds supporting SMSFs currently include:

•  Share prices and financial data feeds provide up-to-date information on the performance of various investments such as stocks, bonds, and exchange-traded funds (ETFs).

•  Bank account transaction feeds automatically import bank transactions into accounting software or platforms, making it easier to reconcile accounts and track expenses.

•  Information on corporate actions and underlying asset allocations

•  Trading data from software platforms, brokers and registry contract notes

•  Compliance data feeds assist with meeting important regulations and requirements, such as SuperStream, audit and tax reporting obligations.

What is Open Banking?

 Open Banking is a legislated initiative that requires Australia's banks give consumers the option to share their data with accredited third parties. Open Banking is designed to increase competition in the financial services sector, promote innovation and provide consumers with more control over their personal and financial data.

Open Banking will allow individuals and businesses to give consent to share their banking data with third-party providers, such as fintech companies or other financial institutions. It is currently being implemented in several countries around the world and is expected to have a significant impact on the financial services industry. 

Open Banking vs data feeds

One of the advantages of Open Banking over traditional bank feeds is that it provides a clear framework, process and specification for sharing banking data. Bank account holders can provide consent but can also easily revoke that consent at any time. This means that consumers will have greater control over who can access their banking data and for what purpose.

Traditional data feed authority forms are often signed and forgotten about months or years later.  This problem goes away with Open Banking as users can review who has been given access at any time.

Additionally, Open Banking provides access to more detailed product information than traditional bank feeds. With Open Banking, users can access transaction data going back several years, allowing for more detailed analysis of their financial history. 

With all Australian banks having to confirm to Open Banking legislation it’s never been easier for FinTechs to build solutions that use banking data to make people’s lives easier.  More practically, for SMSF Software providers like SuperMate it will be easier to set up data feeds, and the total number of domestic bank feeds supported will quickly expand towards complete coverage.

How can trustees and practitioners prepare for Open Banking? 

Excitingly, Open Banking is on its way to the SMSF industry. SuperConcepts is will soon launch Open Banking capabilities within SuperMate, their specialist SMSF administration software. So, what can you do to prepare?

Administrators and Advisers should be aware that there will be changes to the consent process and ongoing consent responsibilities of the bank account holders.  SuperMate software users will need to elect a Trusted Advisor for their site such as a registered Tax Agent. 

Trustees can relax until closer to implementation, however they will need access to online banking to be able to see and approve the sharing of their fund’s banking data with the elected Open Banking Trusted Advisor. 

Open Banking has the potential to revolutionize the way SMSFs access and manage financial data. 
While there are some challenges to overcome, the benefits of greater transparency, flexibility, and choice are significant. By preparing for Open Banking now, SMSF trustees, accountants, and advisers can stay ahead of the curve. Whether you're a seasoned SMSF professional or just starting out, it's worth investing the time and resources to understand Open Banking and how it can benefit you and your clients. By doing so, you’ll secure yourself a position in this rapidly evolving area of financial services.

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