Xero is making it easier for small businesses to manage their finances, one bank partner at a time.
The accounting technology firm on Thursday entered its fourth bank partnership with Capital One, which built an application programming interface that lets Xero retrieve customer data from the bank without compromising, through scraping, customers’ sensitive bank login credentials — the more common way of accessing customer data. Xero has made similar deals with Wells Fargo, Silicon Valley Bank and City National Bank.
“For a business owner to have their own customized financial web and sit at the center of it, we have to have the relationships all across the ecosystem,” said Keri Gohman, president of Xero Americas. “All the banks, accounting partners, ecosystem partners so the business owner can see its full tech stack and how to make it work together.”
Gohman joined Xero less than a year ago from Capital One. Tearsheet caught up with her to discuss the problems data poses for small businesses and the challenges for banks and third parties trying to serve them.
This is Xero’s fourth bank partnership. Is there a theme here?
These bank integrations are happening more and more and it’s a recognition that customers want control of their financials. This is just another continued reinforcement of that trend and the reality that banks really want to get ahead of customer demand.
How has demand from small businesses changed in the last five years?
As consumers, we’re able to log onto Google Maps and have it pull ratings and reviews from Yelp, Uber so I can schedule a car, Waze so I can see traffic. I don’t really know I’m in all those things but I expect them all to work together. In much the same way, business owners are starting to expect that. They’re using the cloud, realizing the benefits of collaboration, they want things to work that same way.
Can you explain the data access issue for small businesses?
Getting access to lending is about your financial history and performance over time. It’s the lifeblood of what a business lives on, and relies on how they get underlying data and how that data all works together. Third party integration is always tough because the data isn’t always reliable, and the feed can get interrupted. Having this data feed directly with the bank creates a tighter integration.
So what’s the problem Xero is trying to solve with Capital One?
Sharing customer data with third parties safely, securely and in a way that puts the customer in control. There’s been a proliferation of great fintech solutions for small businesses, but they don’t all work together. And financial companies are recognizing they want the world to work together. Everything financially should work together so if I’m a business owner I’m asking what’s my bank, what are all the business applications I need? I need all my data to flow through to my P&L. I need to be able to manage all of my business in one place.
What’s the biggest challenge?
Banks have higher fiduciary standards. I don’t tell Google to start feeding Yelp, Waze or Uber, but consumers don’t expect their financial data to just be shared everywhere. If it’s sitting in another system and your bank allowed it to go there, who do you blame? Not the other company. All the banks are wrestling with the right way to do this but also give customers flexibility. We have to go one by one by one to all the financial institutions to set up these partnerships, and they also need to go one by one by one. The challenge is really time.
Where do we go from here?
Everything will become interconnected over time. What this unlocks over time is the economy. It has the ability to transform the data we have access to, the ability to make the systems work together really have the potential to unlock productivity in ways we can’t consider today.