Xero opens the door for fintech banks to become SME advisors


Rod Drury, CEO of cloud accounting platform Xero, penned a blog last week discussing the impact Xero’s financial web is, and will continue to have on the small business community. For those of you who aren’t in the know, Xero’s financial web provides banks with access to Xero customer data via a suite of APIs. Use cases include direct bank feeds into Xero, payment instructions initiated out of Xero for AP, payment buttons on invoices for AR and sharing of financial data for lending decisions.

These are only a few financial use cases. The opportunity for banks to innovate around how this data is used is endless. In my opinion, the big opportunity for banks is in tapping into this data to become true advisors to small business, beyond the financials.

Banks realise this, the execution is just extremely difficult. In Australia, CBA is the only bank who has come close to implementing a business analytics function for its customers, as an advisory conversation starter. The product, known as Daily IQ, delivers ‘unique insights about your business and customers, helping stimulate ideas that can enhance success.’

Xero’s success is built for the most part on the back of the accountant and advisory community. So Rod naturally sees accountants and bookkeepers as the natural conduits for SME banking advisory as well. Helping SMEs move from that ‘now what’ moment that occurs once business insights are revealed, to taking action. He sees banks partnering with this advisory channel to deliver the goods, as per the extract below.

“Accountants are an amazing channel for banks. In the majority of situations, a small business owner who is a cloud accounting platform user is connected to an accountant. Across all these accountants and small business owners, there are hundreds of thousands of conversations about financial services happening every month. Banks need to educate accountants on their services, and accountants are open to this training. Accountants want to know how they can take banking services and add value to small businesses.”

He’s not wrong. But it’s also not necessarily the only option all banks have at their disposal. Thank’s to the emergence of fintech, banking is swiftly moving to being more than just a numbers conversation with an SME. Banking is now a technology + numbers conversation.

What will be interesting is if very focused, tech first, SME only banks emerge as advisors in their own right, not necessarily removing the need for a traditional advisor, but plugging a niche hole that exists to day – namely advisors lack of knowledge about fintech services. This will be an extremely natural place for tech banks to play, as given the nature of their business model, forming relationships with tech vendors embedded in the SME community has been critical to their success from day one. They’ve been advising on tech and banking since their inception.

Understanding how technology knits together with banking is not a natural space for an accountant to enter, yet. But for a tech bank to understand the best practice way banking should and can work with cloud accounting is not a stretch at all. So when a business owner calls into to discuss best practice AP and AR practices for their 4 hospitality venues, the tech bank expert can quickly map out the tech add ons and banking plug ins they need to make everything work.

Legacy banks will struggle with this for years to come. It’s just not in their DNA. It’s not impossible an SME could easily equate tech advisor with bank in the near future. Xero has made this possible. It’s up to tech first banks to now grab the opportunity at hand.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.


  1. While the war of data access continues……
    Bill Harris, CEO of Personal capital and former CEO of Intuit, following the JP Morgan Intuit partnership annoucement, says “They’re hitting the smaller players like Xero and Intuit first, then using that as momentum and leverage to hit the bigger players who would otherwise have more clout to fight back.” http://www.prnewswire.com/news-releases/personal-capital-ceo-bill-harris-former-intuit-ceo-calls-baloney-on-jp-morgan-and-intuit-300403880.html

  2. Thanks for the article Jessica. My favourite blog!

    I understand NAB also have integrated Xero, though understand it is more to assist with insight into financials for SME new loan applications.

  3. The opportunities of banks and accountants alike are profound with app technology enabling them to deepen relationships through broader service offerings. Advisory is critical for these parties to maintain relevance and sustainable returns.

    The front end value proposition is important but the back end opportunities for risk management and operations is profound also. Banks especially struggle to get deep enough insights into small business so Xero’s financial web is one big step to make traditionally nascent sector more transparent.

    Accounting platforms are just the beginning. Invaluable data sits in other tech stacks like ERP platforms, inventory and workflow management platforms. These platforms hold invaluable data to better understand business cash flow and operations. This is the data that truly represents the risk profile of a business. I believe tech platforms in the future will holds the keys to credit and risk. Tech first banks need to move fast to connect to these channels to protect market share and their own balance sheets. We have covered this more specifically in the factoring space here – http://www.skippr.com.au/blog/the-future-of-factoring

  4. Thanks for the amazing article.

    I always inn search for articles that are helpful in marketing project management.

    I am always in search for cost efficient tools that helps in both marketing & cloud accounting. Right now all this is handeled by a company named “easy xero” and they are also very helpful and provide a great help. I will will also check the given Project Management Software Tools.

    Maybe you want to check it out too and may be you may also like to add them in your next articles for the same: http://easyxero.com/


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