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Are banks setting out to compete with accountants?

Is the offer of free accounting software the thin end of a wedge to prise away customers?

When it comes to schmoozing small businesses there is a feeling that the banks are increasingly treading on accountants’ toes.

It might only be a squeeze rather than a full-on foot stamp, but over the past five years both high street and challenger banks have realised the benefits of offering accounting software for free to their SME customers.

They want to be seen as supportive partners, but should accountants be worried by a trend that has accelerated in recent years?

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The self-service model

In 2016 Barclays partnered with Xero and soon launched its SmartBusiness Dashboard.  SMEs can view real-time banking data alongside business information from third party apps including Intuit QuickBooks and social media sites such as Twitter. The idea is that this self-service approach helps businesses to be more productive because they can manage their cashflow, compare data and grow their sales using marketing insight.

In 2018 we saw Santander purchase Albert, the invoicing and expenses app for sole traders and micro-business.

In the same year, Royal Bank of Scotland, part of the NatWest Group, acquired the award-winning online accounting software FreeAgent for £53m.  FreeAgent also integrates with challenger banks such as Starling, Tide and Monzo.

Its chief commercial officer Kevin McCallum understands why some accountants may be raising a suspicious eyebrow at what has been happening.

Automation and data

However, he is adamant that this is not about the banks wanting to compete with accountants. It’s more about the power of automation and the ability for banks, accountants and small businesses to share data for the benefit of everyone.

“NatWest did not acquire us to sell more software licences. They did it to serve their customers better,” he said. “We are a UK-focused business and we help SMEs in areas such as tax support. This is about supporting accountants who are often SMEs themselves and who play an important role in assisting NatWest customers.”

Open banking

The emergence of Open Banking has arguably accelerated this trend because the banks can position themselves as business partners to help SMEs with financial management. The next phase around Open Finance – which will open up a wider range of tailored financial products and services from mortgages and insurance to pensions and consumer credit – will see data sharing becoming even more important.

“Accountants should try to get a better understanding of what is going on in the accounting software world. There is a lot of noise at the moment,” said McCallum. “They should take time to engage with the different platforms and with the vendors. They should also get feedback from their clients who are already using these platforms.”

Financial insights

As for the banks themselves, they won’t openly admit to wanting to park their tanks on accountants’ lawns.

HSBC launched the HSBC Kinetic app in March which enables SMEs to analyse business performance using account insights from platforms such as Xero, Sage and QuickBooks. Kinetic also provides account insights in line with HMRC tax coding. The bank said small businesses simply want to be empowered to make informed decisions.

“For SMEs, understanding cash flow is vital and having a sound understanding of their current financial position allows businesses to make quick decisions,” said a spokesman. “This relies on having real-time, easy to understand financial data at their fingertips.”

Overpromising simplicity

Rob Jones is the founder of RJF Accounting and Business Support for Start-Ups and he said more of his clients are opening bank accounts that include a free accountancy software package.

“The one danger of this is that the banks make it sound like business owners don’t need an accountant or bookkeeper and they can do everything themselves with the online cloud accounting tool they give you,” said Jones. “This isn’t just the bank; the cloud software companies push a similar message. A click of a button can do everything. They make it sound so easy.” 

He added that with Making Tax Digital, most businesses that are VAT registered will need to have a software package to file VAT returns, and it is good PR for the banks to offer to help.

Jones wants accountants to come out fighting and remind businesses of the crucial role they play. Whether that is making sure expenses are being appropriately claimed, VAT is being accounted for or taxes are deducted correctly.

So are accountants overly concerned?


Sarah Wynne, managing director at West Wales accountancy firm Wynne & Co, said she does not think her firm will be negatively impacted in the long-term by banks offering free accounting software.

“It is something banks have been pushing for a number of years as they think it is a value-added service to their business accounts. However, few clients seem to be interested,” she said. “We started looking at this with the banks and thinking that if we can get accredited on the software they give away, they would refer clients to us.  In reality, clients will trust their accountants’ recommendation regarding accounting software over the banks’ suggestion, even if it costs more. They see accountancy as a service they are paying for and which is working for them.”

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What the software providers say


Michael Green is Director of partnerships at Xero and makes no apology for partnering with the banks.

He said this is all about making life easier for small businesses.

“Through partnering with banks and other fintechs, we’ve been able to help businesses get paid faster, make payments more efficiently, access the capital they need, and make well-informed, critical business decisions.”

Indeed, Xero was the first platform to use bank feeds to securely import bank transaction data into its system. Today it has bank feeds into most UK banks.

“Despite access to new tools, small businesses should still be working with an accountant to help them interpret these insights and advise on key business decisions,” said Green. “These tools are helping small businesses and advisors to collaborate more effectively, which is crucial as businesses map their recovery.”

In May, rival Sage announced a partnership with the business financial platform Tide offering an integrated banking and accounting product for Tide members.

The deal connects self-employed and small business banking data and Tide’s existing finance and admin tools with Sage’s accounting and compliance as a service platform.


Andreas Georgiou, vp product marketing for Sage, said the boundaries between accountants and banks are blurring but the aim is to make things simpler for everyone.

“Banks are not looking to cut accountants out and they do not see themselves providing the kind of advisory services that accountants do,” he said. “We need to work together in a digital world and remove the manual systems for accountants and bookkeepers by ensuring the accountant, the bank and the small business are all connected. After all, most SMEs are operating from one bank account.”

Georgiou said business owners want a fully-integrated experience. “The development and streamlining of technology means the accountant can spend more time doing the things they went into the industry to do, which is to really partner with their clients’ businesses.”

The fintech view

The fintech revolution has forced traditional banks to diversify, which is why they are sometimes accused of entering accountants’ territory.

The banks have needed to move away from just helping businesses access capital based on collateral assets.

Perttu Jalkanen is co-founder of Arex, a data-driven fintech that helps SMEs find attractive interest rates and quicker access to cash. He said that in such a fast-moving landscape banks and accountants must work alongside each other.

“Neither the bank nor the accounting software can provide the value and accounting advice businesses require,” he said. “SMEs will always need to rely heavily on accountants as advisors, and accountants should be able to successfully pivot to advise their clients on the best financing options for their business.”

Jalkanen added: “Better financing options for SMEs means accountants can interpret the data and present more meaningful options and vehicles that enable sustainable growth. COVID-19 has reminded businesses that a good accountant underpins their growth and is a trusty advisor.”

Steve Hemsley Is a journalist, media trainer, and podcast presenter. .

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