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The Banking Royal Commission and the opportunity for accountants

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The Banking Royal Commission and the opportunity for accountants
By Admin

We’re watching the Banking Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry very closely. Along with the agri accounting sector, the banking world is a strong partner channel for us in all of our global markets, and the term ‘Misconduct’ is strong. By default, it suggests that things are going to change. We expect the impact will be felt across both Australia and New Zealand.

Of most interest are the findings of the Select Committee into Lending to Primary Production Customers. Recommendation number 8 in their published report states quite clearly The committee recommends that the Australian Bankers' Association ensure all financial documents provided to its members by a farmer (including but not limited to asset and liability position statements, cash flow projections, business plans, valuations, historical and other similar documentation provided for, or on behalf of, customers either in support of loan applications or at any time throughout the relationship and at times of review) be prepared, altered or updated only by the customer and/or their representatives, and not by the bank or financial institution.”

How will the markets respond to this?

Its likely to present a unique opportunity for stronger collaboration between the accounting world and the banking world, particularly for those Xero accountants who can position themselves to meet the budgeting and reporting needs of the banks.

Meanwhile for the banks it will present a challenge. Given a large percentage of the farming sector are likely to find it difficult to provide banks with the information they need, in the required format, when they require it. The first question banks will most probably ask themselves is “where can I go to get the information we need?”

The opportunity for Xero accountants

For any Xero accountant who can get themselves positioned to meet the need, this is looming as a unique opportunity to build out a standardised budgeting and on-going advisory service. This comes in the face of pending change as a consequence of increased automation of compliance services, where there is growing tension about the future for this traditionally strong revenue base.

In the future, providing annual budgets and periodic review information to the banking sector will require consistent and timely data in much the same way as compliance information is required by the ATO or IRD. Which means this has the potential to become a stable revenue stream for any Xero accountant.

The question will then come down to “how can I efficiently and effectively provide the information to the banks?” and equally, build an on-going advisory relationship with my agri clients. The key is going to come down to technology selection. The single ledger that integrates banking, accounting and planning will be the benchmark here.

Leveraging technology for collaboration

The Xero / Figured technology and service stack is positioned to unlock the opportunity for their accounting partners and provide a pathway from the technology out through planning and advisory services to The Farming Team.

Figured positions the accountant front and centre of the farming team, facilitating the value generated from the information that is consumed by other members of the team - the banker, the farmer and wider business support players. The outcome being everyone is collaborating around a common platform, working with a single source of truth, and making good forward-thinking decisions.

This model is geared for the accountant, enabling them with the tools to unlock their intellectual capital and facilitate a service that goes beyond their traditional compliance revenue base.

For those of you attending Xercon 2018 in Brisbane, I encourage you to enjoy and embrace the experience and its energy. Come by and visit us, challenge us. Ask us what we’re doing to drive change in the agri financial advisory services space and how can we help you to be a better business and provide a better service to your customers. Then go away and challenge yourselves with that same question.