NAB and Xero join forces to automate bank feeds 22 April 2015 3:40PM Beverley Head National Australia Bank has signed a deal with accounting software company Xero that will allow the bank's business customers to apply online for automatic bank feeds and, if approved, start receiving them the next day.To an extent Xero is playing catch up with arch rival MYOB which already has agreements with Commonwealth Bank and Westpac in Australia and ASB in New Zealand allowing people to sign up online for automated bank feeds (NAB and ANZ online provisioning is slated for later this year).A bank feed is the direct transfer of a company's bank transaction data into its accounting system, allowing for end of day reconciliation.No matter who's first, the trend is all about taking friction out of financial services and establishing online links that will allow new services to be rolled out.Xero has accepted automatic bank feeds into its systems for the past eight years, but the process of signing up for them previously involved a paper-based and time-consuming approval process that could take ten days to bear fruit.According to Chris Ridd, managing director of Xero Australia, from May 25 NAB customers will be able to apply for bank feeds one day and have them by the next. But that's just the start of what may be possible in the future, he said.Because Xero's cloud accounting software will link directly to NAB's application programming interface, Ridd said that in the future Xero users would likely be able to opt to share business information from their accounting software with NAB.They might, for example, share profit and loss reports and debtor logs, in order to allow NAB to assess their credit worthiness before offering business loans. "Adam Bennett [NAB executive general manager for digital and direct banking] put it well when he said we are building the rails to provide other services," said Ridd.It's not the first time Xero has forged data sharing deals for its customers. Last year it signed a deal with insurer CGU so that Xero users could send business information to CGU which would then use the data to analyse workers' compensation exposure and pitch the most appropriate policies.The integration of different financial systems will become even more commonplace next year as the Australian Tax Office's push for standard business reporting (SBR) gathers pace. The ATO will switch off its electronic lodgment service next year and any business wanting to report electronically will have to use SBR, where prepopulated ATO forms will be completed automatically by SBR compliant financial and accounting software.Ridd said that Xero's deal with NAB wasn't exclusive and that the company was also in discussion with a number of other financial service providers about similar initiatives, but acknowledged that it had taken 12 months to bring the NAB arrangement to fruition. NAB said that it was also looking to work with a range of other accounting firms to offer similar services.Ridd said that information security was a priority, with information transfers between the bank and cloud accounting system being both password protected and encrypted. Ridd also confirmed that Xero was continuing to work on two factor authentication for additional data protection in the future.