In an online article, SuperMate chief technology officer Andy Forbes stated that the financial sector is currently in the early stages of a fresh wave of technological innovation, which will also see some important development for the SMSF sector.
One of the significant trends driving innovation at the moment, said Mr Forbes, is the consumer data right, which changes the way companies collect, use and share data.
“Large enterprises hold a lot of data on their consumers but getting access to it can be difficult. CDR is about ensuring that the end-user is aware and in control of their data being collected and with who it can be shared,” he explained.
One of the CDR areas of interest is open banking, he said, where the end client can easily permit others to view bank account data.
“This method will replace the existing data feed authority process that [major SMSF software providers] use to get transaction data feeds,” said Mr Forbes.
At the moment, the data feed authority process is specific to each bank and, behind the scenes, the files they send to administration systems are also often specific, or bespoke, he explained.
“A fintech wanting a specific bank feed, must reach out to that bank, and try to encourage them to provide that feed. Discussions are had between both parties, and if the need for that data feed matches the commercial or strategic interests of that bank, a project gets kicked off. Development teams start building and, some months later, the software will support the data feed. It’s hard work for the fintech but also a pain for the accountant and the end client,” he stated.
“Open banking makes this significantly easier by mandating the availability and format of data and provides a set of tools for the authorisation process that make it simpler for trusted professionals and consumers.”
Mr Forbes said this would make it easier to sign up for bank cards and streamline approval for a loan or mortgage.
“From an SMSF perspective, it will make it a lot easier to set up bank data feeds, no matter which admin software you’re using. For fintechs needing data feeds, it creates a level playing field as banks are mandated to participate,” he said.
“For consumers, the open banking approval process can be done in minutes and is much better than the old data feed authority forms or screen scraping (and internet banking password sharing) methods currently employed by some software.”
Mr Forbes said that while cryptocurrency has certainly attracted a lot of interest from SMSFs from an investment point of view, the technology behind it, blockchain, is set to transform regular financial processes.
Blockchain is a decentralised ledger for parties to interact with each other that can be applied to all manner of problems to make more transparent, fair, and open ecosystems, he said.
“For me, it’s not about the coins – it’s about what blockchain technology can do to improve the way we do business and interact with each other. Things like trading, without the need for an intermediate business to facilitate it, or smart contracts that have the terms coded into the blockchain solution so that they automatically fulfill their obligations, with no human intervention or action required,” he stated.
Mr Forbes noted that the ASX is currently working on a blockchain-based solution to replace its Clearing House Electronic Subregister System (CHESS), set to go live in 2023. They’ve picked this as it will reduce costs for all players and increase innovation opportunities.
“When it comes to SMSFs, most of the discussion right now is about investing (or not) in cryptocurrency, but it promises a future with more innovative financial products and fintech companies, cheaper trades and settlements, and more control over how your data is stored. It’s still very early days for blockchain technologies – it will take time for it to move from novel to mainstream,” he said.
“A good first step for accounting software in this space is adapting to and simplifying crypto investment tax obligations, compliance, and audit trails.”
