Apologies for yet another Xero related piece (and apologies in advance as there will be another one soon) but then Xerocon was packed with so much great content.
At the end of the day I managed to get a few minutes with a tired but still energetic Rod Drury, the company’s CEO. We’ve spoken a few times over the years and exchanged the odd email but had never met in person so getting him on video was an opportunity I was not prepared to pass up.
Earlier in the day, the company fielded a bevy of questions around automated bank feeds. Xero makes this a virtue and has been able to carve out much of the routine and potential for error through this technique. When the company came to the UK, it was horrified to find that the UK bank feed landscape is nightmarishly complex with individual banks ploughing their own furrow. There is little consistency as between banks on how they allow access to their systems. To compound the problem, some banks are refusing third party access on the grounds that it would invalidate their consumer protection insurance and violate their policies on this matter.
It is a debatable point as to whether the UK banks’ positon is tenable in the long term. However, in light of the questions, Rod said: “Who knows, we might have to become a bank?” That sounded more like a question than a statement of intent but it is an intriguing proposition. If that happens – and there are plenty of barriers in the way to making that a reality – it would be highly disruptive to an industry that needs disrupting for many reasons.
On camera I asked Rod to provide a bit more colour on the topic of analytics and the data Xero is collecting. (I should have asked him to expand on the bank thing – my bad. Another time…) He prefaced his remarks by telling me that the investments Xero has made are just a beginning or rather that they provide Xero with a platform to do the ‘cool stuff.’
Cloud analytics as a value proposition to others is a topic I first talked about at least four years ago so you can imagine my excitement at hearing the company hold forth. In my view, cloud providers are in a unique position to provide services to many businesses based upon the aggregated data they already collect.
While Rod talked about information that would be of interest to both accountants and their advisors, I believe the big opportunity is in providing selected, aggregate data to a variety of third parties in much the same way that Google targets ads to its viewers. Demographic data regarding insurance patterns for instance would be of great value to insurers. Ultimately, it would also be of benefit to buyers of those services. The problem comes in providing this data in a way that preserves customer trust. So far as I am aware, none of the major vendors have attempted to pull this one off but it will happen at some point.
In the meantime, I encourage you to listen to what Rod has to say. It’s a valuable addition to the analytical data debate where you get a real sense of Xero’s next big steps.