Founder of innovative accountancy firm warns of the dangers from FinTech
The co-founder of innovative online accountancy business Mazuma is warning that many accountants could find themselves killed off by the growing threat from FinTech companies.
Lucy Cohen, (pictured) who co-founded award-winning Bridgend-based Mazuma with childhood friend Sophie Hughes in 2006, says getting onto partnership with FinTech businesses could backfire on accountants.
In an article entitled ‘Beware the FinTech wolf in collaborator’s clothing’, Lucy says: “Open banking, APIs and the ongoing saga that is Making Tax Digital (MTD) have created a space in the market for increased levels of automation in the compliance ecosystem. In a previous article I talked about the historic implication by various software houses that their product could replace an accountant. Accountants, of course, know that isn’t the case…
“But do clients know the difference? In today’s political environment we are constantly being presented with information which is at best dubious, at worst totally fictitious and misleading, but that is presented as fact.
“And therein lies the problem. How can we accountants communicate our value to potential clients if they are simultaneously hearing the message, from apparently trusted sources, that accountants are redundant? Especially when they hear it from sources that have previously or are currently using accountants as a source of referral or integration.”
Several FinTech businesses including the providers of credit cards and challenger banks are currently courting accountants to refer them on to their clients.
This is Lucy Cohen’s full article. You are invited to quote from it, but we request you link to the article on our website. (https://www.mazumamoney.co.uk/news/beware-the-fintech-wolf-in-collaborators-clothing/)
Beware the FinTech Wolf in Collaborator’s Clothing
In late November, my attention was drawn to a petition that had launched online. Briefly, it seems that in the USA, Quickbooks had been directly targeting the clients of bookkeepers who had previously partnered with Intuit and sold Quickbooks to their base. The bookkeepers in question were protesting. My first reaction? Quelle surprise!
Not because I think that Quickbooks were being deliberately Machiavellian, or that they’d been playing an incredibly long game to get a large proportion of a whole industry selling their products, only to deploy the old switcheroo on them. No, I think that this is just the first blow in what could turn out to be a long and drawn out battle between accountants and challengers.
Open banking, APIs and the ongoing saga that is Making Tax Digital (MTD) have created a space in the market for increased levels of automation in the compliance ecosystem. In a previous article I talked about the historic implication by various software houses that their product could replace an accountant. Accountants, of course, know that isn’t the case - well, not if you don’t want to end up in a pickle with HMRC.
But do clients know the difference? In today’s political environment we are constantly being presented with information which is at best dubious, at worst totally fictitious and misleading, but that is presented as fact.
And therein lies the problem. How can we accountants communicate our value to potential clients if they are simultaneously hearing the message, from apparently trusted sources, that accountants are redundant? Especially when they hear it from sources that have previously or are currently using accountants as a source of referral or integration. I mean, they work with accountants all the time, they’d know if people don’t need them, right?
Recently I went to a FinTech pitch event. One pitch in particular struck me - it was a company who, using links from open banking, had created an app that categorises income and receipts and will file a tax return with HMRC at the end of the year. Part of their strategy for market reach was engaging with accountants to help push the product. But tellingly, they rounded off the pitch by saying that they don’t want to just revolutionise accountancy, they want to put accountants out of a job. Maybe they hadn’t checked the attendee list and didn’t realise I was in the room. Or maybe they were negging me in the hope for engagement. Who knows?
It’s a ballsy pitch to, with one hand, ask for business from an entire industry, and then with the other state that you’re going to make them extinct.
Yet isn’t that what a lot of the challenger banks software packages and apps are doing? I know of at least two challenger banks who are planning to include tax filing as an add on to their business bank accounts. There are several business credit / debit cards out there that are likely to take the same approach. And what is a common denominator business growth strategy for all of the above? An accountants partnership program.
Are we turkeys voting for Christmas here?
Is this the pandemic that kills off accountants?
It could be. If we don’t get our ducks in a row.
For too long our industry has been fragmented in its messaging. Too quick to criticise our peers. And in recent years, maybe too hasty to evangelise the next big tech.
I think it’s time to firm up our offerings, define our own market clearly and double down on why our clients need us rather than a bot tax filer who is an “add-on” afterthought to the latest Fintech whim ...
Who’s in?
For further information or to arrange an interview with Lucy Cohen, please call Maria Williams on 07790 654274.
NOTE TO EDITORS:
• Mazuma is the UK's leading accountancy firm for small and micro businesses.
• It provides hassle-free, online accounting to businesses across the UK.
• Mazuma uses a combination of cutting edge technology and the expertise and experience of chartered accountants to create an accounting service that can truly make a difference to its clients. Click here to find out more about the business.
• Lucy Cohen won Accounting Personality of the Year in 2009 and was a finalist in the Institute of Directors Awards 2019 after being named Wales Director of the Year in the innovation category. Mazuma won the Account and Tax Adviser of the Year award at the British Business Awards 2019 and the British Small Business Awards 2018.