Multibanking, which refers to managing multiple bank accounts through a single digital platform, has become essential for businesses to manage their finances. It is not only a popular way for companies to manage their finances, but it's also a necessary treasury management activity. To avoid systemic risk, it's recommended that no more than 50% of company funds should lie with one bank. Multibanking allows companies to consolidate their financial services, centralize payment flows, initiate pre-accounting, simplify cash flow control, and plan and streamline their accounting processes without coordinating multiple logins to access the data from each banking portal.
Secure and Compliant Multibanking Platforms
Businesses diversifying their funds due to the increased risk of fraud, cyberattacks, and liquidity runs has driven the demand for secure and compliant multibanking software. As the use of these platforms continues to grow, it is essential to ensure that data protection and compliance standards are met to avoid potential risks. In light of such facts, regulations like the General Data Protection Regulation (GDPR) have been implemented to enforce personal data to be handled responsibly and securely.
GDPR was introduced in 2018 to strengthen data protection and privacy for individuals in the European Union. The regulation applies to all companies that process personal data, including financial institutions and fintechs. GDPR has set strict guidelines that companies must follow to protect confidential data, including bank details.
Multibanking platforms must have robust security measures to ensure financial data security. Two of them are of specific importance:
- On the one hand, data encryption ensures that sensitive data is protected during transmission and storage.
- On the other hand, two-factor authentication, also commonly denoted as 2FA, requires users to provide two forms of identification before they can access their accounts.
Financial management software often offer data masking, a technique that replaces sensitive data with non-sensitive data to protect against unauthorized access. Additionally, some platforms provide automatic data backups, ensuring users' data is always available and up-to-date.
Many platforms also have deletion policies in place. Deletion policies grant that any unused data is deleted promptly and whenever initiated by the owner. This means that users can have confidence that their data is only being stored for as long as necessary and is being deleted when it's no longer needed.
At Friday Finance, we take security and compliance seriously. Our platform fully complies with GDPR and uses industry-standard security measures to protect users' information. We use data encryption, two-factor authentication, and data masking to protect sensitive data.
The State-of-the-Art in Data Protection
Staying ahead of the competition is essential in today's fast-paced business environment. One way to do this is by using platforms that provide a comprehensive overview of all your financial accounts and ensure data protection and compliance with regulations like GDPR.
To achieve this, enterprises should turn to heyData, an all-in-one protection solution that offers a simple, cost-effective way to achieve compliance with GDPR and other regulations. Their software is ideal for startups and small to medium-sized businesses and delivers a complete compliance package that can be used with multibanking platforms. heyData makes it easy for companies to focus on what matters most, their core business, while leaving the complexities of data protection to the experts. You can easily get in touch with them via this link.
Data Protection for Multibanking Services
In the context of multibanking, data protection is a crucial aspect to consider. To ensure that customer data is kept safe and secure while managing multiple accounts, regulatory standards like PSD2 and Open Banking aim to provide a framework for protected data sharing between financial institutions and third-party providers.
PSD2, the Payment Services Directive 2, is a European Union regulation that mandates banks to open up their payment infrastructure to third-party providers. In layperson's terms, PSD2 allows a business bank account owner to access information such as account details, transactions feed, and payments schedule outside of the banking portal. This move aims to create a more competitive and innovative financial services industry to improve customer experience and protection.
Beyond the European Union, Open Banking is also on the rise. Open Banking Policies in the UK are modelled after PSD2 and are compatible with the standards laid out in the regulation from the European Banking Association. The UK's Financial Conduct Authority develops and supervises the Open Banking initiative for the UK and seeks to enable secure data sharing between financial institutions and third-party providers, with an even broader scope than PSD2.
Open Banking aims to create a standardized, secure, and transparent way of sharing financial data to enable new services, increase competition, and drive innovation in the financial services sector. While PSD2 regulates a re-consenting of data access every 90 days, the FCA's Open Banking guidelines have waived that requirement and allow users to access their banking data indefinitely. A similar initiative is currently under investigation by the Berlin Group, the authors of the EU's PSD2.
Financial institutions and third-party providers must implement strong protection measures, such as encryption, two-factor authentication, and access controls, to address the cybersecurity challenges that come along with the open data revolution. These measures help build trust between financial institutions, third-party providers, and customers, leading to a more secure and trustworthy multibanking ecosystem. Examples of compliance efforts include the implementation of secure information-sharing protocols and the use of certified protection solutions like heyData.
Optimal Practices to Manage Multiple Business Accounts
When managing multiple accounts, users may face a few common challenges. One of the biggest is the risk of errors. With various accounts and transactions, noticing essential details can take time and effort.
For example, users may download the wrong time frame for their transactions or miss a CSV export, leading to missing data fields such as references or unknown currency conversions. Additionally, lost login details or different business account owners for different banks can further complicate the management of multiple accounts.
Establishing transparent workflows and procedures for managing multiple accounts is crucial to avoid mistakes.
This can include setting up automatic transfers and reminders, reconciling bills regularly, and connecting financial data with accounting software to help streamline the process. Managers should also consolidate balances using multibanking platforms, allowing for easy access and management of multiple accounts in one place and automating recurring transactions such as bill payments and transfers.
Friday Finance offers a variety of features to help users streamline their financial operations. Because of its holistic approach, users can easily track their finances across multiple accounts and overview critical metrics such as cash flow and revenue. The built-in cash flow manager gives users a detailed overview of their inflows, outflows, and forecasts, allowing them to make informed decisions about their business finances.
By pairing Friday Finance with heyData's compliance solution, entrepreneurs can rest assured that their data and accounts are always protected. The powerful duo provides an ideal compliance solution allowing users to focus on their core business tasks and leave dull, tedious manual tasks behind.
