Mclowd Community Newsletter December 2018

Welcome to the Mclowd Community Newsletter

Mr Frydenburg said the government was confident fintechs and non-banks would be “empowered to develop tools that will allow consumers to make the most of the choices available to them.”
Data laws to make banking simpler, AFR Dec 5th

Introduction

Five years ago MYOB paid more than NZ$130 million for a company called Banklink.

At the time of the transaction Banklink’s value proposition was based on two pillars:

  • Direct feeds from over 100 financial institutions
  • An application layer that allows for the automation of coding associated with that data

I have some rather bad news for the stakeholders of Banklink:

In the months ahead – as a result of the Government’s Open Banking reforms – all of those feeds will become freely available via public APIs.

The application layer will also no longer be required, because the data will be processed by an army of machine learning computers.

All of this will happen with almost no money changing hands.

The inevitable consequence of this process will be rampant per unit price deflation within the core product markets in which Banklink (and by definition MYOB) operate.

Accounting Software Update

Version 2.0 of the Reports Pack is now live.

This release allows SMSF Professionals to:

  • Save a Reports Pack as a template, and generate it against multiple Funds at the click of a button
  • Amend the order in which individual reports appear

The evolution of this feature (from release 1.0 in early October) is a good example of:

  • How progress during the year (in terms of functionality) has opened up the opportunity to direct more attention to usability
  • The critical role being played by Practitioners in the process of collaboration

Speaking of his participation in the Community, Gerard Hannan from Supernova Consulting had this to say:

“The ability of the Mclowd Team to absorb feedback and quickly put changes into production means that I am seeing the gaps with incumbent vendors disappear almost on a daily basis.”

Cost Savings

Whether it is through Open Banking, AI or the core logic, closing those residual gaps as quickly as possible is obviously important.

Because until recently the prospective savings (generated by Mclowd’s unique governance structure) were exactly that – prospective.

As the gap continues to shrink in the coming months, the savings on offer (which can be easily determined via the Savings Calculator on the website) will become all too real. Particularly for larger practices for whom software licence fees can run into the tens – if not hundreds – of thousands of dollars per annum.

Conclusion

The individuals responsible for the Banklink acquisition exercised their authority in staunch defiance of a simple micro-economic reality:

If the marginal cost of a product or service is zero the price of that product or service will eventually – and inevitably – approach zero.

Mercifully the days of capital being deployed in that manner are drawing to a close.

Regards

Ashley Porter

Managing Director
Mclowd Pty Ltd

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