In a unique partnership announced Wednesday, City National Bank in Los Angeles is working with the cloud-based accounting software company Xero to integrate its online banking site for small-business customers with Xero's technology. When the connection is complete, the accounting workflow will be tied to real-world transaction data, with the bank account providing a "source of truth."
Small businesses that were customers of both companies asked for the joint product, Xero and bank officials say. Eventually, clients will be able to complete many online banking tasks in their accounting software, something these customers have also asked for.
The Xero software will compare book transactions and bank transactions and help match payments against invoices.
The $27 billion-asset bank is the first U.S. bank to partner with Xero, although the software company does have a partnership with the U.S. account aggregator Yodlee.
Xero was founded in New Zealand, but now has a U.S. headquarters in San Francisco. Its accounting software is created for the Web and competes with QuickBooks online. It has 193,000 small-business customers in 100 countries.
"The U.S. is where our future is," says David Pollock, director of business development at Xero. "We're on track to double our U.S. revenue and customer base year over year."
Pollock says Xero has tried to not replicate desktop accounting software but has designed a simple workflow for browsers and mobile devices, leaving out features that don't apply to the vast majority of users, such as robust inventory management. "Instead of squishing everything into our user interface, we've opened up our back end to the developer community," he says. More than 200 partners have created add-ons for the product, most recently Expensify and Clio.
According to Pollock, the bank's brand will be prominent whenever bank data shows up in the accounting software.
The integration of the bank's online banking site with Xero's software will take place in phases. "As we move forward, we'll be rolling out a real-time provisioning solution," Pollock says.
For now, Xero customers will submit a form to City National, instructing the bank to deliver their monthly statements to Xero, which will make the connection on the back end.