It’s time to embrace the ‘financial web’

Today, at XeroCon, an event for entrepreneurs and accountants being held in Melbourne, global accounting platform Xero and online storage company Dropbox announced the launch of a new Dropbox for Business integration for Xero’s Australian Tax product. The integration has been designed to help small businesses and their accountants and bookkeepers share files and remove administrative burden from their day-to-day operations. The integration will be available to users from September. In addition to this, Xero also announced a list of other global partnerships with companies like creative platform Adobe, business management system for beauty and health professionals Mindbody, global CRM system Insightly and data analytics company Veda. In this morning's announcement, both Xero and Dropbox referred to Australia's 2 million small business owners that employ over half of the country's workforce, as the powerhouse behind Australia's economy. It is no secret that cloud technologies are having a massive impact on the way business is being conducted these days. A survey conducted by Dropbox in June this year with 1,000 local small and medium business owners revealed that Australians are sharing files at least once a day using some sort of cloud technology; and 63 percent of the group surveyed agreed that cloud technology could help them actually grow their businesses as well as reach more clients. In a talk delivered at RISE conference in Hong Kong two weeks ago, Xero founder, Rod Drury said small businesses are the biggest opportunity on the web right now - especially in the FinTech space. It is something Drury and his team are referring to as the emergence of the "financial web". This simply refers to the ecosystem that is being created by 'financial platform' products like Xero, which enable add-on products to connect to it. In turn, those add-on product companies may also connect to each other creating a web of interconnected platforms, that when used by small businesses in unison, enable them to be more efficient, effective and operate in a more financially sound way. "At Xero there is quite a nice playbook now, we have 400 Add-ons that connect into our ecosystem," says Drury. "So these companies can now market directly to 500,000 potential customers and tens of thousands of accountants looking for solutions, and we can support them by giving them marketing collateral and those sorts of things." Though Dropbox in and of itself is not a financial platform, the functionality of its product is useful to those in the finance and accountancy sector, making it part of this online financial ecosystem that Drury talks about. Dropbox's official partnership with Xero cements this. Xero Tax and Dropbox for Business will provide registered tax and BAS agents with a simple way to manage document sharing at tax time between individuals and small business clients. Users' Dropbox accounts will be able to be directly connected to their Xero Tax account in a world first integration. The reason this is big news is because out of the 400 Xero Add-on partners and 3,000 Dropbox Add-on partners, this is the first one either party are engaged with that has each other's unique value proposition - Storage and Tax. "This kind of integration makes a lot of sense," says Charlie Wood, Australian CEO of Dropbox. "We have connected some very obvious work flows to make life easier for both the accountant and the small business owner." One of the challenges that Wood knows Dropbox for Business faces is educating people about the business product and why it is important for small and medium business owners. This partnership allows Dropbox to start having that conversation with over 200,000 Australian business owners and thousands of accountants straight away. The company is not taking this opportunity lightly either. In fact, Dropbox has hired a team of Business Productivity Advisors (BPAs) that will have the sole responsibility of working with Xero accountants to help educate them around this message. "We have created a new role in Australia, inside of Dropbox called a Business Productivity Advisor," says Wood. "These folks will be dedicated to working with Xero accountants on helping them understand how Dropbox when teamed with Xero can help them in their business and their customers." While Xero and Dropbox are both well-established companies with large databases of clients to leverage from one another, what they are also very consciously doing is demonstrating the power of the 'financial web' concept being spoken about. "Creating a startup within an ecosystem over a platform like Xero seems like a safe place to play for me" says Drury. He is right to a certain degree with that comment, there are indeed advantages to creating a startup that taps into another platforms API - it has certainly worked for many startups within the Xero Add-on community as well as other startups that have used the APIs of platforms like Dropbox, Facebook and Twitter to build their businesses. It is not necessarily for everyone though. But for those who are great at identifying gaps within existing marketplaces leveraging a platform like Xero and joining the 'financial web' could be a very lucrative move. As Drury said to Startup Daily, money does tend to follow money and he can see very clear opportunities in spaces like high volume SaaS billing and the property management verticals that could easily integrate and leverage of Xero's 500,000 strong global customer base.