Bank Feed

What is a bank feed?

A bank feed is a live connection between your bank account and your accounting software. When a transaction clears your bank, it appears automatically in your accounting app — no manual data entry, no CSV imports, no end-of-month reconciliation scramble with a spreadsheet.

Bank feeds are the single most impactful feature in modern accounting software. Before they existed (or before you set one up), every transaction required manual entry. With a working feed, your accounting app is essentially a categorised, searchable copy of your bank statement — updated daily or near-real-time.

How bank feeds work technically

There are two main connection methods:

Plaid (US primary method): Plaid is a US financial data aggregator that connects to 12,000+ US financial institutions. When you link your bank in QuickBooks, Wave, FreshBooks, or Xero, you are usually connecting via Plaid. Plaid uses the bank’s API (where available) or screen-scraping via stored credentials. Major US banks (Chase, Bank of America, Wells Fargo, Citi) have direct API connections — more stable, faster refresh. Smaller credit unions and community banks often fall back to credential-based scraping, which can break when the bank updates its login page.

Open Banking / PSD2 (UK primary method): In the UK, the Payment Services Directive 2 (PSD2) requires banks to provide API access to licensed third parties. This means UK accounting software (FreeAgent, Xero, QuickBooks) can connect to UK banks via standardised, bank-approved APIs — more reliable than Plaid’s credential-based method. Monzo, Starling, Barclays, HSBC, NatWest, Lloyds are all available via Open Banking in FreeAgent and Xero.

Transaction categorisation quality

Once transactions import, the software attempts to categorise them automatically using rule-based systems and machine learning. Typical accuracy after 3-6 months of use:

• Recurring subscriptions (Spotify, AWS, etc.): 95%+ accuracy
• Regular suppliers: 90%+ after the first month
• Ad-hoc transactions: 60-80%

Every tool — QuickBooks, FreshBooks, Wave, Xero — starts with similar categorisation accuracy and improves as you confirm or correct categorisations. The improvement is real: a well-trained 6-month-old account categorises roughly 90% of transactions correctly without intervention.

Why connection quality matters at year-end

Bank reconciliation — matching every transaction in your accounting software to the corresponding entry on your bank statement — is a required step before closing your books. If your bank feed has dropped transactions, duplicated entries, or missed a reconnection, reconciliation becomes a forensic exercise.

The practical test: check your bank feed connection status monthly. In QuickBooks and Xero, a yellow or red connection status means the feed has broken and needs reauthorisation. Letting this slip for 90 days means manually importing 3 months of transactions via CSV — approximately 4-8 hours of work that a monthly 5-minute check would have prevented.

The best bank feeds by region

Region	Best option	Why
US	QuickBooks Online or Xero	Most direct-API bank partnerships
UK	FreeAgent or Xero	Open Banking (PSD2) compliance; direct Mettle/NatWest integration in FreeAgent
Canada	Wave or FreshBooks	Both use Canadian bank aggregation; quality similar
EU	Xero	PSD2-connected; wider EU bank coverage than alternatives

Connections vary by individual bank — verify your specific bank is supported before choosing software based on this criterion.