The community association management industry covers a lot of ground. From landscaping to security, pool maintenance to plumbing, community associations create a lot of professional partnerships. It’s a daunting task when it comes time to assess the partners you currently use, and whether or not it’s time to make a change.

Software is one of the most difficult provisions to dissect. There are so many moving parts! Website building, communications, accounting, electronic voting–there are so many platforms with so many different responsibilities! It can be overwhelming trying to determine which one provides what you actually need, especially if the language being used to describe it is about as clear as mud.

This happens a lot when talking about software that has a banking integration. It’s a very technical topic that’s sometimes easier to just name and move on from. It should be pretty self-explanatory, right? A banking integration means that this software can integrate with my bank. But do you know what that actually means? Probably not, and that’s not your fault! “Banking integration” can have a lot of different meanings, and without fully understanding what’s being offered to you, you risk getting far less than you were counting on for your community.


Banking Integration

Simply put, an “integration” of any kind is a way of saying that two applications are able to easily talk to one another using some kind of automation. Essentially, a banking integration creates a channel of communication between a software provider and a bank. The  integration helps to reduce or completely eliminate most or all of the manual steps your team takes to sync account data and transactions between your software and bank.

Now there is no one-size-fits-all description of a banking integration except for that very bare-bones explanation above; it creates a communication channel. Think back to the last time you went shopping for new accounting software. There’s a good chance “powerful banking integration” or a similar phrase was listed as a selling point for the product. But if we frame that in the content of a communication channel, “Powerful way for your bank to talk to our platform” doesn’t really cut it, right? “Comprehensive” and “robust” sound very nice, but what does that actually mean in terms of quality of service?

Most of the time, the topic can be a little complicated. Because the core function of a banking integration is creating a channel of communication, there are a lot of moving parts on both sides of that channel. A bank could be able and willing to provide the most exhaustive list of information available to them, but only a fraction of software providers can accept and distribute the information. Or conversely, a service provider might be developed specifically to handle all of that information, but only one or two banks can provide it all, and most others give the bare minimums.

When it comes time to switch providers, or even just to assess your current state of banking and software partnership, it can be difficult knowing where to begin. Understanding what is important in a banking integration versus what is sold to you as important is critical, and we’re going to break it all down here.


Debunking Banking Integration Buzzwords

The software sales industry is chock full of buzzwords. Some technology providers take a lot of pride simply in the fact that they exist in the tech space, so there’s almost an air of superiority when it comes to discussions about the specifics of a product’s offerings. On the other hand, that tech speak can be used to obscure the hard facts if they’re less than glamorous; why be upfront about shortcomings when you can hide behind fancy words and confuse non-technical folks so they stop asking questions?

Of course not every sales pitch is insidious, but using overly technical language can create that confusion regardless of the intent, and can stop someone from asking important, necessary questions about the real impact a service offering will provide.

When talking about banking integrations, there are two buzzword phrases that tend to cause that kind of confusion: API and Secure File Transfer. Would it shock you to learn that those two phrases pretty much mean the same thing? And that these features are not the ones you should be weighing a potential future software decision upon?

An API is an Application Programming Interface. If an integration is just the act of two applications talking to one another, the API is the way in which they communicate, and nearly all of our digital interactions use them.

For example, any time you use an application on your smartphone to send a message or check social media, an API is being used. In this case, the “conversation” being facilitated by the API is between a technology platform and a banking platform; but it’s just the hosting of the conversation, not the details. At the end of the day, an API is nice, but it doesn’t contribute in any way to the banking part of a “banking integration.” So if API doesn’t do anything special or unique to the application or product, what’s so great about it?

Let’s be clear: APIs are definitely more than just fancy tech jargon! While it doesn’t add any kind of enhancement to the service being provided, it does allow for that service to operate more quickly–often in real-time. For something like balance knowledge, an API has the potential to make a nice difference. But a high-quality feature that relies on real-time information doesn’t really see a major benefit from the “real-time” access. That doesn’t make the API useless; it just doesn’t make it as impressive or as important as a sales person might make it out to be when considering a new software provider.

Much like an API, a Secure File Transfer is another means of moving data from place to place; it’s just at a different level of efficiency. When software providers boast about how their product uses an API, a Secure File Transfer is the feature they’re trying to one-up.

Where an API calls data in real-time, a Secure File Transfer calls data on a determined schedule. That schedule can be once a day, or more often multiple times in a single day, but it is always scheduled in advance. An API can be scheduled, too, so an API integration is only superior to a Secure File Transfer when the information being called is better in real-time. That being said, this isn’t the case for most bank integrations. For example, bank statements are only presented once per month, so requesting them in real-time doesn’t get you the information faster.

One important thing to remember: regardless of whether your banking integration uses an API or a Secure File Transfer to move the data points around, that data is always encrypted, and is being moved safely and securely.

The Data Flow Quadrant

The flow of data isn’t the star of the show in a banking integration; it’s the data that’s being shuffled from place to place, and how that data services the needs of your business or a community association. That data has a lot of potential and is what will determine the quality of a banking integration.

Today, all kinds of data can flow between a technology provider and a bank. Tasks like Daily Account Balances & Transactions for Auto-Reconciliation and System Initiated Transactions are par for the course, as are visuals like Cleared Item or Monthly Statement Images.

In full, there are dozens of data points that can make up a banking integration. They can be as simple as literally just creating a communication channel with a bank, where you as the user are forced to handle a copious amount of manual tasks, or they can be extremely comprehensive where every last detail is effectively automated. And of course, there are plenty of options in between.

In the community association management industry, there are four data points (and associated features) that any banking integration truly requires, and the strength of the data will determine the real quality of the integration. Each of these pieces of information is crucial to the efficiency of your business, and nearly every banking integration will provide these basic needs. What will make the difference is the quality of the data being provided.

Lockbox Validation Information is a fairly standard provision. It’s information that is used to validate the sender of a payment and ensure a payment is associated to the correct account. For that reason, the important detail here will be the quality of the information being passed between your banking institution and your software product. The higher quality information you have, the better your banking integration can ensure account accuracy. This is done through a process called Payment Matching.

Payment matching is a feature that reconciles improperly submitted payments. Let’s say someone sends a check without a coupon attached. The payment matching function in your banking integration is going to reference whatever lockbox validation information has been provided and try to find the account to which the payment needs to be attributed. If the banking integration can only reference a name and account number, the payment matching system can only successfully match that check if it can find the name or account number somewhere on the check itself.