"We like to work with everybody. The nature of horizontal business apps is, our target is to get every small business on the Xero platform. We have an open API, so anyone can connect to that. If they can provide a service of value to our customers, there could be competition inside the ecosystem for that." Xero is not wedding itself to the big end of town – its financial web also fosters disintermediation; Xero clients are served up links to a few fintech start-ups, including the online working capital lender Moula, and for foreign exchange, OzForex, which received a takeover offer from Western Union last week valuing it at almost $1 billion. Mr Drury said Moula and other non-bank lenders "are a great way for businesses to get started, and as they move through their first year and grow revenue, they can become mainstream banking customers. Meanwhile, the likes of OzForex can leverage our digital connectivity. We are seeing very small businesses getting access to high-quality financial services that really only enterprise customers could have had before." "If your accounting software can help you get funded, that is a good thing." At Xero's full-year results in November, the dual ASX and NSX-listed company said subscriber growth in Australia and New Zealand had leapt 53 per cent during the half, to more than 425,000. However, the company's share price, which hit a high of $42 last year, tumbled to $12.19 in September, and closed at $18.72 on the ASX on Friday.

These numbers are hard for banks to ignore given Xero's customers are also the core customers of the big four's SME business banks. Observers of the financial technology scene are closely watching Xero for its next move in financial services. "Xero is potentially one of the biggest digital disrupters to the big four banks," said a fintech investor. "What they do is up to them. But the potential is there for Xero to compete with the banks by lending to business customers with their own balance sheet." Lending doesn't form part of Xero's current playbook. But Mr Drury acknowledges subscriber growth has undoubtedly enhanced recent conversations with the big four. "Now we have got to such scale – we have 25 per cent of all New Zealand businesses and over 10 per cent of all Australian businesses – we are seeing the conversation with the banks change and lots of inbound inquiries and strategy work to connect small businesses to the banking environment." While NAB is the most advanced in its use of Xero's cloud data, the company has established direct two-way digital connections with most of the major banks in Australia and New Zealand, and Britain, where it is also growing its subscriber base. Bank statements can be pulled into the accounting software; the next phase is payments instructions.

Xero is earning a small broker fee from NAB but Mr Drury said for Xero, "the really big goal is how do we get the mainstream banks and the massive amount of funding they have available, how do we unlock that funding for small business? How do we solve the No.1 issue for small businesses worldwide, around the world, which is access to capital and access to debt? "The problem is it is too fragmented and risky for the mainstream in high-street financial institutions to lend to small business. Companies like Xero are becoming an aggregation point. Digital connectivity allows accountants being able to view numbers in real time. So we are able to start reducing the risk." In creating a financial web of digitally connected data, Mr Drury said security is paramount. Yet "at the right time, banks like to innovate and go hard, and that is what we are doing with NAB". "But that becomes a tide that raises all boats."