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So banks need to do this now, why?

19. December 2008 by james 1 Comments

My post on creating a client-side mashup between a traditional bank website and Wesabe got noticed by The Bankwatch with Colin's coverage on the idea here.  Colin (quite rightly) points out that the idea is a one-off and requires a degree of technical know-how, if nothing else the idea was to again show how banks can be manipulated whether or not it is something the institution actively enables.  We've seen it before with various screen scraping solutions, including the likes of Yodlee and others but I wanted to show a more directly visual means of enhancement.

What I would like to address are a couple of the comments that followed Colin's post which I think are pretty indicative of how banks are seen when we talk about things like this:

Gene said:

"... This is a key process that needs to be discussed and accepted by those in the banking world. The problem is the domain of the IT personnel and others who have a vested interests in NOT allowing this functionality. I can just hear the howls of excuses as to why it shouldn’t be done instead of simply Why not?"

Matt Williamson said:

"... As soon as the banks realize that the college crowd sees banking data much like they view all data, as something they own and want to see when and where they choose, then the banks will be closer to the goal of maintaining customers."

Almost all the medium and large sized financial institutions will have some form of innovation, marketing or R&D function that do get this and are probably internal advocates for it in their respective institutions with a degree of influence.  I'd also suggest that the IT personnel within banks would have very little problem with this sort of thing at all.  Without wishing to be particularly inflammatory, I would say that it's less a case of making excuses for it and it's even not a case of asking 'Why not?' but about asking the question 'Why now?'.  I would suspect the majority of banks have some form of money management or financial planning solutions or strategy up their sleeves but probably not many have the case to go ahead and release it yet.

Online banking accounts for a well touted 40-50% of banking customers but how many of those customers would switch to a bank which offered a Wesabe/Mint/Buxfer (insert PFM startup company here) style interface?  How many customers would switch to a bank that offered OAuth and an API for third party sites to interact with?  How many customers would put up with a bad experience otherwise because a bank tried to engage with customers in a more open way?

The argument for the OAuth/API (or similar) offering is that the early tech adopters pick it up and run with it to create useful functionality or the bank can sponsor the adopters (via startup, competitions etc), in other words the Long Tail.  Whatever the option though, it's a punt on a medium/long-term return for the bank and it may work out well (think eBay and Amazon) or it may sink without trace.  I think it's interesting that something like the Wesabe API introduction gained them much justifiable kudos from the technical community but how much functionality has actually been produced using it and made available over the past year, some, but not as much as I initially expected by any means.

Don't take this to be a 'defending the banks' post, just a starter question on a wider debate (and bear in mind where this post started from):

Breaking down walls is something the banks could do, it's something that many institutions probably believe they should (and maybe even want  to do), but the killer question is whether it's something they must do right now in the current climate?


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