Author: Aden Davies

I will state up front I am a massive fan of the online personal financial management (PFM) sites such as Mint and the now sadly defunct Wesabe.  They have shown how money should be viewed and managed online and have provided a blue print as to how Internet banking should look.  But these sites have a big  problem. They are very difficult for the user to effectively operate because getting your banking data out of your bank and into these services is not that straight forward.

The PFMs all offer a manual upload option, which is currently the most readily available (from banks), safest yet most cumbersome way to interact with them as you have to remember each month/week/day to upload the new set of data. These sites also offer lots of clever ways to logon to your internet banking while you are not there.  This involves giving over your logon details (a classic case of the password anti-pattern) and letting the application scrape your data and return it to the service.  For some services that password details cannot easily be handed over the service can be taught how to log on so it can record scripts and then automate this process. This is not only very unsafe, not too dissimilar to handing over your cash card and PIN number to a stranger, it also probably puts you in breach of your accounts terms and conditions. If any losses occur because of a breach by the PFM you may be liable.  This is not an ideal situation for all concerned.

These services also allow subscription to automatic feeds of the data e.g. XML formatted data. This is a much better way for these sites to operate but unfortunately banks that provide these feeds are few and far between, especially here in the UK.  One of the few banks that had this functionality up until recently was Nationwide.  They switched off this facility recently as it was designed primarily to service MS Money users and as Microsoft have ceased to make that product it was deemed an unnecessary (and costly?) function to keep running.  A few loyal customers of his service who were using the feed for online PFMs like Wesabe rather than MS Money were none too happy and have started a little campaign to get it reinstated.  There are users wanting these services now but are stuck with manual or risky solutions. If only we had standard Bank datafeeds or APIs to allow these automatic links to work. I for one would be willing to pay for that functionality.

So why don’t banks offer this functionality? My personal opinion is it is either the fear of security breaches, not on their radar, or if it is they don’t want to lose control.  The security aspect is probably the most common reason.  What I do hope it is not the last reason.  I am sure every bank would love to know the spending and saving details of any of their customers that have accounts at rival organisations but they maybe unwilling to share their own data.  Data is very valuable, especially such private data as a persons spending habits and bank product holding.  But the world is changing and customers want more from their online banking which is why sites like Mint are successful.  Would these services become too powerful if all the banks implemented a standard open data feed. Letting customers use 3rd party services while the banks updated their own online banking sites to match the functionality already on offer elsewhere.  Would customers ever come back?

A recent survey by Fiserv showed that in the US, customers preferred the safety of PFM tools provided by their banks rather than handing over logon details to third parties.  If safer ways of data sharing existed would this still be the case? Or would people still prefer to do their money management with their bank? I would certainly feel safer using a banks platform and I am pretty sure open up data feeds would not see a mass exodus by customers away from their banks online banking service.

How might this mythical data feed look? What if all the banks, card companies and PFMs agreed on a standard feed format (hopefully compatible with the existing ones such as OFX) and technologies to allow secure access to financial data without breaching the password anti-pattern. For example  why not use the widely accepted and used open standard OAuth?

I can imagine how beneficial this would be to people but I can also see the benefits for the organisations themselves, the ones that allow their customers the most flexibility will earn their loyalty.  The flexibility of having access to this data would also benefit internal developments.  For customers It would allow them to be able to see a real picture of their entire wealth (or in my case lack of it) and be able to manage things better because they would have the complete picture, assuming all their financial products were lucky enough to have this data feed.

So how do we reach this dream land where all financial organisations have a universally agreed data format and method of sharing this with 3rd parties? Who will drive this change? Customers demanding it? Banks joining together to work in an open collaborative way to benefit them all? PFMs coming up with an elegant solution they all agree on and that partner banks can agree to? Will the sledgehammer of regulation be needed? Or will an innovative new player such as BankSimple change the game with their API, making everyone else want to follow? I really don’t know. What I do know is that I want this sooner rather than later so if anyone can make it happen please do.

It is often mused ‘What if Google ran a bank?’ and this has been covered at length by journalist Jeff Jarvis in his book ‘What would Google do?‘ as well as by others such as Brett King.  The concept of a Google bank got me thinking what if a whole host of our favourite brands ran banks? What would they look like? What would they bring to the market? Would I bank with them?  Here are just a few that I have thought about.

The Big Mac Bank – McDonalds the biggest owner of potential bank branches in the world would be an interesting bank owner.  They are renowned for selling the exact same delicious and nutritious products the world over.  If you step into a Micky Ds in London you can get the same Big Mac that you would do if you stepped in to a Micky Ds in Rio De Janeiro.  Could they bring the same approach to banking? Drive thru loans? a truly global experience that is the same the world over?

The Just Do It Bank – The worlds biggest sportswear manufacturer could bring something a bit different to the banking arena. With their recent branching out into the gaming arena via Nike+ they could certainly link financial fitness with real world fitness. Just imagine the stars they could get to appear in their banking adverts? The Brazil football team alone could create such awareness of the bank in their home nation that the established banks in the market would be terrified.

The Bank of Jobs – The one that most people mention on a day to day basis, what if Apple ran a bank? I guess that millions of people would love to have bank designed by the God of black turtleneck sweaters and shiny objects of desire, Steve Jobs.  They enthuse ‘It would be great, just imagine how easy it would be to access? Imagine how stylish it would be? A banking genius bar would be amazing!’ What they don’t consider is how horribly locked down it would all be e.g. the bank can only be accessed via Apple products,  they would overcharge for their products and their customers would be horribly smug (Can you tell I have issues with Apple?)

The Bookstore Bank – Amazon are probably the greatest online retailer in the world.  They sell almost everything and have made scarcity a thing of the past.  What would the long tail of banking look like? Millions of financial products to suit every financial whim? Huge numbers of customer reviews ranking and rating each product? Couple that with one of the most advanced CRM systems in the world, ‘58% of customers who looked at his mortgage bought this one, they also considered these’ and you have a very interesting model for selling banking products…but would that make them a bank?

Facebank – So what if the worlds biggest social network, with its 500 million users, decided to start a global bank.  They have recently introduced a form of currency, Facebook Credits which gives them their own money.  If they could build an online banking service as easy to use and as addictive as the game Farmville (which currently has 81 million players on Facebook and is now using Facebook credits to allow you to buy virtual goods) then they really could become the biggest bank in the world. I personally think this one is the most realistic of all and I am not the only one.

The Supermarket Bank – I have already covered this using the most dominant supermarket in the UK, Tesco, as an example in an earlier post that you can find here.

The RyanBank – Chris Skinner recently wrote about what if RyanAir created a bank.  I think we can imagine what it would be like (Stag and Hen loan products/insurance spring to mind) but I will let you read Chris’ thoughts on how he thinks it would operate.

As social and open source technologies become increasingly prevalent in society it seems inevitable that some day soon a full banking suite of products could be created and given away for free meaning that anyone could run a bank.  There maybe a few pesky regulations to get around but their are ways and means around those, virtual currencies anyone?  So which brands would you like to see run banks? What unique selling points and services would they bring to the banking sector? What about the ones mentioned above how can you imagine them operating and would you bank with them?

The image used is from this post here

In 2010/2011the UK will see at least 3 new high street banks.  Metro Bank has already opened, Virgin Bank and most interestingly of all Tesco Bank should be along soon.  It is the Tesco bank that I am most looking forward to as I am fascinated by what they come to market with.  They really are in a very unique position to offer something completely new in the banking sector.  From an innovation point of view I crave new things especially ones that have the opportunity to move existing markets forward.  They have a very powerful quad play in their armory.  One..Tesco need no branches as they already all over the country. Two…they have one of the best loyalty schemes in the world (Tesco Clubcard), as well as being a great incentive to stay loyal to Tesco for groceries (and everything else they sell) it is also one of the great CRM data sources of our times.  Three…They already have some advanced online services e.g. online grocery shopping and physical delivery. They have also embraced open APIs so hopefully this will lead to a wonderful new online banking experience, Four…They sell mobile devices and they sell THAT mobile device, which not only gives them a great sale incentive (Like a free iPhone with your bank account Sir?) it should also focus their mind on really delivering on the mobile front.

Thinking into the future a little bit (lets very optimistically say January 2013) lets imagine a little Tesco Customer scenario.  Lets call this mythical Tesco customer Barbara.  First thing in the morning Barbara peruses her Tesco Bank account details on her Tesco freebie iPhone (Free when Barbara swapped her account, credit cards and mortgage to Tesco bank).  Barbara’s Tesco app has alerted her saying it is shopping day (based on when she usually does her shopping according to Clubcard) and that she is £75 inside her monthly shopping budget on this time last month.  Babs (we know her well enough by this point to abbreviate things) takes a look through her overall shopping totals for the month (lovely aggregation feature that one) and drills down into the detail of that shopping to see an aggregated view of the products she has bought that month (from Tesco of course).  As she looks through the lists of items she has bought she can also see how many clubcard points she has accrued from each item.  A lovely highlighted number in the corner shows new offers are available.  A quick press and Babs can access this weeks clubcard offers and 2 for 1s that her local store has on offer. It also highlights offers against her usual shopping purchases and how much she will save this week along with how many clubcard points she could make.  Babs transfers into the shopping section (or another app?) and updates her weekly shopping list with a few extra items including some of this weeks special offers and some replacement items for those out of stock in store (the app told her that as it knows Babs local store).  Babs marks the shopping list complete and the app pushes the shopping list over to her husband Geoff so he can collect the shopping on his way home from work (he works nearer and finishes earlier than Babs).

Geoff receives a push notification that the shopping list is ready.  As Geoff reaches the store he receives notification of some extra offers on in store targeted especially to him (some fine ales on 3 for 2 and a cracking offer on some Camembert).  Geoff scans the items in as he shops (the trolley has a lovely iPhone holder to make this easier) RFID tag details are picked up by the phone when Geoff holds the items next to the phone before they are placed in the trolley (the trolley is a series of reusable bags, that Geoff brought with him, held on hooks).  He gets a little notification when the list has been completed (including his beer and cheese purchases).  On his way Geoff sees a poster for a 32″ 3D Super HD TV for just £299 but the offer is out of stock at the moment so Geoff taps his phone against the poster and the item is added to his bill and will be delivered from Tesco Direct at a time slot of his convenience.  He chooses 18:40 on Thursday.

Geoff heads to the checkout where he walks straight through tapping the Tesco iPhone on a scanner, Geoff had previously selected the Pay via Tesco option which means the shopping to be paid for via the online authorisation Tesco have built, this interfaces directly to the Tesco bank account via the internet (therefore skipping those pesky charge inducing card networks).  Geoff waits patiently for a millisecond while the transaction is completed and his receipt is uploaded into his Tesco iPhone App (So he has a guarantee for his new Telly), all the purchase details are uploaded against his account online and his new clubcard points are also added to his loyalty offset mortgage (100 points equals £11 off the mortgage).  While this takes place the checkout area scans his trolley to ensure the contents match the list passed by the phone.   This transaction is complete and Geoff heads to the car to load up the already bagged shopping and head home to get the dinner on.  As he leaves the car park his fuel warning light comes on and this triggers an event on his phone to check the location and prices of the nearest fuel station.  Unsurprisingly Tesco is the cheapest because as a customer of theirs he gets 5p off a litre and 10 clubcard points per litre.

There you have one of my visions of the Tesco bank future.  Exciting from a banking/retailing/innovation point of view yet also a bit worrying from the point of view of smaller retailers.