Who owns your bank transaction data?

Wesabe, which is a personal finance community site, have been doing some really interesting stuff lately.

Here are two recent announcement which have caught my attention:

The first makes it much easier to get your bank data from your bank into Wesabe. The second makes it easier to get your bank data out of Wesabe and into whatever other format/software you want to use.

Put these two things together and Wesabe have effectively provided a complete API for bank transaction data which works independantly of the banks. You could argue it works despite the banks!

This is interesting. Wesabe take the customer-centric view that your data wants to be free where as the banks take the view that your data is an asset that they own and should try and protect and in some cases even charge for.

At the end of the day, whose data is it?

Marc Hedlund, the founder of Wesabe, talks more about this in a recent O’Reilly Radar post:

“We’ve gotten a lot of interest in the Wesabe API in large part because the bank and credit card industries are so tight-fisted with their data.”

“Other companies have done well with their APIs by owning a large set of data and letting people at it through the web; we’re doing well by liberating data from the Phantom Zone of the bank web sites, and making it available to the people who already own it — the banks’ customers.”

“It’s easy for us to offer value to our API users since the companies that currently store financial data do such a fantastic job of putting up barbed wire around it, in the form of archive access fees, download fees, obsolete data formats, and just plain bad programming. Making all of that data available, consistent, and free is value enough.”

From: http://radar.oreilly.com/archives/2007/07/making_the_web.html

Of course bank transaction data is a core part of Xero too. One of the benefits we have over traditional software which is installed on the customers computer is that we can easily interface directly with the banks and import the customers data directly into Xero, saving them the hassle of visiting their internet banking and downloading an export file and then importing it into their accounting software.

Each of the banks have responded to this opportunity differently. Some are happy to provide free access to the data. Others want to charge us a big fee to develop the interface. Others want to clip the ticket on every transaction that gets transmitted. All of them insist on clunky offline registration processes.

The fees are especially surprising given that all of them provide free access to the same data via their online banking websites. I would have thought that they would welcome the opportunity to take load off their servers, but apparently not.

All of the banks have adapted, eventually, to the Web 1.0 world and have taken cost out of their business in the process. It will be interesting to watch as they make the transition to Web 2.0. Those that don’t might find that services such as Wesabe and Xero route the customers around them.

What other examples can you think of where traditional businesses profit from the fact that their data is hard to get to, which keeps you going back to them and allows them to clip the ticket each time? As Marc points out this is where opportunities exist for start-ups.

UPDATE (20-Sept): Fred Wilson, a VC investor in Wesabe, adds his own thoughts on this topic.

9 thoughts on “Who owns your bank transaction data?”

  1. The other one I can think of is the NZX. I have had informal conversation with officials at NZX, since the application that I am working on (in my free time) is one analyze the financial markets in real-time and alert users (investment advisors, individual investors, fund managers, etc) about opportunities in the market by scrutinizing its performance . They told me that I need access fees to the data. I thought that the data belongs to the public (share owners of listed companies).

  2. I’m astonished that they’d think to charge for this. An I’m dismayed at the manual registration process, which is an adoption rate killer.

    Sadly though I am not surprised.

    I’d love to get my hands on my own historical data – for the last 12 years say. Forgetaboutit says the bank.

    Share market data is traditionally charged for on a basis of timing. If you want live data from any market then you pay, as it is valuable informaion. NZX and other exchanges make good money from this service.

    But generally recent historical data should be free for any market (e.g. from finance.yahoo.com) so you should be able to build and test your model before paying the fees at launch. I am struggling in NXZ, though, to find any reasonable recent history data, and wish that NZX would give their delayed data to Yahoo and Google like all the major exchanges do.

  3. Opportunity exists from addng value to public available information. Any attempt to tie information up and derive revenue from delivering it in snippets is destined to failure as more progressive businesses find ways of deriving income from publically available information.

    As an example Xero will fail if all it does is provide an alternative accounting platform – it’ll crank if it develops a more x.0 methodology

  4. Rowan: Pretty much all Government departments!

    Lance: NZX data starts at $1500/month for delayed data and this is not redistributable. There is no easy free access to the delayed data via web services that I can find.

  5. $1500 a month for delayed un-redistributable data is a great way to ensure your market is irrelevant. It means that only brokers can afford it, and so the retail investor is left information-free. That means less retail investors (after all who wants to invest without information) and less market trading.

    Meanwhile I get live NYSE and NASDAQ data via eTrade simply for a having certain number of transactions per quarter or holding a certain (relatively low) amount of invested capital.

  6. One minor point – I think the bank owns the data in most countries, it is their record of the client’s interaction with them.

    Separately, not sure if you have seen yodlee.com in the US but it is worth a look.

    Saasu.com supports another 3 kiwi banks as of last week too.

    Cheers, Peter.

  7. I think the banks do own the data but the NZ Privacy Act says that if an agency (the bank) has information relating to an individual (defined as “a living natural person”) then that person can access the info for a “reasonable” fee. If you think the fee is unreasonable then you can complain to the Privacy Commisioner.

    It only talks about oral or written requests, no mention of electronic requests.

    If the information is for a company does that mean the agency can refuse a representative of the company because the information does not relate to a “living natural person”?

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