Who owns your bank transaction data?

August 12, 2007

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: https://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 startups.

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