I am picturing heads exploding as I write this, so suspend worries about howto and let us just consider the possibilities and opportunity here.
Jmes at infoonthego has written a script that brings the user friendly merchant he has in his wesabe account and pulled them into his Lloyds Bank statement. He replaces the generic names in Lloyds statement with his own understood names.
Mashing up your Bank and Wesabe
If I’ve gone to the effort of giving friendly names to merchants in Wesabe, can’t I get the benefits elsewhere as well? Wesabe have provided an API for well over a year now and although I’ve had a dabble with it now and again I’ve found that until there’s a means of updating information (aside from the undocumented statement upload function) I haven’t really had that much use for it, until now.
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So there you have it, an augmented statement with extra details and no-one else had to do anything to achieve it. It’s by no means an ideal solution and using scripts like this is something to do with your eyes very much open but the fact that the functionality ‘appears’ within a few seconds of you opening your statement is quite neat and can make the statement a little more personal in appearance. One way to take this forwards might be to add the functionality to perform a statement upload into Wesabe directly from your bank’s site.
This has enormous implications on so many levels. Banks cannot possibly keep up with customers needs and requirements even with unlimited investment money. The degree of customisation needed to satisfy each of millions of customers is by definition, impossible. Banks have to design online banking for the average customer, and that will please few and annoy most.
Clearly this implementation is one-off and requires some expertise. So the innovation challenge to banks is simple – how can they adapt to permit use of open API’s from someone such as Wesabe to bring personalised customisation to their online banking.
Relevance to Bankwatch:
Banks have loyalty issues – this is well documented. Ron argues convincingly about the need for customer engagement. They also have decent approval ratings on their online banking, that is generally a result of customers becoming accustomed to online banking. But online banking is treated by banks as somehow disassociated from customer experience, and their is little to engage customers – its a place they go to transact and leave.
The example of use of Wesabe tools inside online banking introduces a dramatic new element of customer experience that can never be achieved by the bank in implementing its own functions. If a customer has taken the time to orchestrate something like Wesabe, and the Bank has taken the time to integrate it – that offers some possibility for engagement.
Bankwatch 
I completely agree that Banking Web APIs are strategic tools for smartsourcing innovation. Software companies do it, why not banks who are really IT shops in disguise. In one of my earlier blog posts ([1]), I wrote:
“banks next best bet might be to do what Apple or Facebook do: expose some of this information via easy-to-use APIs in a way that is more secure than their startup competitors. Then, allocate a VC fund to fund startups using this API (which is equivalent to buy an option to invest more/buy out the most promising ventures later).”
The security hurdle I mention that needs to be resolved is how a bank authorizes a 3rd party to access a customer’s data. This is currently done by providing the username/password, but this process could be much more secure if OAuth support was added to the banks’ existing OFX server (see [2]).
[1] http://lebleu.org/blog/2008/05/19/the-problem-with-banking-innovation-and-how-to-fix-it/
[2] http://lebleu.org/blog/2008/05/13/mintcom-a-perfect-banking-use-case-for-oauth/
@Guillaume – the other security hurdle banks perceive is the access to their systems by third parties.
Excellent post Colin. 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?
Exactly Gene. We will never see true innovation otherwise.
Colin, I think you are dead on with this one. 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.
Otherwise we will see a smart tech-related startup bank leach those customers away… Think MySpace Bank, think First Bank of Facebook, or (shudder) GoogleBank – GBank.
@Matt – thats it. Thats why bank disintermediation will happen.