The Blood and Guts of Modern Banking on Display for All to See
Back when, banking was an exclusive, all-boys club that maintained an aura of mystery and sophistication.
Now, the blood and guts of banking are available for all to see.
Where? Right here is where BankSimple is hashing out its new banking services for all to see — and even comment on. I’ve been watching this discussion forum for a couple of weeks now, and it is remarkable how the business of building a new bank works today. And to paraphrase Otto von Bismarck, making a bank is not much prettier than making sausages.
Consider the discussion regarding point-of-sale tagging of transactions via the proposed BankSimple charge card. Here’s the basis for the feature, posted by someone named Alex from Austin, Texas:
I guess this isn’t strictly API related, but I’ve often wondered why banks don’t allow me to tag my
transactions at the point of sale using a special PIN.I shop at Whole Foods a lot. Some days I eat breakfast and lunch there, and also return to buy groceries for dinner. My wife and I split joint expenses. Dinner is a joint expense, while breakfast and lunch are not. With my current bank, I can see all my expenditures at Whole Foods. That’s nice, I guess. But it doesn’t tell me what I really want to know: how much money does my wife “owe” me for groceries.If I could use a separate PIN for joint expenses and break out expenditures by PIN, then I could categorize my spending at the point of sale, rather than retroactively wading through my register and categorizing. And my wife could do the same.And if this information were available via the API, I could query our accounts to sum the joint expenditures in order to reconcile joint spending for the month. Better yet, I could use the API webhooks to transfer funds from her account to my account and vice versa for each joint transaction as it occurs.
This spurred a long discussion that touched on exactly how PIN works, the very essence of the consumer’s willingness to act, and the security necessary in card transactions. Basically, the end result from BankSimple will operate like this: an API on the customer’s smartphone watching the account will pop up a notice that reads, “A transaction on your account has completed!” Then, the app will give the customer the option to tag the transaction. This option will serve the dual purpose of allowing the customer to tag the transactions and spotting an unauthorized charge.
Here’s how Alex summed it up:
My initial suggestion to implement some sort of annotation at the POS was a response to what has become the norm in personal financial management software: spend your money, then come back later to an application to annotate your transactions so that you can see what you spent it on. As you’re well aware, this is how Quicken, Money, Wesabe (RIP), and others work. Based on what you’ve said on the topic thus far, I surmise that this is the strategy you’ve decided on for BankSimple, albeit with the added twist that I can annotate in real time on my phone opposed to later on my computer. As someone who has tried all of the aforementioned products, I can say that for me they all fail for the same reason: it’s too much work, and if I falter even briefly (which I always do), all my previous work becomes inaccurate. Any automatic categorization provided — normally based on merchant — is insufficient because the categories cannot be adjusted per my preferences.The holy grail, at least for me, is to be able to place my paycheck into buckets and remove money from the appropriate bucket with each new transaction (some buckets are for saving of course). I want to be able to see my buckets in real time (have I been spending too much at lunch? or do I have some happy hour money left over from last month? or if I order this bottle of sake, will I empty my dining out bucket?). Ideally this would all happen automatically, without my intervention, and be managed by my bank. And it all requires some sort of transaction annotation.In my opinion, no one has solved the problem of how to easily annotate a transaction so that funds can be removed from the right bucket. Doing it automatically using customizable buckets is a pipe dream because there isn’t enough data available from the POS — not all Whole Foods transactions come out of the “groceries” bucket, for example. Obviously, my suggestion to annotate at the POS via PIN is also full of holes aside from the possible technical limitations — what about transactions where I sign? But maybe doing the annotations via iPhone app will be so dead simple, that everyone will be doing it. I hope so.
Never has there been a bank (yet to launch) fielding such commentary from consumers. Any banker would find such feedback somewhat uncomfortable — it requires a tremendous effort within the confines of existing systems and platforms that were never designed to even remotely work in this manner. But like fine sausages, overcoming the manufacturing phase should yield a tasty result.
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