This is the second in a series of thoughts on matters digital which were inspired by the trials & tribulations of my year-end tax filing. Millennials are supposed to be way more tech savvy than those of us of the older generation. If you are a fellow Boomer, you might share some of these views. If you are younger, be it Gen X or Millennial, maybe you want to benchmark your views. Read on.
Imagine.
Imagine I am paying a bill, I start on my laptop in an app that lets me select the account, set the value date and select the payee for ones I have used before. I save the details and it updates my balance information by value date, letting me see just one account or a group of accounts. The app has also added a category or tag to the amount, copying my previous payment to the same folks; a little machine learning if you will.
I press transmit and send the payment instruction to the right bank. The app handles the security and deals with the banks API. API is the technical term for the interface that allows my “third party application” to interact with the bank’s systems.
Whilst connected to my bank, the app downloads new transactions in my account, applies categories from previous entries, notices which entries are already on my app, aka my ledger and presents me with the new entries for me to ok them and put them in categories if I want to. That might be a credit from my employer, or direct debit to pay my credit card bill.
At that moment, my app, aka books aka ledger matches the bank account. To use the banking term, I have done my reconciliation.
In parallel, the app would collect the details of each transaction on each credit card that I use. Same thing with allowing me to mark as ok and add a category.
So, during any month, I am up to date, I know what has passed through my account and at the end of the year, if I have used categories properly, I have a great deal of insight into my spending. What was interest, bank charges, meals out, pocket money or clothes for the kids and the like.
This would be a lot better than the position I find myself in today as retail banking customer in Switzerland. Here’s what I can’t do easily:
- Tell you what we spend on food
- Find what we spent on maintenance on the house, which is a tax deductible item in Switzerland
- Add up the tax payments I have made this year
- Check the entries on either my bank account or credit card; all I can do is pull the reports and eyeball them. Low control.
etc., etc., etc.
Lessons to be Learned: Back to the future. 1996 to be precise.
Back in 1996 my wife & I lived in New York. We used Citibank for both our banking and credit cards. We used Quicken and it did every single one of the things above. A great user experience, or UX to use the modern expression.
Forget Fintech, Smartphones, mobile and co. In the intervening 20 years, we have never had as much control over our money as we did then.
Under the hood, the system was rather crude; Citibank would cut a cheque for me and send it to the electricity company to pay my bill and for reasons which I have never been able to fathom, return me the cancelled cheque. But, all that crudeness made no difference to my experience; I had complete control and full understanding of my finances.
Sadly, in all that time, Credit Suisse would not offer the same access and UBS tried Quicken but only for their accounts.
Today, I use only the most basic features of either the CS or UBS web apps. They don’t offer me the opportunity to do those things I valued in 1996 and value now.
My good friend Christian Bieri and his team at Qontis are trying to replicate Quicken. Even now not all the banks will not play along.
Just maybe, PSD2 will be the proverbial can opener and banks will not be able to stop that access.
As well as back to the future, this is back to basics. An appeal to the good folks at the Swiss banks and credit card companies: please, please dig out the details of the old UBS deal with Intuit & Quicken, sort out the API issue and roll out a new version.
I hope the Boomers will support this view and just maybe Gen X and the Millennials have learned a trick or two. Please “Like” and / or Comment and help me gauge how this week’s set of thoughts has resonated.
About the Author: I help banks master their post trade processing; optimising, re-engineering, building.
I understand the front-to-back and end-to-end impact of what banks do. That allows me to build the best processes for my clients; ones that deliver on the three key dimensions of Operations: control, capacity and cost.
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