Account aggregation and user generated content

At the height of the dot-com boom, I worked for a company that was into account aggregation – the downloading and consolidation of transaction details for multiple banking relationships for consumers. We built a number of interesting sites based on this technology, but eventually got out of the business because consumer take-up just didn’t seem to be emerging.

A recent post by Colin at Bankwatch, however, points to a new model for account aggregators: the provision of collaborative advice generated by users. Not only does the transaction categorization and clean-up get shared, individual’s thoughts and tips are as well. The site is Wesabe, and is US only at present.

Back in the first round of account aggregation, institutions were mainly concerned with the idea that they would be disintermediated by such sites. And not only on the web – OFX downloads into personal finance managers such as Microsoft Money were similarly concerning.

But in the end, people kept going back to their institution because they needed to do transactions. Although 7 of ten transactions are account balance online (data from Corillian), practically all users of account aggregation still go to their bank site at some time or other. 

Early adopter Internet banking sites, such as HSBC Australia and Egg in the UK responded by putting account aggregation right into the online banking site (both use technology by ewise, which uses a local to customer password store, similar to that used by Wesabe).

But this is the first time, I think, that user generated content in the context of banking has been done in any real way. And, frankly, it is something that I’m thinking banks should be noticing.

Why?

Because we know that individual opinions, especially those of people who have a trusted relationship in a group – have a great power to sway others. In the Wesabe case, you can imagine an influencer putting a tip against a transaction from a particular restaurant – too expensive, poor service, etc, etc – that comes up on every single transaction for that restaurant for every single user of Wesabe.

As a merchant, imagine if your bank put a message on every single bank statement for their cardholders saying that your product or service was crap, every time that a customer spent some money. That’s what Wesabe users can do.

Who, I wonder, will take the call from an angry merchant suggesting that their business is being damaged by a negative user comment on a downloaded transaction from the bank? Not Wesabe, I bet.

Garter said recently that managing user review and opinion sites is one the top things a bank will have to start doing to protect its brand. I know that most institutions already do this – last week when I was in Australia, I spoke with a smaller regional bank – only 40 branches – and they have a group who monitor the web as part of their charter already.

Wesabe adds a new dimension. By coupling user generated content with a transaction, they’ve made it possible for individual opinion to be associated directly with the hip-pocket of the customer. A powerful combination, I would have thought, from a marketing and influencing perspective.

Update: Marc Hedlund of Wesabe has commented on this post to clear up a few points, especially my remark suggesting that the site is US only. When I tried their automatic account download tool, it seemed to list US banks , but of course, the other transaction upload options would work for any bank. The rest of the comment is also insightful, so thanks for the update Marc.

2 Responses to“Account aggregation and user generated content”

  1. November 21, 2006 at 7:11 am #

    Hi,
    I’m one of the founders of Wesabe. Thanks much for the write-up.
    One correction: we are not US-only, although the site is currently English-only. We accept any QIF, OFX, or QFX data uploads, and we do support and display worldwide currency formats. We already have a user from Afghanistan, for instance!
    I certainly won’t argue with the power of the tips system as you describe — I hope it becomes what you say. I would say, though, that we don’t think of tips as derogatory. They idea of tips is to say, how can I get a better value? Sometimes that means switching to another merchant; sometimes that means looking for particular product or offering at the same merchant; and sometimes that’s just a habit, like our popular “Don’t grocery shop while you’re hungry” tip. Tips are no more or less derogatory than the five-star ratings many Internet sites host for merchants. The difference, as you say, is that we promote tips to the people who seem to need them.
    I would also say that one unhappy customer will not show up in *everyone’s* account list. We promote tips based on reactions from our users. A few users will see a new tip, and based on their reactions, we show it to more people or not.
    I think Wesabe is Economics 101: transparency increases market efficiency. We think of ourselves as a sort of reverse FICO score — rather than a credit rating for consumers, we’re building value ratings for merchants. I can see how merchants who exploit naive consumers might not want that, but it seems to me that this is for the ultimate good of the economy if we are successful.
    Thanks again for your comments, and let me know if you have questions I can answer: marc@wesabe.com.
    Regards,
    Marc Hedlund
    co-founder, Wesabe.com

  2. November 21, 2006 at 8:41 pm #

    The implications from all kinds of advice that people can get in this forum are fascinating for Banks. There will also be the matter of trust, and attempts by Banks potentially to get into the mix within Wesabe, and I will be curious to see how they can maintain the integrity of their model.

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