How Online Banking works in software?
Believe it or not, in year 2015 there are no standards that banks follow when it comes to data exchange. It means that every bank does things their own way. Or doesn’t do them at all. For that reason, there are companies that have just one purpose – to connect to multiple banks and aggregate their data in a unified format.
Developers on the other hand, can integrate with such aggregation platforms to provide Online Banking services to their customers.
This is what we did with MoneyWiz – we’ve integrated with SaltEdge which allowed us to support over 2400 banks in 43 countries. Starting in MoneyWiz 2.0.4, we’re also adding integration with Yodlee, to add more than 12,000 new banks. The total number of banks we’ll support is over 15,000 when MoneyWiz 2.0.4 is released (which we hope will happen around April 7). No other software integrates with multiple platforms, which means that MoneyWiz will be the finance software with widest range of banks support.
Why does it break every now and then?
The way data aggregation platforms get their data from the banks is most often by a method called “screen-scraping”. This means that the platform simulates user behavior in a browser and relies that the bank’s website contains this data where the platform is looking for it. Every time the bank makes a change to their website though, the platform needs to be re-educated how to read it. That creates a period of a day or two when the data aggregation platform will be unable to read the data and unable to provide it to the finance software.
Nothing Free In Rome
As a waiter in Rome once told me when I asked if they had free wifi – “Nothing free in Rome. Just water and only if it rains.”. The same principle applies to online banking. Data aggregation platforms tend to charge a lot!
We are often asked why we charge $5 when SaltEdge charges us $1… let us explain the basic math here:
1. SaltEdge charges us $1 for up to 3 banks. If you add a 4th bank, then it’s $2 for up to 6 banks etc. Regardless of how many banks you connect, we still charge you a static fee of $5.
2. Once we add Yodlee, they will start charging us too. Then if you add banks from Yodlee and SaltEdge, we’ll be charged twice. We still charge you a static fee of $5.
3. Let’s look at things from our perspective… we charge you $5. Apple (and Google) takes 30% of it. We’re left with $3.5. Most people add around 5 banks. That means that we’ll be paying to the aggregation platforms around $2 for you. That means we’re left with around $1.5. From that amount, subtract around 40% in taxes and we’re actually left with around $0.9. That $0.9 covers our increased expenses for support and development. Also, in case you added more than 3 banks in SaltEdge and at least one in Yodlee, we’re actually working at a loss.
How some services do it for free?
There are finance services/apps that provide online banking for free. Don’t be so quick on celebrating though. Step back and think. Have you ever heard of either of those:
1. Charity organization that’s in the business of providing free finance software?
2. Any business that works for free, all of their employees work for free, and the business doesn’t pay bills?
If you haven’t heard of any of these two, it’s for a good reason. They don’t exist.
Now that we’ve established that every business needs money to pay their salaries and bills, assuming that this business gives you the online banking for free, you have to ask yourself – how do they make money?
It’s actually simple. Your finance data costs more than you would pay for an app. Over the past year only, we’ve been approached multiple times by companies who offered us a lot of money to sell our clients’ data. We didn’t even bother replying to these companies. But while we have the integrity to keep a promise – keep your data secure – others might not.
So the next time you are offered something for free, remember that every business needs money, and know that they are making it one way or another. Would you risk handing your finance data to a company like that?
Security? Don’t fool yourself!
Every finance software company makes claims that they keep your data secured. Let’s look into this!
If you’ve tried multiple finance apps/services, you would’ve noticed that some of them send you weekly reports of your transactions. Ask yourself this – how on earth do they know this? If your data is encrypted with your password, then how can they decrypt it, read it, put it in an email and send it back to you?
Well, the truth is – if that happens, your data is most certainly not encrypted properly.
Let us give you an example…
The way encryption works is that it takes some data (let’s assume text), and encrypts it with a private key. The only way this data is secure, is if the private key is your own password. If that is so, it means 2 things:
1. Your data can’t be mailed back to you, because the finance product would need your password to decrypt and read it. They are not supposed to have your password in plain text, so they are not supposed to be able to decrypt your data and mail it back to you.
2. You cannot restore your password…if you can, then it means it’s stored somewhere unsecured. Just think of it this way – how can you restore something that’s unknown? You can’t! The only way you would be able to get back from losing your password would be to reset it to a brand new one.
While we can’t mention names (for legal reasons), we can tell you this – after a thorough research we’ve found out that MoneyWiz is one of very very few finance products that encrypts your data properly, with your password.
MoneyWiz is all about promoting and enabling financial health. We hope this article will help you take responsible decisions when it comes to Online Banking! If you think your friends and family may be fooling themselves about the security of their financial data, share this article and help educating them on the subject. It may save them tons of headaches in the future!