Banks gearing up to offer personal finance tools, but won't open up...yet

By Emma Geraghty Competition between banks to provide online personal finance tools to their own customers will heat up in coming months as BNZ joins Kiwibank and ASB in creating tools to track spending habits and forecast savings. Unlike in EFTPOS and online banks, New Zealand's banks have been slow to provide the sort of online finance tracking tools such as those provided by Mint and Wesabe in America and Europe. So far, New Zealand banks have launched their own tools and have tried to avoid opening up their data so customers with accounts with different banks and credit cards can 'mix and match' in one tool in a real-time way. ASB launched its 'Track My Spending' budget tool a few months ago, KiwiBank has recently launched its new personal finance tool "Heaps" and BNZ has teamed up with Xero to launch their own service for BNZ customers in a few months called 'MoneyMap'. KiwiBank Heaps, was launched on March 8 with approximately 10,000 users signing up in the first week. The main function of Heaps is to pull together transactions across customers' KiwiBank accounts, helping people sort them into categories so they can manage their goals and savings. The tool provides updates every morning telling customers how much they can spend each day. KiwiBank communications spokesperson Bruce Thompson said it is a 'genuine program' that breaks down peoples spending. "It gives people some quite startling insights into their spending habits and what they need to consider if they really want to break a cycle of debt, pay off a mortgage or saving for the future." See a video of what Heaps offers here: BNZ BNZ has teamed up with Xero to offer a similar online personal finance tool, MoneyMap, which is ready to be launched in the next few months after its staff trial is complete.

MoneyMap automatically transfers BNZ account transactions, but it also allows for customers to import other bank account and credit card transaction details into the tool to get an overview of their financial position. Although this importing is done manually rather than automatically or in a real-time way like that used by Mint or Wesabe. BNZ Manager Digital Kostia Shinderman said the tool was a normal evolution in the Internet age. “The next stage is setting goals, it’s about helping you save and achieve your goals. It will measure dynamically day-by-day how you’re going and give you an indication if you’re up to speed. It helps set your goals and work towards them," he said. It creates a visual representation of income and expenses of a customer’s bank accounts, allowing them to categorise, set goals and analyse their spending and financial position at a glance, he said. “We’ve launched MoneyMap internally to our staff, we’re still going through the final stages of the pilot. Once the pilot is over, we’re aiming to launch it over the next couple of months." BNZ said it hoped to increase its market share by partnering with Xero, which has won awards for its small business accounting business that provides Software As A Service (SAAS) from the 'cloud'. Xero, a NZX listed company founded by Rod Drury, won this year's Onya Award for Most Outstanding Website. “Our decision is to partner with the ‘best of breed’ such as Xero and we believe the differentiator we’ll have in the market is the quality of our service as recognised by their awards," he said. MoneyMap will be available to registered BNZ internet banking customers free for a 3 month period and then at $5 per month. Xero Chief Executive Rod Drury said what is happening in New Zealand in terms of personal finance tools is really exciting. "It's a real hot bed in the same way EFTPOS was a few years ago. It's a real hot bed because it is such a small market," Drury said. Xero said it chose the BNZ as its initial bank to launch with because they are able to provide the interfaces Xero required. "Automated bank feeds and automated feed provisioning require significant work to be performed on the bank side", he said. "Eventually we hope all banks will be able to supply data. It’s really outside of our control. But we are lobbying hard.We also require a banking partner so we can quickly get scale. Without that it’s a tough business case to make the substantial investment required," he said. ASB ASB Chief Executive in Retail Banking Ian Park said the two products it offers, Track My Spending and Your Money Explained, provide tools to help people understand their finances and work towards achieving their financial goals. "We believe it's our responsibility to provide our customers with the tools they need to increase their financial knowledge and help achieve their financial goals," Park said. The 'Track My Spending' service on FastNet Classic has had 66,000 sign-ons every month, ASB said. Park said not all banking customers were comfortable organising their finances online, preferring instead to phone the bank or visit a branch. "Financial matters can be very personal and we have found that our customers do not always want to research their financial needs online. If customers are experiencing financial difficulty and would like to speak to someone personally, anonymously if they prefer, they can also call our ASB," Park said. ANZ ANZ Corporate affairs Justine Turner told interest.co.nz that ANZ and National has a number of online personal finance enhancements were in the pipeline, but declined further comment. Westpac Westpac told interest.co.nz it had not launched a similar personal finance tool and declined further comments. Other competitors Xero has also announced plans to offer its own service called Xero Personal, its Chief Executive Rod Drury said. "We hope over the next few years integrated hybrid models will become main stream. We call it (Xero Personal) 2.0, its about opening up web services to link banking into a broader application to integrate with software providers." Drury said Xero was in talks with a number of banks and he hoped to link with Australian banks in the near future. Here's a video with the detail for Xero Personal: Pocket Smith co-founder Jason Leong said the New Zealand market was not as mature as overseas for personal finance tools. Pocket Smith is a Dunedin based start up that allows consumers to integrate their banks' data into forecasting calendars. "All the banks are using their transactions, giving them the edge in the market. This stifles (independent) tools in the market," Leong said. New Zealand banks were not making it easy for customers to import their data from other banks. BNZ will allow data to be imported from other banks, but only manually. "It's healthier, if as occurs overseas, banks focus on what they do best. Unless a bank wants to focus specifically on money management," Leong said. For more comment and background, check out Internet consultant Lance Wiggs' comments on his blog about personal finance tools in New Zealand. Also, see more here from Rowan Simpson, formerly of TradeMe and Xero, about the personal finance tools. This was written before Xero's moves into personal tools. Also, here is a column written in the NZHerald by Bernard Hickey, calling on the banks to open up their systems.

Wouldn't it be great for New Zealand's financial literacy if people were able to monitor their spending and saving through various bank accounts and credit cards in one place so they could forecast their overall financial situation at any time of the day from their computer or phone? It might make New Zealanders think again before borrowing to buy that second coffee or the new car or the 54th investment property. If only New Zealanders had been more informed about their own financial health over the last decade we might have been able to avoid the finance company debacle, the foreign debt blowout and the surge in credit defaults. Such an integrated real-time financial picture might even drive more competition between banks and credit card companies, helping to reduce fees and improve service. There are many powerful new online tools being developed around the world that allow consumers to create just that real-time picture. They're called Personal Financial Management (PFM) tools and they're now big in the United States and parts of Europe. The biggest and best known ones are called "Mint" and "Wesabe". They allow someone to collate together exactly how much they owe or what they have saved from a variety of sources. They can work out how much they spent and on what. More importantly, they can use this information to predict their future financial position. The biggest barrier in the past has been bringing all the information together and then finding the tools to analyse the information in a way a regular consumer could understand. In days gone by, the only people able to do this have been whizzes with Excel spreadsheets and a degree in computer science who could download the data from their online bank accounts and then reprocess it. There's been a few software tools such as quicken but they haven't been as 'real-time' or user friendly as the new tools. This trend towards online PFMs is much more advanced in America where aggregators or middlemen such as "Yodlee" have cut out all the hard work of liaising with hundreds of banks and other financial information providers to ensure online services such as Mint and Wesabe can allow customers to easily pull the information together at the click of the mouse. New Zealand's own Xero, which is the local online accounting software services business founded by Rod Drury, has just done its own deal with Yodlee to help its offshore small business clients integrate their financial details into one place. New Zealand's banks have been remarkably quick and adept in the past at adopting new technology. New Zealand's adoption of EFTPOS is a shining example. So why haven't our banks picked up and run with the PFM trend faster? There's a couple of reasons, but one big reason is a lack of innovation and openness so far. Our banks have started down the track, but they want to keep the customers within their own four walls. So Kiwibank has launched its own tool called "Heaps" and BNZ is just about to launch a tool in conjunction with Xero, while ASB has launched its own tool called MyMoney. This means customers can analyse their spending and saving, but only if they have all their accounts with the one bank. Westpac, ANZ and National have yet to launch their own tools. Only BNZ's MoneyMap tool, which is set to be launched soon, allows customers to import data from other banks or credit card firms. But it's still a cumbersome process and not automated or real-time like the Yodlee/Mint model in the United States. Why won't our banks allow customers to choose to integrate data from other banks onto independent PFMs? Right now, they simply won't allow it. There are plenty of local PFMs trying to open their doors. Xero is planning to launch its own XeroPersonal tool in the next couple of months and Dunedin's own "Pocketsmith" has also asked the banks here for access. Both Xero and Pocketsmith are having to plough ahead in overseas markets without much joy at home. The banks are simply refusing to open up. It turns out New Zealand's banks even want to charge the likes of Xero or Pocketsmith to download the data. It's time the Retirement Commission, the Commerce Commission and possibly even the Reserve Bank encouraged the banks to open up their systems to allow New Zealanders to use both independent PFMs and their own banks' tools for all their account information, regardless of which bank it's with. It would encourage competition and innovation. It may even make it easier for customers to switch between banks. It would also help improve our currently woeful financial literacy.