Banks discredit 22seven

SA's banks are unanimous in their resistance to the concept inherent in 22seven, a local online financial management service launched on Thursday.

The country's “big four” - Standard Bank, Absa, First National Bank (FNB) and Nedbank - have warned customers against sharing account details with any party other than their own bank. This follows 22seven's highly publicised introduction to the local world of personal financial management (PFM), under former 20twenty CEO Christo Davel.

In order to make use of 22seven's financial management tools, customers are required to divulge Internet banking information, including their unique PIN number.

22seven's third-party service provider, Yodlee, interacts with the relevant banking system to extract and aggregate transactional data and present it to 22seven clients in a graphics-rich, single smart statement that acts as an overview of financial standing and assists in spending regulation.

Despite security formalities and in the wake of the ensuing publicity surrounding 22seven, SA's banks immediately began to warn against giving banking details out to any third-party service providers.

Standard Bank's Twitter account on Friday bore the warning: “Any site other than a secure Standard Bank site that allows you to access your account details should be considered to be unsafe... Your account security is our main concern and sharing your account details puts you at risk.”

Absa's Facebook-based Internet banking security warning on Thursday said it is “absolutely imperative that Absa customers and, in fact, customers of all banks, never divulge their sensitive personal information, such as PIN numbers, passwords and one-time passwords, to any parties”. It goes on to say that Absa customers should note forthcoming redevelopments to Absa's online banking platform, set for release later this year, which includes a variety of PFM tools.

It discourages customers against using 22seven and concludes with: “Sites like 22seven conflict with the clear fraud awareness messaging sent out by all major banks, as well as the South African Banking Risk Association and the South African Police Force.”

Nedbank posted a more diplomatic statement on its Facebook page, which read: “The use of PFM tools is a rising trend globally and in SA. It shows that people wish to be able to access their information easily and take greater ownership in managing their financial affairs. There are a number of solutions available in the market today. People making use of any PFM offering, need to be aware of the risks associated with disclosing their personal credentials to others and use service providers they trust.”

On 22seven's launch day, FNB CEO Michael Jordaan tweeted: “Cool concept but have to advise against disclosing password to any third party. Risk all yours.” The bank later issued a statement warning “against online banking logins via third parties”, adding that FNB is “unlikely” to reimburse losses arising from customers who have done so. “As the consequences of compromising PIN, login and password details can be calamitous to an account holder, FNB insists there can be no exceptions to its 'never disclose' advice to customers,” it ends.

Davel, founder of the controversial PFM launch pad, says the reaction of SA's banks comes as no surprise. “They are mirroring that of their international peers when aggregators came to the US market 11 years ago.”

As a case in point, Davel says US banks in 1999 quickly turned from hostile to engaging with independent aggregators. “The majority of the largest US banks now have direct data feeds to the established aggregators. I believe the more innovative of SA banks will do the same in future.”

He says 22seven is not adding any layer of risk to people's digital interaction with their money. Yodlee's track record, he points out, is “impeccable” and he adds that the site has independent specialists constantly working with 22seven to ensure the best international standards.

He says users are starting to realise more and more that “they themselves carry the ultimate responsibility” and the overwhelming response to the beta launch of 22seven “may just show that South African users are ready for fresh, unbiased, and independent input regarding their personal money matters”.