Australian banks warning customers not to hand over online banking passwords to cloud accounting programs didn’t understand the technology behind it, said Yodlee, a financial data aggregator from the US.
“That is competitively motivated by risk guys that don’t understand technology, to be totally honest with you,” said Joe Polverari, Yodlee’s chief strategy and development officer.
Cloud accounting programs such as Xero, Saasu and Reckon One used Yodlee to import bank transactions automatically. Yodlee collected the transactions through direct agreements with the bank (also called bank feeds) or by scraping the data from the user’s online banking screen.
At least one major Australian bank has warned that customers giving their online banking passwords to cloud accounting programs would breach terms and make them unsafe or ineligible for compensation if an account was defrauded.
US banks gave the same response when Yodlee emerged 12 years ago, Polverari said.
“That’s what they said in the US back in 2000 but they gave up on that because they didn’t want to cross their customers. And they knew that we were more secure than they were at that point,” Polverari said.
“They said it in the UK but they don’t say it any more. Some people say it in Australia – not all. Soon none will say it. Soon could be one to three years, who knows,” he added.
A bank would never follow through with the threat to withhold compensation in the case of fraud, Polverari said.
“Go ask a lawyer here if a provision like that is void as against public policy, go ask them if it’s enforceable, go ask them if at the end of the day they really think a bank would even commercially try to do that,” Polverari said.
“That is very difficult from a customer relationship point to put yourself in, especially when it’s not unlikely you’re an offerer of the very sort of service you’re saying breaches your terms,” Polverari said.
Yodlee shared data from over 10,000 financial institutions with 50 million users and provided services to PayPal, Google, Amazon and other online retail companies. It was more secure than many online banking platforms provided by banks, Polverari said.