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New startup 22seven under fire from banks [Updated]

The high-profile launch of new financial management startup 22seven has faced some early criticism, from the very institutions it relies on: The banks.

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Prolific tweeter and CEO of First National Bank (FNB) Michael Jordaan tweeted yesterday that he thought 22seven was a “cool concept”, but warned “against disclosing password(s) to any 3rd party”.

He ended his tweet with this ominous warning: “Risk all yours”.

The innovative startup is the brainchild of Twenty20 founder Christo Davel, and is billed as an “intelligent money saving tool” that plugs directly and securely into users’ personal bank accounts and then delivers analysis on spending habits.

The service buckled under the demand it experienced yesterday, with servers regularly crashing and users reporting issues with linking their accounts.

To begin using 22seven users are required to link their bank accounts to the service. A user supplies their personal bank information from one of the country’s major banks that are pre-selected on the site. The company goes out of its way to show that this is a secure process.

Absa issues statement
Jordaan isn’t alone in his thoughts. Another of South Africa’s banks, ABSA, in a Facebook note last night said “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”.

“Disclosing one’s sensitive information renders the customer completely liable for any losses that may occur due to phishing or other online fraud, as per Absa’s online banking terms and conditions disallowing customers from divulging their sensitive information to any third party,” wrote the bank.

Absa also took the opportunity to punt its own forthcoming personal financial management tools which the bank indicated it would be rolling out in an upcoming portal redesign. The bank claimed it would offer these tools to its customers for free.

Nedbank’s statement
Nedbank also released a Facebook statement making it the third major bank in the country to speak about the “risks associated with disclosing their personal credentials”:

The use of Personal Financial Management (PFM) tools is a rising trend globally and in South Africa. 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.

22seven publishes extensive information on how it keeps users’ details secure and the platform stresses the system is “read only”, which means the service is unable to make changes to a users’ personal account.

The service currently pulls user data through Yodlee, an online banking solution provider delivering money management solutions to leading banks and millions of consumers around the world.

22seven responds

Speaking to Memeburn, Davel said that he expected caution from banks as well as users. “People are right to be wary but we have partnered with one of the leading financial aggregators in the world. Yodlee has been in business for 11 years and has not had one breach in that time.”

“Users should be cautious,” he said. “But our system is read only and all your data is in your hands. Right now we are quite overwhelmed by the number of sign ups we’ve seen and hope to see more growth.”

22seven is similar to Mint.com, a free web-based personal financial management service for the US and Canada. The service which was launched in 2006 now has more than 3-million users and was named one of Time Magazine’s best websites of 2010, as well as one of PCMag’s best free software of 2010.

  • http://twitter.com/jtthom jT

    It’s not in your bank’s interest for you to save money. The more you owe, the more valuable you are to them in interest gains. Mint.com which serves a similar end function was also not well received by US banks.

    • Anonymous

      Yes that was going to be my comment – why are the SA banks not offering these services anyway? As part of their already high charges? – I am sure they analyse this data anyway …

  • Nicky Cornish

    This is a losing concept, with fundamental flaws in the business model. It should never have gone further than a scribble on a napkin. Some questions which boggle my mind:

    1. Why would ANYONE enter their banking details in a third party site, especially in this economy of fraudsters, phishing and identity theft?

    2. Even if they WOULD enter that info, why would anyone (especially in a developing country) pay R70 every month to see pictures of how they’ve spent their money? I wonder if the R70 that is spent for the service is also included in the funky flash graphical reports?

    3. One of the company’s senior management revealed in an interview that they have not even met with the banks in this country. So you start a business, get funding and launch an organisation based off an existing industry and you don’t even meet with the industry to gain their participation/buy-in?

    I honestly don’t see this going far.

    • http://www.fit4kitchens.co.uk/ Kitchen Storage

      I completely agree! Its so danegerous having to give away such financial information online in a way like this. Its hard enough when you consider how many scams there are and how they are on the increase!

  • http://twitter.com/entegral Adriaan Grové

    1) 22seven clearly need cloud servers to cope with demand
    2) It shows this is a potential great product with all that demand
    3) The banks should look at providing an open API for sites/applications like these, where data can be read but not updated. This will take the risk away. A bank can even capitalize on this by offering this service as an add-on for its customers. Imagine how it will stimulate the development of read-only phone and tablet apps.

    • mark

      Adriaan, is the ‘crashing site’ sign of
      a) great demand
      b) a marketing strategy (must be good if it goes down)
      c) sign that the product was not ready to launch

      I let you be the judge!

      • Anonymous

        Possibly all 3 of the above Mark. Twitter is notorious for going down and it is a well-known example of a cloud-hosted service so I fail to see your point here.

        • Mark

          Unfortunately I am no techie Charles, so excuse the ignorance, but I thought with cloud-hosting it was as easy as ‘turning up’ the button to get more service? I understand that often the server is hosted in the USA etc. so if the Africa line goes down then there is a problem but interested to learn why it would be a problem otherwise. Excuse, naivety of the question and I hope it is easy to answer?

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  • Ivan Ayliffe

    Doesn’t 
    https://moneysmart.co.za/ do this already?

  • Ivan Ayliffe
  • http://www.andyhadfield.com Andy Hadfield

    Not sure the ABSA product is going to be “all that”… check some of the functionality descriptions they sent me… http://www.andyhadfield.com/2012/01/personal-letter-from-absa-about-22seven.html

  • http://twitter.com/AlanAlston Alan Alston

    I reckon the onus is on the banks to open up our financial information to services we choose – it’s our data after all & we have the right to do with it what we want. They could quite simply make it available to services we specify without necessarily requiring us to share our credentials with these services. 

    So banks: quit moaning and start innovating. 

    • Anonymous

      I fully agree with you Alan. They should publish web API’s for 3rd party’s to integrate and provide additional, more innovative and robust notification and money management services. The banks are afraid that once this happens, they won’t be able to charge the extortionist R2/SMS they send and R1/email.

  • Clark

    Providing your bank login details can be a risk when banks use such information to relinquish their responsibilities when fraud does take place. 6cents.co.za realised this and therefore provided the same automated categorisation tool but using a statement upload facility instead. Further, note the terms and conditions on 22seven allowing them to make use of your information or distribute anyway they please – that is a significant risk. At 6cents we realised privacy, protection and confidentiality was the biggest concern for users and for that reason used Engine Yard storage for bank like security and privacy. Further, no person can access your information unless a specific request is made for a financial review.

  • Jurgens du Toit

    Unfortunately they had no choice but to go the route of asking for your login details. Read more at http://jrgns.net/content/22seven-com-folly-or-genius

  • Iblis Bane

    Pretty sure that should be “wary” and not “weary.”

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