Veridian Credit Union in Waterloo, Iowa wants to tap person-to-person payments, and is vetting offerings such as Popmoney from CashEdge, Zashpay from Fiserv Inc., and one from the startup Dwolla Inc. Speed and ease of integration are obviously important, but not the only factors for the credit union, which like many institutions is weighing the utility of time to market against ensuring the reliability of complex platform integrations. And speed by itself doesn't always win.
For example, when it launched mobile banking in August, the $1.7 billion-asset 153,000-member credit union used a product from ClairMail that required tapping into the credit union's core systems and building an application programming interface from scratch. The process took an entire year, says Brett Engstrom, manager of web services for Veridian.
"Our ClairMail integration was successful, but I wouldn't describe it as quick."
Platform integration can often be a fraught process for banks, particularly when it affects core operations. In some cases, where large banks have been on acquisition tears, integrations have infamously taken years to complete because of the differences between the systems involved.
These days some vendors claim integrations can be handled in minutes with minimal updates in code, but experts say there is wisdom in taking a slower approach. For the product range sitting atop banks' online banking servers, quicker integration is possible. But for deeper integration with core processing, slow and careful are still the operative motifs.
"If you need to get to core lending systems where all the reporting comes from, or all compliance analysis, you have to take this data down to the applications," says Rodney Nelsestuen, senior research director of the cross-industry group for TowerGroup.
While core integrations are still important, many banks are expressing "a stronger interest in nontraditional integration approaches," says Jost Hopperman at Forrester Research.
To serve that interest, many third-party vendors are developing online services that claim banks can integrate in periods of time ranging from minutes to a few days. This includes open architecture frameworks based on XML, more easily installed software modules, flexible APIs and, in some cases, mere lines of code.
"It is important to satisfy a lot of customers' needs, and developing that big-bang application is not [always] realistic," says Stessa Cohen, research director of banking industry advisory services for Gartner.
Schwark Satyavolu, co-founder and chief executive of BillShrink Inc. in Redwood City, Calif., defends the speedy approach. Satyavolu said all that is required for his product, StatementRewards, to work for banks is to add a thin piece of code that uses javascript to connect bank systems with his company's analytic engines. StatementRewards examines billing statements for spending pattern. "To do the insertion [for Statement Rewards] is probably a day or two of work," Satyavolu says.
Similarly Dwolla, which enables person-to-person payments through e-mail, has also designed an open architecture, XML application programming interface for merchants. "There are different integration steps involved, but if a [financial institution] wants to offer our product, it could take as little as 30 minutes to get them up and running," says Ben Milne, Dwolla's founder and CEO.
Nelsestuen's skeptical of any claims that vendors made about easy integration that could be accomplished in minutes or hours. Still, one integration will often speed the way for others.
"Our typical implementation is about three months, and it is not that complicated," says Peter Glyman, president and co-founder of Geezeo. That's because much of the routine work, such as accessing PFM with a single sign-on and retrieving data from the core, has already been accomplished by banks through previous product upgrades to their standard online banking offerings. What takes time, Glyman said, is customizing the offering for the financial institutions.
That rings true for Veridian. Engstrom says it also took nearly a year for it to integrate its "me-to-me" payments from CashEdge, as well as its Open Now Fund Now accounts. But it expects whichever P-to-P payment platform it chooses to take only four months to integrate. "It makes it less a barrier to entry, extending a current interface, and not creating a new one," Engstrom says.
