Editor's Note: This post is part of a recurring series of classics from our archives. The story below appeared on Dec. 6, 2004 — when, as now, the industry was seeking alternatives to the practice of screen scraping.
OFX Proposal to Make Aggregation Easier
By Steve Bills
A proposed standard for downloading bank account data could eliminate the language barrier between two competing types of Internet banking tools: aggregation, which has generated ire for its dependence on screen-scraping, and personal finance software.
The proposal, which was completed last month and is now open for public comment, would let aggregators use OFX, a data standard originally developed for personal-finance software. Doing so not only would eliminate the need for screen-scraping, but it also could make it unnecessary for aggregators to hold sensitive password data.
Before online banking became popular, tech-savvy consumers could manage their accounts with software such as Intuit Inc.'s Quicken or Microsoft Corp.'s Money. Several vendors in this market developed the OFX standard to let applications download data from dedicated servers at banks.
But when the Internet began to explode in the late 1990s, a few companies began to find ways for customers to view banking information online by aggregating data from multiple banks on a single Web page. That practice initially seemed like it might displace personal software systems, but there were a few critical barriers.
First, to access account information, aggregators had to become the custodians of customers' passwords. Also, the aggregators depended on automated tools to download details from banks' computers.
This practice, which came to be known as screen-scraping, alienated both banks, because it clogged their systems, and consumers, because the information gathered was often inaccurate. And as banks' online banking sites became more powerful — and more accepted — the popularity of aggregators began to wane.
Bank technology experts say the update to OFX — an abbreviation for Open Financial Exchange — could make it easier to aggregate data and may lead to more seamlessly integrated information.
"Almost anything is better than being screen-scraped," said Michael Grandcolas, the chief architect of the Citibanking Technology Solutions Group, a unit of Citigroup Inc., who participated in developing the proposed standard.
The OFX Consortium of Mountain View, Calif., which is backing the proposal, is accepting comments on it until early January and is expected to ratify it after that.
Mr. Grandcolas said the standard could make aggregation more accurate, because the data feeds from banks contain tags to identify each element. Connecting directly to banks' OFX servers could reduce the "server stress" that occurs when automated programs navigate through screens of data intended to be viewed and not downloaded.
"It's totally inefficient" for aggregation programs to access systems in a way that imitates how a customer accesses it, Mr. Grandcolas said in an interview last week.
The OFX Consortium's work grew out of an effort by BITS, the technology arm of the Financial Services Roundtable, to establish guidelines for account aggregation. BITS updated its guidelines in January.
Gary S. Roboff, a senior consultant to BITS, applauded the work of the OFX Consortium. "Aggregation has the ability to do some fundamentally wonderful things for consumers," he said in an interview last week. For example, aggregating information about a customer's accounts at different banks could facilitate account-to-account transfers and would help people better compare their holdings.
However, he also said aggregation might disappear as a stand-alone application and become integrated into more comprehensive systems.
"It's not going to be done under the title of aggregation. It's going to be a service that banks provide through their home banking platforms," Mr. Roboff said. "That is going to get buried in everyday software, and people will say, 'Of course it can do this.' "
Another question involves customer passwords. The OFX proposal acknowledges the need to eliminate the reliance on such personal information, but it does not specify a method for achieving that goal.
"The customer has to archive his personal information with the aggregator, and that doesn't make the financial institutions very comfortable," Mr. Grandcolas said.
Gil Clark, the OFX program manager at Intuit, said the consortium wanted to address the aggregation issue without waiting for an authentication standard, which other groups are developing.
"We weren't about to set our own new standards for identity," he said.
One possible approach would be for the aggregator to use a customer password to access an account initially, then discard it after the bank authorizes future access, Mr. Clark said. After that, the aggregator would be able to trigger a batch download of information from multiple accounts without using a customer password.
Mr. Grandcolas cautioned that it might take 18 months before aggregation software employing the OFX standard comes on the market. However, in the long run "both financial institutions and aggregators will see it is in their best interest to adopt this standard," he said.