Just a point of clarification - Xero uses Yodlee and hence the problems with weird standards and formats is handled by Yodlee and not Xero itself - it's the cost, rather than the hassle, of bank feeds that Drury is saying justified the move. But agree with your summary that net/net it's probably the right thing to do...
Xero will shutter Personal, the world yells foul
Xero is shutting down Xero Personal – in 14 months’ time. It was a move that was clearly a nasty surprise to many of the 6o commenters on Rod Drury, CEO Xero’s blog about the topic. The reasons given were basically:
- Low level of uptake meant that line of business was at best marginally profitable
- The cost of bank feeds to Xero is higher than the company believes it is able to recoup in subscription fees
Among the few who see the bigger picture, Bob Harper commented:
Well done….big, bold and brave; when you know it the only option is to kill something off and hold your hands up and say you made a mistake.
Investors will like this and so will accounting partners because you can now get some features sorted on the business edition that the user base has been screaming for.
That’s a fair assessment given the cards Xero believes it holds on this topic. Curiously though, many of those bemoaning the demise of this service said they would be prepared to pay more for what the service delivers because they see value, especially in the bank feeds. As Ryan said:
…I’m happy to pay for bank feeds. If $50 per annum isn’t enough then I’m happy for that to increase – obviously within reason.
I won’t enumerate the ‘I feel let down and am bitterly disappointed’ set of responses – you can read those for yourself. Unfortunately, most add very little of substance. However, I do see a couple of major issues that seem intractable.
The personal financial management market has been a tough row to plough with much turbulence in the market and many exits. Xero was brave in offering this service as both a low cost add on (in effect) for existing business users and those who might be subsequently tempted to use the business version. But as Drury points out – it doesn’t work as a viable line of business for the charging model they operate. And advertising support was just not something he is prepared to do – understandably in my view.
That aside, the whole bank feed topic is fraught with problems. As Xero found to its cost when coming to the UK, catering for many proprietary methods of exposing data for consumption in accounting solutions is not just tough, it’s a royal PITA. It reminds me of the 1990′s UNIX days when one of the business applications’ tick boxes was ‘How many flavors of UNIX do you support?’ Why? There were so many that if you didn’t cover all the bases you could not address the market. The same goes for those pesky bank feeds.
The sad facts of life are that those proprietary methods are not going to go away any time soon, largely because the banking fraternity are way too myopic in their thinking. They seem to believe that their individual formats are in some way a business differentiator when in reality they are a major hurdle. If they think that operating on single standards will kill them then perhaps they should think more about their service differentiation first rather than relying on an arcane lock in mechanism that stifles the market.
At last year’s UK Xerocon, Drury stood on stage and said in response to ‘Why aren’t you supporting XXX banks yet?’ that the UK is so tough, Xero might have to become a bank. It was a semi serious quip but one that could (just) have been applied to XP. The question is whether it would have reduced cost and even if it did would that be something a ‘personal’ user would trust? And that’s before you start worrying about marketing that as a service.
Xero is absolutely right to shutter a service where there is little to no prospect of making a return. No-one who is invested in the business service would thank them for draining resources away from the core. They’ve done the best they can to communicate the issues. The lead time at 14 months is incredibly generous. But as always in these circumstances, some people get upset and overheated. Xero will just have to suck that one up. The banks on the other hand might wish to think about what it says about their attitude towards fostering innovation. In my view, they stand condemned of archaic thinking.
Image credit: The Weird Worder, Featured image via Xero
@dahowlett read your comments on bank feed standardization with ironic interest having yesterday been looking at BIAN - a banking industry initiative that has called on IT vendors to provide more standardized banking architectures. I wonder if they have bank feeds on their list?
@benkepes To be precise the clarification should be 'Xero Personal uses Yodlee' as the business package has always had direct feeds from a number of NZ banks and from HSBC in the UK - Dennis was referring to the past difficulties of expanding that direct capability to include other UK banks.
And as one Xero Personal user commented in the Xero Community earlier this year
"Yodlee bank feed require you to give your password to a 3rd party, thereby breaking your T&C with your bank and voiding any protection they offer against fraudulent access. Can you give Personal customers the option of getting direct bank feeds (that do not require you to give away your password) even if this has to be a paid for add-on?"
I guess George has his answer now ....
@philww About as much chance of success as I have of stepping on Mars. Banks have fought tooth and nail on this topic for years with no sign of relenting.