The clumsy method of downloading a transaction file to a local computer, then importing the resulting file into a financial management program, is error-prone—and often results in duplicated or missing transactions.
This should not have been a big surprise. Intuit wanted to drop support for QIF (Quicken Interchange Files) importing with the 2004 edition, but kept it on for one more year to make sure users were well-informed of the upcoming change. Quicken 2004 users, when importing a QIF file, were greeted with a message that told them that Quicken 2005 would no longer let them perform such an import.
In a document published in January 2000, Intuit said: "Although Intuit originally developed QIF, and certain Intuit products still contain the ability to import and/or export files in QIF format, Intuit does not endorse or provide support for this format for data download.
"Intuit does not believe that QIF is a good solution or provides a good customer experience for such activities as data download, which is why Intuit has spent millions of dollars to support better connectivity protocols, particularly OFX [Open Financial Exchange], that provide a better user experience. Intuit encourages financial institutions to adopt OFX."
The problem as I see it isnt the cutting off of support for QIF import—that was announced a long time ago. Convincing technology-shy financial institutions to hook into OFX seems to be a larger dilemma. End-users of financial software that use OFX are usually pleased with the ease of data transfer—once its available. Derek Owens, marketing manager for the financial institution connectivity and support group at Intuit, says, "Customers dont complain. When they go from QIF to OFX, they never want to go back."
The industry has been engaged in the transition to OFX since the technology was announced in 1998. When an end-user goes through a QIF import into financial software, there are 16 steps involved—but just one mouse click for an OFX transfer of data. Owens says, "We recognize that there are people who dont like change, but OFX is clearly a better way. We became number one in personal finance software because we embrace new technology."
One area where OFX data transfers are clearly superior to importing QIF files is transaction matching. The same .QIF file can be accidentally imported multiple times, resulting in register duplicates and technical support calls. The customer must manually accept or reject every transaction every time an import occurs—there is no transaction pre-filter.
OFX-imported data, however, includes unique transaction IDs, so a downloaded transaction will never be inappropriately matched to a previously downloaded transaction. If the same transaction was downloaded twice, a pre-filter on unique transaction IDs will hide this transaction from the user.
When OFX was first announced, it was mostly picked up by larger financial institutions. They could afford OFX servers and deal with the technology. The smaller and midsized institutions wanted it when they saw how well it worked for the larger banks, so OFX service providers emerged to serve the midrange banks and smaller. They could develop an OFX server and sell it to a bank, or host the service and connect a bank up. Firms such as Fiserve, Jack Henry and Digital Insights emerged to serve the smaller banks.
In Quicken 2005, users can use OFX only for checking, savings, brokerage and 401(k)s. But other types of transactions can still be imported via QIF, such as credit cards, cash accounts, asset and liability accounts, small business payables and invoice accounts.
Chris Repetto, public relations manager for Quicken/Quicken.com, says, "When there wasnt an OFX download option available, we continue to support QIF imports. In 2006, credit card will be OFX-only. Moving forward, more and more types of accounts will be OFX-only, and QIF support will be discontinued."
David Kalt, president of optionsXpress, says in regard to Quickens reliance on OFX, "This is good news to optionsXpress and our customers, because we fully support real-time OFX integration. Our belief is that OFX provides superior data reliability and transparency. Quicken is a large enough force in the industry to force movement to this higher-quality standard."
But Kalt says the switch might hamper some financial institutions. "By making firms support OFX, they are limiting the number of software applications that can support Quicken. This is going to make it difficult for Quicken customers to easily import data from other applications and sites until those vendors can catch up to Quicken."
When a bank certifies with Intuit to enable OFX data transfers, it chooses between Direct Connect or Web Connect. Direct Connect is initiated from within Quicken; a data request goes from Quicken to the financial institution, gets the appropriate data and brings it back to Quicken.
With Web Connect, the user starts at the financial institutions Web site and pushes the data down into Quicken. Some banks want the users to be on their Web site when initiating a data transfer, so they opt for Web Connect. Intuits Repetto says, "Its a better user experience for Quicken user to have Direct Connect, but banks want their users on their Web site." Both Direct Connect and Web Connect track the transactions that have already been downloaded.
Intuits Owens encourages financial institutions to support OFX, saying, "The typical Quicken users are the banks most valuable customers—high-net-worth customers, people who get the extra services like loans. Theyre very worthy customers."