Why are the description info on Bank Account Statements so confusing? We can not find what is the debit for and from whom the payment / transfer come in? End of the month when you see the statement we have to break our heads to decipher the entries.

It’s a very old problem.

It’s caused by the fact that a bank Statement of Account is the last stage of a multistage process that cuts across multiple systems in banks, PSPs and scheme operators. At each stage, there are many limitations and leakages as well as garbling and “ad-hociness” of data.

Until upstream issues are fixed, you can’t really improve the readability of a bank statement of account.

Third Party PFM (Personal Finance Manager) apps have tried using advanced AI / ML systems to repair and enrich messages but they have not been able to go mainstream. I don’t know whether they failed because of technical or commercial reasons, or both.

Of course, banks and scheme operators can sit together and redesign their systems such that the aforementioned limitations, leakages and garbling issues are prevented at source. But that would require a lot of time and money. It will happen only if banks find a strong business case i.e. hard dollars for themselves.

In general, banks – anywhere in the world – don’t spend too much brainpower or moneypower just to prevent their customers from breaking their heads. Although, from time to time, they do pay lip service about doing so e.g. Enhanced Remittance Data project in UK.

COMMENT DATED 10 SEPTEMBER 2020 FROM MANIVANNAN SHAN

Imagine the amount of manpower wasted throughout the world on a simple activity like Bank Reconciliation. Millions of man hours every year. Banks can make an onetime change to display the Details entered by the initiator of the transaction which performing the online transaction.

REPLY DATED 11 SEPTEMBER 2020 TO ABOVE COMMENT:

Copy-pasting my comment in response to Manivannan Shan ‘s comment dated 10 Sep 2020.

Oh, while I spoke only about business case earlier, it’s not that simple technically either.

It’s not only intrabank systems, which themselves can pose severe challenges.

On top of that, Interbank Messaging happens via different communications protocols for different products e.g. ISO 8587 for ATM, SWIFT MT for Cross Border Payments, ISO 20022 for something else. Each standard has its own attributes in terms of field length, type of characters supported versus not supported, and so on.

It’s even technically virtually impossible to rewire everything, let alone find business case for.

But, that hasn’t stopped tech startups drunk on the Kool-Aid of “how hard it can be” from trying. Sadly, it’s only after they jumped in did they realize that they didn’t know f-all about banking. Not surprisingly, all of them paid the price, none of them could go mainstream e.g. PFM & MoMMA.

UPDATE DATED 18 SEPTEMBER 2020:

I just received the following receipt for my recent purchase from an ecommerce company.

I ordered only one item. As you can see, the bill is over a foot long.

The item is listed as follows in the receipt:

I doubt if anyone can figure out what the item was just by reading the above description.

The retailer could have always printed the full product name by just elongating the receipt by another inch, which wouldn’t be such a big deal since the receipt is already over a foot long. Had it done so, it would have drastically improved the readability of the receipt.

But it still truncated the description and made it virtually impossible to figure out what the ordered item was.

Now, Retail systems are single party systems. Unlike banking systems, they’re not subject to eccentricities of different communication protocols between different entities, they don’t support any third-party data (e.g. payment narration entered by Payer in a banking system), they can print receipts of whatever length as they want, and so on.

Despite all that, a receipt from a retailer is no easier to decipher than a bank statement.

What gives?

I’m guessing it’s because of a limitation on the number of characters for SKU description in the retailer’s core inventory system. But I could be wrong.

This is not to single out any Retailer or anybody else but to illustrate the magnitude of the problem under question. While anybody is free to solve it, they should appreciate the nature of the beast. Otherwise, they risk creating another lemon.