Account Aggregation 2.0

It’s been one year since we first profiled financial account aggregation pioneer VerticalOne  . Account aggregation, aka statement aggregation, which we named the number one milestone of 1999, has generated an unusual amount of controversy during its first year, especially given how few customers actually use it (see Table 1 below).

If you are thinking about adding the service within the next 12 months, first ask yourself these questions. Will account aggregation:

1.       Drive new business?

2.       Cement our relationship with users?

3.       Increase profitable cross sales to existing users?

4.       Improve service quality and/or reduce service costs?

We think that for 2000 and 2001 most banks will answer no to all four questions. Does that mean you shouldn’t push forward with an aggregation service? Not necessarily. Account aggregation will be a critical online banking feature in the future. Yahoo’s launch of account aggregation on Aug. 30 certainly boosts awareness of the feature. But with a forecast of only 600,000 users prior to 2002 (3% of online banking HHs), it’s a question of priorities. Before you add a relatively unknown service such as account aggregation, make sure you offer the features with proven customer demand, such as email statements, email alerts, interbank funds transfer, fraud protection, quick online loan decisions, and so on

households using account aggregation services

Source: OBR estimates plus or minus 50%, 8/00; Celent Communications www.celent.com , 3/20/00 & 8/1/00, Celent will be updating their forecast in a new report published by 9/30/00, includes those that have used or signed on in last 30 days

¹Total online banking HH estimates from; ²VerticalOne claims 250,000 aggregation customers but we believe a large portion will remain inactive; ³In April, Piper Jaffray estimated there would be more than 25 million users in 2003.