Account “aggregation” vs. account “aggravation” (NetBanker)

Sizing the Market

Definitions

Account Aggregation (aka statement aggregation): Downloading statement data from multiple providers and arranging it on a single Web page in an easy-to-understand format allowing users to quickly get a sense of their overall financial situation, and take action to optimize returns and/or minimize expense

Account Aggravation (aka data dump): Downloading statement data from multiple providers and dumping it on a single Web page and letting users figure out what to do with it all

Table 1

Prior Articles on Account Aggregation

Month	Num	Pages	Title
Feb. 00	57/58	2-4, 8	Screen Scraping: Naughty or Nice?
Nov. 99	54	18-19	PayTrust’s SmartBalance Integrates Financial Statement Aggregation with Scan-and-Pay Bill Management
Aug. 99	52	19-24	VerticalOne Wants Your Customer’s Data (Surprise! They already have it.)
Aug. 98	40	18-19	MaxMiles Pioneers Statement Consolidation
June 98	38/39	1-15	Building the Amazon.com of Financial Services
Mar. 98	35	9-10	Non-bank statement consolidation

We’ve been a long-time advocate of account aggregation, first discussing it in general in early 1998 and using it as a core feature in our Building the Amazon.com of Financial Services report published in mid-1998 (see Table 1 for back issue references). But, before we go any further, let’s step back for a moment and think about what it takes to become an active user of an account aggregation services. Table 1 is a typical 16-step decision and activation process for new users.

Table 2

Steps to Becoming an Active Aggregation User

1. Have secure and private Internet access

2. Be interested in “account aggregation” (whatever that is)

3. Figure out who offers it

4. Determine whether it fits your needs

5. Trust the provider to keep data private

6. Trust the provider to keep data secure

7. Trust the provider to offer reliable technology

8. Trust the provider’s customer service staff to resolve problems in a timely fashion

9. Feel confident the service provider will be around for the long haul so the setup time is not wasted

10. If transactions such as interbank funds transfer are provided, users must trust service quality

11. Trust the provider not to peek at the data, or allow others to do so, for self-serving reasons

12. If free, decide if the risk is worth the benefit; i.e. if there is no fee, users know there is some catch, either poor service quality, lack of privacy, intrusive advertising, etc.

13. Go through the initial sign-up process

14. Enable multiple accounts to be aggregated

15. Go to the individual service providers and set up Web account access if it’s not already been established

16. Remember to use it

Source: Online Banking Report, 8/00

Forecasting Near-term Demand

At each step of the 16-step process, a certain number of prospective users drop out. Many will come back later and resume the decision process. But in this example we are only estimating first year adoption.

Step	% of All Bank Customers
1.	40% have the necessary equipment/connection
2.	20% of those might be interested
3.	50% of those figure out you offer it
5-11	50% of those will trust you with their data
12-15	33% of those register outside accounts
16.	50% of those use it during the first year (after signup)

Multiple these probabilities together:

0.4 x 0.2 x 0.5 x 0.5 x 0.33 x 0.5 = 0.3% usage

or about only 1 out of every 300 HHs at your bank

A 0.3% penetration would yield 300,000 U.S. households if every bank offered it. But since only a handful of major banks will offer the service by year-end, actual usage will be approximately 125,000 to 150,000 this year*.

*We are forecasting active users; the signup numbers released by early adopter financial institutions will be far higher.