Bank of Dreams
Despite our less-than-rosy forecast for short-term adoption , we think
that long-term – probably within the next 36 to 48 months – account
aggregation will become a standard online banking feature.
Banks desiring a state-of-the-art Web image (such as Net-only banks) and
traditional banks looking to grow via the Net, will want to add account
aggregation no later than year-end 2001. But others can defer the project
until 2002 or later, leaving it to the pioneers to educate the market. No
matter which camp you are in, you need to understand and personally use
aggregation services now so that when the time is right you are prepared to
act quickly.
Table 1
Account Aggregation Timeline
| Date |
Milestone |
| 1984 |
Intuit’s Quicken “account
aggregation” software is released; requires manual input of data |
| Jan. 1994 |
Microsoft Money
integrates online banking with its PFM software; data can be
downloaded directly from the three charter banks, US Bancorp,
Michigan National, and First Chicago (now part of Bank One),
reducing the data entry burden |
| Nov. 1997 |
Microsoft introduces
ActiveStatement allowing any bank to offer automatic downloading
of statement data into Microsoft Money at no other than Web site
programming |
| Dec. 1997 |
The first non-financial statement
aggregation function is launched on the Web, Mileage Miner
from MaxMiles |
| Aug. 19999 |
The first financial statement
aggregation site appears on the Web at VerticalOne (sold to S1 in
Sept. 1999) |
| Dec. 1999 |
First Union sues PayTrust to stop it
from including First Union accounts in its account aggregation
service; the suit is later dropped |
| Feb. 2000 |
The first major financial site launches
financial account aggregation; OnMoney.com, the wholly-owned
subsidiary of AmeriTrade (powered by VerticalOne) |
| July 2000 |
First major bank begins offering
financial account aggregation; Citibank’s Myciti.com built by and
powered by Yodlee |
Source: Online Banking Report, 8/00
User Benefits
To ensure that you are not simply building an account aggravation
service, consider the user benefits. We’re not certain consumers are ready
to see account information from multiple providers in one spot. Research
shows that consumers prefer to have financial accounts diversified across
providers. A reporter recently confided to us that he would never have his
loans and deposits at the same bank because he fears that the bank would dip
into his deposit account to repay the loans if a problem arose.
So what are the real benefits of account aggregation for the mass market?
It’s a good question, and one that we haven’t quite put our finger on just
yet. Table 2 shoots down several widely touted aggregation benefits.
Table 2
The Shaky Value Proposition
|
Stated Benefit |
Aggravation |
| Saves time with single login |
If you have 5 accounts registered with
the account aggregator, it does save time to login once vs. logging
in 5 times. But at any given moment, most users only want a single
piece of info, such as their DDA balance, so it MAY actually take
LONGER to go to an aggregation site and wait for info. to download
from five different sites, then slog through all five accounts to
find what you need. |
| Don’t have to remember Web addresses
and passwords at a many different places |
Many users will be reluctant to hand
over the keys to all their accounts so they still may need to
remember other passwords; on the other hand since many users
maintain the same username and password at every site they frequent,
the user already has just one to remember; finally bookmarks,
autofill URLs, and toolbars make it easy to navigate to multiple
sites. |
| One view of the entire financial
situation |
Do users really want to have to deal
with every financial account each time they want to check their DDA
balance? Users may think they want it all, but information
overload is a real downside that could keep users away even after
they’ve gone to all the trouble of setting up their accounts. |
Source: Online Banking Report, 8/00
ð
The bottom line – simply aggregating a bunch of financial data – provides
little real benefit to the user. If you are thinking about simply dropping a
link on your site to Yodlee, forget it. Do yourself and your customers a
favor and add the weather forecast instead. It’s much easier to use and
provides more benefits for the vast majority of users.
Yahoo’s account aggregation is tightly integrated with its popular
Yahoo! Finance site (see Accounts in the center of the page).
Adding Value to Account Aggregation
While we aren’t thrilled with the plain vanilla version, value-added
aggregation integrated with your existing services is another matter. Once
users receive obvious tangible benefits such as money savings, peace of
mind, and/or time savings, we think it will catch on big time.
We believe the key to making it work is how tightly it’s integrated into
your existing offering. Users should be able to add an outside account just
as easily as adding a new account from your bank. Notice how Yahoo
has simply posted an “add a bank” link on top of its popular Finance
section . It makes it sound easy to set up and users don’t have to go
through a lengthy purchase decision to give it a try.
Another important factor is seamless funds transfers across all accounts,
not just internal ones. It should be just as easy to transfer funds from a
Citibank account to your checking account (and vice versa), as it is to move
funds from your checking to your savings. Finally, the key ingredient for
profitability is a tightly bundled credit lines so users can easily transfer
loan balances from competing companies to yours. You’ll also want enough
flexibility in the system to offer price incentives for balance transfers.
Table 3
Building Value into Account Aggregation
Minimum requirements for account aggregation
- Bank branding: a “Powered by YourVendor” logo is acceptable,
but your brand must dominate or users won’t trust the service
- Plain language security and privacy statements
- Integration behind your online banking password
- Integrated line of credit: a credit line that can be tapped to
take care of cash shortfalls in any aggregated account*
Advanced personalization and automation features
- Interbank funds transfer*
- Quicken-like budget and categorization of transactions
- Report writing across all accounts
- Email alerts across all accounts
- Fraud and privacy protection features/alerts
- Bill payment integration and scheduling
- Loan payment integration
- Financial planning features
- Personalized financial “recommendations”
- Small business modules
- Meta-customer service: help users resolve problems even at
other providers*
- Downloadable in QIF, ASCII
- Deal finder: Notifies users of savings opportunities quantified
with the user’s actual balances; for example “You are carrying a $3,000
balance at Citibank at a 17.9% APR. To save $38.12 per month, we recommend
transferring the balance to your MBNA card where you have a 3.9%
introductory rate. Press TRANSFER to move the money now.”
Automation Features
- Automated interbank sweep
- Automated bill payment
- Automated asset allocation via mutual funds and/or equity
baskets
Optional Features
- Monthly/quarterly/annual paper statements covering all
aggregated accounts
- Tax preparation
- Scan-and-pay bill pay options
Source: Online Banking Report, 8/00
*good cross-sales tool
Naming
One problem with pioneering a new feature is educating the market on its
benefits. It took more than a decade to educate consumers on the benefits
and safety of microwave ovens. Account aggregation has many of the same
educational issues, without the obvious benefit of a steaming plate of
lasagna. Users want to know: What is it? What does it do for me? Is it safe?
To help the education process, the service needs a better name than
statement/account aggregation or screen scraping. One of the best names
we’ve seen is Virtual View from VirtualBank.com, but that
works primarily with their unique bank branding. We’re not sure what to call
it: uni-statement, one-click statement, build-your-own-statement, Quicken
(oops, that’s taken)? So we pose the question to readers. Do you have a
great idea on what to call this thing? If so enter send it our way. The
winning entrant will receive a DVD player or 13” TV/VCR. Send your ideas to
namethething@onlinebankingreport.com (in the case of a tie, the
first entry wins).
Product Positioning
Most of the talk about account aggregation is feature based. The program
does X, Y, and Z. But users need to know what it will do for them
right now. Table 7 (right) provides ideas on how to position
aggregation as a consumer BENEFIT rather than a product or technology
FEATURE.
On Aug. 30, Yahoo launched an account aggregation service powered by
VerticalOne.
The same day, Wells Fargo announced, it too, had signed with VerticalOne to
build an account aggregation service to be available by year-end.
Table 4
Product Positioning
| Name/URL* |
Positioning |
My(yourbank)er
My(yourbank)Banker
My(yourbank)Netbanker |
Your own personal banker that
aggregates statements and provides live assistance in resolving
problems |
| My(yourbank)Broker |
Same as above but positioned as an
assistant for investment matters |
| My(yourbank)CFO |
For businesses, an aggregation site
featuring help with financial matters; also MyAccountant, MyCPA |
| My(yourbank)Book-keeper |
Similar to MyCFO (above) focusing more
on data entry and billing |
| My(yourbank)financial-planner |
Focuses on asset allocation and
long-term retirement and estate planning |
| My(yourbank)Lender |
Focuses on management of total debt
with the goal of minimizing after-tax interest expenses (also
MyLoanOfficer, MyMortgageBroker) |
| My(yourbank)Private-banker |
Targeting upscale users, or at least
those that want to appear upscale |
*The service could have its own URL, such as
www.MyEverbanker.com , or it
could be used with the regular URL, such as mybanker.everbank.com, or both
Pricing
So far, account aggregation has been positioned as a free service at the
few companies who’ve launched it. While that fits the pre-April Internet
model of providing free services to attract eyeballs, we believe that
strategy is flawed.
Here’s a service that can and should demand monthly or annual fees. We
think users will have more trust in the service if they are required to pay
a nominal fee (see Table 5). If it’s free, users will suspect that service
quality is shoddy, or that account data will be sold to the highest bidder.
* It’s like surgery; do you want the lowest cost provider handling your
surgery? No, you want the best. The same goes with safeguarding your
financial data. OK, so account aggregation isn’t brain surgery, but you get
the point.
Think like Federal Express. You can be paid well for taking care of the
customer and providing comprehensive tracking tools. Also, by charging a
fee, users will be motivated to follow the 16 steps to become an active user
While fees will discourage trial, that can be mitigated with special
offers.
*We like how Stacie Zoe Berg, writing in TheStreet.com, put it: “
If a complete stranger approached you on the street and offered to
take care of all of your household chores -- free of charge -- if you
would just hand over your house keys, would you? www.thestreet.com/funds/investing/987002.html
Table 5
Account aggregation Pricing
| Segment |
Fees Options |
|
Monthly |
Annual |
Graduated |
| Consumer |
<$5 |
<$50 |
free for first account, $25/yr for
under 5 accounts, $50/yr for more than 5 accounts |
| Business |
<$25 |
<$250 |
$100/yr for less than 5 accounts, $250
for more |
Building the Product
It’s pretty clear that most banks will outsource the core technology.
Even the largest U.S. banks such as Citibank (Yodlee, see screenshot right),
Chase (Yodlee), and Wells Fargo (VerticalOne) have signed on with vendors.
Building a “scraping engine” and keeping it current against an ever-changing
database of 50,000 content providers is something best left to specialists
who can share the costs among a large pool of clients. Table 9 contains a
list of the current suppliers of account aggregation technology. Jeff
Runnfeldt, of Dain Rauscher Wessels (650-234-4163,
jrunnfeldt@dainrauscher.com
) has been researching this space and gives high marks to Yodlee and
its proprietary scraping technology that uses fuzzy logic to capture a data
field even if it’s changed positions since the last visit. We will look at
the vendors in more detail in a future issue.
Next Steps
Even if you are not planning on launching your own account aggregation
function in 2001, there are things you can do now to prepare for its growing
popularity:
1. Beef up security procedures on monetary transactions: The
simplest way for banks to thwart hackers and frustrate screen scrapers is to
require periodic password changes. But this is tough on users and a burden
for customer service. A better approach is to require an additional
“transaction password” whenever users want to move money out of an account.
Customers would be encouraged to NEVER give their transaction password to
anyone or any Web site.
2. Educate consumers on how to avoid fraudulent virtual banking
services and Web site spoofs: We recommend a low-key approach enlisting
the support of the customer, but not threatening to leave them high and dry
if there is a problem. For example: “Please be aware that we cannot
guarantee the privacy of your info if you give your password to a third
party.”
3. Review your Web site design in light of the fact that
users arriving from aggregators may already be logged in and will miss any
marketing or navigation messages displayed on earlier pages.
4. Work with aggregators to ensure that customer data is
safe; forge partnerships for favorable placement on third-party sites.
5. Lobby for oversight of statement aggregators and e-payment
companies (license requirements, bonding, SAS 70 audits, etc.).
6. Train your e-reps on EXACTLY what to tell customers about
specific aggregator sites.
7. Flag accounts being scraped and send periodic “warnings”
to customers notifying them that a third party is downloading their account
data.
8. Develop fraud detection algorithms to watch for unusual
withdrawal activity; and potentially seek confirmation from the customer
before processing any large or suspicious withdrawals.
9. Send an email to the user each time their account
is accessed.
10. Monitor your log files to see how much activity is coming
from aggregators.
11. Most importantly, plan to offer account aggregation
yourself, so that the activity takes place on your turf, not a Web site in
Azerbaijan.
It took awhile but Citicorp finally came out with a world-class Web
site, www.myciti.com , which is
built around Yodlee’s account aggregation engine.
www.Myciti.com is more than
just account aggregation however. The site also does an excellent job
selling financial products using a benefits-oriented approach. For example,
users can enter their age and income for a customized list of appropriate
products.
Table 6
Account aggregation Suppliers
Table 7
Screen Scraping Scorecard: Who’s Playing with Whom
Source: company and industry reports, 8/00; TBA = to be
announced
RSS Subscribe
We first discussed the usability advantage of direct-to-the-desktop information delivery in the 1998 Online Banking Report, Creating the Amazon.com of Financial Services (see note 1). We called it a "meter" instead of today's widget or gadget, but its essential function was to show balance levels on the user's PC without requiring a login each time. 
