That's the proposition of account aggregation. Give up all your passwords to a single aggregator, whoever that may be, and let them present all of your information to you, pre-chewed and ready to digest.
When this concept was first floated at the height of the dotcom boom and portals such as Yahoo! and CNBC started offering the service, financial institutions were loathe to embrace the idea. After all, if portals or other banks got in on the scene it promised to steal valuable interaction time from the bank's own online service.
There were also serious questions over security. One bank, First Union, even tried to sue account aggregator PayTrust for "scraping" its users' account information. The bank later dropped the suit, apparently concluding that consumers have the right to release their personal financial information to anyone they want.
But since mid-last year, many US financial institutions, led by the likes of Citibank, Merrill Lynch and even First Union, have begun to embrace account aggregation as a competitive advantage rather than a competitive risk. And once a few of the major players began to offer aggregation to their clients, it was a no-brainer that others would have to follow or risk losing their customers.
Studies from research companies such as Gartner Group have shown that there is demand for this kind of convenience among customers, at least in the US, and Henry McVey, financial sector analyst at Morgan Stanley Dean Witter, predicted last year that aggregation users will represent 40% of total online banking and brokerage customers by 2003.
Now Korea's largest commercial bank, Hanvit Bank, has followed suit, launching its account aggregation service to its customers last week. While the level of trust among Asian customers when asked to give up their passwords in the name of convenience has yet to be tested, the Korean market is probably one of the best places to trial it. According to International Data Corporation (IDC), there are currently 2.9 million online banking accounts in Korea -- and the number is predicted to grow to 5 million by 2004, representing roughly half of the total number of active bank accounts expected for that year.
Hanvit Bank has selected Toronto-based banking technology company 724 to provide the tools it needs to offer the account aggregation service – in particular LiveClips, which does the actual aggregating, and 724 Alerts, which can generate notifications for the user when a given situation, such as a due date for bill payment, occurs.
724 has also formed a joint venture with Nomura Research Institute and NTT Data -- the two largest systems integrators in Japan and specialists in the financial services industry -- to promote and implement its products in the Japanese market . The product line has undergone localization for the Japanese market, a feat made easier by 724's support for double-byte characters, which is needed to display the complex characters found in the Japanese, Korean and Chinese languages.
For now, the LiveClips and 724 Alert products are in soft launch phase at Nomura Securities but Susan Huggett, 724's vice president of alliances, Asia Pacific, says the company expects many of Japan's top financial institutions to begin implementing account aggregation into their online services around September.
By the end of the year, 724 expects to be able to offer its products over NTT DoCoMo's iMode platform. 724 already has a large list of top-tier clients globally for its mobile banking products that can be used via a WAP browser on a handphone or PDA.
InfoInOne is another company aiming to make its name as a provider of account aggregation technology. The Hong-Kong based start-up has been offering an aggregation service on its own Web site since February, and is promoting its technology to financial institutions and other portals. It offers access to information on a small but growing number of Hong Kong accounts, including HSBC and Hang Seng bank, several trading sites, a few mobile operators, and local electricity companies.
Account aggregators usually use a technology process known as 'screen scraping' to accumulate the data from various accounts. Customers give up their various user names and passwords, either directly to the aggregator or to the financial institution that is using their services. The aggregator then uses these passwords to log into each account and retrieve the relevant information for display.
In theory, this means that an aggregator is only limited to the accounts it can access by the information provided by the customer, as well as the interfaces it builds to these -- a process usually programmed in the Java language. But in practice, the aggregators and their client financial institutions are more sensitive to the issues of customer and information ownership and often work on a more permission-based model.
Building relationships and trust with a wide range of financial institutions will also be key if the aggregators want to take their business model to the next stage and offer more than just account balance information. To enable transactions with all accounts at an aggregated site will require the agreement of all parties as well as a more standardized procedure for data transfer and security guarantees.
To date, account aggregation has only been targeted at retail customers or in some cases, such as Merrill Lynch in the US, private banking clients. Screen scraping technology has yet to be offered to corporate banking clients, though this isn’t surprising given that the commercial banking area has in recent times lagged behind the retail sector in offering integrated online services.
Should the banks decide to offer this kind of service to their corporate customers, very little change in the technology would be required. "Technically it's quite possible," says 724's Huggett, particularly if the aggregation is limited to balance information only, she adds.
If this occurs, it is likely to be offered only through financial institutions rather than a third-party portal, which would have a harder time gaining the trust of corporate treasurers, no matter how convenient a one-stop shop for all financial information might sound.
