Banks Eye One-Page Web Wonder ; the American System of Profiling All Your Accounts on One Web Page Is Beginning to Gain Acceptance, Says WILLIAM KAY. but the Big Problem Centres on the Dangers of Fraud
Kay, William, The Independent (London, England)
Britain's banks are still deeply divided over offering a free service already used by millions around the world. Called account aggregation, it allows consumers to view, on one web page, information from their online accounts with banks, building societies, credit cards, frequent flyer accounts and online retailing and stockbroking.
This way, individuals can get a picture of their entire financial position without having to log in separately to all their financial service suppliers. The pollster Mori found three-quarters of online UK bank account customers would use the service if it was available.
The idea started in the United States in 1999 and has spread to more than 20 countries. It was launched in the UK more than a year ago by the American Citibank, with its My Accounts service. That was greeted with an outcry by British banks publicly fearful for the threat to customers' security and privately determined to prevent the American intruder from snaffling their customers.
Others, notably the Prudential's Egg online bank, were keen to join but were held up by their rivals through the mechanism of the Association for Payment Clearing Services (Apacs), to which all main banks belong.
Several schemes were put on hold while Apacs set up a working party which this year produced guidelines clearly the result of a huge compromise. They set out rules for best practice, but they warn that account aggregation "has undoubted benefits for the consumer, but exposes them to potential risks. In particular, by combining access to all of a consumer's financial accounts, consequences of a security breach are significantly heightened".
Despite that, Egg went ahead in May and now claims 100,000 people registered for its Money Manager service, of whom 90,000 have signed up since a promotional push in August. Many have accounts with the big banks, which is making those banks look more closely at this embryonic market. Once someone has gone to the trouble of loading all their bank and other financial details on one of these services they will be reluctant to move, giving the pioneers a big advantage.
That is why HSBC's First Direct and Abbey National's Cahoot online banks are preparing to enter account aggregation early next year. Lloyds TSB and Barclays are studying developments and all are expected to join eventually. The conversion of Abbey National to the cause is particularly significant, because it was among the vocal opponents a year ago.
Then, Ambrose McGinn, Abbey's retail e-commerce and strategic development director, said: "We will be making it clear to customers in the strongest way that they will be invalidating their terms and conditions [if they pass their PIN number to an account aggregator]. Customers will put themselves at huge risk by taking part in such services."
Now Tim Sawyer, Cahoot's marketing director, says: "We were not concerned about account aggregation per se, but whether people had thought through the security issues. The last thing you want is a major internet banking scandal. But we are more relaxed because there have not been major problems in the past year."
There are two main types of aggregation service. When Citibank arrived last year it imported the system it had developed in the US, which involves using your passwords to "scrape" your account information from other providers, then relaying it to you. This intrusion caused the greatest upset, not that Citibank would do anything untoward, but aggregation being unregulated, anyone could, in theory, offer it and use the data unscrupulously.
That gave rise to an alternative approach, which Egg has adopted. All data, passwords and pin numbers are held on the customer's PC, on to which the software must be downloaded. The aggregation is conducted by the customer with software supplied by the service provider, whose only continuing involvement is to hold the encryption key that lets the customer into the system.
Citibank has modified its system to let customers initiate the scraping, but this has not allayed the security fears. The system is server-based, which means it can be accessed from any computer, while Egg users are tied to the PC which contains the software.
So moneysupermarket.com, the financial website, has come up with a compromise in which the customer has control but the provider is able to analyse the customers' data to recommend money-saving changes.
Anthony Davies, who lives in south London and is setting up a virtual mobile phone business, admits Egg Money Manager encouraged him to be a "rate tart", moving his money from account to account to capture the odd percent of interest. "I use it two or three times a week, mainly to look at the balances on my accounts. "I don't have to log on to different sites and I can access it wherever I am."
Although you cannot move money around on Citibank's My Accounts, it offers a far wider range of facilities than Egg's financial accounts, ranging from air miles to shopping and lifestyle. These variations will gradually be whittled down by competition, as the providers find out what people want.
Chris Nixon, of moneysupermarket, said they intended to launch a rival service by 2003, as a showcase for comparable packages. Jonathan Etheridge, head of e-futures at First Direct, added: "We are starting in the first half of next year. Customers are demanding it. They are early adopters and 20 per cent use text messaging. Our parent, HSBC, offers account aggregation in the US, where the more tech-savvy and higher earners use it."
Officially, Lloyds TSB says its position has not changed, but it has quietly altered the terms and conditions of its banking service so account aggregation will no longer breach them. Sir Richard Branson's Virgin One and Smile, the Co-op's internet bank, are also watching carefully. But the two big antis are HBOS and Royal Bank of Scotland, whose spokesman said: "We still have concerns about security aspects. But we are keeping an eye on it."
HBOS is the most surprising opponent since account aggregation seems tailor-made for Intelligent Finance, its phone and internet bank, and its young audience. But its spokesman said: "It's against our terms and conditions to give information to third parties. Breaching our terms and conditions can reduce our fraud guarantee, and our customers are not telling us they want this service."
Egg has offered a guarantee that customers' funds will be protected.
AN IDENTICAL PASSION FOR NEATNESS
THIS SUMMER, Lucy Field was sitting in an internet cafe in Greece coolly flicking through her financial, e-mail and lifestyle accounts, all on one web page.
Lucy, 25, and her twin, Kate, have an identical passion for keeping all their financial accounts in one place. Both work in marketing, both belong to Citibank, and both have signed up for My Accounts, the bank's account aggregation system.
"It's great," said Lucy, who lives with her sister in Brondesbury, north- west London. "I bank with Citibank and have an Egg credit card, but I also use My Accounts for my online Filofax and my Hotmail account, which we can't access at work.
"And I have my Orange mobile phone account on it, and a couple of lifestyle accounts. I'd be all over the place if I had to remember all my passwords."
Lucy said "There's nothing the Citibank service doesn't give me. I can even change my internet codes on it, which we have to every three months. I wouldn't want to move anywhere else."
Kate has put her Barclays bank account, Egg Card, Yahoo! account and BA air miles on My Accounts. She said: "A few of these accounts I use are a real pain to access because they require pass codes, user names, security questions etc.
"If I were to access each of my individual accounts separately every day I reckon I would waste between 20 to 30 minutes each time.
"Plus, I would have to remember all the passwords, which is difficult when you are advised not to write any of them down for security reasons.
"Also when I travel with my work (which I tend to do about every four to six weeks) it makes it a lot easier to check my finances when I'm on the move, because I can do everything in one fell swoop."…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Banks Eye One-Page Web Wonder ; the American System of Profiling All Your Accounts on One Web Page Is Beginning to Gain Acceptance, Says WILLIAM KAY. but the Big Problem Centres on the Dangers of Fraud. Contributors: Kay, William - Author. Newspaper title: The Independent (London, England). Publication date: November 2, 2002. Page number: 1. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.