Account Aggregation: Consolidation on the Cutting Edge Security Concerns Trust Standardized Formats
Robert, Katie, Independent Banker
ASSESSING ACCOUNT AGGREGATION WADE THROUGH THE MYTHS AND OBSTACLES IN ADOPTING THIS SERVICE OPTION BY KATIE ROBERT
In 1998, when Venhat Rangan, who later founded Yodlee Inc., developed account aggregation, industry experts seemed intrigued by the possibilities afforded by the technology, most notably, the ability for customers to view their entire financial portfolio from a single location.
Many community bankers were skeptical of how offering account aggregation would benefit their banks. There was also a concern about sharing customer information with unaffiliated third-party vendors. Bankers were worried about keeping their customers' financial information secure. Some bankers even viewed the process of "screen scraping" as stealing information.
The term screen scraping applies to the practice of gathering customer's information with or without their permission, using "cookies" or tags that collect information from users as they travel from one Web site to another. Not only could screen scraping leave community bankers open to liability resulting from unauthorized access to information, data collected in such a manner may not be accurate or up to date.
While the account aggregation customers provide their passwords and permission to aggregators gathering their information off Web sites, screen scraping often takes place without the knowledge of the financial institution holding the customer's information. Screen scraping, because it typically occurs without a cooperative agreement with the company holding the information, creates much more uncertainty about the accuracy of the information delivered to the customer. Some banks have even thrown up various technical barriers to hinder or confuse screen scrapers.
In less than a year, however, the attitude that aggregators were stealing changed, largely with the introduction of direct feeds. In contrast to screen scraping, direct feeds occur when a company or bank providing the customer's information is under agreement with the aggregator to do so. In addition to the legal arrangement, direct feeds also provide the technical access to the information provider's that allows live, up-to-the-moment information. This allows larger banks like Citibank, to partner with niche software aggregators like Yodlee, and strike agreements so that, one, the data was up to date and two, not subject to corruption or misuse.
"A lack of standard format has made some banks wary of getting involved with aggregation," says Viveca Ware, ICBA's director of payments systems. "To alleviate these fears, banks should go to their core processor or Internet banking provider and pressure them to offer an aggregation product, if they don't already. You already have an established relationship and trust with them."
Today most community bankers are still taking a wait-and-see approach. According to a survey of ICBA members, only six percent were offering an account aggregation product to their customers.
The main reason for the hesitancy seems to be a lack of clear information on the product's benefits to banks. "It's an interesting technology, but that's not enough," says Ian Rubin, director of online financial research at IDC, a technology firm in Framingham, Mass. "Banks want to know how they can fully use the product. It needs more functionality." And while financial institutions may find aggregation interesting, because of the slow economy they consider aggregation a luxury item-- one that they're not setting money aside to explore, Rubin says.
That approach may be fine for now, considering the conflicting studies showing just how in demand the service has been. Results from an American Banker/Gallup found that about one million people were using the service in 2000 and the survey also breathlessly predicted that number would balloon to a staggering 90 million people by 2005. A study conducted that same year from Celent Communications, however, found that only 100,000 customers were signed up for the service and predicted a meteoric rise to some seven million users by 2003. …