Academic journal article ABA Banking Journal

Account Aggregation Solutions Move In-House. (Webnotes)

Academic journal article ABA Banking Journal

Account Aggregation Solutions Move In-House. (Webnotes)

Article excerpt

How important is it for the average bank account holder to be able to see, on one web screen, all her financial information--from her banks, brokerages, insurance providers, and other investments and debts? Answer: Nice, but not all that important. But for a wealthy client? Very important. For an advisor to wealthy clients? Essential.

Account aggregation--the technology for collecting and presenting financial information from disparate sources--has been around for about two and a half years. At the end of last year, about 100 financial institutions (banks, brokerages, and advisors) offered the service, according to a Celent Communications study. Growth of the industry slowed during the "great cash" of the dot coms. It wasn't helped by the kludgey technology of the early providers. Screen scraping, as it is called, seemed to be a crude, error-prone, and vaguely dishonest way of enabling one bank to go to another financial institution and pick off account information about the two institutions' common customers--at their request, of course. Many early-adopting customers, already skittish about the free circulation of their financial information, got scared and quit. Banks, in turn, were reluctant to push a new product with such a precipitous downside. And while they might be happy to hook information from other institutions, they certainly d idn't want others to be fishing in their customer pool.

Celent is now forecasting healthy growth for account aggregation: from about two million users at end 2001 to eight million in '03 to fifteen million in '05. That's a 52% compounded annual growth rate over four years. Account aggregation is now more widely adopted than electronic bill presentment and payment (EBPP), notes Ariana-Michele Moore, who did the Celent study. That leads her to believe that account aggregation is likely to "evolve efficiently" to new levels of technical reliability and customer acceptance. Financial institutions have stopped griping about screen scraping and are working to make it more reliable. According to Celent, two of every three users still get their "foreign" account data via screen scraping. About one in four get aggregated information via Quicken's downloading software. Only one in twenty-five use OFX (Open Financial Exchange), the horse that most analysts are picking as the eventual winner. QEX is a financial messaging protocol--which provides the "direct feed" of data betw een banks' core processing systems--bypassing screen scraping and thus making data exchanges more secure and more accurate. However, banks have been slow to adopt OFX [not to mention IFX, the next-generation version still warming up]. Celent found that as of a year ago only 1,400 banks and brokerages were set up to handle OFX messages.

Celent's Moore analyzed the account aggregation market in terms of two constituencies: retail--providing aggregated data directly to consumers; and wholesale--providing it to financial advisors so they can better serve their wealthier customers. A hybrid offering lets a retail user share access with her financial advisor.

Until very recently, banks outsourced their account aggregation services to third parties. Yodlee, the pioneer provider, still holds about half of the entire market, delivering its services at websites co-hosted by financial institutions. Now that the technology is looking a little better, most banks will doubtless feel more comfortable having full control of its customers' financial data. …

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