All of your finances in one online swoop
Consumers who bank online know well the frustrations associated with having multiple Internet accounts: easily forgotten IDs and passwords, annoying log-in sessions, and wasted minutes spent hopping from site to site to check them all.
Now a small handful of Web sites called "account aggregators" offer consumers the ability to keep an eye on their investments, credit-card statements, bank transactions, brokerage funds, bills, frequent flyers miles, e-mail accounts - you name it - at a single Web site. It's a huge time-saver for consumers.
Celent Communications, a research firm in Cambridge, Mass., reports that only about 100,000 people use account aggregators today. But the company expects that number to rise to 4 million users by 2004. By that same year, Forrester Research Inc., also in Cambridge, predicts more than 45 percent of online households will use the Internet for financial services.
So why do sites such as EZlogin.com and Yodlee.com, in the words of a recent industry report, "strike a chord of fear" in the hearts of many retail financial institutions?
Experts say the answer is spoken partly in the language of marketers at banks and brokerages. Such institutions fret about declines in "brand power," visibility, and "cross-selling opportunities" that result when customers stop at aggregator sites to check their accounts instead of coming directly to a bank's site.
Computer-security professionals also worry about how the technology, known in techie jargon as "screen scrapers," operates. For the service to work, you hand over the IDs and passwords for all accounts you want the service to access, typically e-mail and financial accounts. The aggregator usually stores the passwords locally and gives you one master ID and password to use. The software automatically visits the sites, logs in, downloads data from the accounts, "scrapes out" what it doesn't need, and presents the information to you - stacked neatly alongside your other account summaries - in one place.
But experts say aggregators don't always ask for permission to access account information, and bank officials say the companies often store passwords and IDs in unsecured environments.
"Banks worry when customers hand over user names and passwords to their life savings to these companies," says Octavio Marenzi, an analyst with Celent. "If a hacker gets into a database there will be major problems. And that's bound to happen. Every human system fails at some point or another."
While banks see potential problems in aggregation services, they also see potential booms. When sites first appeared on the scene last summer, banks responded antagonistically.
Charlotte, N.C.-based First Union sued Paytrust, a bill-payment service that performs some account aggregation. The bank accused the aggregator of getting customer data without permission and storing it in an unsecured system. First Union backed out of the suit and now says it is considering building its own aggregator.
The turnabout has come in part because banks may like the idea of peeping into their customers' other accounts, a potential mother lode of sales leads. So consumers can expect most large financial institutions to offer their own aggregation feature by the end of this summer, with smaller banks following the lead.
As the technology becomes more sophisticated, time-strapped consumers will not only be able to view their account information, they'll also be able to pay bills and transfer money among accounts as well. Some services already offer limited transactional capability.
Matt Cone, chief marketing officer at Corillian Corp., an aggregation service in Beaverton, Ore., says aggregation systems will one day automatically transfer money from low- to high-yield accounts. Cone says banks have traditionally offered such money-management consultation services to high-net-worth individuals, but aggregation systems stand to bring it "to the masses."
As the service becomes more popular, problems are sure to arise. Hacking is inevitable, and since these services store passwords and IDs to other accounts, the potential for damage is immense. Who's responsible if hackers do strike: Banks or third party aggregators? The courts will have to decide.
If you decide to check out an aggregator, remember that many of these companies are software developers that license the service to other sites rather than offer them directly to you.
VerticleOne, the industry leader, has already licensed its service to portals like SmartMoney.com, OnMoney.com, and CNBC.com. Yodlee.com sells its software but does offer an aggregation system for you to use called MyYodlee. Paytrust.com also has an aggregation feature as does EZlogin.com.
If you'd rather wait a little while, you're sure to find aggregators scattered all over the Web.
(c) Copyright 2000. The Christian Science Publishing Society