Consumers to embrace account aggregation

Australian Banking & Finance, June 14, 2001

LATEST RESEARCH INDICATES that the concept of account aggregation has strong appeal for Australian consumers.

However, there remain some obstacles to widespread adoption. A survey of 1,400 consumers by Jupiter Media Metrix revealed that 20% of people would be extremely likely, and 28% would be very likely to take up a service that enabled them to check account balances and manage an array of accounts [across product types and providers] at a single website, with a single username and password.

The first obstacle to increased take-up is inertia.

One of the Lessons of the technology markets correction is that consumer uptake of new technologies often takes Longer than first anticipated and secondly, current account aggregation technologies are limiting.

"The screen scraping approach used most commonly in the US suffers from Limitations in the degree of functionality that can be built into an aggregator site, ultimately making the model an interim stage", advocates Jupiter Media Metrix local analyst Andrew Sergeant.

Legal issues related to ownership of customer information also present a challenge.

In the US, several `aggregated' sites have taken legal action against aggregators over unauthorised capture and use of customer information.

An account aggregation service that hopes to achieve widespread uptake will require industry-wide standards and structured data exchange between billers, technology providers and financial institutions.

While consumers are increasingly managing some accounts online we are still at an early stage.

Jupiter Media Metrix data indicates that Australian internet users who log onto a financial services site, do so on average 4.4 days per month, or about once a week.

Sergeant argues "to find value in a financial account aggregation service, users will need to be accessing multiple accounts on a regular basis.

"This will require further migration online to a point where a wider range of accounts are being accessed online, and users are conducting a greater proportion of their account management online."

Jupiter Media Metrix US data indicates that few users are Logging in to check balances at multiple accounts during the course of a month. Indeed, two-thirds of all users who initiated a secure log-in with a financial, institution, did so with only one financial, institution. Another 20% did so with only two institutions.

Account aggregation also offers possibilities outside the aggregation of financial services.

The aggregation of web-based email accounts has been popular in the US. This is a relatively tow level use of account aggregation, but provides an adoption path that will enable users to become familiar with the service, in a low-risk context.

There are compelling reasons why this model will develop in the Longer term. Convenience for consumers is a key benefit similar to that which a one-stop-shop might provide, but they are able here to choose their preferred provider for each product type.

For billers, substantial cost reductions are possible as the need to print and post statements to customers is eliminated.

AS THE GOODS AND SERVICES

Tax approaches its first anniversary, financial, services businesses should be looking at strategies to minimise the impact of the tax on their bottom-line.

The pressure to reduce costs and the focus on cost to income ratios is still a key driver in the financial, services sector.

Despite there being opportunities for cost reduction using GST planning, Jon Graham of Andersen's Financial. Services GST Group, notes "the diversity in approach to GST planning is significant -- some businesses are leading the way, others are following and a surprising number appear to be doing very little".

THE TOP 10 COMPANIES IN
RANKING OF APPEAL TO
CONSUMERS AS A POTENTIAL
PROVIDER

(if the company was offering the service
of online account aggregation)

Tetstra                        1
Australia Post                 2
BPAY (The company)             3
Cotes Myer                     4
CBA                            5
NineMSN                        6
Microsoft                      7
Yahoo!                         8
Westpac                        9
Cable and Wireless Optus      10

Source: Jupiter Media Metrix, May 2001