FOOL'S EYE VIEW
See You Later, Aggregator

By David Kuo (TMFDragon)
January 24, 2002

Carburton Street, London -- Just the idea of being able to retrieve all your personal online financial information from a single web page, through one account number and one password, is an exciting one.

Just think about it. You could dispense with trying to remember the different account numbers for your credit card, mortgage, pension, reward scheme, bank account and online stockbroker. Not to mention the raft of associated passwords that are needed to access all those various accounts! And quite apart from the sheer convenience factor, you could even evaluate your net worth at any given moment in time.

All this is now a reality because through the use of account aggregators, customers who use these aggregation sites can access their online accounts through one single website.

But here's the rub. To subscribe to an account aggregator, you will need to part with your account details and also those closely-guarded passwords. The account aggregation firm will then retrieve the information through a process known as "screen scraping". This is not quite as painful or as scary as it sounds. Screen scraping is achieved by the aggregator logging into your various accounts, reading the account information as it appears on the screen and then re-presenting it all in a convenient and friendly format. Scraping is normally performed in the evening, outside of peak Internet traffic times, and updated every twenty-four hours.

However, divulging your account numbers and passwords to a third party can be a contentious issue. It should not be done without careful thought. For this reason, the convenience of being able to manage your finances without hassle should be weighed against any possible loss of privacy. We are constantly told by our banks to guard against revealing our account details to others.

Even the Financial Services Authority (FSA) has taken a cautious stance on account aggregators. The financial watchdog recommends that customers check carefully with both their online account provider and account aggregators as to what would happen should things go wrong. The FSA stressed that customers of account aggregators may be denied access to the Financial Ombudsman Scheme or the Financial Services Compensation Scheme in the event of financial loss because aggregation services are not regulated.

But despite the obvious downside to account aggregators, the service that these companies offer has proved to be popular in the US. It is estimated that over a million people in America now use account aggregators and that number is expected to double every year in the medium-term. In the UK, Citibank Group (NYSE: C) launched its free account aggregation service, known as My Accounts, at the end of last year. But at present, the number of banks that allow My Account to access information is still somewhat limited. And whether this is likely to change is as yet still unclear.

There is obviously strong competitive rivalry between the banks and it is unlikely that any one bank would willingly allow another to screen scrape freely. It is also clear that any bank that is prepared to provide its customers with an online service would also want to leverage the amount of commercial activity that is carried out on its own site. This increase in activity is likely to be hurt should a bank's customers decide to sidestep its service in favour of an account aggregator. But it is unlikely that banks that oppose account aggregation would be able to do so forever, especially if account aggregators prove to be as popular as anticipated.

There is also the question of whether a bank or any financial service provider can legally stop an account aggregator from scraping information, especially if permission to do so has been granted by the customer. Furthermore, the fear that customers may switch to other banks that are pro account aggregators may prompt other banks to bow to popular opinion.

Account aggregators look as though they are here to stay. Of course, we still have the choice of whether to subscribe to them. But clearly, great care should be taken should you choose to go down this path. It is a good idea to check with your existing bank as to who would be liable should fraud ever be perpetrated. The same question should also be posed to the account aggregator. It is advisable to read -- carefully -- the privacy policy provided by the aggregator and ensure that security standards are up to scratch. And lastly, if you are in any doubt over aggregators, then don't use them.