Account aggregation may indeed be the definitive financial management tool for members, but it isn't worth the risk, according to Brian Warfel, senior vice president of e-business and communications at $295-million Power 1 Credit Union.
The much-heralded technology, which pulls members' financial data from various webpages and consolidates the information on a CU's (or competitor's) site, has delivered few adopters since its debut in 1999. Only 0.7% percent of U.S. online households use the service regularly, and fewer than 3% will next year, according to Forrester Research Inc., Cambridge, Mass.
Warfel believes users are gun shy because of security risks. "The regulatory environment for aggregation is very gray. I take the sword up on the regulatory side to protect both the member and the organization. We don't want to see members get into a dangerous situation where they lose money."
The potential for fraud lies in the fact that members must opt-in to share their passwords to third party financial sites. With a member's opt-in and password, credit union aggregators can scrape third-party sites for data.
But there's also the risk that unauthorized parties may get hold of passwords. Warfel said that possibility not only increases CU insurance liability but dissuades members as well.
"When members clearly see that they're going to have to drop their personal security to use aggregation, they decide it's not for them," Warfel continued.
Power1's surveys of its 39,000 members show that up to 65% are interested in aggregation services, but that only 20% are interested in sharing passwords.
A recent Raddon Financial Group survey revealed similar statistics-of more than 20,000 consumers polled, 58% indicated they are likely to use aggregation, yet only 42% of those likely users say they will provide their passwords.
Clearly, aggregation will suffer until security concerns are resolved. "Until we can see an environment where members won't have to provide account information to the aggregator and aggregators can't see PIN numbers, we will feel a concern for our member," Warfel said.
Indeed, the industry is taking a critical look. For example, Phase II of the BITS Aggregation Services Working Group, a unit of the Financial Services Roundtable, seeks to provide regulatory guidelines and eliminate dependence on password-sharing by looking at a promising alternate technology: direct data feeds.
As a replacement for the riskier screen-scrape solution, data feeds are based on open architecture and are being used with increasing regularity to positively identify consumers.
But Warfel still isn't buying, as he fails to see the overriding value in aggregation. "Even with data feeds, aggregation's pricepoint is extremely high. I don't think that the value proposition is there." Pricing stands at $250,000 to $1 million in licensing fees with per-user charges ranging from $5 to $10 at Redwood Shores, Calif-based provider Yodlee Inc.