Expect costly account aggregation to continue attracting few users for the next few years, say industry analysts-yet watch as 1st Tech CU this month enhances its aggregation services.
It's a simple matter of "offering our members the kinds of services that engender trust," explained Michael Scheuerman, business technology officer and CIO at the $925-million CU. The CU's aggregation portal is now integrated with its homebanking website instead of linking off to its service provider, Redwood Shores, Calif.-based Yodlee.
Aggregation technology incorporates screenscraping, which pulls members' personal data from various financial websites and consolidates the information (in this case) at 1st Tech's homebanking site. As a result, 1st Tech is able to assist its 87,000 members with their financial planning.
"What makes aggregation interesting is that you can provide members with additional information and resources to help them manage their financial lives," explained Scheuerman.
An example, he said, is letting members know they could save on credit card rates. "For us to do that, we need to have information that the member is willing to give to us if they opt-in."
And the opt-in, ironically, is where other CUs and analysts say that aggregation may actually weaken rather than cultivate a member's trust. In order for screenscrapers to access information from third-party financial sites, members must agree to share their passwords, thus compromising privacy policies.
Partly because of concerns over fraud, account aggregation is expected to see only about 10-million users worldwide by 2005, whereas other Internet technologies, such as online and wireless services, should garner up to 140-million users, according to a recent report by Boston-Mass.-based research firm Celent Communications.
Scheuerman's take on the privacy issue? "There's a bit of a dichotomy. We try to train our members not to give out their passwords and then we turn around and ask them to give them out with aggregation."
At the same time, opting-out of aggregation because of potential fraud is a bit like avoiding driving for fear of being hit, he said. "Life is inherently risky. I think the risk with aggregation is so slight that it is virtually negligible," continued Scheuerman, himself a 1st Tech aggregation user. "The value received by the member is worth this very slight risk."
The Issue Of Liability
And while the members may be taking a slight risk, participating CUs cover their bases. Scheuerman said. "In our user agreement, we basically say we're not going to be liable for errors that happen. Members have to decide whether it's a risk they want to take."
Most members aren't opting-in. Yet Scheuerman was impressed that 400 members signed on in the first week after the enhanced site was launched.
Aggregation users are happy, said Scheuerman. They write that aggregation is "the coolest thing since sliced bread." At the same time, he has received e-mails from dissuaded members asking, "Why would I ever use this service?"
Soon, the privacy debate may be moot. There's hope that new approaches, including data feed technology that won't necessitate password sharing, will decrease the threat to privacy and ease maintenance. "Screen scraping is on it's way out," Scheuerman said. "Data feeds are much faster, cleaner and reliable."
Scheuerman concluded, "Aggregation is expensive in some ways, but it's a heck of a lot more expensive not to provide. Members won't leave 1st Tech for aggregation alone, but the members who want aggregation are going to go and get it somewhere else. We'll lose a little bit of mindshare."