From the beginning, banks worried that account aggregation might eat into their client base by causing customers to shift their primary relationships to financial services firms that offered aggregation early or to close accounts that did not stack up well against others in their portfolios.

A report from the New York consulting firm Novantas seems to confirm the worst fears: It warns that banks offering account aggregation stand to lose up to $28 billion of revenue to customers' moving their money to accounts that earn more interest. Aggregation lets customers easily identify their lower-performing accounts, the report noted.

"We think that even if a modest percentage of bank customers begin to aggregate their deposit accounts, it could have a dramatic effect on bank income," says Seamus McMahon, a managing director at Novantas, which specializes in revenue strategies for financial institutions.

The shift to more productive accounts would accelerate a trend that has been under way for 10 years. In 1991, 37% of consumer deposits were held in checking and savings accounts, against only 23% in 1999, according to Novantas.

Even though the percentage of total deposits held in savings and checking accounts is declining, the company says, these assets generate $60 billion of revenues for banks.

McMahon says banks might be able to recover about $6 billion of the $28 billion at risk by offering money market or other high-yield accounts. But those assets could just as easily move to brokerage accounts, he says.

Aggregation's low adoption level belies the potential danger to banks, McMahon says. Though relatively few people would move their accounts, he explains, they are a valuable segment. "All of the money we are talking about is held by 5% to 15% of the customers; the rest don't have any money."

The stock market's volatility makes matters worse for banks. "In previous down markets we have seen people work their cash balances," he says. "What they don't spend they put into mutual funds and higher- paying accounts."

Leslie Mitchell, a senior director at the Banking Industry Technology Secretariat, says banks have not expressed much concern about losing money to more productive accounts because of aggregation.

"The banks we work with feel that there is a lot of opportunity there, that there is so diverse a reward, and those facts from Novantas have not come up in our working groups," she says.

Ariana-Michele Moore, a research analyst at Celent Communications, says the upside of account aggregation would counteract any revenue loss.

"I think the benefits of having a service that customers demand would be greater than the probability that customers would take their accounts elsewhere," Moore says.

She also contended that consumers are not new to the concept of putting their money into higher-paying accounts. "There is so much information out there, and other sources where they can find out this information already."

Megan J. Ptacek writes for American Banker, another Thomson Financial publication.

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