Several large banks let people transfer money online to or from an account at another bank, but some small competitors are taking that idea farther by letting people view information about accounts at other banks, as well as transfer funds, on a single Web page.
The banks and credit unions that are trying to create an online financial services hub for their customers hope the effort can drive up both customer retention and fee revenue.
“It certainly puts our credit union on a level playing field with the big banks,” said Alison DeTuncq, the president and chief executive of University of Virginia Community Credit Union in Charlottesville.
Her company was the first to install the Funds Transfer with Aggregation software from the Calabasas, Calif., banking technology vendor Digital Insight Corp. The software collects summaries of a customer’s accounts from multiple banks and displays the data on a page within the credit union’s Web site.
The credit union tested the software with employees for three weeks last month and expects to make it available to all its members July 1. The New York funds transfer software company CashEdge Inc., which has sold other transfer products to Citigroup Inc. and Bank of America Corp., developed the new software at Digital Insight’s request.
Digital Insight, which formally announced the product’s development this month, says it already has more than a dozen customers lined up; most of the current users of its banking products are small and midsize banks and credit unions.
Neil Platt, CashEdge’s vice president for sales and business development, said that banking companies of all sizes have installed either funds transfer or aggregation tools, or both. However, he also said he could not think of a single company that combines the two features on the same screen, nor could two analysts from Watchfire GomezPro and MasterCard International’s TowerGroup Inc.
Spokespeople for B of A and Wachovia Corp., for example, both said their companies have no plans to combine the two applications.
Michal Geller, a director of product management at Digital Insight, said interbank transfers are popular with bankers, because they tend to increase account balances. For Digital Insight customers, over 70% of transfers are inbound, and on average, these customers keep 5% more money in their accounts than people who do not use transfers, he said.
Some banks impose a fee on outbound transfers, in part to encourage people to move more money in than out.
Citi has reported an even higher percentage of inbound transfers, about 80%, and also charges a fee for transfers to other banks.
Mr. Geller said that by adding aggregation, his bank customers hope to improve balances even more and increase the fee revenue from outbound transfers.
Ms. DeTuncq said that the aggregation feature may seem trivial at first, but that having information for multiple accounts visible on a single page can have a significant effect on users’ behavior.
Historically, bank customers who wanted to set up a transfer had to visit multiple sites to check account balances, but because the credit union is adding aggregation to its funds transfer page customers have less reason to leave their primary online banking site, she said. “It drives stickiness.”
Leslie Robinson, the University of Virginia Community Credit Union’s vice president of information services, said that when customers see the combined features on a single page, “it really does kind of hit home — you don’t have to go to any of these other Web sites.”
Chris Musto, a vice president for research at Watchfire GomezPro, of Waltham, Mass., said that by offering online transfers, banks can present themselves as “the best place to manage their cash, and therefore the best place to keep their cash.”
Adding aggregation would probably increase the use of the transfer feature, Mr. Musto said. Account aggregation is “a feature that becomes useful when it is paired with another feature that it supports.”
Someone with accounts at two banks whose Web sites both offer interbank transfers might find the aggregation feature attractive, he said. If only one of the banks’ sites offered the feature, the customer might start using that one as the primary online banking site, he said.
Beth Robertson, a senior analyst at TowerGroup, of Needham, Mass., said that many large banking companies have both online funds transfer and aggregation features, but not on the same page, and there is often no clear link between the pages.
“If an overall online banking platform is well designed, a user is not going to experience a lot of difficulty moving from aggregation to funds transfer,” she said.
