First came the portals - nonfinancial institutions powered by the masses - bringing airline miles, vacation spots, movie reviews, and favorite music sites.

The portals were virtually ignored by the financial institutions until bank, brokerage, and credit card information began to be requested by portals on behalf of customers. As financial institutions saw their Web sites being used as a simple data depository, and as they began losing face time with customers, some stood up and took action. Large banks were the first to join the aggregation tsunami. Their motivating factors have been fear and greed. Banks fear that the loss of contact with the consumer may hasten their customers' departure to other financial institutions. Another fear is the potential security threat that screen scraping poses to the financial institutions' computer systems. Financial institutions cannot control the method of screen scraping nor the volume, which could lead to system security and availability being compromised.

Cross-marketing is a double-edged sword. Financial institutions want to be able to provide the highest level of service to customers, and sometimes that might mean asking customers to buy a product or open a different kind of account. At the same time, financial institutions do not want to be perceived as pushing all of their products on their customers.

In addition to opportunities, there are risks associated with account aggregation. On March 2, the Office of the Comptroller of the Currency issued Bulletin 2001-12, outlining the risks and advantages involved in offering account aggregation services, and suggesting management control mechanisms that financial institutions offering (or thinking of offering) aggregation services should consider.

Risks the OCC cited include: strategic risk from relying on third-party service providers; reputation risk from failure to meet customer expectations (whether provided by the bank or a third-party provider); transaction risk if data is compromised or is not current; and compliance risk. Since aggregation services are still a new development, financial institutions should closely monitor regulatory changes, specifically regarding funds transfer (Regulation E) and asset management (ERISA), the OCC said.

Despite the risks, financial institutions will embrace account aggregation. But account aggregation cannot stand on its own. It must, at a minimum, add funds transfer and advisory services.

With the advent of automated advisory services in the form of "what if" scenarios and "life stage" situations, financial institutions will be able to serve medium-net-worth customers in the automated style of private banking customers.

For account aggregation to survive in the long run, there have to be standards set and followed. Responding to banks' growing interest in offering account aggregation, the Financial Services Roundtable is developing a software liaison between banks and aggregators that would help banks keep consumer information safe and private during the aggregation process.

There are at least 21 institutions providing or planning to provide account aggregation by the end of the year. Banks have the inherent advantage of being the fundamental account holder and having a trusted brand in the account aggregation market.

Internet-only banks have the advantage of catering to the Internet-savvy customer, and have an established reliance on alliances and partnerships to supply products and services to their customers.

The brokerage companies have the attention of the Internet investor, who is an early adopter of Internet-based financial services. They also have the type of customer who visits the site often. This could be a detriment for the broker since the user will have to wait for all of the accounts to download to see the brokerage account.

Brokerages have the advantage of providing advisory services as part of their basic service. They must use this basic premise as a tool for capturing their market share.

Vanguard Group said it plans to introduce an aggregation service, Consolidated View, this year. If it launches as planned, Vanguard may be the first investment management firm to offer aggregation.

American Express is the only credit card company to introduce an aggregation service.

Banks or other financial institutions that figure out how to leverage account aggregation will begin to gain market share during the next few years. But it will still be three to four years before account aggregation becomes as accepted as online banking is today.

Mr. Graber is a senior analyst in the commercial banking group at TowerGroup Inc., a bank technology research firm in Needham, Mass.

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