Responding to banks' growing interest in offering account aggregation, the Financial Services Technology Consortium wants to develop a software liaison between banks and aggregators that would help banks keep consumer information safe and private during the aggregation process.
The consortium will meet June 15 in Chicago to advance the proposal, which it hopes will be the answer to banks' concerns about aggregation.
The service that FSTC leaders have envisioned would act as a switch between financial institutions and aggregation companies like Yodlee and PayTrust, which let consumers use the Internet to pull all their account information from various institutions into one central spot. The technology the FSTC aims to develop would establish direct links between the bank and the aggregator, and would establish an authentication procedure to make sure that consumer information was not compromised.
Banks have been wary to embrace aggregation services because they often involve screen-scraping - a practice in which companies cull information from others' Web sites, usually without the site owner's knowledge or authorization.
But if the consortium could vouch for the aggregators, financial institutions would not have to take such risks, said Anatoly Kissen, a consortium committee member who is also a vice president and the lead general technologist at Citigroup Inc.
"The issue with aggregation today is that it largely relies on third parties using customers' user names and passwords to access their account information," Mr. Kissen said. "You can imagine the danger here if some dispute arises. So what we thought was that rather than letting these companies scrape our sites, we can provide a direct feed to offer them this information."
Bank consortiums are a byword for inaction, but the FSTC seems different, because its strategy is to come up with ideas and then pass them to others to translate into actual products, said Catherine Allen, the chief executive officer for BITS, the technology group for the Financial Services Roundtable.
"They are much more of a research and development lab, where the participants can learn and work together to come up with ideas and problems and then hand them off to someone to implement them," Ms. Allen said.
In an initiative last year, for example, the organization tested the viability of electronic checks and then handed the project off to CommerceNet, a multinational, multi-industry group of which the FSTC is a member. That e-check project aimed to create a functional equivalent of paper checks for the Internet by using electronic mail and digital signature technology.
Last month the FSTC gave rights to its check truncation project to SVPCo LLC, a for-profit arm of the New York Clearing House Association.
"We never claim that we are going to commercialize and implement the projects," said Adam Backenroth, the consortium's president, who is vice president of emerging technologies at Chase Manhattan Corp. "We feel that there is important work that needs to be done here to lay the groundwork down so that others can do it."
The aggregation proposal is one of four pilots that will be discussed at this month's FSTC meeting. The pilots open the second phase of the consortium's Financial Agent Secure Transactions project, which it began in November. This project aims to develop a cost-effective way for strangers to conduct Internet transactions when they have no authentication mechanism in common.
Phase one was discussion of how such an authentication process could work, and phase two will be to implement pilot programs based on those discussions, explained Parker Foley, a vice president at First Union Corp. and chairman of the project committee. "Now we need to get together and build," Mr. Foley said.
The other pilot three projects under discussion are using an authentication model in electronic marketplaces; using the authentication model between customers and financial institutions for online account enrollment and credit transfer in Internet banking or brokerage services; and using the process to enhance the authentication of merchant-consumer transactions to reduce fraud.
The committee will test a maximum of three projects, depending on member interest, Mr. Backenroth said. Last month, the FSTC announced it was involved in a six-month biometric test with the International Biometric Group.
"I expect aggregation to be up there, because there has been a lot of interest from the financial services industry," Mr. Backenroth said. It could take up to three months after the meeting for the pilot phase to begin.
If the committee does decide to implement the aggregation project, it will invite any interested financial institutions to join the pilot, Mr. Kissen said. Several banks, including Citigroup, have said they would want to be involved. The project would probably use Open Financial Exchange (OFX) and Interactive Financial Exchange infrastructure as the delivery standard.
Steven C. Franco, an analyst at U.S. Bancorp Piper Jaffray of Minneapolis, said the consortium's proposal may encourage financial institutions that have been skeptical about account aggregation to give it a try.
"Some banks have been worried about letting their information out, which is more of a short-term reactionary strategy," Mr. Franco said. "At least this gives them a seat at the table."
