The charge by full-service brokerages into online account aggregation has begun.
Merrill Lynch & Co. said it will offer the increasingly popular consumer service - which lets people manage financial accounts from competing institutions in one place - on its Web site by yearend. Merrill comes hard on the heels of some banks and is the first brokerage to announce such plans. Analysts said other brokers may quickly follow suit.
Many institutions remain wary of aggregating accounts because it requires them to engage in the dubious practice of scraping data from other sites, usually without the site owner's knowledge. But recent moves by Chase Manhattan Corp., Citigroup Inc. - and now Merrill - into aggregation are bolstering the technology's advance.
For Merrill, aggregation would be just a starting point. The New York brokerage firm plans to use account information gleaned from the service to feed a financial advice and research service.
"The differentiation moving forward is about giving clients pictures of their financial situations," said Frank Zammataro, first vice president and senior director of alliances and investments in Merrill's digital development group. "The goal is to make Merrill the best-of-breed place online to make a financial decision."
Merrill's customers will be able to use the service to generate charts and graphs illustrating aspects of their financial lives - much as they would use personal financial management software like Intuit Inc.'s Quicken or Microsoft Corp.'s Money. For example, clients could chart the asset allocations in their financial portfolios and compare them with models developed by Merrill financial analysts.
Eventually, Merrill said, it plans to use collaborative technology, such as video conferencing or live chat sessions, to let clients and their brokers view information simultaneously. It also plans to make aggregated accounts available on wireless devices but has no timetable for this.
Merrill said it will work with Yodlee.com of Sunnyvale, Calif., a technology company that has a handful of banking companies - including Chase and FleetBoston Financial Corp., through its NetFriday venture - as customers. Yodlee said it is close to announcing a deal with another large broker.
All brokers, both discount and full-service, are expected to begin offering account aggregation soon, said Stephen C. Franco, a senior research analyst at U.S. Bancorp Piper Jaffray.
"The brokerages should be the first to offer this service," he said. "If you are in the advice business, you can't really give good financial advice without knowing your customers' entire portfolios, not just what they have of your proprietary products."
Merrill is not the first to say it will make aggregation part of a larger financial advisory service. Last month Citigroup said it plans to introduce a similar service through a separately branded Web site this year. Subscribers will be able to use the site, Finance.com, to view all their accounts, get financial advice, and shop for loans and other financial products.
The account aggregation bar will continue to be raised as more financial institutions start offering it, said Brook Newcomb, a senior analyst at Forrester Research of Cambridge, Mass.
"Developing static viewing of accounts is going to be a ho-hummer," Mr. Newcomb said. "It's really going to be about what you can do to enable information to benefit the customer. That is where this is headed."
Merrill already offers an account aggregation service to customers who have at least $5 million invested. The high-net-worth service, which is offered through Greentrak, a New Rochelle, N.Y., investment-tracking company, gives clients quarterly or annual reports online or on paper.
The Yodlee account aggregation service is aimed at more mainstream customers and will be free to Merrill's online customers. A Merrill spokeswoman declined to say how many online customers the firm has.
Mr. Zammataro said Merrill decided to offer account aggregation even though "screen scraping is not optimal." He said he is confident that more formal technical links, such as the Open Financial Exchange specification, would soon replace screen scraping as the aggregation standard.
Meanwhile, "you have to start somewhere," he said.
Banks that wait on the sidelines to offer aggregation will be in danger of losing customers to those that incorporate it as part of a larger financial tool, Mr. Newcomb said.