European banks and software companies are preparing to launch account aggregation services.
As people access more and more financial information online, managing it all is becoming increasingly time-consuming and inefficient. Account aggregating websites, which allow consumers to access information on their finances from all their providers, are expected to become a major way for consumers to manage their finances. Aggregators have been operating in the US for over one year with about one million users – this is estimated to grow to 22 million by 2003. Yet even though consumer demand should be strong, aggregation has yet to take off in Europe. A recent US survey showed 87% of online customers and 63% of offline customers said they would be interested in using account aggregation services.
Financial institutions in Europe have begun to recognize the possibilities. US aggregator Yodlee says it has been the focus of much European interest. HSBC’s eCommerce unit is keen on launching account aggregation services, while Lloyds TSB is in talks with a number of aggregators and expects to make an announcement in the near future. Offering the services would be a good move. Account aggregation will serve as a point for differentiation between competing financial institutions, creating a higher level of customer loyalty. As the number of site hits increases, the service will also boost brand recognition. In addition, early adoption will create a positive PR image, establishing the institution as an innovative, technology-oriented player.
However, existing portals such as AOL and Yahoo! pose a threat to banks. From the success experienced by Yahoo! Finance and similar sites, it is clear that the public is happy for non-financial institutions to provide financial information. Extending their existing financial services products by offering account aggregation may therefore prove fairly easy. A flurry of activity from financial services and Internet firms can therefore be expected over the next six months in Europe. Given the growth that has been experienced in the US and the number of players planning to get in on the action it should be an interesting fight.
