Wednesday, November
8, 2000
Online Financial Institutions Look for Loyalty
Financial institutions jockeying to become a one-stop financial source
are looking toward account aggregation as a key to securing future customer
loyalty. However, lack of features, low consumer interest, and nonexistent
industry standards should cause financial institutions to take a conservative
approach in adopting aggregation technologies, according to a new report
from Jupiter Research, the worldwide authority on Internet commerce.
Jupiter analysts believe that a rushed approach, such as adopting current
screen-scraping technologies, will not capture loyal customers, but will
place these trusted relationships at risk instead.
Jupiter believes online financial households (households
that research, manage, or purchase financial products
online) that use personal financial management (PFM)
software serve as an excellent proxy for understanding
future online adoption behavior. Of the 13 million online
financial households, 4.7 million currently use PFM software
to help manage their online finances. Of this online
PFM base, fewer than one million households (or ten percent
of all online financial households) use the account aggregation
functionality that is bundled with this software.
"If personal finance techies have yet to buy into this
technology, there is little chance of near-term adoption
by the population at large," explained Robert Sterling,
an analyst with Jupiter Research, a Jupiter Media Metrix
company. "The issue is that current scraping-based aggregation
has so many limitations that it is nothing more than
a grandiose balance-check feature. It is incapable of
achieving unified access to long-term keeping of transaction
records that consumers and institutions will find truly
valuable."
In a recent Jupiter report, Account Aggravation - Stumbling
into Screen Scraping , Sterling stated that financial
institutions must add features such as keeping long-term
records of tax lots, securities pricing, and reorganization
data for account aggregation to offer significant value
and encourage online customers to adopt these services.
Sterling also said the lack of industry standards for
account aggregation presents a risk that data pirates
and identity thieves can successfully pose as customers.
Industry standards must focus on data file formats, structured
data transfer environment, and certification of a limited
number of entities to act as data go-betweens.
In the long term, financial institutions can use account
and data aggregation most practically for marketing,
sales, and compliance efforts. Firms must find ways to
gather more complete customer information, utilize that
information to model customer references, and finally,
better personalize Web views and sales efforts.
