Banks split on merits of account aggregation

TORONTO — Four of the big five banks are split on consumer demand for account aggregation, but one industry analyst says the service will hit the mainstream within two years.

Representatives from the Royal Bank of Canada,

Canadian Imperial Bank of Commerce, Scotiabank and Bank of Montreal discussed account aggregation and other online banking issues during a panel discussion hosted by the Association of Internet Marketing & Sales (AIMS Canada). RBC and CIBC have account aggregation programs underway — Scotia and BMO don’t see it in their immediate future.

“”We spent a lot of time looking at account aggregation. (Research) indicates our customers don’t understand it and frankly don’t want it,”” said Bob Grant, senior vice-president of electronic banking delivery channels for Scotiabank. “”Until they express some desire, we just won’t.””

Account aggregation allows account holders to view most of their financial assets across various institutions through a single online portal. Getting this definition across to customers is a major challenge for banks, said Don Rolfe, analyst with Toronto-based Gomez Inc. The concept is still widely misunderstood, he said. “”Obviously we’re going to have to change the name,”” he said during a presentation that preceded the panel discussion.

“”But consumers do see the benefits of it once account aggregation is explained to them,”” he added in an interview. “”Account aggregation will take hold, but it’s still early stages. . . . The industry has not built up enough awareness about it and if you don’t have awareness you can’t drive behavioural change.””

RBC was the first out of the gate with an account aggregation offering in January, narrowly beating out CIBC. Both banks have signed agreements with CashEdge Inc., a New York-based firm building the analysis tools necessary to the service. “”We think of account aggregation as a really big milestone,”” said Jane Broderick, vice-president of eCommerce for RBC. “”Our customer research indicated it was convenient for them.””

Broderick said that account aggregation represents a “”foundation piece”” for offering value-added services to customers like online financial advice.

“”The real issue comes down to how (banks) will deploy this service,”” added CIBC’s vice-president of planning and development for Internet channel Benoit Long. “”I’m sure my colleagues (Scotia and BMO) will soon be joining us.””

Despite the protestations of Scotia and BMO, Rolfe said Long may well be correct. “”My personal opinion is that the Bank of Montreal will follow, then TD and then Scotia. Probably in that order, as a matter of fact.”” But, he added, “”it’s not going to naturally follow without well-articulated value propositions that are relevant to the consumer.””

Lack of such value propositions may well have been what prevented the adoption of online bill presentment — the practice of e-mailing bills to customers rather than snail mailing a paper copy. Customers weren’t provided with sufficient time- or money-saving incentives to make the service inviting, said Rolfe.

On the whole, though, Canadian banks are doing a remarkable job of keeping online customers happy, according to results compiled by Gomez. In a March survey, the research firm concluded that 82.5 per cent of active online customers are satisfied with their bank. “”I’d say these numbers are higher in the online world than in the offline world,”” said Rolfe.

Some customers are asking for more online services such as mutual funds and person to person fund transfer, according to Rolfe, but for others there are concerns preventing them from going their banking on the Internet. Security and privacy are chief among those concerns.

Banks have done their homework in eliminating security risks online, said Rolfe. Their biggest task is getting this information across to customers in terms they can understand.

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