Royal Bank beats CIBC with online account aggregation

Royal Bank is the first out of the gate for online account aggregation.

The service allows Royal Bank account holders to view most of their financial assets across various institutions through a single online portal. The bank

piloted the technology last year and Thursday made the service available.

Royal Bank will proceed cautiously since aggregation services are so new to the world of online banking, said Tom Wolf, the bank’s senior vice-president of e-business.

“”Right now we are taking it fairly slow in terms of rolling it out to our customer base and making sure — since it is a new service — that we fully understand what people want,”” he said.

Aggregation will be marketed on a limited basis at first, starting with 8,000 online customers. The initial offering will be very basic, with add-on services to come over the next few years.

First Royal Bank wants to understand what types of services clients would be willing to pay for, said Wolf. Right now, account aggregation fees are rolled into existing packages for online customers.

Customers have the option of allowing the bank to view their entire financial portfolio or keeping the information private. If customers do provide the bank permission, it could open up the possibility of Royal Bank providing tailored services to individual customers. “”Eventually, we could offer financial services like financial planning and other value-added services from those accounts. . . . But if they’re already aggregating on the Web site, it’s easier and it’s a good (place to start) a conversation with a financial planner,”” he said.

The more customers open up to their bank, the more opportunities the bank will have to push other services and develop customer loyalty, said Toronto-based Gomez Inc. analyst Don Rolfe. The bank may be able to encourage its customers to bring more of their financial assets under one roof by offering competitive rates on, for example, mortgages. But privacy is a tricky issue in the online world, particularly when it comes to money. “”I think it will take them a bit of time to figure that particular piece out — how to go about offering without feeling that you’re intruding,”” said Rolfe.

Royal Bank will offer aggregation through technology developed by New York firm CashEdge Inc. Other banks that have signed up with CashEdge include Bank of Laurentian, TD Canada Trust and CIBC. Royal Bank has a sizable advantage over other major Canadian banks by being the first to offer the service, according to Rolfe.

“”They probably have a six-month advantage on the marketplace, because they have already been doing their testing for a number of months now,”” explained Rolfe. The first half of the year is the most important in the banking calendar, he said, since it includes tax and RRSP season when many clients are going to their banks for advice.

Meanwhile, CIBC is racing to get its own aggregation service up and running. The bank announced its partnership with CashEdge last November. Its pilot, set to begin this month, will last three months. “”We’re disappointed that Royal beat us to it because we do plan to launch before the end of the month. Fundamentally, we expect to be online with our own limited customer pilot before Jan. 31,”” said Corinne Charette, vice-president of Internet channel for CIBC.

It’s only a matter of time before every major Canadian bank starts its own version of online account aggregation, said Rolfe. However, the service will have its limitations — mostly geographic. Aggregation development has stalled in the U.K., he said, and there will be international limits since aggregation policies are differ from nation to nation.

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Jim Love, Chief Content Officer, IT World Canada

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