WORLD WIDE WEB - Keep up or be left in the wake of another financial's Web site. That's the take many credit union leaders are offering on the somewhat controversial tech service of aggregating members' financial data in one place on the Web. Aggregation of consumers' financial data really came to the forefront in September of last year when Yodlee.com, Sunnyvale, Calif., came on the scene with a fully-functional product that could aggregate consumers' relationships with different financial service providers. The technology to aggregate data was attacked by privacy hawks and financials themselves. So-called "screen scraping" is used-with the consumer's consent-to basically scrape their account information off of provider Web sites. Consumers have to give Yodlee.com their account user names and passwords so the data can be scraped. Screen scrapers do not necessarily get the consent of the financial provider being scraped. While the technology is still viewed as "hackerish" by many, the concept of financial aggregation is gaining acceptance. At press time, Yodlee.com had just announced a deal with Chase Manhattan Bank to provide financial aggregation services for Chase's customers. Another financial giant, Citigroup, announced that it will offer aggregation services via its Finance.Com site. Credit unions aren't far behind. "We're all looking for something to enhance the stickiness of our sites," said Stan Hollen, president/CEO of The Golden 1 CU, Sacramento, California. "I think there's a little value in the service, but my feeling is its usefulness is overvalued. Yodlee and others can aggregate accounts, however you still can't move money, you can't do transactions-you can only see the transactions," said Hollen. But as a CEO, Hollen is concerned about losing even some members for lack of an aggregation service. "It's all about perception. It's a marketing ability to say you can aggregate balances from multiple providers. I think there is a small segment of our members that would sign up and find it useful." Hollen said The Golden 1 CU is still feeling out different aggregation providers to find a partner to bring the service to its members. MEMBERS Development Company (MDC), a company formed earlier this year by 31 CU CEOs, six CUSO CEOs and CUNA Mutual to bring strategically important products to the industry, has identified aggregation of members' financial data as one of its top priorities. Rick Rice, CEO of Teachers CU, South Bend, Ind., and chair of MDC, said financial aggregation could become an essential strategic product for credit unions. "Ultimately it will be important because one thing we all talk about is target marketing. In the past target marketing interpreted demographic data and credit union data. You may have two people with the same demographic make-up, but they have very different sources of banking, borrowing and investing. The more information we can aggregate, the better target marketing we can do," said Rice. For example, said Rice, if a credit union is aggregating their members' financial data and finds that a member has a Merrill Lynch relationship, they can target similar CU products to that member. "If we see Merrill Lynch we know it's probably more about asset management, as opposed to an E*Trade which might mean that member does a lot of trading. Either way, we're learning about our members," said Rice. Rice said if credit unions let other financial providers and non-financial providers be the aggregators, they run the risk of losing their members from a Web standpoint. Members might move away from visiting their CU's site, if they can see their CU relationship at an aggregation site, he said. "Credit unions are truly the trusted model for financial services. Members will trust this concept more if it's coming from their credit union rather than a bank," said Rice. Rice doesn't envision credit union groups like MDC building an aggregation solution from scratch, but taking more of a partnership approach. Interest in aggregation among credit unions has been intense, said Suresh Khanna, business development manager for Yodlee.com. "We've been surprised by the credit union industry. I can't get specific, but we've met with a number of the credit union consortiums and are doing presentations all the time," said Khanna. Khanna said a handful of credit unions are currently beta testing Yodlee.com's service. "They really have that trust factor over the banks that they can leverage." Khanna said the media has kind of missed the boat on Yodlee.com in the sense that it consistently refers to the company as a screen scraper. "We've been grouped into the screen scraping bucket, but we can accept data using OFX, XML or by data pipelines," he said. The company uses screen scraping for the providers that don't want to give Yodlee.com access to their data, but partners like Chase will be piping data to Yodlee.com. He said one of the company's biggest challenges is getting its sales force to form relationships with providers so information doesn't have to be scraped. From his perspective, the privacy argument is a moot one. "We don't share any data with third parties. If partners like Chase want to do cross-sell marketing it's up to them. It's really Chase's relationship with their customers. We're just providing the data. They use it how they wish," he said. Khanna said prior to launching the service, Yodlee.com placed the concept under intense legal scrutiny. "We did a ton of diligence. The thing to remember is that it's a user-based permission service. If you bank at Wells Fargo and your account information is sitting on their servers, that's your data not Wells Fargo's. It's not copyrightable because it's actual account data." Internet solutions provider Digital Insight, Calabassas, Calif., acquired aggregation firm 1ViewNetwork in April of this year to gain an entrance into the aggregation arena. "Credit unions always take the consumer perspective. The consumer perspective is that there is a need. Members who have multiple accounts have to remember the user names and passwords to look at all those accounts on the Web. Credit unions can add that one password functionality to provide convenience," said Paul Fiore, co-founder of Digital Insight. "The contrast to that argument is privacy. Members are giving all their passwords to a Yodlee.com. But credit unions run the risk of losing their members to a Citibank if they are offering aggregation. Citibank now has access to all your members' relationships," said Fiore. Fiore, citing recent CUNA data, said credit union members on average have more accounts (approximately 3.4) than non-members, making aggregation more valuable to members. Down the line, the technology to gather the information will move away from screen scraping and to a more structured approach using OFX and XML, said Fiore. He also said there is keystroke technology that could be used that basically mimics the keys a user would press to type in all their names and user passwords at their financial provider sites. Les Muma, president/CEO of Fiserv, said Fiserv is set to unveil a portal/aggregation product. "We are within a week of signing an agreement with a consolidator and it will be part of our portal offering," said Muma. Muma said credit unions are primed for the service. "A year ago if a credit union had Internet banking that was fine. Now they want portals and the consolidation of data is starting to come up. Credit unions are always looking for that stickiness." From a technology standpoint, the screen scraping technique is a bit "barbaric" said Muma. "We think we can bring more seamless interfaces of providers. The technology is here, it's the relationships that have to be put together." Corillian Corportation, Beaverton, Ore., is another of the leading aggregation solution providers. Corillian is using a mix of screen scraping and OFX technology in its OneSource aggregation solution. Gary Oakland, CEO of Boeing Employees CU, Tukwila, Wash., said his credit union has been looking at aggregation and hopes to have a solution up and running by the end of 2000. -email@example.com
Credit unions warming up to financial aggregation concept
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