CUs must carefully weigh the costs and benefits of aggregation

SEATTLE-As unique as each credit union and its members are, so are their needs. In an education session during NAFCU’s 35th Annual Conference, NAFCU Director of Regulatory Compliance Linda Dent told attendees that credit unions must make individual decisions about whether account aggregation is an appropriate and worthwhile service for their members. “You can become their primary financial institution because you’re the `go to’ place,” Dent said. Additionally, aggregation can give credit unions a competitive advantage, access to additional member information, and allow for more targeted and general marketing while providing members convenience and a money management tool for side-by-side comparisons. However, setting up an account aggregation service can be costly. She explained that Yodlee estimates start-up costs at $500,000, plus an additional $8 to $12 dollars per user annually. Additionally, there are transactional risks due to erroneous data or inadequate identification authentication devices. Other costs might not be monetary. These risks could include compliance risk (regarding Regulation E, the Fair Credit Reporting Act, and the privacy provisions of the Gramm-Leach-Bliley Act), reputational risk should something go wrong even if it is not directly the credit union’s fault, and strategic risk. In studying strategic risk, credit unions should consider their field of membership’s interest and expectations for the program before taking account aggregation on, Dent commented. In relation to this, unveiling the service must be done once the credit union knows members are interested, but not so late that many have gone elsewhere to get it. However, through proper planning and agreements with vendors, these risks can be effectively mitigated. In the audience, only few said they were already offering aggregation services, and a handful were serious about starting a program. Most were using or intended to use a third-party service provider, which Dent explained was the most popular route. Another choice credit unions have is using a screen scraping method or direct feed. The compliance attorney explained that screen scraping was most common but the accuracy is less reliable. Screen scraping can either be done by a third-party or can be user-driven. [email protected]