COLUMBIA, S.C. – Catherine Graeber pulls no punches in her just-released Forrester Research piece on aggregation. "A year ago, aggregation was the hot topic. But muted consumer adoption and poor data has led some firms to discontinue their offerings," she writes in a brief paper titled "Aggregation: The Emperor Still Has No Clothes." "With an ROI still MIA, Forrester believes banks should stop pushing aggregation at mass-market banking customers," the Forrester analyst advises. She singles out "the vendor of choice," Yodlee, for particular attention and mentions a couple clients of the aggregation pioneer who abandoned ship because "Yodlee's service was too costly and their customers weren't using it." She also says low activation numbers and few linked accounts "left the data-mining experts with too little to mine." Her conclusion is hardly subtle: "At $8 to $12 per enrolled customer, only a handful of big banks like J.P. Morgan Chase have the customer base, product development capabilities and deep pockets needed to drive revenue with aggregation services." The bottom line to her: Get out now. Jim Taschetta begs to differ. "We're just coming to the end of the cycle for our first two- and three-year contracts, and all of our major clients have renewed," says Yodlee's chief marketing officer. Yodlee's list of 90 clients includes 25 credit unions, with another 20 in the pipeline, Taschetta says. "It's one of our high-growth areas." Taschetta and Graeber's take on the hot topic can be seen from the "cup half empty, cup half full" perspective. "Just 1% of U.S. households using a Web-based aggregation service in the first three months of 2002. Even Yodlee reports that just 44% of its enrolled customers are active," Graeber writes. "Consumers who do use it are typical early adopters – male, college-educated and wealthy – not mainstream bank customers." To Taschetta, that's just the point. Early adopters lead the way. "With three million users after two years of deployment, we're well ahead of where bill pay was at this point in its lifecycle, and it took bill pay four years to get to this point," he says. "And it's really starting to take hold at the credit union level. We're able to offer a more turnkey, affordable approach, with less customization they don't need but with the same functionality and power," he says. That, however, doesn't address the problem area Graeber cites as "the unfulfilled promise of data mining and cross-selling." Hampered both by privacy concerns and lack of technical expertise, she writes, "not one bank has used aggregated data to power online advice or financial planning tools." Taschetta counters that again, like the individual user, the early adopters in the financial services industry are still learning and developing the new technology. "We're finally just now seeing the tools come out that will allow financial institutions to take advantage of the information in their CRM systems," he says. That includes aggregated data. And that's just the point to Zachary Tumin, who could be seen as perhaps a neutral voice in this debate. Tumin is executive director of the Financial Services Technology Consortium, a research organization comprising financial service firms, industry partners, national laboratories, universities and government agencies. "Nearly 10 million Americans are using account aggregation, a scant three years since its introduction by Yodlee," Tumin says. That makes it the fastest adoption rate in the online financial services' 22 years of history. "The future looks strong," he says. "Consumers are favorably disposed to account aggregation." As proof, he cites various reports, including one from Forrester, that predict that say as many as 87% of Internet users are interested in viewing and accessing all their account data at one source, and that the number of aggregation users will grow to at least 80 million Americans by the end of 2005. But like Graeber, Tumin sees challenges to that growth. "The Holy Grail for account aggregation is financial data that is not just observable, but also provides the foundation for value-added services," he says. And, Tumin says, "while initial adoption has been strong, there are a number of thorny problems that need to be resolved before account aggregation can reach its full market potential and turn into a strategic asset for financial institutions." To meet that challenge, Tumin's consortium is working on a pilot project "to define and prove the feasibility of the next-generation account aggregation network." The first goal is to come up with a way to not require users to share passwords directly with aggregation providers, leaving authentication solely with the financial institutions. That, Tumin says, will create "the technical foundation for consumers to use a single aggregation provider to update multiple accounts, initiate payments and transfer funds between financial institutions." Yodlee is involved in that effort. "By working with FSTC, we're helping to prototype the next phase of the account aggregation market, one that enables more financial institutions to support next-generation authentication networks and more structured data transfer mechanisms," Yodlee vice president of product development Schwark Satyavolu said when the effort was launched recently. "What's happening now is probably the most exciting development so far," Taschetta adds. "Aggregation so far has been a fairly passive view of your information. But what's happening now is that data management technology is beginning to empower the next generation of applications, things like budget trackers and portfolio planners," the Yodlee marketing chief says. "This is exactly the direction we need to see it go to build on the early success that aggregation already has enjoyed," Taschetta says. "Aggregated data will be able to drive a lot more utility to consumers and unlock the key to efficient, targeted marketing that benefits consumers and their financial institutions," he says. "It'll be part of every Web site going." -

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