Bank of America plans to offer a free account aggregation service that will allow customers to consolidate and manage all of their account information through a single Web site.
The service, available through www.bankofamerica.com, will let customers manage their online banking, brokerage, mortgage, credit card and frequent-flier accounts. Yodlee, Redwood Shores, CA, is providing the infrastructure.
Bank of America also said it had acquired an equity stake in Yodlee, serving as the lead investor in a fourth round of the company's equity funding. The bank did not say exactly how much it had invested in Yodlee.
The new service will be the centerpiece of Bank of America's new consumer financial portal. When customers enroll in the account aggregation service, their online banking accounts with Bank of America will be included automatically. It can be accessed using their existing user ID, the bank said.
While the goal of Bank of America's account aggregation service is to attract and retain customers by driving traffic to its Web site, the bank may not see a return on its investment for quite some time, according to a recent report by Forrester Research.
The report, which looked at 45 financial services firms that offer aggregation services, noted that low customer adoption, high vendor costs and the inability to mine the data will prevent the companies from turning their service into profits.
“Financial firms are blindly rushing into aggregation without a solid business model, and they won't succeed,” said Catherine Graeber, a senior analyst at Forrester Research. “Few firms have the right attributes to offer it successfully. Even the ones that pass the test to offer aggregation won't profit from it as a stand-alone service.”
Graeber noted that most consumers do not consider their finances complex enough to warrant aggregation services. She also noted that once consumers learn that an aggregation service provider has access to their account user name and password, interest in such services drops precipitously.
Bank of America's privacy policy tries to make consumers aware of this fact.
“An aggregation provider may request access to your personal financial information,” it notes. “You should ensure that the aggregator company has appropriate policies to protect the privacy and security of any information you provide or to which they are gaining access, and that you trust the aggregator company. If you provide information about your Bank of America accounts to an aggregator company, we will consider that you have authorized all transactions initiated by an aggregation site using access information you provide, whether or not you were aware of a specific transaction.”
Graeber noted that only 7 percent of online U.S. households are interested in aggregation services and are comfortable giving someone else access to their financial information.
She also noted that for the provider of the account aggregation service, vendor fees start at about $70 per user the first year and decline to about $36 per user after three years. Companies need to cross-sell more than two additional products to each aggregation customer in a three-year period just to cover their costs.
“Only a small handful of firms, such as mid-tier brokerages, have the right elements to overcome ROI hurdles,” Graeber said. “Successful firms will use the data to provide personalized financial products that solve the needs revealed by the aggregated data.”
