Beginning this month, 100 of Bank of Montreal's on-line customers will be able to log on to a personal Web site and view a single page that shows their chequing account balances, what they owe on their credit cards and how much they are earning on their mutual funds.
The bank's customers can already access all their bank and brokerage accounts at BMO on-line through Veev, its wireless service. BMO earlier this month expanded this one-stop access to other financial institutions through the market trial involving 100 customers.
BMO is the first major Canadian bank to roll out its version of account aggregation, the hottest thing happening in on-line financial services. Royal Bank of Canada announced similar plans in July but it is not yet offering the service.
Both banks have linked up with one of a handful of Internet startups called "aggregators" or "screen scrapers." These companies "scrape" information from an individual's bank, credit card and investment accounts and consolidate it on a single Web page.
For the banks, the appeal of aggregation is its potential to help them realize a key objective: cross-selling different products to customers. The more banks know about their customers, the easier it is for them to persuade them to transfer balances, refinance loans or purchase new products.
"Some of our customers really would like to be able to have the convenience of seeing their financial picture in one place," says Thomas Wolf, Royal Bank's senior vice-president of e-commerce.
But Canada's Big Five banks are split on whether aggregation is a smart strategy. BMO and Royal have embraced the notion, while Bank of Nova Scotia has explicitly rejected aggregation.
The remaining Big Five banks -- Canadian Imperial Bank of Commerce and Toronto-Dominion Bank -- are taking a wait-and-see approach. "I just don't think you need to break down all the barn doors to be there tomorrow," says Chuck Hounsell, TD's senior vice-president of electronic banking.
In any case, some experts say the growth of these services will be held back by privacy and security concerns. They question whether the convenience of having so much information in one place is worth the risk of setting up a virtual magnet for cyber-snoops.
Under the plan, consumers give aggregation companies access to just about everything that pertains to their personal and financial lives: bank and brokerage statements, chequing account balances, mutual funds, credit cards, and even household bills.
Having all this information in one place allows consumers to better manage their financial affairs, says Mr. Wolf of Royal Bank.
"You can drop into your Visa statement and look at the entries that went through yesterday or the day before," he says. "You're in control."
But one of Canada's most prominent privacy experts say that aggregation services could present a too-tempting target for hackers.
"This will be the Fort Knox of your financial records," says Ann Cavoukian, Ontario's Information and Privacy Commissioner. "The biggest problem whenever you have one-stop anything is they make for very tempting targets for unauthorized access."
Aggregators typically don't get the permission of the banks or Web sites whose information they cull. Instead, customers hand over their account numbers and passwords, then the aggregators gather data from various bank and brokerage Web sites and present it all in a single location.
Still, the aggregation trend has generated heated debate among bankers. Albert Wahbe, executive vice-president of electronic banking at Scotiabank, is opposed to the screen scrapers, saying consumers should not give out their passwords to anybody.
"We have been preaching for years that this is confidential. You should never divulge it."
Marc Rotenberg, executive director of the Electronic Privacy Information Center, a Washington-based public interest research firm, says the federal privacy commissioner in Ottawa should investigate how the information is collected and how it is used.
But the area is so new that the federal privacy commissioner's office, which will extend its jurisdiction to the banks in January, has no one on staff familiar with the issues, a spokeswoman says.
The two domestic banks leading the charge into aggregation both agree that issues surrounding privacy and security need to be addressed before they can start offering all of their on-line customers a complete picture of their financial affairs.
"We're going to be very careful with it," says Mr. Wolf.
Royal Bank plans to use technology developed by California-based CashEdge Inc., which will weave its aggregation technology into the bank's Web site. Royal owns a 10-per-cent stake in CashEdge, which was founded last year. BMO is using technology developed by 724 Solutions Inc. of Toronto.
Mr. Wolf says screen scraping is not the bank's No. 1 choice for amalgamating a customer's financial affairs. Rather, he says, Royal would prefer authorize it to directly collect information from their account at other firms, a method that would also require agreement among banks.
Talks are under way among the banks and other financial institutions on this front, but it is difficult for all the different players to reach an accord, Mr. Wolf says.
"This is a service that we think our customers want now, and so the question is do we want to wait until there's agreements everywhere," he says.
The service also has the potential to be a huge boon for the banks. That's because any information on a customer's assets and debts at other financial institutions is enormously useful to the banks in their efforts to sell different products.
Both Royal and BMO have vowed that their staff will not look at the information on the personal Web pages unless customers explicitly gives their consent for them to do so. To this end, Royal and BMO will try to get customers to share this information by convincing them of the merits of having the banks provide them with financial planning.
Cross-selling will work only if customers agree to share information on their personal Web page with the bank.
The pitch will go something like this: the more the banks know about their customers, the better they can provide "value-added" services.
Essentially, the goal for both Royal and BMO is to become a trusted advisor to customers and win a bigger share of the retail banking market.
"We feel it will obviously increase customer retention and customer loyalty, and that it will bring additional business to us," BMO's Mr. Piermarini says.
Canada's big banks can afford to take a cautious approach to introducing aggregation because they dominate the retail banking market. In the United States, by contrast, the banks run a greater risk of losing business if they don't offer the service because consumers tend to bank at several institutions.
The fragmented banking market in the United States has paved the way for Yahoo Inc., one of the Web's most popular portal sites, and rival America Online Inc. to enter the market. Yahoo introduced an aggregation service available to customers of 200 banks last month and AOL plans to offer a similar service this fall.
Yahoo is also ahead of most financial institutions. So far, Citigroup Inc. is the only major U.S. bank to launch an aggregation service, though several others have announced plans to offer them.
As some of the Canadian banks brace themselves to enter this arena, there are three questions consumers should be asking, says Ms. Cavoukian: "How is my information being collected, how is my information being used, will it be disclosed to any third parties without my consent?"
How aggregator sites work
A consumer gives an aggregator the password to information stored on a financial site.
The aggregator uses the password to log in to that site and harvest the individual's financial information, including bank accounts, brokerage accounts, mutual fund statements and credit cards. The company pulls out the relevant pieces, such as account balances.
The information is posted to a single Web site and continually updated throughout the day. The site requires a single password for access.
The process does not require another financial institution's permission because the customer has given the aggregation company the go-ahead to get the information.
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