Add Intelligence to Data to Create Competitive Advantage
You may recall the hype that account aggregation produced several years ago when firms like Yodlee burst onto the scene. Banks and brokerages were quick to add these tools to their sites, fearing that if they didn't, their competitors would. As fate would have it, these tools never really reached a tipping point among consumers. Why? Because most of the firms that used Yodlee or other screen-scraping technology never added any value to the aggregated data. Yodlee and the other aggregation vendors did their part in gathering the data, but there was always the question of "So what?" lurking in the background.Fast forward a few years. A new breed of financial websites is again threatening to cut financial services firms off from their customers. Firms like Mint, which analyzes customer spending data to provide recommendations on ways to save money, have popped up that aim to revive aggregation as a service. And it's not just about aggregation. Small firms employing Web 2.0 principles threaten to disenfranchise established banks. However, banks are actually well positioned to defend against this - after all, the banks already have the customer data. If they can just help their clients turn the data into intelligence, real value would be added to the relationship - which, in turn, could help to increase share of wallet with the customer. In a recent Bank Monitor report, we looked at advanced reporting tools that can help clients do this.
In the world of online banking, many features and tools have become ubiquitous over the last several years, including check imaging, bill payment, and recent transaction tables. Up to this point, however, advanced reporting tools that allow users to take a more in-depth look at their own transaction trends have not achieved similar widespread rollout. While the banks clearly had all the data, with a few exceptions, the only way for clients to truly analyze this information would be to use a financial software package like Quicken or Microsoft Money.
Indeed, of the firms that we track for Bank Monitor, just 33% offer advanced reporting tools: B of A, E*TRADE Bank, HSBC, KeyBank, and Wells Fargo. While some other firms offer links to outside tools or aggregation services offered by third-party providers, these five banks have taken the lead in providing reporting tools that are either proprietary, heavily integrated within their private site, or in most cases, both.
While just five firms offer these tools, capabilities vary widely. Most notable is the degree of client input required in order to make the various tools useful. Only two firms, Bank of America and Wells Fargo, automatically assign category tags to each transaction a user makes. (Note: B of A's My Portfolio can be used as an aggregation tool as well as a reporting tool; only spending from B of A accounts is automatically tagged with a category.) The remaining firms require clients to manually add tags to each transaction in order to make category-based reports - a central part of each firm's offerings - possible. This time consuming process almost certainly reduces the number of users who actually take advantage of reporting tools, though it does allow E*TRADE, HSBC, and KeyBank to offer user-defined categories. The process at B of A and Well Fargo, meanwhile, may not be foolproof - indeed some transactions end up tagged as "uncategorized" and need to be manually adjusted by the account holder - but the automatic inclusion of tags help create immediately usable reports.
There are, of course, several other factors that define a robust reporting tool, which our report addresses. Here's a taste of some of our recommendations for building a best-in-class reporting tool: