24 January 2001
New technology allows the crosspollination of personal finance information on the Internet, writes John Collett.
The battle is on. Online brokers don't just want you to visit their Web sites for the occasional trade, they want to keep you there. And they're adding portfolio management and administrative and reporting tools to their services at a great rate to win customer loyalty.
Technology developed in the United States, however, looks set to leapfrog these developments. ``Screen scraping" or ``Web harvesting" allows users to give the details of their online accounts held with other financial institutions to a single site. That site then ``scrapes" financial information from these other sites and displays it as one consolidated report.
In the US, some sites (called aggregators) allow customers to make transactions from the one site. Some even provide financial planning advice.
Last September, Macquarie Bank gave an inkling of what the future might hold when it launched Australia's first online aggregation service. Called Enrichment.com.au, it allows investors to view their online bank accounts at a single Web site, using one password. At present, the aggregator can only log into bank accounts held with the Commonwealth Bank, ANZ and Westpac.
In the next few weeks Macquarie is expected to announce the addition of seven brokers to its Enrichment service: ComSec, E*trade, Quicken, St George QuickTrade, TD Waterhouse, Westpac Broking and Macquarie's DirecTrade.
The holy grail of aggregation is one site through which investors can add details of all their assets, including property, shares, managed funds, bank accounts and collectables. The idea is not just to have each of these valued, but to be able to do transactions on any of the accounts through the aggregator. Although the technology is already available in the US, transacting through an aggregator is still many years off for Australian investors because there are several hurdles to be cleared.
First, the issues of trust and security must be overcome.
For example, financial institutions give out passwords and PINs on the condition that investors do not reveal them to anybody else. Macquarie has been working with the investments watchdog, the Australian Securities and Investments Commission (ASIC), on the wording of the terms and conditions of its Enrichment site. By agreeing to the terms, investors give permission for Macquarie to act as a ``limited agent" on their behalf to gain access to account details held with other financial institutions.
Robert King, the chief executive officer of Enrichment, says Macquarie does not have to seek the permission of the financial institutions to access account details. ``All we need is the permission of the investor," King says. And financial institutions have no way of knowing whether it is Enrichment or the users themselves accessing account balances.
While ASIC has informally approved the way Enrichment goes about sharing information, there are bigger problems to overcome before investors can carry out transactions on their accounts though an aggregator. King says the toughest hurdle is tying down who is liable if, for example, an unauthorised transaction is made.
The banks are the best placed to become the aggregators, because not everyone is in a position to make the successful jump to ``trusted partner".
Stephen Coulter, general manager for global e-commerce with the Commonwealth Bank, says: ``Banks have the upper hand because customers will want to deal with an aggregator from an organisation they can trust."
AMP and the Queensland-based Suncorp Metway are working on similar services. The Commonwealth Bank has what it calls an ``aggregation site" covering any assets or liabilities, artworks, jewellery or banks loans. But the Commonwealth's service is not yet screen scraping; it works in a similar way to the longer established Your Prosperity (www.yourprosperity.com.au).
Your Prosperity, owned by the National Australia Bank, has a free asset tracking service that allows investors to monitor the assets they hold and the assets they are interested in, such as retail and wholesale managed funds, shares and property trusts. It even allows investors to maintain their other assets, such as paintings and investment property, to gain a picture of their total net worth.
If the investor has an account with another institution, he or she has to update the changes in value of these assets. Your Prosperity, like the Commonwealth Bank, cannot yet screen-scrape this information on the investor's behalf.
Account aggregation will really hit its straps once it can be used to transfer funds, buy shares and managed funds, pay off a credit card bill before it's due and shop around for the best home loan. The ability to manage better with one site, one password and one PIN is not only potentially more convenient and time-saving, it may also save money.
Get up to $600 in 1 hour with a Payday Loan!
To be eligible, you need to be employed for at least 3 months and earn at least $400 a week. If you think you qualify, then apply now or find out more.
* Please note, CashDoctors are currently unable to service Queensland residents.
