Many consumers have a mortgage at one bank, a credit card at another, and retirement accounts elsewhere. Amid this fragmented financial picture, it would seem that external account aggregation—where a customer can see all their products and accounts in a single view—would be in high demand.
It isn’t. But this should not be viewed as a rejection of the solution. Rather, customer indifference largely mirrors banks’ own attitudes toward account aggregation.
As Dylan Lerner, Digital Banking Analyst at Javelin Strategy & Research, detailed in the Why Banks Haven’t Sold Consumers on Account Aggregation—Yet report, this is a missed opportunity for financial institutions for several reasons.
For one, aggregation offers a key opportunity for banks to stay top of mind with customers at a time when their financial lives are more complex than ever. Perhaps even more importantly, giving consumers a holistic financial view keeps them engaged with an institution’s platform rather than the competition’s.
Seeking Meaningful Adoption
Once the purview of financial advisors, consumers now most frequently encounter aggregation services through fintech apps such as Mint, Intuit, or Rocket Money.
The main draw of these apps is that they allow users to log into a single platform and see all their finances, rather than accessing multiple apps or websites. Despite this advantage, there has yet to be meaningful adoption of external account aggregation.
“The digital banking platform vendors—Fiserv, FIS, Q2, Jack Henry, all those big players—they told us, ‘We’re not seeing a lot of adoption here,’” Lerner said. “Part of the reason we discovered is, you guys aren’t really selling it to your banking clients; you’re not telling them here’s the value of this and what they get out of it.”
“Then you go to the banks, and the banks say, ‘Our consumers aren’t really using this, they’re not adopting it,’” he said. “Well, are you communicating the value and compelling them to use this new feature?”
This indifference among digital banking platforms and financial institutions has trickled down to consumers. A Javelin digital banking survey found that roughly 70% of respondents who held accounts at multiple financial institutions did not use aggregation services.
Counterintuitively, roughly half of respondents said they preferred logging into multiple apps. While this preference might appear to stem from lack of awareness or concerns about security or privacy, the survey found no significant evidence that either factor played a role in this behavior.
Cross-Selling and Engagement
This preference appears to be driven more by indifference than rejection. Still, aggregation is already prevalent in digital banking, whether consumers realize it or not.
For example, banking customers regularly use services like Plaid or MX to link their accounts to other financial services providers. Aggregation also powers how many consumers access credit scores through fintech apps or online banking platforms.
Yet the account aggregation message isn’t filtering down to consumers largely because no message is being sent.
“Over the last five or six years, I’ve been taking screenshots and tracking this on a deeper level,” Lerner said. “We’ve only ever seen four or five examples of financial institutions or even fintechs who are really communicating the benefits and value propositions of using external account aggregation directly to their customers.”
“That’s what a lot of this is about, how do you frame the benefits to customers?” he said. “How do you put the best foot forward so that you can ensure that your customers use it and that it can benefit them?”
Along with customer benefits, there are distinct advantages for banks, including access to richer customer data and increased engagement. While these may not translate into direct revenue streams, aggregation is more about share of mind than share of wallet.
“The bank can use that data to learn more about me and sell me products and services and offer me advice,” Lerner said. “It could say: ‘I see you’ve got this money over there at this other bank or I see you’ve got this mortgage over there. We can give you a better rate, let’s refinance. We have a better savings rate, come open the savings account.’ There are cross-selling opportunities and there are engagement opportunities.”
The Three Value Propositions
Distilling it further, Lerner identified three value propositions for both customers and banks that articulate the value of aggregation: oversight, insight, and foresight.
Oversight represents the benefit customers receive from having a single source of financial truth across accounts.
Insight follows, where the institution leverages aggregated data to provide customers with perspective on budgeting and cash flow performance. This also gives banks a more complete financial picture of the customer, enabling greater personalization.
The third value proposition is foresight, where banks proactively help customers manage their finances by delivering recommendations and targeted services.
“All three of those benefit customers and the bank,” Lerner said. “The way we framed this is, ‘Banks, here’s how you can inject this into your marketing messaging and ensure not that just you’re not just offering aggregation, you’re selling aggregation.’ I don’t mean monetizing it necessarily, but selling aggregation in the sense of you’re trying to make people adopt it and use it.”
Seeking Share of Mind
Although there are many advantages to aggregation, it also introduces competitive challenges. For example, many aggregators now offer more than simple account data like balances. Instead, they provide full-fledged ledgers where customers can view and interact with transactions at a level that rivals—and sometimes surpasses—traditional banking experiences.
This can be an obstacle for banks already struggling to differentiate themselves in the digital landscape, especially since the primary reason consumers use mobile banking is to view balances and review transactions.
This could mean that a bank with only a credit card relationship could become the sole source for a customer’s financial activity—and use that opportunity to expand the relationship. This is also an area that has seen continued encroachment from fintechs, who often offer more mobile- and digital-friendly experiences.
All these challenges suggest that financial institutions can no longer afford to be indifferent to aggregation.
“There’s this concept of aggregate or be aggregated.” Lerner said. “We’re not saying this is going to happen tomorrow, but over the broad scheme of the next couple of years, that technology might develop to the point where you do have to be concerned.”
“A lot of banks right now don’t want to be commoditized, but this is one of those many avenues that that might happen to them,” he said. “There’s a competitive threat that comes along with this. You can’t just worry about what your bank does. It’s what your competitors are doing, because it may very well affect you in the long run.”
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