Booz Allen Releases First In-depth Study of Consumers Who Use Account Aggregators to Consolidate All Their Financial Accounts Onto a Single Web Page.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 18, 2001

Study found that high traffic Internet portals and financial

content sites are winning customers' trust and taking business

from banks and brokerages

Many aggregation customers are open to automated analyses of

personal and private data to identify money-saving opportunities

In the first-ever in-depth study of online account aggregation customers and their behavior, Booz Allen & Hamilton and e-Rewards has found that one-third of aggregation customers have selected Internet portals not tied to major financial institutions - such as Yahoo! Finance, America Online (co-branded with Quicken), MSN's MoneyCentral and OnMoney.com - over the offerings of banks, brokerages and other traditional financial institutions.

This detailed study of the new and rapidly emerging aggregation industry, which enables users to view consolidated and up-to-date information and balances from multiple financial institutions at a single location on the Internet, was released today by Booz Allen & Hamilton. It has been estimated that the number of aggregation customers will grow from 1 million in 2001 to more than 22 million by 2003.

In a surprising finding with significant implications for traditional financial institutions, customers of these online portals and non-financial institutions are making their choices based equally on first-mover status and trust in the site or company sponsoring the service. This finding suggests that portals are adept at educating their visitors about new offerings and signing them up for these value-added services, and that the online upstarts will be able to give banks and brokerages an even stronger run for their money - and their customers - as interest in these services grows.

Moreover, the loss of these customers to the portals could lead to significant lost revenue opportunities, as 45% of portal customers either stopped visiting or reduced the number of visits to the sites associated with traditional financial institutions. Moreover, 79% of these customers are interested in the personalized product and service offerings that could generate future revenue for banks and brokerages that currently offer aggregation services.

Said Booz Allen & Hamilton Vice President Larry Altman, "Brand-name financial institutions can't assume existing customers will automatically gravitate to them for account aggregation. The Internet portals and financial content sites are emerging as a serious threat, and as the popularity of these services skyrockets, the pressure is clearly on the banks and brokerages, who risk being distanced from their clients and losing the opportunity to sell them additional products and services."

In another key finding, 21% of consumers who research and shop online have purchased offline, by phone or face-to-face. This is one area in which the traditional players with physical assets, such as branches and call centers, have an edge - but only if their online offerings are top-notch and their products are strong enough to match up well versus the competition in independent, online comparisons.

The study involved an in-depth online survey with 2,900 Internet users, of which just over one third were current account aggregation customers at either financial institution sites, such as Citigroup, Inc., Wells Fargo, Merrill Lynch & Co., and Morgan Stanley Dean Witter & Co. (67%), or portals not tied to financial institutions (33%). Aggregation customers are a very attractive group given their relative youth (average age of 36), affluence and demonstrated Web-savvy. According to the study:

-- The average user aggregates nearly 5 accounts, of which nearly half (41%)
are financial accounts;

-- 64% of aggregation customers are between 25 and 39 years old, and 63% are
male; and

-- 81% have incomes between $50,000 and $149,000.

Consumers willing to share their most private financial data

Despite widespread concerns over Internet privacy, 84% of all aggregation customers are comfortable with automated analyses of their personal and confidential financial data in order to obtain financial advice and value-added services.

The study also found that 90% of all aggregation customers would find personalized offers of additional financial services, such as an automated analysis of financial data, very or somewhat valuable. In addition, 53% of account aggregation customers expressed an interest in professional financial planning advice vs. only 41% of non-aggregators.

Mr. Altman anticipates that the advent of these services can lead to incremental revenue growth for aggressive banks and brokers through the cross-selling of enhanced financial products and services - offerings that the portals may not be able to match. "Once customers aggregate at a particular site, their connection to other financial providers starts to slip, and they become targets for competitive offers. To win big, major financial institutions must move fast to lock in aggregation customers with compelling personalized services. The stakes are huge - successful companies will retain existing customers and attract new ones, enhance their brand and capture new revenue opportunities," Altman said.

Surprising levels of trust in online providers

The study found existing relationships (68%) and degree of trust (25%) were the top reasons customers selected sites associated with financial institutions, while users of portals and other online providers based their decision on their level of trust in the company or site (24%) and the fact that it was the first such aggregation offering they found (26%).

Concluded Mr. Altman, "We may be seeing the first instance in which Internet-based companies are able to directly compete with traditional financial institutions for the trust of the consumer. Many customers are as willing to share their personal passwords and other confidential data with these non-financial institutions - some only in business a few years - as they are with the banks and brokerages with which they have had long-standing relationships."

In addition to providing a virtually real-time snapshot of a user's financial picture on a single web page, some account aggregation services also show a range of non-financial information, such as frequent flyer and other reward accounts, e-mail, utility and cell phone bills, and news updates. Aggressive companies are distinguishing themselves through expanded core offerings, such as fund transfers, consolidated bill presentment and payment services, and financial planning. These enhancements will quickly raise the bar for all competitors as the study also found that current aggregation customers are interested in accessing a range of additional offerings, including fund transfer (49%), e-mail alerts (43%), bill consolidation (40%), financial planning (34%) and travel reservations (34%).

An article about the survey is available electronically as an e-news bulletin on the Web site of strategy+business, the quarterly business journal published by Booz Allen & Hamilton. The bulletin can be accessed at www.strategy-business.com/enews/011501/enews011501.html. strategy+business alerted key subscribers to posting of the e-news bulletin via an e-mail notice.

About Booz Allen & Hamilton

Founded in 1914, Booz Allen & Hamilton pioneered the business of management consulting. Today, it is one of the world's leading international management and technology consulting firms, with more than 10,000 employees in over 100 offices worldwide and sales in excess of $1.8 billion. Booz Allen & Hamilton corporate headquarters are located in McLean, Virginia.

Booz Allen's client base includes many of the world's largest industrial and service corporations, as well as major institutions and government bodies around the world, including most U.S. departments and agencies. Booz Allen provides services in strategy, systems, operations and technology to clients on six continents. The firm delivers a powerful combination of strategy, e-business expertise, industry knowledge, functional capabilities, implementation expertise and technical know-how to organizations facing the challenges of the new economy. Consistent with its position as a business thought leader, Booz Allen sponsors strategy+business, a quarterly journal containing the best ideas in business. Visit the Booz Allen Web site at www.boozallen.com or the strategy+business Web site at www.strategy-business.com.