Putting It All Together.

Insurers that don't participate in online account aggregation risk losing an attractive customer segment.

People who want to check their bank, brokerage, credit-card and even frequent-flier accounts can go to the Internet to see where they stand. And account aggregators make this process far easier for consumers by collecting data from multiple accounts into a single, personalized Web site, where consumers can keep track of all their statements. During the past year, traditional banks and brokerages and emerging personal-finance Internet portals have been racing to provide this service at their sites, with a great deal of success.

According to a new survey conducted by Booz-Allen & Hamilton and e-Rewards of 1,000 aggregation-service users and 1,900 general Internet users, consumer acceptance of account aggregation is growing rapidly. The number of users of aggregation services exploded in 2000 from 10,000 in January to 700,000 in December. Citibank reported that it has had as many as 2,000 users per day signing up for its personalized Internet service, known as myciti.com.

Although banks are still the largest players among financial institutions (41% of the aggregation-user respondents aggregate at banks), 33% of the respondents use portal sites not affiliated with large financial institutions. This means portals are attracting a solid chunk of a very attractive customer segment--people who are relatively young (average age of 36), affluent and Web-savvy.

The survey also suggests that traditional financial institutions risk losing consumers to financial portals that will aggregate their accounts. Specifically, 36% of consumers who aggregate their accounts at portal sites are spending less time at the Web site of their financial institutions, and 9% have stopped visiting these sites entirely.

Portals and financial institutions alike offer aggregation for free, reinforcing consumers' reluctance to pay for online services. It stands to reason that aggregators will depend on product sales to fuel their business models.

The upshot: Once customers aggregate elsewhere, their connection to their financial institutions starts to slip, and they become targets for competitive offers from portals and other institutions eager to sell to them. Indeed, the survey found that aggregation customers are receptive to offers tailored to their financial profiles (39% called such offers "very valuable").

In general, insurers do not offer account-aggregation services. This is not surprising, given the low frequency/transaction nature of insurance compared with checking accounts, brokerage accounts, credit cards and mutual funds.

But this inactivity poses a risk to insurers, because other financial institutions or portals are assuming a greater role in consumers' financial lives, distancing insurers from their customers and relegating them to product- vendor status. Specifically, aggregator sites will enable their users to continually shop around for better deals. Cross-sellers will aggressively target insurance and investment products, at least those products that lend themselves to comparisons and have low switching costs.

Given this threat, insurers must consider one or both of two approaches. Insurers can become aggregators, deploying the same strategic weapon that other financial institutions are trying to wield. An insurer following this path would aim to leverage a trusted brand name, position itself as an independent source of information and offer additional channels, such as phone or face-to-face, for customers who want to receive information or purchase products offline.

Or insurers can link with aggregators--providing their products, customer account information and support tools to the aggregation sites. By following this path, insurers would design products that are highly competitive and stack up favorably in objective comparisons. They also could make their offline channels available to Internet partners as a way to leverage their physical assets.

Whichever approach insurers choose, they will need to address security concerns that are heightened when customers put multiple accounts on one site, develop strategic-innovation skills that enable them to adapt products, services and partnerships quickly in response to market opportunities and adopt a more robust approach to customer relationship management that can strengthen linkages to customers while accommodating customers' interest in aggregating elsewhere.

While the winning strategies are not yet clear, the rapid growth and potential of account aggregation mean that insurers, like other financial institutions, have some important decisions to make as they position themselves to win with customers and investors.

Larry Altman, a Best's Review columnist, is a vice president in the New York office of Booz-Allen & Hamilton.