We recently heard about a new approach to aggregation that a firm called Mint is taking. Essentially, it uses Yodlee’s platform to aggregate users’ credit card and banking balances and then analyzes the data to recommend other products and services to customers. It’s an interesting approach, but one that ultimately relies on the consumer wanting to be sold to.

However, the fact that Mint is at least trying to do something with the aggregated data is refreshing in its own right and actually highlights a problem that we have always felt the Yodlees of the world have failed to deliver: What does one actually do with the aggregated data? In research we’ve conducted for both our Bank and Brokerage Website Audits, consumers have routinely given aggregation a low priority when it comes to desired website features. Indeed, after the initial infatuation with Yodlee several years ago, we have watched as firms have removed the service outright or at least relegated it to less-valuable real estate on their websites.

Our suspicion was that the reason for this lack of acceptance by clients was that other than seeing all of your information in one place, there was nothing that could be done with the data. What decisions did this help clients to make? For banks to really reap the benefits of aggregation, they need to add some analytics to the service that would entice clients to sign up for it. Doing so would also allow banks to differentiate their offerings from their competitors.

As an example of how to do this, one can look outside the banking industry to Fidelity. Their Full View application is built on Yodlee, but they take it a step further and integrate into other areas of the client relationship. In particular, for Income Management Account clients, the Yodlee (er, Full View) data actually feeds the monthly client statement as well as the IMA analysis tool. Thus, Fidelity IMA clients have a very compelling reason to set up their outside accounts on Full View.

Every few years, we review commissions at the firms that we monitor. Given the recent elimination of the "Merrill Rule", it seemed an opportune time to revisit this issue since the default account that clients are being switched into (unless they specify otherwise) are standard commissionable brokerage account.  Our latest Broker Monitor report shows some interesting trends when compared to our last review of the topic in 2003:

1. For the most part, online commissions have trended lower. - probably no great surprise there. But…
2. Commission-Free Trades are starting to appear as customer loyalty programs. Three firms we track - BofA, Vanguard, and Wells Fargo - have launched such programs recently.  While their qualifying criteria differ somewhat, the number of free trades range from 12 to 360 per year.
3. Full-service firms by and large don’t publish their commission schedules (nor are they simply a matter of number of shares - in fact it often seems like the phases of the moon comes into play when calculating full service firm commissions). So, to test this, we asked our brokers what the commission would be for both a 100-share and a 500-share buy of Citigroup. We used Citigroup in 2003 as well, which luckily for us was trading at pretty much the same levels making comparisons easy. As it turns out, most of the wire-houses commissions for this particular trade were flat.  One, however, was up 40% for the 100 share trade and up 24% for the 500 share trade. The regional firms were also up about 10% or so. The only firm whose commission for the trade we conducted was down significantly was Wachovia by 14% on the 100 share trade and 5% on the 500 share trade.

Bank of America recently launched a couple of security initiatives for both its banking and brokerage clients. To us, one of them seems pretty innovative, the other a potential nuisance.

On the brokerage side, SafePass will be used to secure online OTC Bulletin Board and Pick Sheet stock trades. The service includes an electronic card that displays a 6-digit, one-time use code. After clients place OTC Bulletin Board and Pink Sheet trades online, they will see the SafePass icon on the Preview Order page. Clients are then required to press the button on the card to display the security code and use that number to place the order. Unlike E*TRADE’s Digital Security ID, which is optional, the SafePass is required for these types of trades. We’re not sure if this is a small rollout to test the product and if BofA is planning to require this for all trades, but it does strike us as a bit extreme to require clients to use it. Complicating the matter, this is not the same SafePass card that customers of the retail bank can choose to use. So, even though the name is the same, if you are a bank customer and place OTC trades, you now have two cards to carry around.

Interestingly, however, on the retail bank side of the coin, BofA has launched a new feature for SafePass that actually allows customers to use the SafePass on a device they likely already carry around - their cell phone (they are evidently developing a card as well, but it is not yet available). Once customers have set up the SafePass system, they will be asked to request a six-digit SafePass code, which will be sent to a previously registered mobile device, each time they (or anyone else) attempts to execute one of the protected functions (e.g. transfer accounts, bill pay, P2P transfers, etc. - users can choose the functions they want to require SaffPass authentication, a nice feature). This is an excellent compromise between security and convenience - and as an added bonus, customers that sign up for this service are given higher transfer limits. If it is something that the industry at large adopts, it would mitigate the need for customer to carry a multitude of security key fobs. Now, for example, a customer who banks at BofA and trades at E*TRADE would be able to simply use their cell phone for the authentication tool.

As we discussed in our weekly e-Monitor Update, Fidelity this week updated its Live Chat tool with a new design and format. While the changes were strictly aesthetic, the tool clearly remains an important factor in connecting clients and customer service representatives.