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Research Friday, 24 May, 2002, 16:42 GMT 17:42 UK
Banks fight it out over 'Money Manager'
Online bank Egg
The one-stop shop aims to make life simple
Online bank Egg has launched a one-stop internet service allowing customers to manage all their accounts by accessing one webpage.

The launch has caused a storm in the banking world, with Halifax, Barclays and the Royal Bank of Scotland demanding to be taken off the system. Egg has refused.

HBOS claim the service is in breach of the Association of Payment and Clearing Services guidelines, which clearly state banks should only be included if they have given consent for their data to be used.

Security fears

The guidelines were developed in response to the first aggregation service started by Citibank in October 2001.

'My accounts' stored passwords on a central computer, raising questions about security and who would be liable if money went missing.

Once APACS guidelines were drawn up and the consent issue in place most banks officially refused co-operation. As a result the service has not really taken off.

Egg's selling point

The 'Money Manager' differs from the Citibank model by storing encrypted passwords on the users home PC with software provided by Egg. This is Egg's selling point.

As the passwords are not disclosed to Egg, there is in theory a greater level of security.

When Egg's Director of Banking Andy Dellar spoke to the BBC Radio 4's Money Box programme, he claimed:

"By definition, it has to be completely secure, it has to be completely legal - and it is".

But HBOS is not convinced.

Data protection

HBOS say there is a responsibility under the Data Protection Act to safeguard their data.

Customers, they say, risk breaking their terms and conditions if they take part, which would mean they are not covered against fraud.

As Jason Clarke of HBOS explained to Money Box:

"Our prime concern is the security of our customers... if they take part in the service they will not covered by our online guarantee... and if they are the victim of online fraud where does that fraud occur from?"

But Andy Dellar insists: "Fraud managers from the various financial institutions liaise all the time regarding what has happened to create a fraud and therefore where the liability lies".

Free service

Egg maintain they are fully compliant with the Data Protection Act and if security is breached and customers lose money, they will be reimbursed.

Currently, the service is free but that may not always be the case as Andy Dellar admits:

"We are reserving the right to charge for this at some point".

Consumer confidence

The real test for the service will be consumer confidence. But doubts over security may well be calmed by Egg's commitment to guarantee users against fraud.

According to recent research from Mori and Egg, three quarters of the 6.6 million people who have online accounts are desperate for a simple way to manage finances.

Figures from analyst firm Datamonitor suggest 35 million consumers will be using such a service by 2005.

If this is the case account aggregation services will become big business.

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