Account-aggregation services offered by financial-services companies are a money-losing effort-at first. But after a couple of years, these services begin to produce substantial returns, according to research from MIT that was presented at its annual eBusiness conference last week.

For the first two years, a financial-services firm will lose money on an account-aggregation system, which gathers bills and data from savings, checking, and other financial accounts and presents them to customers in a single Web portal. But after that, returns start to grow fast. The MIT research shows that a $200 million financial-services firm that provides aggregation services to all its clients will lose up to $300 million in the first year after deployment of the system, but by the fifth year will see about $1.2 billion in returns.

Banks and financial-services firms that want to thrive must offer such aggregation services, says Michael Siegel, principal research scientist at MIT. The marketplace is evolving into "a world where all financial transactions-bill payment, online shopping, banking, investment, and credit-are done through a single portal," he says. "This is the ATM machine of the 2000s."

Many of the account-aggregation systems are well-designed, says Ian Rubin, director of online financial-services research at market-research firm International Data Corp. But all financial institutions can make further improvements by capitalizing on the data they collect, he says. "The key for all institutions is to keep on improving the richness of information." Banks and financial services companies "can put more functionality around the data, like a rate comparison, value pricing, or account analysis," Rubin says.

Account-aggregation services also let financial advisers help their clients because they provide a more complete view of a client's financial portfolio, including accounts with competitors, says James Kuser, VP of the client solutions group of Merrill Lynch Wealth Management Services. Merrill Lynch's advisers also have a better opportunity to convince clients to shift assets and accounts, cross-sell its products and services, and work more effectively to retain clients, he says.

Merrill Lynch targets high-net-worth clients with portfolios of $75 million or more and uses an application created by GreenTrak Investments, which was acquired last year by Kinexus, that performs complete data downloads of account information rather than the "screen scraping" method used by some competitors. "This gives us a granularity of data," Kuser says. It also positions the financial adviser as the "quarterback" of a client's financial life.

It helps to build a relationship even with customers unlikely to switch accounts from other financial-services providers. "Owning the client is key," Kuser says. "Once you own the client, you have ROI."