With VerticalOne Acquisition, Yodlee Grabs Spotlight

Not long ago the word "yodlee" might have evoked the image of someone suffering the vocal stylings of a Swiss mountaineer. Now it's become virtually synonymous with account aggregation.

Yodlee's December acquisition of VerticalOne leaves the Redwood Shores, Calif. account aggregator in control of more than 100 partner relationships, including accounts with Internet portals Yahoo and AOL, and financial institutions Chase Manhattan Bank, Citigroup, Wells Fargo and Morgan Stanley Dean Witter. "I think it's near impossible for anyone to have the same number of cachet accounts any time soon," said H. Thomas Carter, e-finance analyst at U.S. Bancorp Piper Jaffray.

Still, competitors in the evolving account aggregation market haven't ceded the field to Yodlee quite yet.

--Bank of Montreal, South Korea's Hanvit Bank, and Keycorp plan to use LiveClips from Toronto-based 724 Solutions.

--Royal Bank of Canada has become an investor and initial client of CashEdge, Milpitas, Calif.

--Heritage Commerce in San Jose, Calif., plans to use an aggregation platform written using Enterprise Java Beans from ettache, Fremont, Calif., at the Web sites of its bank subsidiaries.

--BankAtlantic Bancorp in Ft. Lauderdale, Fla., online bank NetBank, and Bankor, a Tulsa, Okla., alliance of community banks and credit unions, plan to use the Tekportal aggregation service from Teknowledge of Westport, Conn. The software company has signed resale partner agreements with both NCR Corporation and Financial Fusion.

--Also, Internet banking vendor Digital Insight, Calabasas, Calif., hopes to introduce an aggregation product in mid-2001.

But there's another development brewing upstream. In November, Yodlee partnered with Advent Software, a San Francisco software company that maintains direct data feeds with approximately 1,800 asset custodians. Advent's Trusted Network provides investment managers with institutional-quality securities data, such as information about hedge fund assets and other non-traded securities. Advent will now supply this data through Yodlee as well.

With aggregated custodial account information, financial institutions may now provide retail clients with automated asset allocation and tax planning tools that take a complete view of an individual's total balance sheet, particularly for those who have assets in custody yet lack personalized investment advice.

"Think of the direct data feed-meaning links to clearinghouses and trust departments-as the 'crude,' the raw material, and think of account aggregators as the distribution," said Carter. "The raw suppliers are going to definitely have incentives to partner with distribution because that's where they're going to be able to monetize it."

Both sides stand to benefit from the partnership. "It was a substantive deal-Yodlee got access to data and domain knowledge, and we got access to distribution," said Charles Record, vice president of new business development at Advent. "We had many of their competitors calling to talk to us about gaining access to our data. And we resisted and resisted to wait and see who we believed would emerge as the winner."

Although a number of innovative software companies are landing new financial services clients for aggregation, Yodlee's market positioning and partnerships give it an edge, observers say.

Yodlee will migrate existing VerticalOne accounts onto its new version of the account aggregation platform. VerticalOne's former parent S1, now a 32% shareholder of Yodlee, will provide the new company with a set of data warehouse and data mining tools.

S1's data center in Atlanta will continue to host the service for current VerticalOne clients. Other Yodlee customers, such as those using Internet banking software from Corillian, can have the service hosted by Exodus Communications, a Yodlee investor. Also, Yodlee and Corillian are developing an integrated Yodlee module for Corillian's Voyager platform, which can be hosted either in an outside data center or within the bank's walls.

Yodlee's service incorporates electronic bill payment services and institution-to-institution funds transfer capabilities. Other application partners will provide Yodlee users with financial calculators and other resources.

"Yodlee has partnerships with everybody," said Noor Menai, managing director of consumer portals at Citigroup. The "myCiti" aggregation service is the centerpiece of Citigroup's overall strategy, since it provides a unified way of presenting Citigroup's services and products, said Menai.

Yodlee intends to release a software developer's kit early in 2001. It also plans to offer a so-called light version of the platform for smaller institutions such as credit unions and community banks.