Aggregation Turns to Billers

For some inexplicable reason, many Internet users are no longer as concerned as they once were about tracking their day-to-day net worth.

In keeping with the times, an upcoming upgrade of account aggregation software from Yodlee (Redwood City, Calif.) will instead focus "strictly on helping users manage their billing relationships," says Hill Ferguson, general manager for electronic bill payment and presentment (EBPP) services at Yodlee. "It's not focused on trying to build a personal balance sheet or trying to show you what your net worth is."

Yodlee's new "BillDirect" service, currently in beta-test with one of its to-be-named larger clients, will provide a standardized interface for connecting to the "biller-direct" Web sites of almost 2,500 service providers -- lenders, credit card and mortgage companies -- as well as non-financial billers such as mobile phone, cable television and long-distance companies.

At the moment, biller-direct EBPP sites offer a few things that banks don't. For one, billers often present the most recent line items before they appear on a monthly statement. By bringing that information into its aggregated data set, Yodlee can offer customized alerts that, for example, notify someone that they're about to run out of cell phone plan minutes or miss a credit card payment. To the extent that the service helps consumers to cut back on payments for excess phone usage and late fees, the benefit should be a tangible one.

Furthermore, Yodlee believes that billers won't mind having their information aggregated by a third party, since each online customer helps companies to migrate away from paper statements, lockbox services, and telephone call centers. "If Yodlee BillDirect can encourage customers to sign up for biller-direct offerings, which it does through 'auto-registration' technology, we are in effect promoting their model," says Ferguson.

Yodlee clients will also have an opportunity to make use of the increased pool of aggregated information. Conceivable applications include marketing customized products to customers who, say, make overseas calls to a particular country, or taking note of which customers consistently make on-time payments beyond the information available in consumer credit reports. While such usages would have to meet the standards of applicable privacy and credit reporting laws, the data's there for the picking. "Technically, they have access to all of it," says Ferguson. "They have their own internal policies around how they use that data, according to their own privacy policies."

"We work with each of our customers to make sure that we're meeting their guidelines and standards," adds Ferguson.

Another benefit for banks is that consumers who make their online payments through billers' sites, rather than through banks' EBPP systems, essentially shift the burden of managing those payments -- and the cost of doing so -- to the biller. This shift serves both banks seeking to reduce the costs involved with offering EBPP, and Yodlee's Internet portal clients that do not have direct links into the financial network. Yodlee has 150 clients, including Internet portal operators AOL, Microsoft and Yahoo; and financial institutions including Bank of America, Citibank, Fidelity, JP Morgan Chase, Merrill Lynch and Wachovia.

The biller-direct model also has the advantage of providing instant feedback as to receipt of an electronic payment, at the time of payment. By contrast, bank EBPP sites lacking a data feed to a given service provider can only promise that a check will be sent on a given date, without reference to due dates or mailing times.

However, a pilot program announced last week by the Electronic Payments Association (Herndon, Va.) will attempt to mitigate some of those information gaps. Called the Electronic Billing Information Delivery Service (EBIDS), the pilot will promote a secure, standards-based network for exchanging payment and remittance information, between banks and billers, using the ACH network.