Hosting account aggregation for many of the world's leading financial institutions and Internet portals has given Yodlee, based in Redwood Shores, Calif., unique insights into how banks, portals and their customers use the service. Such a client list also opens up the possibility for unique opportunities in marketing and in payments.
Yodlee's financial institution customers include Bank of America, Citibank, Fidelity, First Union, J.P. Morgan Chase, Merrill Lynch, and Morgan Stanley. America Online, Microsoft's MSN and Yahoo also offer the service. Yodlee now aggregates $90 billion in assets for 3 million users, through the Web sites of 90 clients. Ten sites have already have passed the 100,000-user milestone.
Yodlee discovered that most of its customers, although aware of the potential for mining aggregated customer information, hadn't yet done so. That's why it released two new business intelligence tools: Yodlee Navigator, a desktop application for custom analytics; and Yodlee Octane, which pipes aggregation data directly into a bank's existing CRM systems.
"It was conceptual, and everyone loved the idea," said Jim Taschetta, chief marketing officer for Yodlee. "It's now practical."
The unleashed power of aggregation has the potential to reshape the direct marketing business. "The most practical application for banks is to do profiling, and then do marketing campaigns with that profile," said Taschetta.
Instead of purchasing lists of probable customers from companies such as Lands' End or Volvo, aggregators can instead query the Yodlee database about their own customers, using metrics including: total cash balance for investment accounts, total credit card balance, total credit line, total bank or credit card usage in the last 250 days, total liabilities, total minimum payment for card accounts, and total portfolio balance. The system can then filter the results to include only those customers who have aggregated a particular company's data.
In other words, a Yodlee-powered bank can, for example, offer an airline affinity card to people who have aggregated frequent flier miles from a specific carrier. Or, the bank can look for people who have high credit card balances at a competitor and then decide whether to make a better offer based on the amount of money in their investment accounts.
Although not a core feature of the new Yodlee Business Intelligence suite, it's also possible to conduct a search at the transaction level, i.e., to limit the search to customers who shop at Land's End with a credit card. As long as consumers have opted-in to receive offers from the aggregation sponsor, whatever information they choose to aggregate becomes fair game for the sponsor's search.
Since consumers who use aggregation typically include financial data, banks and brokerages can improve their cross-sell efforts by understanding their customers' other financial relationships. But the major U.S. portal sites are also avid Yodlee customers, and that's no accident. Portals, such as AOL, MSN and Yahoo, "can sell access to a tightly-targeted list," said Taschetta. So instead of cross-selling their own products, the portals will sell the ability to cross-sell to their customers through multiple marketing channels.
Selling lists involves real revenues. A broadly targeted direct mail list might have a cost per thousand, or CPM, of $20. However, a pre-qualified list of likely buyers with known purchasing habits might fetch a CPM of $400, said Taschetta. With those revenues in mind, portals have become fierce competitors to banks for new aggregation customers. After all, people are expected to require just one aggregator. "There really is a turf war going on between the portals and the banks," said Taschetta. "This is a zero-sum game."
Accordingly, MSN and Yahoo have been "quite aggressive" in seamlessly integrating aggregation into their respective universes, said Taschetta. For starters, Microsoft provides budget-tracking tools through MSN, while Yahoo has gained share through its popular stock portfolio news and information page. It's not hard to imagine ways in which these competitors, including AOL, can extend the value of aggregated information beyond the consumer's desktop computer.
No matter how the aggregation sponsors eventually use the information, or which sponsors break through to the mass market, Yodlee focuses its efforts on obtaining account information from multiple sources and making it available to its customers. Yodlee aggregates data from approximately 6,200 Web sites, of which one-third provide direct data feeds. Taschetta expects data feeds to comprise 50 percent of Yodlee's connections by the end of the year.
Data feeds benefit both the aggregator and, to an extent, the financial institution housing the data, said Taschetta. Providing a data feed alleviates the strain on a bank's servers, by avoiding tens or hundreds of thousands of screen-scraping requests in a narrow time frame. "That benefit decreases as the size of an aggregator decreases," said Taschetta. "It's unlikely that a large financial institution will give more than one company its data feed, unless the aggregator has critical mass."
Data feeds also lay the groundwork towards a two-way connection between the financial institution and the aggregator. Currently, interbank payments take place as automated clearinghouse (ACH) transactions, incurring a delay measured in days. "The problem with ACH is that the settlement time is too long," said Taschetta. "People would like to have point-and-click movement of assets."
Indeed, Yodlee intends to be the account aggregator to provide that.