By Timothy J. Mullaney
Back in the big, bold days of the tech boom, execs from young companies used to make the press rounds. One question we journalists would ask, sometimes while they were there and sometimes after they had left, was: Is this a company or just a feature? Is the product that was just pitched sufficient to lay the groundwork for a successful, public company or just enough to make its inventors a tastily lucrative bit of takeover bait?
Everyone in my business had those moments, and one I remember clearly came when I met with representatives of Yodlee, the Redwood City (Calif.)-based startup whose software lets you aggregate information about most of your bank, credit, and investment accounts in one place. The idea: To use their Web-based software -- hosted at a portal like MSN or Yahoo!, an online service like AOL, or at a financial institution's site (it's now at dozens of these, including giants like Citibank.com, Fidelity.com, and BankAmerica.com) -- to gather data about all of your accounts in one place.
Basically, you give Yodlee's partner (in my case, usually MSN) your passwords and click on an authorization to let them act as your agent in updating your info and aggregating it at the partner's site. The buzz -- remember buzz? -- on them was that their tool gave you "your net worth at a glance." And so, account aggregation and Yodlee itself became white-hot, a "killer app" many people thought would help online banking take off.
Two years later, Yodlee is still private, so we don't really know if it's a successful company, but having spent time trying to use its lead product on both AOL and MSN, I don't think it's all that great a feature. Yodlee's financial information isn't as current as what you get at your bank's site, and, more important, it's too divorced from actually doing anything with the information to make it a big deal. It's also far too balky to be the kind of smooth-running, easy-to-set-up experience that will make a big difference to most people's financial management. Or, at least, to mine.
First, let's talk about how often the information Yodlee "screen scrapes" from your bank, credit card, and investment accounts is updated. As I sit writing, I have about one-fourth of the amount in my checking account that Yodlee/MSN says I do. I know this because I am aware of what checks have cleared, which I learned -- yesterday -- from checking my bank's Web site. Yodlee has not updated its information on this account in two days, according to the helpful update posted at MSN Money.
To update the data myself -- as if I should have to, given what this product is supposed to do -- I had to click on the link that takes me to account details, then another link to update the account. In two clicks, I could have been to Fleet Homelink and seen this information myself. And if I simply went to Fleet in the first place, I would have been done already. Similarly, my credit card accounts haven't been updated in 24 to 48 hours either.
WHY PAY TO PAY?
Second, once people know what's in their accounts, they often want to do something about it, and Yodlee offers too little. MSN says it has souped up the base offering by tying it to an online bill-payment service and budget-tracking software. Personally, I don't use budget-tracking software, but I do pay bills online and there's a reason why offerings like MSN's haven't caught on: Portals want you to pay for online bill payment.
Seventy percent of America's bills, according to Gartner analyst Avivah Litan, come from just four industries: loans (mostly credit cards), utilities, telecom, and insurance. But nearly all players, especially in credit cards and telecom, offer online bill payment for free. Since a big part of the point of online bill payment is to save money on stamps, checks, and other supplies, you might as well go all the way, not give half your savings to Big Bill Gates.
And the billers' sites offer much deeper account-management functions than MSN's Yodlee feature is likely to match soon. At Verizon.com, I can get old bills, schedule a service call, or add Caller ID to my phone line. At Discovercard.com, I can apply for a balance transfer or credit line increase. Other card companies are taking charge dispute forms online.
Similarly, I can do a lot more about my bank account at Homelink than I can at MSN. I can schedule recurring bill payments, for example, so I'm never late. To keep up with all of what banks and billers are doing on their own, portals like Yahoo or MSN would need to partner with all of their sites. In the meantime, if people have a manageable number of accounts, they don't need to wait for that to happen.
The problem is, consumers more or less figured out what they wanted to do about their online financial management last year -- and Yodlee's approach, for now at least, either isn't it or is just a small part of it. Gartner says about 30 million Americans now pay some bills online. Most are loan and credit-card bills, and the overwhelming majority of us use card companies' sites to pay online.
Portals have an especially tough time in the finance business because they're disconnected from most transactions. To do what you want to do with the accounts a portal tracks, you often have to go back to the biller's site anyway. So who needs the portal?
People want financial information, but they don't want it in a vacuum. It has to be absolutely accurate, timely, and actionable. That's more important than having all the raw data in one place. And, at least in MSN's iteration of Yodlee's service, it isn't there yet.
Mullaney covers e-finance for BusinessWeek from New York