Financial accounts aggregator Yodlee Inc. and National InterBank, which provides private-label banking software and services for online businesses, are trying to muscle in on one of banking institutions core functions: moving assets.
The companies last month announced plans to create the Web-based Internet Funds Transfer Service, or IFTS, which will integrate NIBs connection to the national Automated Clearing House network with Yodlees Personal Information Platform to create a new funds transfer platform.
The result is that Yodlee commercial customers, which include such companies as America Online Inc., Chase Manhattan Bank, Morgan Stanley Dean Witter & Co. and Citigroup Inc., will be able to offer customers the ability to use a Yodlee-powered portal to transfer money between bank and brokerage accounts even if they dont have an account with NIB.
Consumers will be charged an annual fee as well as a transaction fee for the service, which will be available this quarter.
While transactions traveling through IFTS will take two days to clear, officials at Indianapolis-based NIB, a division of the First Bank of Mitchell, said the goal is to offer real-time transactions.
"Right now we are limited by two things," said Ron Hynes, executive vice president of NIB. "We have to be very cognizant of fraud and risk in a business like this, and the processing times are dictated by the ACH network."
NIB is looking at tapping into other systems, including the ATM network, that will allow near-instantaneous access to funds and facilitate real-time transfers, Hynes said.
Monetary services are the natural evolution of account aggregation, which has been largely informational to date, according to Anil Arora, CEO of Yodlee, in Redwood Shores, Calif.
By partnering with others, Yodlee has been working to develop an aggregation platform with applications that fall into three categories. The first answers simple questions, the second offers advice and recommendations, and the third—just emerging—provides transaction capabilities.
Arora, who is promoting the development of third-party applications through Yodlees software development kit, said consumers can look forward to new funds transfer applications. One will provide online tax payment with the click of a button, in which Yodlees aggregation technology will populate forms.
Transactional capabilities are the obvious next step for account aggregators, said Paul Jamieson, an analyst at Gomez Inc., in Waltham, Mass. Banks need to use their position of trust in the marketplace as a defense against the progression of portals in this area, Jamieson said.
Portals "are going down the financial services path," said Jamieson. "They want to create greater transactional capabilities that would endear a user to their site, more so than they are today.
"Everyone would love the opportunity to have a bill-pay relationship with a customer; it anchors a customer to a particular site," he said. "That anchor is a barrier for customers leaving the site."