By David Ortiz,
PBN Staff Writer
Andera Inc., a Providence-based firm marketing technology that enables banking customers to open new accounts online, last week announced it has formed a strategic relationship with Yodlee Inc., another pioneer in online banking services.
Andera’s partnership with Redwood City, Calif.-based Yodlee will provide retail financial institutions with the most comprehensive online account opening and funding solution in the market, said Charlie Kroll, Andera’s CEO.
Andera, which Kroll founded in 2000 with seed capital from the Slater Technology Fund, ran the first automated account-opening transaction in the market two years later, and today is the nation’s biggest vendor of online account opening solutions, serving more than 125 customers.
Yodlee made its name as the inventor of account aggregation technology, which enables financial institutions and Web portals to give their customers the ability to see all their various accounts on one screen.
Today Yodlee is the leading provider of instant account verification technology, processing more than 4 million verifications per year for clients that include Bank of America, Fidelity Investments, JPMorgan Chase, Merrill Lynch, AOL and MSN.
Andera’s ability to incorporate Yodlee’s account verification technology into its own product enables the company to increase the security of its online cash transaction, eliminating what Kroll described as Andera’s most significant competitive disadvantage.
Until now, the company’s account opening platform did not offer state-of-the-art security features that major banks and financial institutions look for.
“This partnership with Yodlee allows us finally to fill that gap once and for all, in a way that doesn’t just catch us up to everybody else – it actually vaults us way ahead of everybody else and turns what used to be our biggest gap into what’s now become one of our biggest strengths,” Kroll said. “I don’t want to throw the term ‘category killer’ around too easily, but if there ever was one, I think this is it.”
Under the terms of the agreement, Andera will be the exclusive provider of account opening technology to Yodlee, and Yodlee will be the exclusive provider of account verification and funds transfer technology to Andera, with the combined solution being available from both companies to all financial institutions.
For Yodlee customers, Andera’s account opening service will be sold as a standalone product and as part of the Yodlee MoneyCenter online banking product suite. For Andera customers, Yodlee’s AccountVerification and FundsTransfer will be offered as options within its New Accounts Online suite.
The two companies also will integrate Yodlee’s funds transfer technology with Andera’s account opening application.
“Technically, it’s a revenue share,” Kroll said. “You can buy the combined solution from Yodlee, under a Yodlee contract, and Yodlee in that case is our customer, so they pay us the wholesale rate. And if you buy Andera’s product in the future, and you select account verification option, you don’t have a separate contract with Yodlee; you’re buying it through us.”
The decision by both companies to form an exclusive relationship was reached relatively quickly, with the both sides inking the deal at the end of July – about two months after discussions first began. Andera and Yodlee already have their first three beta customers signed up, and plan to launch the integrated solution later this year, Kroll said.
In May, Kroll told Providence Business News he was charting a course to grow Andera’s customer base to 1,000 financial institutions within the next three to four years. The market demand for online account opening is strong and growing stronger, according to a study published last year by Aite Group, a Boston-based financial services consulting firm.
Banks and credit unions of all sizes can save a significant amount of money by offering customers the ability to open new accounts online, according to the report, “Something for Everyone: Online Account Opening Delivers the Goods.”
For example, a mid-sized bank with 20 percent of new accounts opened online could realize a $1,125,000 in savings over traditional account-opening methods, the report found. At higher conversion rates, the savings become “astronomical,” according to the report.
At the same time, customers welcome the ability to open accounts online, the report found.
“Interest in online account opening technology continues to grow,” Eva Weber, an analyst at Aite Group and author of the report, said in a press release. “We’re now reaching the point where these solutions are no longer simply nice to have; they are part of what customers expect from their providers.” •
