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Yodlee Helps Banks Earn Online Interest

Seventy percent of bank accounts opened online never get a dollar's worth of deposits.

Yodlee, which makes technology solutions aimed at the financial services industry, thinks it can help improve that metric.

Yodlee today rolled out AccountOpenings, a service that verifies a new customer's identity; figures out how the customer wants to fund the new account; and establishes an electronic connection between the new account and the customer's account at another bank so the new one can get funded.

The idea is to make it easier for customers to open accounts online at a time when accounts aren't getting funded and users are falling off.

"Brick and mortar banks are now getting around to that marketing and sales channel," said Archie Emerson, director of product management and general manager for risk management at Yodlee.

Yodlee's AccountOpenings prompts customers to answer questions that can't be answered simply by checking the contents of a wallet.

Yodlee does this by matching name and social security information with other data that could only be known to the person in question, such as the name of the institution that is holding their mortgage or car loan, or the date of their last deposit.

Yodlee is even prepared for customers with little or no credit history, known in the industry as "thin users."

"We might ask a thin user a series of six questions, the answer to which is all "none of the above," Emerson explained.

Once a user has been authenticated, Yodlee provides a choice of processes by which customers can identify an account from which to fund their new one.

Users can either choose micro-deposit verification, which takes several days to complete, or they can choose an automated process that takes seconds or minutes.

Finally, once the customer has been authenticated and his or her access to the other account has been verified, the money is transferred into the new account.

In addition to providing the back-end logic, Yodlee offers financial institutions with professional services, such as designing user interfaces and customizing certain aspects of the solution to suit their particular requirements.

AccountOpenings is typically provided as an API, although one customer, Fidelity, uses Yodlee software on-premises because of the number of on-line customers it services, and the degree of customization they wanted to perform.

Observers say that banks have good reason to keep trying to make this work.

"Online account opening will play an increasingly important role within the retail banking industry as banks continue to look for lower cost channels to acquire and service customers," said Dan Schatt, senior analyst at Celent, LLC.

"The ability to open and fund an account seamlessly without sending in a physical check or interacting with a branch teller or call center representative provides a solid consumer value proposition."



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