Bloomberg: Citi and MSFT to compete w/

Citigroup, Microsoft Said to Plan Challenge to Intuit,

Hmmm… I believe Brian found me from my Mint/Intuit note below. Hope I don’t come off as a radical. Citi must be successful.. US taxpayers are shareholders. Jeff is a great guy, and one of the most talented people I have ever worked with. I have no idea how Citi keeps hold of him. Perhaps it’s like joining the Army.

Citi/MSFT will obviously look to provide services to non customers and industry sources tell me that the account aggregation will be provided by Yodlee.  There is some amount of irony here, as Citi’s customer’s had access to Yodlee’s services until September 2005. During my time at Wachovia customers loved the Yodlee service, but we had to end it due to cost and risk issues. 

For Citi/MSFT a central challenge will be moving customers away from their bank to engage in activities such as budgeting and paying bills… and then transacting. (Remember Transpoint from MSFT…. it was close to the date when Gates said Banks were dinosaurs in 1994…) In the US, MSFT, and INTU had trouble getting customers engaged seperate from their Banks. In the US, Mint had the fastest growth rate with a total of just over 400,000 customers. A figure not likely to strike fear in the heart of many banks, this combined with the Mint demographic seems to indicate that the customer base of “spenders” vs “savers” (hence the need for budgeting). This would seem to indicate a card focus for Citi.

Assuming a card focus, a short term need to generate revenue, offering customers a way to transact with Yodlee as a service provider.. I would see card based bill payment as a key service to be offered in this new Citi/MSFT venture. During my time at Wachovia we piloted the Yodlee biller direct service. The UI was fantastic… and that was 4 years ago. This service leveraged cards as the vehicle for bill payment through aggregation of the billers online payment interface. BAC also evaluated this service as a way to generate interchange revenue off of bill payment. 

Hence, I would assume that Citi’s business case for NewCo is based upon the following:

  1. Transacting. Both leveraging credit cards for a bill payment, and purchases. (interchange)
  2. Market customers based upon transactional data (marketing)
  3. Cross sell Citi products 

There are several organizational, brand issues and customer support isssues with Citi’s approach. Citi’s customer may get confused, is this a Citi service? How can Citi’s current card customers leverage it? How do they leverage it? For example, it is hard for me to remember the 3 separate log ins that I have today with Citi today: Card, banking, Obopay… now I need a forth? Who do I call when I have a problem?

Globally, the only success model for aggregation and comparison that I am aware of is, which Citi acquired May 2007 for just over $1B.  If you sit down with Paul Gratton, Egg’s first CEO he will tell you that their success was driven by a complete focus on delivering value to the customer, both in product and online services. It is the coupling of product and service value that creates challenges for large companies to replicate, particularly with respect to cannibalization of existing products.

In the UK, customers select their bank savings account through leading comparison sites like In the US, customers select their bank based upon the proximity to their house. The business premise with, Intuit and its competitors is that customers will start with budgeting, and then move to select financial products (no retention play as these are not necessarily Citi Customers) or transact. Egg was successful because is first started with the most competitive product, establishing trust, and then moved to deliver the best services to surround it.  

Fortunately for banks, customers prefer to go to their bank directly to perform financial services. This “Trust Pattern” is something banks should want to reinforce. WFC exemplifies the alternate approach within its online banking services, with integrated budgeting tools, which is a great service and provides solid customer retention. Banks hold enormous control over the success of any aggregator’s site. Yodlee possesses no contractual right to the data, and the collection of customer information by any third party can be managed. If Mint, or Microsoft/Citi start to gain traction with mainstream profitable customers.. expect banks to start charging Yodlee for access to their customer data, or eliminate it outright.

2 thoughts on “Bloomberg: Citi and MSFT to compete w/

  1. Pingback: Bundle – Citi/Microsoft Venture « New Ventures in Financial Services

  2. A bit late on my reply (18 months), but I think I have an interesting point so I’ll make it anyway. I’m a longtime Yodlee user (direct, not through a branded portal like BofA), and while I take issue with several aspects of their service, I’m happy overall (and indeed would be willing to pay good money for it if they actually started addressing bug reports).

    As I recall from reading the fine print when I first signed up, their terms included my granting them limited power of attorney to act as my agent in such and such capacity. It wasn’t spelled out explicitly, but I got the sense that this was to give them legal authority to posses my username and password, and to log into any FI website for which I had provided them my username and password. The power of attorney also presumably supersedes any clause in FI’s online usage agreement making me promise not to share my password with anyone.

    I’m not a lawyer, but as a layman it seems to me that such a clause gives them as much right to access account data on behalf of their users as those users have themselves as customers of a given FI. I would expect some creative lawyers to be able to make a lot of money arguing back and forth on this if an FI starts actively blocking Yodlee (and such an action would be extremely likely to make me as a customer leave that FI).

    Incidentally, as a user, what I want is everything – a) a complete view of all of my accounts, including bank, credit card, investing, auto/home loans, etc, b) useful analysis tools to understand where my cashflow is going, c) decent budgeting tools including what-if projections, d) configurable alerts, e) useful long term analysis tools to track my net worth over time, and f) reports of configurable granularity about my investment performance.

    a) is far and away the most important aspect. Decent support for every site I care about is paramount, and it means that no matter how good Jwaala is at b-f, it is completely useless to me (I recently gained access to MoneyTracker through my CU). Yodlee is not perfect, but it only has trouble with 2-3 of my current accounts. I understand that INTU had a terrible time with the backend aggregator migration for mint, but I may try that soon now that it’s done. INTU has a bad track record with user friendliness, though, so I might not.
    Yodlee stinks at c), but I’m hoping that will develop over time.
    In e), Yodlee has some particularly annoying bugs dealing with closed, past accounts of mine, but they do provide a barely acceptable historical view.

    None of those include transacting, and so I’m not sure how anyone can manage to make money at it. I could conceivably see myself using a billpay service through an aggregator, but I’ve been working in software for almost a decade and I’ve never tried a bank’s online bill pay (I use autopay for cable/power/etc to a credit card, and I manually run credit card payments to pull from a checking account).

    That said, I sincerely hope someone figures out how to offer me all the services I want (at no more than $10 a month).

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