Yodlee, a shrewd platform strategy or missed opportunities?

For those not in the business of financial software, Yodlee might not be a familiar name.  However, if you use online bill pay or one of the popular online personal financial management software, you probably have been using Yodlee without knowing it.  The issue I want to explore in this post is whether Yodlee has missed a great opportunity to provide vertically integrated solutions that end users use or that they have been smart to stay away from the trench warfare in the end consumer products space.

Yodlee has spent over over 10 years to build out its business relationships, technological capability and dominance in the financial data aggregation space.  It makes little sense now for anybody building personal financial software to go sign individual agreements with each of the likes of Citibank, Fidelity and Chase.  As the go-to platform, Yodlee now earns a platform tax from every Personal Financial Management software provider that needs to integrate with banks, credit card companies and investment firms.

At the same time, one cannot help but wonder what would have happened if Yodlee’s end user facing business was a lot more successful and most people actually subscribe to Yodlee to do their bill and financial management, as opposed to doing it through their banks or using services like Mint.com.  Given the number of new product launch and M&A activities across the US, UK and India in the news, Mint.com, Artha Money, Kublax and MoneyDashboard, DebtGoal are just a few of them, there must be significant opportunities to be realized.  However, it appears that Yodlee will not become a dominant player for end users.

Yodlee is in every one of these Personal Financial Management software but it is staying in the background.  That might well be a very comfortable commercial position.  However,  this article from bankingtech.com, Where’s the money in Personal Finance? indicates that Microsoft (after killing its MS Money software) is teaming up with Citi to build a vertically integrated solution to rival Mint/Intuit called Bundle.  If they are successful, they will have a platform that competes with Yodlee as well.  I said earlier that it made little sense for anybody to replicate Yodlee, but then Microsoft is not anybody.  It has cash and it needs growth stories.

This just goes to show no matter where you are, you cannot stay still with a successful product.  What do you think?