Open Solutions Inc. announced Thursday that it will offer its clients access to the FinApp system from Yodlee Inc.
The partnership will give Open Solutions, of Glastonbury, Conn., access to a wider breadth of applications, as well as a personal financial management platform it can offer its small bank and credit union customers. Open Solutions launched its own financial application store in the spring.
The partnership also gives Yodlee, of Redwood City, Calif., access to a large group of smaller financial institutions. Yodlee had previously focused on the largest banks to distribute its products and services.
Most recently, Bank of America Corp. and Citigroup Inc. announced they had used the FinApp platform to develop parts of their online banking services.
Although Yodlee works with other core providers to offer PFM, this is the first core channel partnership it has for its FinApp platform, Yodlee says. Banks that offer PFM tools, which let consumers set financial goals and chart spending, typically devote large portions of their online banking sites to it. The FinApp system, by contrast, allows banks to add and remove services (such as tax preparation) as needed without disrupting the rest of their websites.
"This is about much more than apps," Jacob Jegher, a senior analyst with the research firm Celent, says. "This is a larger online banking play."
Banks of all sizes have realized that PFM is a critical part of a comprehensive online banking strategy, Jegher says. Having the ability to integrate financial applications into a PFM dashboard is an important part of that trend.
"This is a way for Yodlee to go down-market through Open Solutions, whose clients are typically smaller institutions," Jegher says.
In recent years, the core banking providers have been pairing off with PFM providers. Fidelity National Information Services Inc. partnered with Intuit Inc. Jack Henry & Associates partnered with Lodo Software Inc. And in mid-November, core provider Integrated Bank Technology Inc. announced a partnership with Geezeo Inc.
"All the core processors are putting their ducks in a row in terms of partnerships to offer PFM," says Ron Shevlin, senior analyst at Aite Group LLC.
While the financial application store model is intriguing, and most likely the way consumers and banks will access and consume new banking features, it is not currently generating in a lot of business, Shevlin says.
More important for Open Solutions is that it can now offer its 3,400 credit unions and small community banks PFM, which has been a gap its product line for several years.
"Open Solutions is finally catching up with [PFM] and filling a hole in its product line," Shevlin says.
While Open Solutions' customers could access PFM on a per-app basis before through its app store, the partnership with Yodlee gives Open Solutions "easy-to-use personal financial management tools," John Messier, vice president of product management for Open Solutions wrote in an email.
But the partnership raises the question of what will happen to Open Solutions' own financial application system, called DNAppstore, which was launched in the spring.
Yodlee's product set is complementary to that of Open Solutions, says Joe Polverari, Yodlee's chief marketing and strategy officer. Yodlee's apps are more consumer-focused and Open Solutions' apps are more focused on back-end processes, he says.
"Although separate from the DNAappstore, Yodlee's FinApps complements this vision by providing consumer apps for the online banking environment," Messier wrote.
The app-store distribution model is likely to become more common, particularly for smaller financial institutions, which often lack the resources to develop their own applications internally, as well as for a wide swath of consumers for whom standard PFM tools may not be enough, says Mark Schwanhausser, senior analyst at Javelin Strategy and Research.
"This is an opportunity for smaller institutions to get innovation sooner, rather than waiting for their online banking providers, who tend to build online banking platforms to fit most consumers," Schwanhausser says.