After a recent stroll through Yahoo's vision of the future, it was easy to see why so many analysts predict that Internet portals will sap customers from banks - and why the bleeding probably won't be that bad.
On one hand, Yahoo's personal finance offerings are far more comprehensive and easy to use than the ones offered by most banks, and many of its services - including account aggregation, limited online bill payment, and some money transfers among accounts - are free. On the other hand, Yahoo is not a bank, and the people who run the personal finance operation are not bankers. Anyone needing assurance or guidance other than what is on the Web site would learn quickly that he or she is trying to do financial transactions through what is essentially an entertainment company.
Yahoo, the Sunnyvale, Calif., company that was started six years ago as a search engine and now casts itself as a way of life for Webheads, breezed into New York last week for a three-day "open house" for the news media.
In a rented apartment that was big by Manhattan standards, a delegation of bubbly young Yahoo staffers set up personal computers, handheld Internet gadgets, posters blazoning Yahoo-related factoids, and myriad Yahoo-branded tchotchkes. In a homey touch, framed photographs of the company's founders were placed on the living room piano.
The idea was to show "how consumers are using our products holistically, as an essential part of their everyday lives," explained Jackson Holtz, who bears the inscrutable title "director of consumer and property p.r."
Thus, guests were shown how people could use Yahoo in the home office to manage their finances, in the den to check sports scores, in the kitchen to look up recipes, or in the bedroom to set up online photo albums. Each room showed how various Yahoo features could be enjoyed in a stationary location or on the go.
The chilling part for banks was the Yahoo Finance part of the tour, which included a demonstration of how Yahoo addicts could aggregate all their financial accounts through the portal, just as easily as they could keep track of their local weather and sift out news about their favorite pop stars.
"The main benefit of using Yahoo Finance is the integration with the rest of Yahoo," said Jennifer Dulski, the senior brand manager who narrated that portion of the tour. People who use it "run the gamut from the super-beginning investor to the really financially savvy," she said.
Yahoo not only gives away what many banks charge for but also offers better information than most bank Web sites. There are answers to questions about automated teller machine fees, what to do when a debit card is lost or stolen, and the like. There is a "bond center" for people interested in that market and a tax preparation service offered in conjunction with H&R Block, which supplies a do-it-yourself package for $20 or help from a professional for $99.
A new feature is a search engine that lets people find mutual funds to meet their investment criteria. Another is an "expense manager" that helps people figure out how much they can allot to various personal expenses while keeping within a budget.
Revenues for the site come from advertising and monthly subscription services. In personal finance, people can pay companies on a list of participating billers free. Beyond that, they can pay $4.95 a month to make 12 payments that can be sent to anyone. The two-tier system is new, but to Yahoo's gratification, "people are migrating to it," Ms. Dulski said.
She said she regrets that she cannot share specific numbers, but she did say that of the 192 million people who use Yahoo every month, 75 million use Yahoo Finance. "Yahoo Finance is the No. 1 finance site on the Web, according to Media-Metrix," Ms. Dulski said.
Like a multitude of banks, Yahoo contracts with CheckFree Corp. of Atlanta for the back end of its online bill payment service. As for the account aggregation service, which can pull together the accounts a consumer holds at any number of financial institutions, Yahoo engages in widespread screen-scraping, pulling information off the Web sites of financial companies without consulting them.
Ms. Dulski does not use the term screen-scraping. "We work with Vertical One," an account aggregator that is now part of Yodlee, the market-leading aggregation vendor, she said. "They get the information from the banks."
Another relatively new service is what Yahoo calls its "real-time package." The service, which costs $9.95 a month, delivers streaming, real-time stock quotes, lets people place "alerts" on stock prices, and gives them access to Yahoo "Finance Vision," a Webcast service that the company started last year.
That last service is one of those knock-your-socks-off Internet features. Through a broadcast studio set up at Yahoo's headquarters, "anchors" and "correspondents" report on the markets and on business news throughout the day, and subscribers can view the programming through a pop-up window on the Yahoo Web site. Finance Vision has "reporters" stationed at the Nasdaq as well as in California.
For active traders and other market junkies, "you can be trading at the same time that you're watching real-time, live information," Ms. Dulski said.
Yahoo has a similar broadcast service for the shopping component of its site. Similar to the shopping channels on cable television, the Yahoo version showcases products for sale and pulls in celebrities such as Britney Spears, who once went shopping under the auspices of the portal, which broadcast what she bought.
On the business news end of things, E-Trade Group Inc. also has a broadcast studio, in its new midtown Manhattan site, that functions very much the same as Yahoo's. Both E-Trade and Yahoo were born of the Internet, so it would be logical that they, and not a traditional financial services company, would invest in projects of this sort.
At Yahoo "we were really kind of ahead of the game on this," Ms. Dulski bragged. Yahoo operates in 24 countries, and Yahoo Finance was "one of the first services to launch in all countries."
Yahoo also brags about its wireless capabilities. In January it signed a preferred-provider deal with Compaq Computer Corp. of Houston, which was on hand in Yahoo's apartment to show off its iPaq handhelds, cute little $500 contraptions that were stationed around the rooms. The screens are slightly larger than those of a Palm Pilot, in full color, and with on-screen keyboards that operate by touch.
"It's the equivalent of your desktop PC three years ago," said Mike Hockey, the Compaq representative on hand to show off the iPaq. "When we talk about being untethered from the PC, it's not about computing. It's about communicating."
Indeed, the Yahoo apartment - leased from a family named Greenberg who have nothing to do with the company - housed enough expensive technological splendor to arouse the envy of any commercial bank's chief technology officer. Clearly, Yahoo's technologists and content planners have figured out how to deliver a compelling package of information in convenient and entertaining ways.
But there are some things a company like Yahoo just cannot provide - and that financial services companies can and do: people in the branch or at a call center who can straighten out an account problem, loan officers who can approve a mortgage, and brokers or consultants who can help plan a financial future.
Yahoo may have a slick, ready-for-prime-time presentation, but financial services companies offer substance.
Related Content Online