A year ago few people had heard of Yodlee Inc. or VerticalOne Corp., or of what they do, which is online account aggregation.

Today the technology is so popular and the number of vendors offering it so limited that the proposed merger of these two firms has sparked strong reactions.

On Monday, uMonitor Inc. of Germantown, Tenn., a smaller competitor, denounced the deal on antitrust grounds.

It would "be detrimental to the industry at this early stage," said Dinesh Sheth, president, founder, and chief executive officer of uMonitor. "People are still evolving, and there are still a lot of innovations to be done, and this can stifle competition."

Some people say these claims are inflated, but Mr. Sheth may have a point. Yodlee, of Redwood Shores, Calif., seems already to have gathered up many of the prime customers for account aggregation, including America Online and Citigroup Inc. VerticalOne, a subsidiary of the Internet banking pioneer S1 Corp. of Atlanta, serves Wells Fargo & Co. and Yahoo Inc., among others.

S1 Corp. chairman James S. "Chip" Mahan 3d said the combined company, to be called Yodlee, would be "an unprecedented force in the industry."

Yodlee is already introducing its next generation of services. On Monday it announced new partnerships with several technology firms. A deal with National Interbank will help Yodlee consumers transfer funds. A pact with CheckFree Holdings Corp. will help customers pay bills electronically. And an arrangement with FinanCenter.com will help them analyze their financial holdings.

But not everyone is as frightened as uMonitor. Ettache.com, a Mountain View, Calif., aggregation company, has adopted a can-do attitude.

"If there is a larger player in any industry, it may slow technology, but it makes the standards even higher for us to prove our efficacy, and we are working even harder," said Rajiv Saxena, co-founder, president, and CEO of Ettache.com. "Yodlee has first cut of the product, but new, smaller companies are more innovative by definition and can embrace the risk."

Executives at 724 Solutions Inc. of Toronto, whose customers include KeyBank and Bank of Montreal, say they see the merger as a possible boon. "We are already clearly differentiated between both those products, so it makes our story easier to tell," said Tom Hounsell, director of information products.

Industry observers say the merger may create headaches for smaller competitors, but will not stifle the advance of aggregation technology.

"It is a bit dramatic to say that it will hurt the growth of technology in the industry," said Octavio Marenzi, managing director of Celent Communications in Cambridge, Mass. "It is clearly going to make life much more difficult for the smaller competitors, but they will have to find a way to coexist and provide services that Yodlee can't take the time to develop," such as financial planing tools, online portfolio management, and analytics to complement core aggregation services.

Ettache, whose customers include Heritage Commerce Corp. and Franklin Planner, says it already stands apart by letting financial institutions retain ownership of aggregated data in-house, rather than storing it in a third-party database, as Yodlee does. 724 Solutions plans to let banks start hosting their own databases next year.

"Ultimately, this merger is good news for the smaller companies because, as buyers of technology, the banks always want to pit one against the other," said Avivah Litan, a senior analyst at GartnerGroup.


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