Discover Financial Services Inc. has become the first card issuer to offer Yodlee Inc.'s consolidated online bill payment product, but Citigroup Inc. plans to stop using a Yodlee aggregation product.
Analysts say the pair of developments signal a shift away from standalone aggregation in favor of systems that are more integrated and functional.
Discover is using CardDirect, a Yodlee product that lets card Web sites function as consolidated bill payment sites similar to the ones many banks offer. Discover customers can now use its site to pay their card bills and a variety of bills from other companies, as well.
Leslie Sutton, the director of public relations for Discover, would not discuss the product for this story, except to confirm that the Morgan Stanley unit is using it.
Timothy Sheehan, Yodlee's chief marketing officer, said it would announce soon that a top card issuer has agreed to use CardDirect. "Their statement stuffers go out this month."
But last week Citibank became the first large customer to say it would not renew its contract for Yodlee's aggregation product, OnCenter. (Other Citigroup units will continue to use the product, Yodlee says.)
Mark Rodgers, a Citibank spokesman, confirmed last week that it would stop using OnCenter, "due to low usage from customers." The contract will expire this fall.
He would not say whether Citibank would install another aggregation product.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said that technology advances may have simply made stand-alone aggregation obsolete. "The market segment might be doomed; it doesn't mean that Yodlee did a bad job."
For Yodlee, "if, at last, a major issuer like Discover is using this product, that is going to help Yodlee regain some credibility in the bill payment space," he said.
Mr. Bezard also said he thought Yodlee was losing credibility because it kept putting off its long-promised announcement that it had signed up a card company for CardDirect.
Beth Robertson, a senior analyst at MasterCard International's TowerGroup Inc. research unit in Needham, Mass., said there have been other products that let customers pay multiple bills from a credit card site, but "the thing about the Yodlee platform is that it's very focused on building the value of cards specifically as payment mechanisms."
Though a product like CardDirect may be able to spark strong consumer use at the card site, "you're going to be seeing banks offer credit cards as an option to consumers at their sites," as well, she said.
Dan Schatt, a senior analyst for the Boston market research firm Celent Communications LLC, said there are three things that drive advancements in online bill payment: the ability to lure a customer to a particular site, customer-centric offerings (instead of product-centric ones), and profitability.
To that end, CardDirect and its deal with Discover "will definitely play a role in changing the face of online banking and bill pay," he said.
According to Mr. Sheehan, Citibank was using an outdated version of OnCenter, which it never updated since installing it in mid-2000. Mr. Rodgers did not return a call Friday asking for a response on that point.
Mr. Schatt said OnCenter's low adoption rate among Citibank customers "stemmed from basically a poor implementation, and that probably stemmed from a strategic decision to not include the application as part of a standard bank offering."
He has worked for both Citi and Yodlee and remains a Citi customer, but "at some point when I was working at Yodlee, I stopped using" the aggregation tool at myciti.com. "I found it frustrating," he said. "It was not something you could really get to easily. … It wasn't well integrated."
Instead, he now regularly uses the more updated version of OnCenter at Yodlee.com.
Mr. Sheehan said he expected to lose Citibank as a customer. "Something we've really struggled with is trying to get their attention, and Citi has focused on other things."
Bank of America Corp. and Wachovia Corp. have better integrated Yodlee's product into their sites and had better enrollment, he said.
Lawrence Baxter, Wachovia's chief e-commerce officer, said the Charlotte company has not heavily advertised Yodlee's product, because it is focusing on other priorities.
But in October, Wachovia upgraded its version of Yodlee's product. Since the upgrade, which did not get any significant promotion, enrollment has increased from 178,000 in December to more than 235,000 today, he said.
In December the average online banking customer had enrolled 9.4 accounts for the aggregation tool. By May that figured had increased to 13.3.
"I use it myself all the time," Mr. Baxter said. "It's the only way my household can see what we've got online."
Wachovia has 5 million customers enrolled for online banking, and 3 million of them have banked online in the past 90 days. It has almost 540,000 online bill payment customers.
Betty Riess, a B of A spokeswoman, said that since it has integrated Yodlee's aggregation product into its online banking operations in January, "enrollment has almost been doubling month-over-month," though she did not provide specific enrollment figures.
