Financial solutions provider Envestnet has acquired a financial software company Yodlee, a financial data aggregator platform for around US$590 million.
Yodlee
Yodlee has over 45 million users, and is well known for its account / financial data aggregation platform which allows users to see their credit card statements, bank statements, investment portfolio, email, travel reward accounts, etc. on one screen. The company has an extraordinary customer base of over 150 financial institutions, and currently serves 11 of the 20 largest U.S Banks ranked by assets, according to Fortune.
Over the past few years, Yodlee has continued developing APIs or application program interfaces of a financial data verification platform called Yodlee Interactive.
Yodlee Interactive enables users to skip account verification processes, which often takes days to weeks and to verify “micro-deposits to their bank accounts to prove they have access to those accounts.” Meanwhile, “instant access to financial data confirms the ownership of the account and verifies the account balance in less than a minute.”
Criticism
Envestnet concluded the deal at US$590 million, valuing Yodlee’s stocks at US$18.88 per share. Yodlee went public on the NASDADQ in October 2014 and generated US$98.6 million in revenue in 2014.
Despite their successful operations, the company suffered from criticism from the media and analysts about their consumer transaction data sharing system and the amount of sensitive data they share with financial institutions and organizations.
According to Fortune, The Journal report asserts that Yodlee sells data it gathers from credit card and debit transactions to investors and research firms, and points to a study from MIT that claims the data can be de-anonymized.”
Yodlee has allegedly been selling consumer data for about a year now, and the operation amounts to a relatively large percentage of their annual revenue. However, Yodlee has refuted these claims in their blog post.
2nd Largest Deal in 2015
The acquisition of Yodlee is the second largest fintech deal since the US$890 million acquisition of Xoom in July.
The fintech industry is growing exponentially, as startups in unique areas of the financial sector have begun to emerge over the last two years. Xoom alone has serviced over 1.3 million US customers and processed over US$7 billion worth of transactions in 37 countries. With many large financial institutions and organizations eyeing international expansion, analysts are expecting more multi-million dollar acquisitions of fintech startups to come in Q4.