Voice Banking: What’s Old is New Again

Capital One was the first U.S. bank to integrate with Amazon’s Alexa platform.

I am as excited about Alexa/Cortana/Siri/Google as the next geek (except maybe for this guy) and look forward to seeing many examples at Finovate in 2 weeks. We already own a pair of Amazon Echos and we’ll probably get more. Our biggest uses: music, the grocery shopping list (which still requires a visual to use when shopping), and as a kitchen timer. We love it. But is it a great interface for financial services? I’m not sure.

1987 AT&T advertisement

Roll back the clock three decades. Voice banking was the newest thing. It offered 24/7 access to bank balances and transactions. No more waiting for a paper statement, queuing up at an ATM or even going to a branch.

However, when the Internet arrived in the late 1990s, routine automated queries began migrating from the phone, where it was tedious and time consuming to “listen” to data, to the wonderful new visual medium. Users could comprehend a series of numbers much, much faster visually than orally.

So when I see the hype around voice banking, it’s hard not to think that we’ve just gone backwards in UX by two decades. I don’t think the current crop of voice products are all that compelling for day-to-day banking. Sure, “Alexa, what’s my balance?” is easier and faster than calling a toll-free number or even logging in to mobile banking. But most customers looking for their balance also need to understand the transactions that created it. And for that a visual aid is much better than a recital of a bunch of figures.

To add value, voice interfaces must handle requests AND deliver results that are not better served with visuals. (Note: We are not talking about voice commands for mobile or desktop banking which do add value for almost any task.) What might those use cases be?

  • Annotating transactions:
    Trigger: “Alexa ask me what my recent purchases were for?”
    Alexa: “$12.77 at Pizza Press yesterday?”
    User: “Lunch with Charlie at school”
    Alexa: “$64.12 at Office Depot on Monday?”
    User: “Business expense for office supplies”
  • Second factor for online/mobile banking
  • Alerts (assuming Alex could proactively start a conversation with you)
  • Routine customer service questions (such as Capital One example above)

Bottom line: For marketing and convenience reasons, financial institutions will Alexa-enable a wide variety of tasks such as transaction queries, transferring funds, authorizing payments, and so on. But few of those tasks are handled more effectively by two-way voice communications. Sometimes, it may prove more convenient (e.g., think of a busy parent trying to avoid an overdraft while making dinner for their 3-year old). But even if they can use Alexa, I think most people will pull out their mobile phone for the majority of banking tasks, very likely using voice commands to simplify the input process.

Author: Jim Bruene (@netbanker) is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 


Photo credit

Friday Fun: Top 12 U.S. Cities for Fintech Startups

Yesterday, Bank Innovations named five emerging U.S. fintech hubs (outside NYC, Silicon Valley and Boston). Its up-and-comers were: Atlanta, Austin, Lincoln, Miami and Washington DC. While Austin and Atlanta made sense, I was surprised by Miami, DC and especially Lincoln, Nebraska.

The article didn’t include a methodology, so to test their hypothesis I searched AngelList’s database of fintech and financial services startups (financial technology, financial services, payments, fin tech or insurance). Miami did in fact make the top 12, but Lincoln (7 startups) and Washington DC (9 startups) are pretty far out of the running, at least from a startup perspective. Admittedly, Bank Innovations was considering more than just startup activity.

Here’s the 10 most common U.S. homes of fintech startups outside SF and NYC:
(Note: this is by no means clean data, so consider it a proxy only; also it does not include neighboring cities such as San Jose or Brooklyn.)

HQ/Number of Startups

  1. NYC 1,367
  2. San Francisco 1,241
  3. LA 431
  4. Chicago 267
  5. Boston 246
  6. Austin 226
  7. Atlanta 161
  8. San Diego 156
  9. Palo Alto 136
  10. Seattle 116 (tie)
  11. Dallas 116 (tie)
  12. Miami 107

Source: Angel List, 18 Aug 2017

Enjoy your weekend all!

Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 


Photo credit, LA Fintech Meetup Aug 22

 

HoneyDue Tackles Major PFM Challenge: Collaborative Spending

Managing a relationship is stressful enough without introducing unnecessary miscommunications about day-to-day spending. This is one reason why many couples maintain separate spending accounts with pre-defined responsibilities (e.g. you pay the rent, I’ll pay the utilities, etc.). But that doesn’t alleviate the need to communicate, especially when one person has more “discretionary” funds. And separate accounts can lead to more trouble if one person is more of a free spender than the other, or if one has more trouble avoiding overdrafts and/or tapping out accounts well in advance of payday.

Joint accounts have the advantage of keeping funds in a single bucket which is statistically easier to keep above zero compared to stretching funds across two or more accounts. And joint accounts by definition require the couple to work together as a team to manage spending. But many couples, especially early on, aren’t entirely ready to cede “control” over their paychecks. Overall, it’s an area ripe for disagreements and resentment.

That’s why we love Simple’s best-of-both-worlds solution, the Simple Shared plan which offers 3 accounts: an individual spending account for each person, along with a joint account for the pair. While that’s a great foundation, it still doesn’t address the day-to-day communications necessary to keep both partners on the same page.

Enter the newest PFM player, HoneyDue (formerly WalletIQ), currently toiling away in Y Combinator’s summer class (S17). After a stint as one of Apple’s favorite apps in May, the company already has 20,000 registered users, 60% of which are female. The app debuted on Product Hunt two days ago, and was the most popular product of the day (currently 820 upvotes) and so far is fifth highest of the week. You’ll be hearing more about them in two weeks when they officially debut at the incubator’s demo days (Aug 21-23).

HoneyDue uses Yodlee (probably) to aggregate transaction accounts across multiple FIs into one mobile app. Then it provides tools to make it easy to annotate expenses and communicate with each other about what they were.

Bottom line: Collaborative spending tools are an attractive account management option that absolutely should be offered by every bank, credit union, card issuer and PFM provider. HoneyDue is a good example of how the UI can work. And banks, consider joining the company’s seed round, if only as an R&D effort (strategic seed investing).

JP Morgan Chase’s Startup Portfolio with CFSi

JP Morgan Chase is more than halfway through its 5-year $30 million commitment to startup innovation in its partnership with CFSi’s FinLab. Each of the past three years, fintech startups have been invited to apply to the accelerator which is focused on finding financial solutions for low- and moderate-income consumers (for example, this year’s challenge).

So far, CFSi/Chase have invested $250,000 each in 24 for-profit companies for a total of $6.0 million (notes 1, 2). In addition, they’ve made two grants totalling $500,000  The investments (note 3) were made in June 2015, June 2016, and this month, so it’s too early to see how well the venture is at picking winners (official rules here).

We do know that two of last year’s class are already out of business, Bee and Remedy, a surprising result for companies winning a quarter-million investment from the third largest bank in the world just 12 months ago. On the other hand, the class of 2015 already has six early winners from the 9 investments (below), so things look good overall:

  • Digit, the impulse savings app which has raised $36.5 million
  • LendStreet, a marketplace-lending platform which has raised $28.25 million
  • Ascend, the loan management service, which has raised $12.75 million
  • Even, the income smoothing service, which has raised $12.25 million
  • SupportPay, the child-support management app, which has raised $7.1 million
  • Propel, the food-stamp support app, which has raised $5.4 million

Since the average investment is just 12 month’s old, it’s too early to judge CFSi/Chase’s seed-stage investing prowess. And that isn’t even the primary goal of the joint program with CFSI. But it’s always nice to turn a profit while doing good. Based on the excellent performance of its first class, we estimate that the venture is already sitting on a paper gain in excess of $1.5 million (note 3) across the 21 for-profit companies still in business, a 50% total gain on an average of $3 million invested. And they may have had some return of capital with the acquisition of Prism by PayNearMe.

 


Total Return (2015 to 2017)

Total invested: $6.0 million in 24 companies (note 2)

Total grants: $500,000 in 2 non-profits (note 3)

Total returned: 1 exit, unknown valuation

Total market value: $7.5 million+ (note 4)

Paper gain: $1.5 million+ (50% total gain on average of $3 million invested from July 2015 to date)


 

Results by cohort:

2017 Investments


Total invested: $2.0 million

Total market value: $2.0 million

Paper gain/loss: $0


Blueprint Income: Creating the future pension – a simple, pre-determined income stream backed by insurance companies.

Total funding: $250,000

DavePredicts your “7-day low” checking account balance and offers advances on your paycheck at 0% interest to help prevent overdraft.

Total funding: $3.25 million

EverSafeMonitors seniors’ bank and investment accounts, credit cards and credit reports — serving as an extra set of eyes to detect fraud, scams, and identity theft.

Total funding: $250,000 (Finovate alum)

Grove: Personalized, comprehensive financial advice that is accessible and affordable.

Total funding: $250,000

Nova: World’s first cross-border credit reporting agency by building data partnerships across the globe.

Total funding: $250,000

Point: Home-equity platform giving homeowners cash today for a share of their home’s future appreciation.

Total funding: $250,000

Token TransitMobile app to quickly and easily pay for public transportation.

Total funding: $250,000

Tomorrow: Providing long-term financial security to busy millennials and working families.

Total funding: $2.85 million

 

2016 Investments


Total $ invested: $2.0 million + $250,000 non-profit grant

Total $ returned: 2 startups shut down, assume $0 return to investors

Total market value: $1.5 million

Paper gain/loss: ($500,000)


Albert: Mobile app that improves financial health with practical, actionable financial recommendations.

Total funding: $2.85 million

Value to Chase/CFSi: $250,000+

Bee: Mobile banking alternative to the under/un-banked (In process of shutting down)

Total funding: $4.85 million

Value to Chase/CFSi = $0

Earn: Non-profit leveraging technology to solve America’s savings crisis.

Total funding: $250,000

Value to Chase/CFSi: $0 (non-profit grant)

EarnUp: Platform that intelligently automates loan payments and identifies earning opportunities for the 200 million indebted Americans.

Total funding: $3.25 million

Value to Chase/CFSi: $250,000+

CreditHero: eCreditHero helps consumers fix their credit report errors for free.

Total funding: $250,000

Value to Chase/CFSi: TBD

Everlance: App for freelancers to automatically track their business miles and expenses.

Total funding: $250,000

Value to Chase/CFSi: TBD

RemedyProtects people from medical bill errors and overcharges, saving the average family over $1,000 per year (shut down 14 July 2017)

Total funding: $2.15 million

Value to Chase/CFSi: $0

ScratchModern-day loan servicer that delivers a borrower-first experience.

Total funding: $250,000

Value to Chase/CFSi: TBD

WiseBanyan: Free financial advisor.

Total funding: $250,000 (Finovate alum)

Value to Chase/CFSi: TBD

 

2015 Investments


Total invested: $2.0 million + $250,000 non-profit grant

Total returned: 1 exit, unknown valuation

Total market value: $4 million+

Paper gain: $2 million


AscendReduces risk on current loans and rewards the borrower by lowering interest payments for positive financial behaviors.

Total funding: $12.75 million

Value to Chase/CFSi: $500,000+

DigitAutomated savings tool that identifies small amounts of money that can be moved from checking into savings based on spending habits.

Total funding: $36.5 million

Value to Chase/CFSi: $1 million+

EvenTurns the inconsistent income of hourly and part-time workers into a steady salary.

Total funding: $12.25 million

Value to Chase/CFSi: $500,000+

LendStreetMarketplace-lending platform that helps borrowers reduce their debt and rebuild their credit.

Total funding: $28.25 million

Value to Chase/CFSi: $1 million+

PayGoalNon-profit workplace tool that enables financially underserved workers to improve their financial health.

Total funding: $250,000

Value to Chase/CFSi: $0 (non-profit grant)

PrismComprehensive bill payment and management app that helps people better manage their personal finances. In early 2016, Prism was acquired by fintech company PayNearMe.

Total funding: $3.8 million

Value to Chase/CFSi: Exited at unknown price

PropelSimplifies the food stamp application process by streamlining the initial enrollment form.

Total funding: $5.4 million

Value to Chase/CFSi: $500,000+

PuddleReduces risk on current loans and rewards the borrower by lowering interest payments for positive financial behaviors.

Total funding: $250,000

Value to Chase/CFSi: TBD

SupportPayAutomated payment platform that enables parents to share child expenses and exchange child support.

Total funding: $7.1 million

Value to Chase/CFSi: $500,000+


 

Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 


Notes:

  1. We only know that Chase is a “founding partner” in the $30 million effort. We don’t know if Chase is the sole investor, or merely the lead. And we don’t know what happens with any investment gains, whether they go back into CFSi’s balance sheet or accrue to Chase and any other investors involved.
  2. It appears that the companies are each offered a $250,000 convertible note. But we don’t know the overall terms, how many companies accept the financing, or if they are all $250,000. For the sake of this post, we are assuming everyone takes the full $250,000. We also don’t know if Chase is earmarking part of the $30 million commitment for add-on investments. So far, there are no public record of add-on investments in the 26 companies.
  3. Non-profits receive restricted grants of $250,000.
  4. Since none of the companies have revealed valuations in their subsequent financings, to value Chase’s stake, we are assuming a 2x valuation on A-rounds and a 4x valuation on B-rounds.

Friday Fun: Alliant Credit Union Raises Savings Rates

In this era of low rates and stingy credit approvals, it’s always nice to get a little good news from your FI. This week, Chicago’s Alliant Credit Union made the most of its 10 basis point increase in its basic saving rate. On its homepage, the drop-down navigation menus for both Bank and Invest, included a cute graphic touted the new 1.11% APY (see above).

And clicking on Learn More takes you to a page proclaiming rates “15.9x times the national average (I feel like they could just say “15x,” the extra 0.9x just makes it harder to read and is meaningless). See screenshot below.

Bottom line: If you got it, flaunt it. Have a great weekend! (and go Venus!)


P.S. Congratulation Alliant on being named “best HSA for spending” by Morningstar.

Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 

First Look: Zelle Takes on Venmo, Square and Itself

Seventeen years ago PayPal took on Wells Fargo’s Billpoint (joint venture with eBay) and Citibank’s (C2IT) fledgling P2P payment services. It wasn’t a fair fight. With a $400 million VC war chest and an all-star exec team (Elon Musk, Peter Thiel, Max Levchin, David Sacks, Reid Hoffman and so on), the fight didn’t make it past the first round. Within a year PayPal had a stranglehold on eBay payments due to its superior UX and aggressive business model.

Now the banks are back with Zellea rebranded version of the clearXchange that has been up and running for six years. The service already has great traction. In 2016, Early Warning, the bank-owned operator (see note 1), processed 170 million transfers totaling $55 billion for the 85 million customers of their big-bank owners. That works out to exactly 2 transactions per customer annually with an average of $320 per transfer.

The value transferred is three times the size of Venmo’s $17.6 billion in volume, though the number of Venmo transactions is probably higher, perhaps considerably higher if its average transaction size is in the $15 to $20 range implying 1 billion venmos last year.

Using Zelle
Yesterday and today I used the mobile and desktop Zelle from Capital One for the first time. Other than the glitch with my mobile phone number (see note 3), which would stop many consumers from going further, setup was quick and easy. The desktop version is pretty straightforward, with a Send Money with Zelle link in the middle of the Payments menu (see screenshot below). This assumes you know what Zelle is, or you just ignore it since it comes after the key words, “Send Money.”

But the mobile UI is less intuitive. It wasn’t initially obvious how to use it because there is no Zelle or payments navigation item in the Capital One app…yet (it’s only been out since June 12). However, once you go to your checking account section, it’s one of the main navigation items at the top (see inset below).

 

I was initially surprised at what happened with my test payment. I sent a buck to my son (sorry, Paul I only had $1.12 in my account) and I was pleasantly surprised to find that my payment had been “qualified for expedited deposit” and he’d have the cash right away without the usual ACH delay.

But when my son forwarded the email he received, I was surprised to find that my Capital One payment has morphed into a branded Chase QuickPay with Zelle. There was no mention of Capital One anywhere in the message (see screenshot #1).

That makes sense now. My son has a Chase account and was already registered with Chase QuickPay. If he’d not already been registered, he would have received a Capital One branded email (see screenshot #2 below).

Why the new brand?
Zelle/clearXchange will continue to grow at a good clip if its big-bank owners stick with it. It’s already 3x the size of media darling Venmo (owned by PayPal). But I’m not sure the massive investment in creating a new payments brand is worthwhile (cut to the boardroom discussion of a 2018 Super Bowl ad).

I get that they are trying to create another Visa/Mastercard network that consumers recognize and trust. But unlike credit transactions at the POS in the 1950s and 60s, p2p payments are relatively understood by consumers and have much less need of a third-party organization to achieve the network effects. The big banks are already wired to each other and what’s needed, what clearXchange was already offering, is just a simpler UX inside each bank’s online and mobile application. Adding the Zelle name to the mix seems like a step backwards on that front.

Maybe I’m wrong and we’ll all be Zelling money to Mars in a few decades. But I’m not convinced the new brand will stand the test of time.

Bottom line: Love the service, which I expect to flourish, but confused by the branding.


#1: Email to a pre-registered Zelle recipient banking at Chase

 

#2 Email to a Zelle recipient not registered with a participating bank


Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 


Notes:

  1. Owners of Early Warning (aka Zelle) are: Bank of America, BB&T, Capital One, JPMorgan Chase, PNC, U.S. Bank, and Wells Fargo.
  2. If I were any bank other than BofA and Capital One, I’d be crying foul over how the banks are listed in alphabetic order. On the desktop, it doesn’t matter (yet) since they are all above the fold. But on mobile, you can only see BofA and Capital One, and there is no indicator that you should scroll for more.
  3. I received a fatal error message when I tried to use my mobile number as contact to send Zelle payments (see inset) from Capital One’s mobile app. This could be something particular to my account, but from the cryptic popup message, it sounds like my phone is registered at another bank. And that would be a big concern for most customers who would fear that identity thieves are hard at work draining their accounts.
  4. Image credit

Friday Fun: AI is the Best thing Since Big Data

Note: I wanted to call this post, Frid-AI Fun, but visually, “Frid-AI” (sound it out) doesn’t really work as well as I thought it would. So we’ll just skip the “clever” headline and get right to it.


As a semi-active analyst, full-time fintech advisor, and dormant engineer, I could not be happier with the rise of the term artificial intelligence or AI as it is mostly written these days. And the term is not as new as you might think. Spielberg released a movie with the name 16 years ago (see inset). And the term is at least 62 years old, having been studied at Dartmouth in 1955/1956. But it went mainstream this century, especially the past few years (see search activity below).

It is a clever rebrand of a fairly mainstream process, the creation of computerized algorithms. It’s one of the hottest phrases in fintech history, second only to Big Data. For what it’s worth, the Internet still gives “big data” the nod ahead of “artificial intelligence,” 68 million Google results to 44 million, but I’m guessing AI pulls ahead soon. Banks are creating AI teams, fintech bloggers are using it headlines (Finovate, Financial Brand), and conference organizers are creating keynote sessions around it.

Google trends for the search term AI (16 June 2017)

Bottom line: I predict a long, long run for the phrase AI, so you might as well come to terms with it. Add it to your website, job description, or your team’s mission. You’ll be glad you did when the robot overlords come to evaluate your organizational value.

Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as
Principal of BUX Advisors, a financial services user-experience consultancy. 

Feature Friday: Editing Transactions in Online/Mobile Banking

One basic feature missing from most online and mobile banking services is the ability to edit/annotate transactions. Some banks, BMO Harris for example, support transaction and/or category editing in their PFM modules. But it’s very rare to see it within basic digital banking.

One exception, is BBVA Compass’s Simple banking unit. Simple allows full editing of the transaction name, category, and goal. And users can add a memo and an attachment to individual transactions. Clicking on a transaction brings up the detail section along the right (see screenshot below). The feature is functional on the desktop, but it’s easier to use, and more robust, on a mobile phone where the built-in camera aids photo attachments. And the transaction is visually more appealing after editing on mobile (see After mobile screenshot).

Thoughts: While it’s a little harder to use than I’d like, it feels wrong to complain about UX issues at Simple, when the vast majority of FIs don’t allow any editing whatsoever. But my job is to whine, so I’ll make this suggestion. The best user experience is to edit directly within the transaction record rather than following commands over to the right. And on mobile, voice editing should be supported.

Bottom line: While Simple’s transaction editing may not quite live up to the digital banking pioneer’s name, it’s head and shoulders above the competition. And that’s no simple feat.


Transaction editing on the desktop

Step 1: Select transaction on left; if desired, change category (#1), or funding source (#2), then press “edit”

Step 2: Annotation options (1) Edit name, (2) Add memo, (3) Upload image, (4) Add location


Transaction editing on mobile

Before edits                                                             After edits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as
Principal of BUX Advisors, a financial services user-experience consultancy. 

 

 

The Great Rewiring of Financial Services: Consumer Debt Collection

Perusing the hot financial services startups on AngelList today, I noticed Finovate alum TrueAccord (FS2015 link) in second place across more than 8,600 companies. TrueAccord’s core service, a digital-first approach to consumer debt collection, is a great example of the profound changes occurring all around us. Every transaction, every process, every customer interaction (and every job), is being rewired for the digital world.

Think about the typical non-digital collection process at large lenders and other merchants. A series of annoying calls that were both stressful for the recipient, who is often in the middle of some life crisis, and awkward for the financial institution, especially if they had an ongoing relationship with the customer outside the delinquent credit account. Both sides were easily riled, leading to combative communications that were the opposite of transparent, honest and collaborative. And really, it’s almost impossible to rationally assess repayment options on a phone call you are desperate to not have.

Compare that with the 3-step digital debt collection process (outlined below). Consumers receive a well-crafted email message inviting them to begin a dialogue to work together to solve the problem. While many recipients will avoid the emails, just as they avoid phone calls, and snail mail, those that are truly interested in resolution can review their options in the privacy of their own web browser (or phone), and select what works best for them.


Step 1: Email to delinquent customer with giant Resolve Now button

Step 2: Choose a repayment plan. Note the variety of choices with the amount “You Save” at the bottom for faster repayment.

Step 3: Make first payment via credit card or bank transfer


My take: Obviously, not everyone will respond to the kindler and gentler digital approach. Deadbeats and fraudsters are still deadbeats and fraudsters. And non-responders will continue to receive harshly worded voice messages from hardened collectors. But for the forgetful and/or the well-intended, laying out their options visually in a safe and neutral manner is a great improvement for the customer relationship, which will pay dividends over time.

Author: Jim Bruene is Founder & Senior Advisor to Finovate as well as
Principal of BUX Advisors, a financial services user-experience consultancy.