Author: Jim Bruene

Blog Sighting: UW Credit Union’s SourceCode

By Jim Bruene Posted on
Categories: UW Credit Union

image It's been a while since we found a new financial institution blog worth writing about. The last two were The Diff, a brilliant recruiting-focused effort from Quicken Loans (here) and Carolina Postal Credit Union's i love my hoopty (here), an interesting idea that lacked follow through, a common problem with blogging. 

While it only has three entries, I can already tell UW Credit Union's SourceCode is a winner. First, the man behind it, Eric Bangerter (see note 1) has a track record of bringing new innovations to market at a rapid pace. Madison, WI-based UWCU is on the short list of places I go back to time and time again to look for innovative examples of web-based delivery. 

Second, the blog's stated purpose, "the official blog for Web Branch and UW Credit Union's internet offerings," demonstrates that the CU is not just jumping on the blogging bandwagon. They are strategically using this communication tool to reach the customers most likely to appreciate it, power users of its online banking service.

Finally, it just plain looks good. And not in a fluffy way. It has takes a serious, "I need to pay attention to this," approach that should resonate with its members, many who are highly educated or in the process of getting that way.  

The first two weeks
The first entry, posted Feb. 18, provides a very important, but often overlooked, summary of the author's background so readers know the writing comes from a true insider and not just a biz school intern (note 2).  The next two entries discuss a new online banking feature, QuickView, a nice addition that delivers a popup view of the last five transactions when mousing over an account title.

The blog entries so far are very concise and well written. The entries all have a graphic or picture to break up the text and/or illustrate the point. Finally, SourceCode has a good look and feel with all the expected features: RSS/email signup, links to the main site, an About Us section including an email address, and article tags to navigate to various topics. The only thing missing is a search feature. 

Grade: A

UW Credit Union blog

Notes:

1. Eric is a long-time subscriber to Online Banking Report (thanks!). 

2. There is nothing wrong with using biz school interns to blog, as long as the right audience is targeted, such as other college students. Or if they have a good editor to make sure the tone and content is superb.

3. For more info, see our report on blogging, OBR #135/136.

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Authentium, Diversinet, Vidoop, and FindABetterBank Added to FINOVATE Startup Lineup

By Jim Bruene Posted on
Categories: Finovate

image When we first began planning FINOVATE Startup, we hoped to have at least 20 financial startups demo'ing at the conference. We are well past that now, with 31 companies confirmed for the April 29th conference (previously announced presenters are here). 

We are almost at capacity for the single-day event, but we will add a few more presenting companies in the next two weeks. The latest additions are: Authentium, Diversinet, FindABetterBank from Facilitas, and Vidoop. 

If you want to be in the audience and have a chance to see and interact with these companies, the early bird registration deadline is just 48 hours away. So save $250 and register now (here). 

 image  image image  image

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Updates on Credit Karma, Prosper, and GlobeFunder

By Jim Bruene Posted on
Categories: Credit Karma, GlobeFunder, P2P Lending, Prosper

Here are three updates I've added to the posts from the last week:

  • imageCredit Karma, which we discussed here last week, is in private beta. But they have agreed to give NetBanker readers the invitation code to come in and kick the tires: CKFRND. Let us know what you think.
  • prosper_logo Prosper, discussed here yesterday, was named one of the Fast 50 2008, the 50 most innovative companies in the world by Fast Company magazine (here). The list is in the March issue. 
  • image GlobeFunder: I finally caught up with GlobeFunder founder Ben Decio last week. I noted in my NetBanker post a few weeks ago that the company was not yet accepting money from individual lenders. It sounds like that may be permanent. The company's current business plan is to use money from institutional lenders to fund all loan requests. That doesn't alter the value proposition to borrowers, since money is money, but it does move the company out of the P2P lending space. 

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Prosper Helps Borrowers Tap the Value of Their "Social Capital"

By Jim Bruene Posted on
Categories: P2P Lending, Prosper, Social Networks

image This morning I was at the Parc55 Hotel in San Francisco to hear Prosper CEO Chris Larsen's "state of the union" address at his company's annual user meeting, Prosper Days. I've heard him speak four times in the past year, and I learn something important every time (see note 1).

The highlight today was an analysis he unveiled showing the performance of loans made to borrowers who've been endorsed by friends and family. About a year ago, Prosper added an important social networking feature that allows friends and family of potential borrowers to post endorsements. Even more important, Prosper shows whether the friend has put their money where their mouth is and made a bid on the loan (see screenshot below; note green number in upper right showing the amount of the bid made by the endorsing friend).

image

Analysis
The theory is that the social endorsement(s) will have two important benefits:

  • Help lenders identify quality borrowers 
  • Provide borrowers with more incentive to repay the loan so as not to disappoint their endorsing friends

The first year's worth of data are in and the results are promising. The loans with higher social capital (i.e. endorsed by and bid on by friends) are performing significantly better so far:

  • Loans with a single friend bidding on the loan are performing 35% better than similar loans without that endorsement
  • Loans with multiple friends bidding are performing 50% better

Because Prosper makes its loan performance data public, investors will be able to track the value of these endorsements over time. If it turns out that endorsements do correlate with better long-term loan performance, loan rates will be bid down accordingly, and the borrower will capture the value of their social capital/reputation through lower loan rates. Already, the rates to these endorsed borrowers are running 10% lower. 

Lenders can even search on these so-called "social elements." Prosper's advanced search includes 43 searchable fields, four in the social area (see screenshot below).

 image

Note:

1. Prosper will be demo'ing their latest platform improvements at our upcoming FINOVATE Startup conference (previous coverage here).

2. For more information on Prosper and person-to-person lending, see our Online Banking Report, published in December.

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400,000 Users at Online Personal Finance Startups

By Jim Bruene Posted on
Categories: BillMonk, Buxfer, Expensr, Geezeo, Mint, Personal Financial Management, Wesabe

link to BusinessWeek article In a Feb. 11 BusinessWeek Online feature (here), reporter John Tozzi listed the self-reported user bases at seven new entrants in online personal finance. The roundup led with an anecdote about Wesabe CEO Jason Knight answering phone calls from users (see inset).

The seven companies listed below are only a subset of the online personal finance space. The list does not include users at Quicken Online, Yodlee, Mvelopes, and another two dozen smaller players. Nor does it include users at financial institutions that support online personal financial management such as Bank of America, Wells Fargo, Key Bank, River City Bank and others.

Company   Users Traffic
Mint* 135,000 150,000
Wesabe* 100,000 41,000
Buxfer*   80,000   9,200
Geezeo   20,000+ 14,000
NetWorthIQ   13,000 11,000
BillMonk   10,000+   1,000
Expensr* Five figures   1,700
Total 370,000+ 230,000

Sources: Users per BusinessWeek Online, Feb 2008, figures are reported by the companies and may include inactive users; Traffic: Compete, Inc, estimated unique visitors for January 2008

*Will be presenting at our FINOVATE Startup conference April 29, 2008

For more information:

  • Previous NetBanker coverage here
  • Online Banking Report #131/132: Personal Finance Features for Online Banking
  • Online Banking Report #142/143: Social Personal Finance

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Aradiom, Guard ID, and Vestopia Added to FINOVATE Startup Lineup

By Jim Bruene Posted on
Categories: Finovate

Four additional presenters have just been added to the FINOVATE Startup lineup: Aradiom, Guard ID Systems, Vestopia and another stealth company (see previous coverage here).
 image  image vestopia_logo

These companies join the 23 startups already announced: Andera, Boulevard R., Buxfer, Cake Financial, CAPS (Motley Fool), ClairMail, Credit Karma, Expensr, FindABetterBank, First ROI, Guardian Analytics, Jwaala, Lending Club, Mint, Prosper, SmartHippo, Unified Money, Wesabe, Wonga, WorkLight and three other stealth companies. FINOVATE Startup presenters

Seating is limited, so make sure you secure your spot for the early-bird price of $745. Early-bird discounts end Feb. 29. For more info refer to our conference website.

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ING Direct’s $60,000 Sweeps for Automatic Savings Plans

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, ING Direct

ingdirect_logo ING Direct, renowned for its many contests that have created strong brand-buzz, is offering customers the chance to win one of five monthly $1,000 prizes. Any user with a new or existing automatic monthly deposit of at least $100 is entered into the sweepstakes. In addition to the monthly prizes, one grand prize winner will take home $30,000. The contest runs for six months, so the total payout is $60,000.

Low-cost incentives to encourage automated savings are a win-win (see note 1). The bank gets a stable flow of deposits to its savings products, and customers end up "paying themselves first" and developing a savings habit. We recently covered WaMu and Wachovia's efforts in this area (here). 

ING Direct Transfer Money area within online banking (logged in)

ING Direct transfer money area with sweepstakes banner

Same area showing second part of animated banner 

ING Direct online banking screenshot

Note:

1. Unfortunately, the sweeps ended up costing me $700, although it went to a good cause. Since I'm a sucker for a contest, and I didn't have an eligible auto-debit, I went to the bank's Transfer Money page to set up a new one. In the process, I noticed that the auto debit for our son's allowance had ceased working in mid-2005 (note 2). We owed him 31 months of allowance plus interest. Ouch. After taxes, the $1k in prize money will just about get me to breakeven.  

2. The allowance transfer originates from another ING Direct account, which was likely out of funds in July 2005, so the transfer was canceled. It's up to the customer to reinstate the transfer, which evidently I never did. 

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Free “Ad-Supported” Credit Scores from Credit.com, Credit Karma, and Quicken Loans

By Jim Bruene Posted on
Categories: Credit Karma, Credit Reports & ID Theft Protection, Credit.com, Experian, Quicken Loans, TransUnion

image In August 1997, QSpace (now owned by Experian) was first to bring credit report data to the Web. The cost was $12 per report (see note 1), a price that has changed little over the ensuing 10 years.

Three years later, in October 2000, WorthKnowing.com introduced the concept of ad-supported (i.e., free) credit scores (see Online Banking Report, #66, article reprinted here). But the company failed to make it through the dot-com crash and ceased operations (note 2). Both QSpace and WorthKnowing earned OBR Best of the Web awards for their innovations.

It took seven years for the concept to reemerge, but now two Bay Area rivals are offering free credit bureau info in exchange for permission to present credit and other product offers. And just as I was about to finish this post yesterday, Quicken Loans introduced Quizzle, a personal finance/credit portal that also offers free credit bureau info (yesterday's post here).

Here are the players:

  • image Credit Karma: This San Francisco-based startup, with backing from Prosper's Chris Larsen, is delivering an actual credit score computed by TransUnion, one of the three major U.S. credit bureaus. It does not precisely match the commonly used FICO score from Fair Isaac. And the scale is different, with a top score of 900 instead of 850. The credit score service is still in closed beta, but we'll see if we can get some invites from the company. Credit Karma will be presenting at our FINOVATE Startup conference April 29 in San Francisco, if you want to meet the team behind this new service.
  • image Credit.com: Another San Francisco company, but one that dates back to 1995, recently launched a similar system, called the Credit Report Card. Credit.com CEO, Adam Levine, presented his other company, Identity Theft 911, at our inaugural FINOVATE conference last fall in NYC (video here). Credit.com provides a full evaluation of your actual TransUnion credit report and assigns letter grades to five different components of the overall score (see third screenshot below). The score is shown on a chart at the top that appears to top out at 850. The report is extremely well done. Like Credit Karma, the company earns fees from targeted offers. In our case, we were given a choice of applying for two Citibank cards.   
  • image Quizzle powered by Quicken Loans: Quizzle's business model is completely different because it's run by a financial institution instead of a lead generation site. The idea here is to get customers and prospective customers to use Quizzle frequently so that when the time comes for a new mortgage, the user remembers to apply at Quicken Loans. See yesterday's post for a complete overview.

Credit Karma homepage (15 Feb. 2008)

Credit Karma homepage

Credit.com Credit Report Card homepage (15 Feb 2008)

Credit.com credit report card

Credit.com Credit Report Card (top portion, detailed analysis of each section not shown)

 image

Note:

1. QSpace charged $12 for the first credit report, then $5 each to reorder. Data was from Experian (see Online Banking Report #28).

2. TransUnion now owns the WorthKnowing domain name.

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Quicken Loans Enters the Personal Finance Space with Quizzle

By Jim Bruene Posted on
Categories: Credit Reports & ID Theft Protection, Loans & Credit, Mortgage, Refi & Home Equity, Personal Financial Management, Quicken Loans

image Two years ago, computerized personal financial management was a two-horse race: Intuit's Quicken vs. Microsoft Money. Both full-featured. Both relatively easy to use. But both were packaged software apps, clearly not the future of consumer computing.

Fast forward to 2008: We now have two dozen startups, several banks, and other financial stalwarts, offering online personal finance of every size and shape (see Online Banking Report 142/143 and 131/132).

image The latest entrant: Quicken Loans, which launched an open beta of Quizzle, an online budget and personal finance portal that features home values, mortgage advice, and free credit reports/scores from Experian (see note 1).

Quizzle also calculates what it calls your Quizzle score based on your credit score, home value, savings, debt, and household income/expenses (see second screenshot, below). Debt payments are imported from credit report data, but users can edit the information or add other items to improve the results.

Quizzle also provides home-value estimates calculated from public records, but in my case, it's no Zillow, and listed a home value that was significantly wrong (see note 1).  But it's simple to edit the number with your own estimate. Quicken Loans should consider tapping Zillow's API to provide a second opinion.

The sign-up process
Signup is simple with users providing name, address, birth date, email address, income, and home-purchase date. Email address is verified with a message that must be confirmed. Then identity is verified online using data pulled from the Experian credit bureau.

This is the same procedure used by every online credit-report provider with one huge exception. Quicken Loans DOES NOT REQUIRE A SOCIAL SECURITY NUMBER, a huge usability and privacy gain. The company is allowing credit-report access based on a name/address/birth date match. That's a welcome improvement for the user.

Analysis
There are a few rough edges in the tool. The home-equity portion is not well explained. In my example, my home value was shown to be about $50,000 more than the loan balance. However, in the equity portion of the tool, it showed that my home equity to be zero. Evidently, the site uses an 80% LTV criteria to calculate the amount of home equity available to lend against. While that's a perfectly reasonable assumption in today's credit environment, it should be spelled out in detail.

But overall, it's a great tool. The really free credit report and score alone are enough of a payback to gain consumer usage. The rest of the Quizzle score is less useful, but still interesting. And seeing it all in one place is fantastic. It will be interesting to see how Quicken Loans pulls me back to the site in the future.

Quizzle is off to a great start, and I look forward to seeing more companies, including banks, credit unions, and card issuers, integrate credit scores/reports into their online offerings (see note 2).

Overall scores:
    Look and feel (user interface) ==> A
    Credit information ==> A+
    Other tools ==> B
 

Quizzle home (18 Feb. 2008, prior to entering a ZIP code)

Quizzle from Quicken Loans home 18 Feb 2008


Overview pages showing the makeup of the overall Quizzle score
(upper right)

Quicken Loans Quizzle main results page

Note:

1. Quizzle uses a 900-point scale for credit scores, padding 50 points to everyone's score compared to Fair Isaac's FICO that tops out at 850. This makes you feel a little better about your score. No doubt, credit score inflation will continue, with someone using a 1,000-point scale in the near future. 

2. WaMu has provided free credit scores to credit card customers for several years.

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More Innovative Reward Checking Accounts from FirstROI/BancVue

By Jim Bruene Posted on
Categories: Advertising & Promotion, BancVue, Deposits, Checking, Savings, CDs

image If you are a subscriber to our Online Banking Report (see #150), you know how impressed we are with the work of BancVue and FirstROI. They are the team behind the 400+ rewards checking accounts we first discusssed here in early January (see note 1).

The reward-checking phenomena, largely created by these companies, landed as the sixth most important trend of 2007, according to our year-end report. The Wall Street Journal looked at several BancVue clients in an article last weekend (here).

If you are looking for ideas to spice up your Web-based marketing, take a close look at the FirstROI portfolio (note 2). They are doing some of the most creative work I've seen in 12 years of following the space, rivaling the UK banks, which have long set the bar for online bank marketing.

Case in point: Green Reward Checking from Bank of Hiawassee/Blairsville/Blue Ridge, all part of Georgia's $440 million Chatuge Bank Shares is well-explained in a clever Flash animation (see first screenshot below). Wisconsin's $770 million First Banking Center uses similar Flash techniques with a much more "serious" branding (see second screenshot below).

Green Reward Checking from Chatuge Bank Shares Inc. <www.frogreward.com>  
$440 million-asset bank headquartered in Hiawassee, Georgia

Frog reward checking Chatuge Bank Shares


First Banking Center Rewards Checking
 <firstbankingcenterrewards.com>
$760 million asset bank in southern Wisconsin

First Banking Center Reward Checking

Notes:

  1. (2) The credit union that first sparked our interest in the subject, Verity Credit Union, was advertising its reward product, Velocity Checking <velocitychecking.com>, on the radio this morning during Seattle's rush hour. The focus was on the 6% APY.
  2. (1) First ROI will demo its latest innovations at our FINOVATE Startup conference April 29 in San Francisco.

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IOU Central Launches First P2P Lending Exchange in Canada

By Jim Bruene Posted on
Categories: Loans & Credit, P2P Lending, YouTube

image

We were surprised to learn today that someone beat Community Lend to market, becoming Canada's first person-to-person lending exchange (previous coverage here). The Montreal-based startup, IOU Central, says they've been working on the company for a year.

The company merged with an established Danish person-to-person lender FairRates <fairrates.dk>, whose co-founders, Robert Bialek and Arkadiusz Hajduk, are now on the IOU Central team.

Much like its U.S. counterparts, Prosper and LendingClub, IOU Central facilitates installment loans of up to $25,000 CDN, with terms of up to 3 years.

The company's homepage includes a YouTube video of its President, Phil Marleau, giving an 80-second overview of the company. Even more important, they have a testimonial from a former TD Bank EVP to the right of the video (see screenshot below).

The company issued a news release today (here) that was picked up by several blogs (here and here). For more info on the market for P2P loan, and what financial institutions should do about it, see our recent Online Banking Report (here).

IOU Central homepage on launch day 12 Feb 2007

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