Jim Bruene, Author at Finovate

Splash Screens: PayPal Promoting its Debit Card at Login

By Jim Bruene Posted on October 10, 2007
Categories: Epayments, PayPal

Logging in today at PayPal, I was greeted with a full-screen message promoting its debit card (see screenshot below). Note the prominence of the yellow Apply Now button compared to the Go to my account in the lower right. The company has offered a debit card option for more than five years and promotes it from time to time within its site.

Speaking of PayPal, the melodramatic headline on the front page of this month's Bank Technology News grabbed my attention (see upper-left corner of October issue here and inset):

Electronic Payments are a Knifefight.
PayPal's Bringing a Gun.

Evidently, there is at least one headline writer trying to make it logk like a major war is brewing between PayPal and the banking industry. Sure, they are a tough competitor, but they also facilitate a large number of profitable credit card transactions that directly benefit issuers. And I don't see how PayPal is any more of a threat now than they were last year, or the year before.

PayPal is not going away anytime soon. Rather than worrying about the "gun" the company is wielding, banks should be looking for ways to leverage the PayPal payments platform. For example, recent Facebook apps such as Geezeo's iWant (coverage here) or ChipIn (coverage here).

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First Look: Bank of America’s New Networking Site — Small Business Online Community

By Jim Bruene Posted on October 10, 2007
Categories: Bank of America, Small Business

In the past 10 years, we've seen dozens of bank-powered sites targeting small businesses. Citibank ran one for a few years called Bizzed. Back then, they were called "portals." Now, they are "social networks." But the purpose remains the same: Create a destination site for business owners to learn how to run their business better while reinforcing the bank brand as small business savvy.

In general, it's a good idea. But it's extremely difficult to get traction with small business owners who usually lack the time and/or interest to read extensively about how to run their business (note 1).

Bank of America's effort, Small Business Online Community, tries to get around the attention problem by creating forums where specific questions and answers can be posted (press release here). Again, not a new concept, but probably the best way to get something like this off the ground.

Analysis
I registered (see note 2) and spent a few minutes poking around the site. In addition to the forum, the site includes columns by business experts and reader-submitted stories. It will be interesting to see if the so-called user-generated content in the latter category is all self-serving promotions from the small business participants, or meaningful perspectives that allow conversations to begin.

The well-designed site, with Web 2.0 touches, is off to a good start from a registration standpoint. This morning alone (as of noon Eastern time), 300 new members had signed up. They may all be bankers in disguise, but it's still far more than I would have expected.

Other than the small "powered by" link in the upper right corner, the site doesn't appear to have any direct involvement from the bank. Frankly, I'd like to see bank officers weighing in on the financial topics, as long as they take a consultative approach and disclose their affiliation. But I understand the bank's initial restraint.

Note:

1. However, entrepreneurs in the research phase, what is sometimes called "pre startup," often devour reams of material. And since they are often highly interested in financing opportunities, a bank-sponsored site could gain their attention.

2. A couple nitpicks:

Usernames are case sensitive; a twist that tripped me up when trying to log in the first time. The bank should remove that stipulation, especially in a less security-sensitive application such as this.
Lots of the material is available as RSS feeds, but other than the little orange icon, it's not very obvious how to subscribe via RSS or email.

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PayPal Revives X.com Domain for its Lab Site

By Jim Bruene Posted on October 9, 2007
Categories: Epayments, JP Morgan Chase, PayPal

Last century, serial entrepreneur Elon Musk launched what he expected to be a top-10 bank by now. And in true late-1990s dot-com fashion, it was simply called X.com. In retrospect, maybe not the best name for a bank, but it certainly was more memorable than First Security Bank of Whatever. The company soon merged with PayPal, dropped the single-letter name, and eventually took over the world of alt-bank payments.

For most of the past eight years, if you typed X.com into your browser, you simply ended up on the PayPal homepage. But recently, PayPal has opened a new area under the X.com URL called PayPal Labs. This is a place where competitors, developers, analysts, and anyone with too much time on their hands can see the latest new "beta" services under development at PayPal.

With just two services listed (see below), it's no Google Lab, but it shows that PayPal still has Silicon Valley DNA at its core, despite five years working within the shadow of the larger eBay brand.

My take: More financial institutions should open "lab sites" to demonstrate their commitment to innovation. The only one I remember was JPMorgan's LabMorgan, which was really was part VC, part incubator. But its URL only shows an error message these days, a shame.

Update (10 Oct): A reader reminded me about Fidelity's lab site, fidelitylabs.com.

In the PayPal Lab

PayPal Request Money for Facebook (see previous coverage here)
MySpace Fundraising Badge

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Mint Attracts 50,000 Users in First Two Weeks

By Jim Bruene Posted on October 8, 2007
Categories: Mint, Personal Financial Management

New TechCrunch co-editor Erick Schonfeld posted a short article yesterday (here) about Mint winning the Best of Show award at our FINOVATE conference (note 1). That post allowed TechCrunch's 600,000 readers to weigh in again on the pros and cons of Mint's model. During the past 24 hours, it attracted 72 comments, many with security concerns. Mint's CEO Aaron Patzer bravely joined the discussion and posted a half-dozen of the comments himself.

It's interesting to understand the concerns posted by TC readers. Of course, this is not at all a mainstream audience, so we take the complaints with a grain of salt. But it's still indicative of the hurdles a new financial institution, especially an unregulated one, faces when launching a new service.

Schonfeld's post also included the first metrics we've seen from the two-week old company:

50,000 total registered users
35,000 active users (have come at least once since registering)
5,000 power users (use it every day)
5,000 mobile alert users

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E-Mailbag: InsWeb Auto Insurance

By Jim Bruene Posted on October 8, 2007
Categories: Email Marketing, Email Samples, Insurance, InsWeb

Personalization of the subject line is less common in financial services marketing. Although the technique doesn't guarantee a response lift, it's a good variable to test (note 1).

InsWeb encourages customers to review their insurance coverage every six months with an eight-minute survey that begins within the body of the email.

The company creates interest by claiming a $301 average savings on a six-month policy. If accurate, it's a great ROI on the eight minutes required to complete the online form. It would be interesting to see a bank or credit union use this technique to market other financial services, such as deposits or home equity loans.

Email Characteristics

Date: Mon. 8 Oct, 2007

Time: 3:02 PM Pacific

Subject: Bruene Auto Insurance Review

From: InsWeb Customer Care InsWeb@mailer.insweb.com

To: jim@netbanker.com

Personalization: Subject line

Full Message

Landing Page

Note:

1. See our Online Banking Report on Email Marketing.

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Facebook Battle: Students 1, HSBC 0

By Jim Bruene Posted on October 5, 2007
Categories: Facebook, HSBC, Public Relations, Social Networks

My teenage son has just starting "Facebooking," and he loves it. It's his first foray into social networking, and I can tell he'll be a user for the rest of his life, or at least until something better comes along.

Those of us who are merely parents of social network users often find it difficult to understand its power. In my son's circle, Facebook IS the Internet. It's where every online session begins and ends and where important social connections are made and nurtured. That's why strategic investors such as Microsoft, Google and others are said to be giving Facebook as much as a $10 billion valuation (see previous coverage here).

All this has enormous implication for every retailer and service company on the planet. It amplifies word of mouth exponentially. Remember the old adage that every disappointed customer tells 10 people about their problem. With the instant broadcasting capabilities, an unhappy customer can now share his/her thoughts with 100+ Facebook friends with a single click (note 1).

And it's not something that is 15, 10 or even 5 years away. It's happening today. Case in point: this summer HSBC (UK) was forced to reverse a policy change that would have ended a common perk for U.K. student banking accounts, a multi-year grace period for overdraft credit lines with limits up to US$3,000 (see HSBC student page here).

Local students were so taken aback by this change in account terms, they formed a Facebook group called, "Stop the Great HSBC Graduate Rip-Off" (here or see screenshot below). Apparently the group was planning to rally its 5,000 members into a little civil disobedience. The group was hoping to cause customer service headaches by flooding the bank's branches, and overloading teller lines, with student customers asking for detailed explanations of the new fees.

According to news reports (here and here), the bank quickly backed off the rate change and reverted to the liberal interest-free borrowing guidelines.

Implications
You should be using, tracking, analyzing, and brainstorming about how to tap social networks for sales, marketing, service, and recruitment.

Note:

1. And the simple click-and-complain activity can be broadcast to every friend before the disgruntled customer has a chance to cool down (and/or sober up) and think through the issue in a more rational way.

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Mint, Mortgagebot, and Prosper Win Best of Show at FINOVATE

By Jim Bruene Posted on October 5, 2007
Categories: Finovate, Mint, Prosper

Following is a press release we just sent out over the wires. While these three companies received the highest ratings across the 117 ballots, ratings were relatively high across the board, averaging 5.02 on a 7-point scale. Eight other companies received scores within 10% (e.g., 0.5 points) of the lowest-winning score and thirteen companies were within 20% (1 point).
_______________________________________________________________________________

Oct. 5, 2007
For immediate release:

NEW YORK—(BUSINESS WIRE)—On Tuesday, attendees at the FINOVATE 2007 conference voted on their favorite financial product or service from among the 20 innovations presented. Overall, the DEMOs were extremely well received with an average score of just over 5 points on a 7-point scale. The three winners (in alphabetical order):

Mint: A new online personal finance company launched
two weeks ago (previous coverage here)
Mortgagebot’s Mortgage Marvel: A new mortgage marketplace launched Oct. 2 at FINOVATE 2007 (previous coverage here)
Prosper: The first U.S. person-to-person lender,
launched in Feb. 2006 (previous coverage here)

About the Voting
One “Best of Show” ballot was issued to all 230 registered attendees. Representatives from the presenting companies were not eligible to vote. Each of the 20 DEMOs was rated on a 7-point scale with the three highest receiving “FINOVATE Best of Show” awards. About two-thirds of eligible attendees voted.

About the FINOVATE Conference
The FINOVATE conference is the first demo-based conference for the financial, banking and lending technology industries. Held annually in New York City, the conference offers a chance to explore the future of finance in a fast-paced, intimate and unique way. FINOVATE is organized by Online Financial Innovations. For more information, please visit www.finovate.com.

About Online Financial Innovations
Founded in 1995 by former banker Jim Bruene, Online Financial Innovations is a Seattle-based research company. OFI is best known for publishing the Online Banking Report, a regular newsletter featuring in-depth analysis, relevant data, and informed recommendations to financial services executives in 50 countries. For more information and free sample reports, visit Online Banking Report, email info@netbanker.com or call (206) 517-5021. You may also find OFI’s blog on the latest in online finance & banking at NetBanker.com,

Contacts
Online Financial Innovations
Jim Bruene, 206-517-5021
info@netbanker.com

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Mortgagebot Launches New Mortgage Exchange, Mortgage Marvel

By Jim Bruene Posted on October 1, 2007
Categories: Loans & Credit, Mortgage, Refi & Home Equity, Mortgagebot

One of the great promises of the Internet is a better shopping experience. While most retail products have indeed become easier to shop for—think automobiles or vintage postcards—the financial services experience is still a mixed bag.

It's certainly much easier to compare savings rates online, a capability that has fueled growth at ING Direct and others. But loans are still much harder to shop for. The lead-generation sites, such as BankRate, GetSmart, LendingTree and Interest.com, have made it easier to contact multiple lenders, but in most cases, the customers still has to select a single lender, complete an application, and hope that there are no nasty surprises at closing in the form of extra fees or higher rates.

However, Mortgagebot is about to change all that and hopefully usher in a new era of transparency in mortgage pricing, with the launch of Mortgage Marvel, making its debut at our FINOVATE conference tomorrow.

How it works
Mortgage Marvel is a destination site where mortgage shoppers can search and find actual rate and fee information for participating lenders, usually at a nearby bank or credit union. And there is no personal info required, just the loan amount, property value, and zipcode. If the shopper finds what they want, a simple click on the APPLY button sends them directly to the lender's application to lock in the rate and fees listed (see screenshot below).

The key to making the marketplace work is having a wide variety of participating lenders with recognizable brand names at the local level. Normally, that's extremely difficult. But Mortgagebot, with more than 700 bank and credit union clients on its mortgage platform, can plug its existing client base into the exchange with ZERO systems integration (note 1). Currently, there are 250 lenders on the system.

And Mortgagebot clients have little to lose by placing themselves into the exchange which for the most part, only charges fees when mortgages are originated through the marketplace.

Right now, all mortgage lenders are displayed equally in order of lowest APR. But in the future, the company may offer preferred placement for additional fees.

Summary
For the first time, U.S. consumers can easily shop and compare the total price for mortgages from competing lenders. And thanks to the Internet, they can complete an application in less time than it takes to drive to the nearest loan office.

Note:

1. Currently, only Mortgagebot mortgage-platform customers are allowed to participate in the network.

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NetBank Falls But Don’t Blame Online Delivery

By Jim Bruene Posted on October 1, 2007
Categories: Direct Banking, ING Direct, NetBank

I was flying to New York Saturday morning when I read the news in The Wall Street Journal that NetBank had gone under, the largest bank failure in 14 years (note 1). While the WSJ headline, NetBank Failure Shows Online Limits, implied that online delivery shared some of the blame, NetBank's downfall was primarily from poorly underwritten loans, both prime and sub-prime, and most of those originations came the old-fashioned way, through face-to-face mortgage broker sales.

Over the years I've been acquainted with a number of NetBank employees and have written extensively about their innovations since their launch in 1996, as the second Internet-only brand. Interestingly, the three major U.S. Internet-only brands launched in 1995, 1996 and 1997 are gone: the first Internet-only bank, Security First Network Bank was sold to Centura (owned by RBC) and Compubank was sold to NetBank.

But no matter what the reason, a failure of one of the key names in U.S. online banking certainly gives the industry a black eye. My hope is that a forward-thinking bank buys the NetBank brand from the government and relaunches it with much fanfare next year. Sure, there's some negative brand equity this year, but the NetBank name is a classic and shouldn't go to waste (note 2).

ING Direct, which now lays claim to the retail deposits (note 1), has taken over the NetBank hompage for now (see screenshot below):

For more information:

FDIC info on the closure here
NetBank timeline from the Atlanta Journal Constitution here
It takes a failure for a bank to make TechCrunch here
American Banker's good summary of the failure, complete with quotes from federal regulators, here

Notes:

1. The company was taken over by federal regulators, who will sell off the assets and return all deposits up to the $100,000 insurance limit. About $1.5 billion in retail deposits, and 102,000 customer accounts, have been purchased by ING Direct. The estimated $110 million shortfall will be covered by the deposit-insurance reserves funded by premiums levied to all banks. The failure does not have direct cost to taxpayers.

2. We said the same thing about NextCard in 2001, but no one followed our suggestion. Now the most well-known website and brand of the most prolific advertiser in the late 1990s has been reduced to a link farm collecting rent from Google Adsense.

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Final FINOVATE Conference Lineup

By Jim Bruene Posted on September 27, 2007
Categories: Finovate, FINOVATE Conference

The schwag has been delivered, the notebooks printed, and the lunch order is in. We are all set to welcome more than 200 bankers, tech providers, press and analysts to Mid-town Manhattan on Tuesday, Oct. 2. We sold out the main auditorium last week, but you can still grab a good seat in the overflow room by registering at our conference website.

If you'll be there in person, be prepared to network with the presenters and other attendees. For two hours after both the morning and afternoon DEMO sessions, the presenters, along with other execs from each company, will be available for one-on-one or small group discussions and demonstrations. And a special thank-you to Philip Faulkner and Amdocs for sponsoring the networking area.

If you can't make it, watch this space for liveblogging during the event from Huntington's Brandon McGee. And at our NetBanker blog, Vancity's William Azaroff will also be covering the event in person (and check out his post today on planning your first social media effort). And within a few weeks, you'll be able to watch all the DEMOs in their entirety at our FINOVATE website.

Here's the final FINOVATE lineup:

8:00 AM Continental Breakfast

9:00 AM Welcome: Jim Bruene, Editor & Founder, Online Banking Report

9:05 AM Morning DEMOs (7 minutes per company)

Geezeo
Shawn Ward, Co-Founder

Metavante
Chris Burfield, Product Line Manager, E-Payments

Lending Club
John Donovan, COO

Andera
Charlie Kroll, CEO

    CheckFree
    Bob Homer, VP Product Management
    Milind Pandit, Director Product Management

Mortgagebot
Scott Happ, President & CEO

Billeo
Murali Subbarao, Founder & CEO

    Online Resources
    Bill Kinnelly, SVP Product & Marketing
    Mike Martell, Business Development Exec.

Identity Theft 911
Adam Levin, Chairman

Yodlee
Peter Hazlehurst, SVP Product Development

10:40 AM to 1:00 PM Networking with the                                                 Sponsored by:
              Morning Presenters
             (lunch available)

1:00 PM Welcome: Jim Bruene, Editor & Founder, Online Banking Report

1:05 PM Afternoon DEMOs (7 minutes per company)

Firethorn
Kyle Cochran, Product Manager

Monitise
John Tantum, Business Development Director

ClairMail
Joe Salesky, President & CEO

MShift
Awele Ndili, Founder & CEO

mFoundry
Drew Sievers, CEO & Co-Founder

    Prosper
    Chris Larsen, CEO & Co-Founder
    Andrew Martinez-Fonts, Head of Product Management

Jwaala
Andrew Taylor, CTO

iPay Technologies
James Hyde, SVP Strategic Alliances

Digital Insight, an Intuit company
Paul Rosenfeld, VP & GM Small Business

Mint
Aaron Patzer, Founder & CEO

2:40 PM to 5:00 PM Networking with the Afternoon Sponsored by:
Presenters (snacks & beverages available)

4:30 PM Best of Show Awards Presented

5:30 PM to 6:30 PM Informal cocktail hour (location TBD)

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Final FINOVATE Conference Lineup

By Jim Bruene Posted on September 27, 2007
Categories: Finovate

If you can't make it, watch this space for liveblogging during the event from Vancity's William Azaroff. And Huntington's Brandon McGee will also be covering the event in person. And within a few weeks, you'll be able to watch all the DEMOs in their entirety at our FINOVATE website.

Here's the final FINOVATE lineup:

8:00 AM Continental Breakfast

9:00 AM Welcome: Jim Bruene, Editor & Founder, Online Banking Report

9:05 AM Morning DEMOs (7 minutes per company)

Geezeo
Shawn Ward, Co-Founder

Metavante
Chris Burfield, Product Line Manager, E-Payments

Lending Club
John Donovan, COO

Andera
Charlie Kroll, CEO

    CheckFree
    Bob Homer, VP Product Management
    Milind Pandit, Director Product Management

Mortgagebot
Scott Happ, President & CEO

Billeo
Murali Subbarao, Founder & CEO

    Online Resources
    Bill Kinnelly, SVP Product & Marketing
    Mike Martell, Business Development Exec.

Identity Theft 911
Adam Levin, Chairman

Yodlee
Peter Hazlehurst, SVP Product Development

10:40 AM to 1:00 PM Networking with the                                                 Sponsored by:
              Morning Presenters
             (lunch available)