Jim Bruene, Author at Finovate

Launching: BillGuard’s “Anti-virus for Credit Cards”

By Jim Bruene Posted on May 26, 2011
Categories: Credit/Debit Cards, Launches, Personal Financial Management

Fintech made a good showing at TechCrunch’s semi-annual Disrupt conference in NYC. Of 32 startups that launched on stage, three were financial-related:

Spenz: A mobile PFM (Disrupt demo)
InvoiceASAP: A mobile invoicing app with accounting integration (Disrupt demo)
BillGuard: A transaction-monitoring service (Disrupt demo)

And both InvoiceASAP and BillGuard (discussed below) were selected to come back on the third day and compete, along with four other startups, for the top prize in front of an all-star panel of judges. The judges selected BillGuard runner-up behind GetAround, a clever peer-to-peer car rental service which wowed the crowd, also taking home the People’s Choice award. _____________________________________________________________________________

BillGuard overview
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The TechCrunch judges and analysts went gaga over BillGuard. Everyone wanted to use the service, and most wanted to invest in the company.

However, the company recently landed a $3 million Series A round (February 2011), so they’ll have to wait. Investors include: Bessemer Venture Partners, Chris Dixon, Ron Conway, IA Ventures, Howard Lindzon and Yaron Galai. The Israeli company has 12 employees. The founders are Yaron Samid, CEO, and Raphael Ouzan, CTO.

Currently, BillGuard is free for the first card and can be upgraded to monitor an unlimited number of cards for $4/mo, a classic freemium model.

In the two days following the company’s Monday launch, users added 10,000 cards to the alerting service. In the initial scans, looking back through 30 days of transactions, the company identified potential nuisance charges on 20% of the cards analyzed. The flagged transactions ranged in value from $2 to $6,000 with the latter described as “fraud on a very wealthy person’s card.” ______________________________________________________________________________

How it works
_____________________________________________________________________________

1. Register at the site with just your email address and ZIP code

2. Enter your username and password for a credit card account into the Yodlee-powered aggregation engine

3. The past 30 days of transactions are immediately downloaded and analyzed for potentially fraudulent or unwanted charges (see screenshot 2)

4. Charges are color-coded by risk assessment (green = good, orange = review, red = flagged) (see screenshot 3). Much like anti-virus companies, BillGuard relies on its user base (crowdsourcing) to identify nuisance and fraudulent charges.

5. You can quickly call up the “reviewable” transactions and choose to mark them “good” or wait for more information on the merchant from BillGuard and its user base (screenshot _______________________________________________________________________________

Analysis
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In my case, the service did not find any bad transactions in the 85 it reviewed from my primary business and personal credit cards. All seven marked “unsure” were fine. None were flagged red.

But according to the company, the average American loses $300 per year in unwanted charges, and I’m way over that. Just last year, I lost more than $1,000 because I had the wrong plan on my mobile phone. But that was a legitimate charge from an existing merchant of mine. BillGuard doesn’t guard against stupidity, yet, but it wouldn’t take a whole lot more intelligence to start flagging this type of out-of-bounds charge as well.

The potential for financial safeguard services is huge. Just look at the multi-billion credit-monitoring industry, or Mint.com for that matter which alerts users to bank fees and keeps a running total. The question isn’t whether consumers want this type of protection, certainly they do. The issue is whether anyone will take the time to set up the service, pay for it, and then take the time to monitor their accounts.

BillGuard knows that and is actively pursuing deals with large banks to package the service into online banking. In its Monday demo, the company said it was in talks with three top-ten banks (on Wednesday they said, “Make that 4”).

Distributing BillGuard would be a mixed blessing for banks. Earlier detection of fraud would be useful, but the labor involved in working through increased dispute resolution, especially false positives, would have to be factored in. But again, BillGuard understands the dilemma and is developing dispute-resolution capabilities that will SAVE issuers time and money.

I predict we’ll be seeing a lot more from this company so keep them on your radar. I know we will.

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1. Welcome screen after first download & scan (26 May 2011)

2. Initial scan results with 7 transactions marked “review”

3. Transactions are color-coded by risk assessment

4. The transaction review page

5. TechCrunch finalist demo (click to watch on TechCrunch site; )

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Note: For more on online personal financial management (OFM/PFM), see our Online Banking Report.

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New Online Banking Report Published: Creating Fee-Based Online & Mobile Banking Services

By Jim Bruene Posted on May 23, 2011
Categories: Online Banking Report, Pricing

The scariest thing about being a banking industry analyst, besides boring your family & friends, is looking back at the advice you handed out 5, 10 or even 15 years ago. While I’ve had my share of hits and misses, one thing I’ve been particularly adamant about, is the need to create fee-based online financial services. Sadly, this is one that’s been completely ignored so far (see note 1).

If U.S. financial institutions had charged an average of $1 per month per user (note 2) over the past decade, it would have generated $10+ billion in incremental profits, much of which would have been reinvested into the channel.

Had that happened, we’d already have:

Ironclad security
Highly personalized 2-way alerts & messaging
Integrated PFM and credit monitoring
Responsive online/email customer service
Killer mobile banking and iPad apps
And much more

But what matters now is where do we go from here? Consumers have been trained to expect everything, even costly services such as online billpay, to be free of charge. Anyone who tries to charge fees for the existing state of the art risks massive backlash from customers and the media.

The way to introduce fees after the fact is to charge only for new value-added services such as those listed above. That way, no one pays fees unless they want the new benefit. It’s the classic freemium model, and it works well across a number of industries, just ask LinkedIn.

Our latest report lays out 33 value-added modules that could support a la carte subscription fees. We look at eight use cases where these modules are bundled together for various-high value segments:

Power mobile users
Road warriors
Families/parents
Small/micro business
Homeowners
Financial trackers
Empty nest/retirees
VIPs

Currently, the best examples of multi-tiered pricing in the United States is business online banking where a number of banks and credit unions have a basic free option and at least one higher-end “cash management” solution (see Western Bank screenshot below).

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About the report
______________________________________________________________

Creating Fee-Based Online & Mobile Banking Services (link)
Pricing 2.0: How new revenue models will propel online/mobile banking to the next level

Published: May 18, 2011

Author: Jim Bruene, Editor & Founder, Online Banking Report

Length: 44 pages (10,000 words), 17 Tables

Cost: No extra charge for OBR subscribers, $395 for everyone else (link)

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Western Bank’s online banking pricing matrix (link, 15 May 2011)

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Notes:
1. At least in North America. Financial companies in other areas of the world have been more successful with fee-based services.
2. This is an average amount. Most users would pay zero, but with 20% paying $5/mo, you get to the $1/mo average.

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FinovateFall: Last Chance to Save $300 on Sep. 20-21 Event

By Jim Bruene Posted on May 18, 2011
Categories: FinovateFall2011

Thanks to everyone who made FinovateSpring a success just a week ago (my Twitter transcript here). But innovation doesn’t stand still, so we are already collecting applications and selling tickets for FinovateFall in New York City.

In fact, if you want to save on your fall ticket, register by the end of the day Friday (May 20) to receive $300 off regular ticket prices. Based on early results, it could be the biggest Finovate yet.

Last year, the conference expanded to two days (selling out three weeks in advance) and the audience loved it. Once again, each day will be packed with our unique blend of short, fast-paced onstage demos (no slides allowed) and intimate networking time with top executives from the demoing companies. With each company receiving just seven minutes onstage, FinovateFall is the only place to see dozens of fintech innovations in such a short period of time.

So make sure you are part of the excitement at the fifth annual NYC Finovate on Sep. 20 & 21, and save $300, by registering today!

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Last year’s presenters (FinovateFall 2010)

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Zong: A Payments Company Name to Remember

By Jim Bruene Posted on May 17, 2011
Categories: Facebook, Mobile Payments

Editor’s note: This guest post was written by Daniel Thomas, a 25-year veteran of the financial services industry and a principal consultant with Mindful Insights LLC. He’s been involved in strategy and product development for Online Resources Corporation, ARINC, and TeleCheck. He recently authored a report on merchant-funded in-statement rewards for Online Banking Report.

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Admittedly, my online game prowess is more closely aligned with Pong and Donkey Kong than the latest complex and socially intricate diversions. Back in the day, computer games garnered only a single payment transaction: when it was actually purchased. But today, in order to reach the next level, buy virtual pets or beat your opponent a half a world away, a player/avatar/consumer will typically transact multiple times per month in order to buy Facebook credits or other virtual currency (cash, coins, gems, etc.).

These transactions can often occur in the heat of battle (literally), and the last thing any good soldier wants to do is stop progress in order to begin the seemingly weeklong process of taking out their credit card and typing a bunch of numbers just to spend a $2.99 to re-fill their weapons cache.

Before you could say billabong, along came Zong to make it as quick and as easy as a song. How? They ask if you want the charge to tag along on your mobile phone bill. And before long, you are back in action and that much stronger.

So, what’s the big deal? What has tickled my lifelong fascination with payments is not where Zong is now but where they are headed. Keep in mind that all these newfound payment transactions are seen only by the game company (merchant);, Zong (acquirer and network); and the mobile phone company (issuer). Financial institutions are involved only when the phone bill is paid at the end of the month.

Furthermore, the fees that Zong and a throng of other “carrier billing” processors command can be as high as 40% of the transaction amount. Ding-dong! Hello? After all, the cost of goods sold for a new virtual tank is pretty small and so is the actual transaction amount once the price has been converted from the game company’s internal currency.

But even so, 40% ain’t chicken singsong, especially when you consider that the online gaming (not gambling) market today is along the lines of $100 billion. Admittedly, 90% of that market belongs to the non-virtual console and PC games that Zong will be moving into as those products enter headlong into the virtual world.

Future plans
Zong, which now has 100 employees, is already available as a form of payment for Facebook Credits and virtual goods in 42 countries. The company has big plans to expand with its model. Online gaming is just phase one of its multi-prong strategy. Zong knows that moving into markets where physical and digital goods are purchased online (phase 2) will require a reduction in the processing fee percentage. But they already have millions of loyal consumers enrolled in their service which they can leverage to expand to merchants selling relatively low-priced products with reasonable margins (think: books, music, etc.)

Phase three takes things one step further as Zong’s strategy intersects with mobile payments at the physical point-of-sale. The idea is that consumers will use the Internet to research their next purchase, as they do today, and will buy the item online using Zong to place the charge on their mobile phone bill. That payment information is then stored in the cloud so that their customers can go to the physical store, pick up the item and show proof of purchase to the merchant.

That should keep traditional payment providers awake all summer long.

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Purchasing Facebook credits with Zong

Step 1: Choose number of credits

Step 2: Enter mobile number

Step 3: Random 4-digit authorization PIN is sent via Text message

Step 4: The PIN is entered into Facebook

Final confirmation screen

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FinovateSpring 2011 Best of Show: BancVue, BankOns, Dwolla, oFlows, Mitek, PayNearMe & Wikinvest

By Jim Bruene Posted on May 11, 2011
Categories: Finovate, FinovateSpring 2011

FinovateSpring 2011 is a wrap. It was an inspiring two days, with 64 demos, all with an interesting twist or two or three on the state-of-the-art.

In the end, seven were chosen by the audience as best of show, but it was a tight race. Most companies received a significant number of audience votes and piles of business cards in the networking sessions.

The FinovateSpring 2011 Best of Show winners (in alphabetic order):

BancVue for its youth-oriented financial game system, MoneyIsland
BankOns (company launch) for its mobile merchant-funded rewards system
Dwolla for its alternative payment service (taking root in Iowa)
oFlows for mobilizing the application process via iPad2
Mitek Systems for Mobile Photo Billpay, doing for paper bills what it did for checks
PayNearMe for enabling online bills and transfers to be paid with cash at a 7-11 store
Wikinvest for SigFig, a service to help users understand investment costs & alternatives

Congratulations! And thanks to everyone who presented, sponsored, attended and followed the #finovate tweets.

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Notes on methodology:
1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.
2. Attendees were encouraged to note their favorites as the day went on and choose 3 favorites from just the demos of that day. Ballots were turned in at the end of the last demo session each day.
3. The exact written instructions given to attendees: “Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed. Note: Ballots with more than three companies circled will not be counted.”
4. The seven companies appearing on the highest percentage of submitted ballots were named Best of Show.

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FinovateSpring 2011 Kicks Off Tuesday

By Jim Bruene Posted on May 9, 2011
Categories: FinovateSpring 2011

We just finished the dress rehearsals for the latest Finovate conference. We’ve worked out the glitches, seen some amazing new products, and look forward to putting 64 cool fintech innovations through their paces Tuesday and Wednesday.

It will be the biggest Finovate yet, with more than 800 packing San Francisco’s Design Concourse Exhibition Center. You can track the audience reaction in real-time with the Twitter hashtag #finovate. And I’ll be live tweeting from Netbanker during the next two days.

The 64 demoing companies are show below (here is a list with links).

We are looking forward to seeing everyone tomorrow!

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FinovateSpring 2011 Kicks off Tuesday

By Jim Bruene Posted on May 9, 2011
Categories: Finovate, FinovateSpring 2011

The 64 demoing companies are show below (see here for a list with links).

Looking forward to seeing everyone tomorrow!

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Out of the Inbox: Chase Invites Business Clients to a Free Webinar with Google

By Jim Bruene Posted on May 6, 2011
Categories: Email Marketing, Email Samples, Google, Small Business

On the one hand, it’s easy for a bank to get the attention of business clients and prospects. Just announce a streamlined commercial loan-app process. But since that’s unlikely to happen in the wake of the Financial Meltdown, a Webinar with Google is a pretty solid Plan B.

Chase has a winning effort here. The topic, 7 ways to sell online, is so compelling that Google is tossing in a $100 AdWords credit for attendees (see note). And it never hurts to associate with a powerful and well-regarded Internet brand.

The email design is good with an interesting subject line, an email to ask questions, and a big green button for the call-to- action. The copy is a bit predictable, but it’s short and to-the-point and doesn’t distract. There are small quibbles regarding design-layout; perhaps, a Gmail issue; and they forgot to capitalize the W in AdWords, but those are minor glitches.

Grade: A-

Chase email to existing business clients (6 May, 10:33 AM, Pacific)

Landing page hosted by Google and co-branded with Chase (link)

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Notes:
1. Google usually offers the $100 only to new clients, but I don’t seen any fine print limiting the bonus. I hope they don’t add a restriction after the fact, which could negate the positive energy Chase generates from the Webinar offer.
2. For more info on the space, see Online Banking Report: Micro- and Small Business Online Banking (published Oct. 2009)

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First Look: Bank of America’s Just-Launched iPad App

By Jim Bruene Posted on May 3, 2011
Categories: Bank of America, iPad, Mobile Banking

A little more than a year after the iPad launched, Bank of America finally made it their own with a native app. It appeared in the iTunes store around midnight last night and has already climbed to #42 on the list of most popular free apps across all categories (5 PM Pacific; see update below and notes 1, 2).

I took it for a spin a few minutes ago and it’s about what you’d expect for the first version. The most important functions are all there: view recent transactions, transfer funds, pay bills, find ATM/branch locations, and contact customer service. It also includes the ability to apply for a new account within the app, something that is still relatively rare (and not included in the bank’s iPhone app).

Analysis: Overall, it’s a solid, if somewhat tardy, initial effort and will be adequate for most users. However, BofA has a reputation for being an online leader, and there is nothing in the app so far that supports that brand positioning. But, then again, simply having an iPad app puts it ahead of most competitors (see list of top banking apps as of last week).

A few other notable features:

Users have the option to store their username, so subsequent logins can be accomplished by simply entering a password (screenshot 1)
Pressing anywhere on a line item in the statement brings up a small popup with additional transaction detail (screenshot 2)
While it won’t win any design awards, the app gets a passing grade with an overall look and feel that is consistent with other iPad apps with relatively intuitive navigation. At least it’s not simply an expanded version of its iPhone app (like the Chase iPad app)

It also disappoints in a few areas:

I tried to pay my credit card bill, but the iPad app doesn’t support payment via external checking account (regular online banking does)
It times out after 10 minutes (good), but leaves your account balances visible until you dismiss the popup (screenshot 4)
I was not able to access business credit card statement data (system unavailable) but was able to get personal card data
The squares didn’t quite fit the screen right in portrait mode (screenshot 4)

Update: At 11 PM Pacific, the BofA app has reached #22 among all free iPad apps.
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1. Initial iPad app sign in (3 May 2011)

2. Transaction details popup

3. New account app

4. Time-out warning still shows account balances

Notes:
1. The app still shows up as #32 in the finance category. So clearly, the top list among all apps is refreshed more often than the individual category lists.
2. There is no mention of the app on the bank’s website as of 5 PM.
3. For more info on mobile banking, see our previous Online Banking Reports.

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ING Direct Adds Phone-to-Phone Mobile Payments Powered by Bump Technologies

By Jim Bruene Posted on May 2, 2011
Categories: ING Direct, Mobile Banking, Mobile Payments

I’ve always admired ING Direct’s focus on deposit accounts primarily sold and serviced through the Internet. While the bank has diversified into checking accounts, mortgages, and investments during the ten years since it launched, the core website look and feel is virtually unchanged (see 2001 version here).

So I was more than a bit surprised to learn this weekend that ING Direct became the second U.S. financial institution to add Bump-powered phone-to-phone payments to its iPhone app. PayPal was first, adding the feature more than a year ago.

Bottom line: Evidently, with “high-yield savings” stuck at 1%, the giant direct bank needs to be a little more creative on the feature side to attract new business. While bump-to-pay will eventually be replaced with direct communications via NFC or other technologies, it’s a nice addition that positions ING Direct as a mobile leader.

Bump is now one of two choice on the P2P menu on ING Direct’s iPhone app (2 May 2011)

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Note: For more info on mobile banking, see our previous Online Banking Reports.

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Account Alerts: Discover Card Helps Users Visualize the Options

By Jim Bruene Posted on April 28, 2011
Categories: Alerts & Messaging, Discover Card

We are approaching the 15-year anniversary of the first retail banking account alert. Britton & Koontz Bank was the first to offer them in the summer of 1996 (note 1). But alerts didn’t become widely available until a few years later.

Back then, you’d be lucky if you had three or four different alerts to choose from. And of course, there was no such thing as a mobile alert.

Today, banks and card issuers offer a dozen or more alert types capable of going to multiple email addresses, multiple mobile devices, or even to your land-line via voice message. Consumers are better served overall, but the wide range of options can be confusing.

One solution is to use default selections. Users can select their preferred profile, and the bank establishes a set of recommended alerts. This profile selection could be made during online banking registration. For example:

Normal alerts
More alerts
Less alerts

Another helpful practice is to show examples so users can visualize what they are signing up for. Discover Card uses this technique in its card-management area with popups that show both the email and text-message version of each alert type (see screenshot below).

Alerts are a vital part of online and mobile banking, so take time to educate users on the appropriate mix (note 2). It’s also a great topic to cover in your blog or Twitter feed.

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Discover allows users to review samples of each alert type (28 April 2011)

Notes:
1. Signet Bank was the first major to offer email account alerts. We covered it in OBR 22 (Feb 1997).
2. For more information on alerts and messaging, refer to this Online Banking Report published in 2003.

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65 Most Popular iPhone Apps from U.S. Banks and Other Financial Services Companies

By Jim Bruene Posted on April 26, 2011
Categories: Apps, Mobile Banking

This is a followup to last week’s 30 most popular iPad apps. Unlike the iPad, most major financial institutions have had an iPhone app for a year or longer. So the most-popular list reads pretty much like a who’s who of U.S. banking.

Observations:

Only 16 (25%) of the top-65 also have iPad apps
36 (55%) apps are from banks representing 29 unique banks (i.e., 7 apps are second or third ones from the same bank)
15 apps (23%) are from credit unions
Banks/card issuers command 6 of the top 10 spots (7 if you count PayPal)
The highest credit union is #23, Navy Federal Credit Union; Suncoast Schools FCU is second highest at #35

Methodology: Using an iPhone in the late afternoon today, I accessed the Free apps in the Finance category of the Apple App Store and sorted by “Most Popular.” I included apps only from U.S. financial institutions or from third parties that tap directly into financial institution data using account aggregation (e.g., from Yodlee, CashEdge, etc.). Pure content apps, like ING Direct’s ATM Finder, were not included even if from a financial institution.

Note: The first column below is the rank among all financial institutions (as defined above). The second column in the app’s rank within the entire App Store “finance” category. And the third column is the rank of that company’s iPad app, if they have one.

Table: 65 Most-Popular U.S. Banking Apps

FI Rank	Finance Rank	iPad Rank	Company
1	1	—	Bank of America
2	2	4	Chase bank
3	3	—	Wells Fargo
4	4	—	PayPal
5	5	—	Capital One
6	6	1, 5	Pageonce
7	9	—	Mint.com
8	10	—	American Express
9	12	2	Square
10	14	8	USAA
11	15	—	Citibank
12	17	—	Regions Bank
13	18	—	Discover
14	19	—	TD Bank
15	20	—	PNC Bank
16	21	9	Fidelity Investments
17	23	6	E*Trade
18	24	—	ING Direct
19	25	—	SunTrust
20	26	—	US Bank
21	27	—	Schwab
22	30	—	PNC Virtual Wallet
23	32	—	Navy Federal Credit Union
24	35	7	TD Ameritrade
25	43	—	Barclaycard
26	44	22	BB&T
27	47	—	ShareBuilder (ING Direct)
28	48	—	Citizens Bank (RBS)
29	52	—	Vanguard
30	58	—	JP Morgan
31	66	—	M&T Bank
32	67	24	BBVA Compass
33	70	11	Expensify
34	78	15	Merrill Lynch, My Merrill
35	82	—	Suncoast Schools FCU
36	89	—	TCF Bank
37	93	—	Arvest Bank
38	103	—	SchoolsFirst FCU
39	105	14	TDECU
40	108	—	Charter One (RBS)
41	109	10	thinkorswim (TD Ameritrade)
42	110	—	RBFCU
43	113	—	Wings Financial Credit Union
44	121	20	Merrill Lynch, Edge
45	122	—	Union Bank
46	124	—	Safe Credit Union
47	125	—	Service Credit Union
48	140	—	Comerica Bank
49	141	—	BECU
50	143	—	Zecco
51	151	—	DCU
52	158	—	NetSpend
53	160	—	Tyndall FCU
54	161	—	Golden 1
55	162	—	America First Credit Union
56	174	12	Mercedes-Benz Financial
57	178	—	Woodforest National Bank
58	179	—	TradeKing
59	182	—	M&I Bank
60	189	—	Wells Fargo, CEO
61	190	—	First Tennessee Bank
62	195	16	Bank of Oklahoma
63	196	—	SFEFCU
64	201	—	IBC Bank
65	205		VyStar Credit Union

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Note: For more info on mobile banking, see our previous Online Banking Reports.

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