Author: Jim Bruene

Call for Entries: FINOVATE 2008, NYC Oct. 14

By Jim Bruene Posted on
Categories: Finovate

image Our second annual financial innovations conference, Finovate 2008: Experience the Future of Finance, will take place Oct. 14 in mid-town Manhattan. Like the sold-out event last year, 20 innovative financial tech companies will demonstrate their latest products and technologies. Each company exec has seven minutes in front of the audience, and is then available at a dedicated demo station for 90+ minutes of one-on-one discussions. 

While we won’t be releasing presenter names for some time, you can get a taste of the content by reviewing our blog coverage (here) and videos from Finovate 2007 (here). Last year, the audience selected Mint, Mortgage Marvel from Mortgagebot, and Prosper as Best of Show. For the entire list of 2007 presenters, see our blog post here.

Nomination process for presenters
Presenter slots are by invitation only. But since we don’t (yet) know every cool financial services company on the planet, we’re also taking nominations (yes, you can nominate yourself). The two main selection criteria are simple. The product/service/technology must be:

  • highly innovative
  • related to financial services (either direct-to-consumer, or delivered through financial services companies)

If you are interested, tell us how you will impress an audience of banking execs, reporters from the major dailies, top industry analysts and bloggers, VCs and a variety of “new product folks” from major tech companies. Please contact my colleague and conference director Eric Mattson <mattson@netbanker.com> for more information on becoming a presenter. 

Attendees, save $350 by registering before May 31
The super-early-bird price ends in three days. So take a moment to lock in your $350 savings on Finovate admission (price = $745). We have a liberal cancellation policy (note 1) if your plans change, so register here before prices go up.

Press, analysts, and bloggers
Subject to space limitations in NYC, we are again inviting press and industry analysts and bloggers to attend at no cost. So get your press requests in early. Contact OBR/Netbanker editor Jim Bruene <jim@netbanker.com> to request a press pass. For bloggers, please detail your reach in the financial and/or tech industries.  

Note:

1. Cancellation policy: At any time prior to the day of the show, you may transfer your ticket to someone else or roll it over to a 2009 Finovate event. Alternatively, you may elect to receive a refund of the full amount through the end of July; 75% through Aug. 31; 50% through Sept. 30; and 25% up until two days before the event, in this case, by midnight PST Oct. 11.

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ING Direct to Offer Desktop Security Plug-in from Trusteer

By Jim Bruene Posted on
Categories: Authentium, ING Direct, Security & Privacy, Trusteer

image While everyone wants better online banking security, the business case for most solutions is elusive. Even the simple step of adding an password in front of sensitive transactions can cost millions in customer service, enrollment procedures, employee training, and other soft costs.

So financial institutions, especially in the U.S., have taken a pragmatic approach to security, adding behind-the-scenes monitoring and making it difficult to transfer large amounts of cash out of the bank, rather than incur the expense of more robust login security. Banks have been especially reluctant to get involved in the security of the customer’s desktop due to the potential tech support costs and liability issues.

That’s what makes ING Direct’s new solution especially novel. The large U.S. direct bank, which has pioneered several security procedures, including multi-factor login and PINpad data entry, will offer a downloadable 400k plugin that creates a “secure tunnel” from the user’s computer to the bank (more analysis from Gartner’s Avivah Litan here). 

According to the software provider, Israel-based Trusteer, even if the user’s computer is infected with malware, the company’s Rapport software defeats all attempts to view, capture, or take over the transaction. It also encrypts keyboard entry without impacting the speed of the interaction with the bank. If it works as billed, it could be a boon for online banking security. 

The optional plug-in is expected to be made available to the direct bank’s 14 million customers worldwide, including 6.5 million in the U.S. The software is already in use by U.S. brokerage Muriel Siebert & Co. which mentions it in the What’s New section of its homepage (see screenshot below; read more here).

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Cost
The software is now available here. It is free-of-charge to communicate with ING Direct and three other websites. Users will likely have the option to purchase a premium version that communicates with a larger number of websites. 

This so-called freemium business model should help minimize the cost of the software to the financial institution. But the bigger cost issue for the bank is the customer service expense. ING Direct, which has famously kept customer-service costs down by focusing on serving only profitable customers, likely will offload as much of the tech-support burden as possible to Trusteer. But there’s no such thing as zero impact. So it will be interesting to see if they can make the ROI work across 6.5 million customers, many of whom haven’t a clue about safe computing basics.

A competing system, Safe Central from Authentium, was showcased at our Finovate Startup conference in April. The full-length demo of the program will be available here within a few days.

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Synovus Testing Free iPod Nano at Bank of North Georgia

By Jim Bruene Posted on
Categories: Advertising & Promotion, Synovus

image It’s an unusual time of year to see a free iPod offer (see previous coverage here, here and here). Usually, they appear closer to the fall “checking account season” when consumers start thinking about holiday gift giving. That way, even if they don’t need an iPod themselves, they might still be motivated to get one to give to someone else. 

However, Bank of North Georgia, one of 36 bank brands owned by Synovus, has an offer running through June 20. Customers opening a new personal checking account, including free checking and sending three bill payments by the end of July, earn a free iPod Nano. The bank may be testing the pull of the freebie during the graduation gift season. We checked the other Synovus banks and none are offering free iPods, at least not prominently (note 1).

Bank of North Georgia is using a homepage graphic of the latest generation iPod Nano, complete with Flash video running on the Nano screen. The fine print (as shown on the offer landing page): 

image 

The iPod ships before Oct. 1, just in time for the next holiday. Thanks to Bank Deals for the find.

Bank of North Georgia homepage (20 May 2008)

image

Note:

1. Tested from a Seattle IP address on 20 May 2008. We refreshed the homepage multiple times to see all offers presented in the main window. We did not search the entire websites of the 36 banks.

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Scooter Loans from "Green" Credit Unions

By Jim Bruene Posted on
Categories: Green Marketing, Loans & Credit, Public Relations

image According to the Wall Street Journal, scooter sales in the U.S. are up 25% compared to last year (article here). While still relatively rare in U.S. cities, I have a feeling that 10 years from now, after a steady diet of $5/gal gas, American cities will look more like their European counterparts, with scooters zipping about everywhere.

For banks or credit unions, this might be the ideal time to jump on the scooter bandwagon by helping customers buy the energy-efficient vehicles. It would be a great way to grab a little PR boost during the slow summer-news cycle, and with some models selling for $4,000 or more, you could boost vehicle loan outstandings by a measurable amount.

A brief Google search located two financial institutions pushing scooter loans, both appropriately with “green” in their name: South Burlington, VT-based Green Mountain Credit Union and a Wisconsin-based credit union (who’s name we removed at their request in Aug. 2010 because the offer is no longer available and they still get inquiries from this post). 

Evergreen is promoting a special one-day, 3.99% scooter loan on its homepage (see screenshot below and note 1). The Saturday morning event, conducted in partnership with a local scooter dealer, included test rides, free hot dogs, and prize drawings. The CU also gave away a scooter earlier this month as part of its 50th anniversary special.

Benefits/Opportunities

  • Incremental loan originations: If you are a good relationship lender, the $4,000 scooter loan today could lead to many $25,000 car loans in the future. 
  • Search-engine marketing: Currently, there are no direct ads running on the keywords “scooter loans,” although you will compete with several advertisers displaying against the generic “loan” in the search term. There are also few organic results for the term, so there’s a good chance an SEO-optimized landing page would rate highly in Google results.
  • Leverage branch parking: One of the problems with urban scooter use is lack of available parking. Branches with parking could turn over one or more spaces for customers with scooters, creating good will, as well as the occasional picture on the 5 PM news.
  • Public relations: Anything that saves gas makes for a good story this summer and beyond. It can also be pitched as a “green banking” story, although it’s not a pure environmental win. The gas savings are easy to see, but scooter emissions can be significantly higher than those of the automobiles they replace.
  • Starter loan/credit: If you can convince your underwriting staff to accept applicants with limited or no credit history, the scooter loan could be a great way for young adults to build a credit file and improve their credit score (thanks, Andrea, for the idea)
  • Customer acquisition: Scooter loans could be a great way to introduce younger consumers to your financial institution.
  • Trendy icon: At least for urban customers, the scooter, especially the classic Vespa look, makes for an attractive graphical image, conjuring up memories of trips to Italy, or at least movies shot there on location. Your scooter program could make for good website content, eye-catching outdoor feel (great bus ad!), and or a nice flourish for other media efforts.
  • Strike a deal with Scooter Financial: The number one result at Google for “scooter loans” is Scooter Financial, which does exactly what you’d expect, make loans to buy scooters. Given their name and Google pagerank, they could be an ideal company to partner with.

Cons and potential problems

  • It’s an asset easily hidden from the repossession agent, so it’s harder to use the repo-threat to enforce outstanding debt. 
  • The accidental death rate for scooter owners is about 65% higher than that for cars; so you might want to be careful how much you push it as an “automobile alternative.” But the news isn’t all bad: Scooter owners are much less likely to perish than motorcycle owners. 
  • Most gas-powered scooters release significantly more pollutants than most automobiles.
  • The smaller loan sizes may lead to little, if any, profits.
  • Not a big market overall.

Green Mountain Credit Union homepage promotes 6.49% scooter loans

(21 May 2008)

Scooter loans from Green Mountain CU homepage

Credit Union homepage promotes Saturday “scooter loan” special (21 May 2008)

image

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WaMu Launches Text-based Mobile Banking

By Jim Bruene Posted on
Categories: Mobile Banking, SMS, Washington Mutual

imageWaMu just launched its first foray into mobile banking, a text-message-based (SMS) service believed to be powered by New Zealand’s M-Com (previous post here). Thanks to Brandon McGee, blogging from his vacation via iPhone, for the tip (here).

The free service provides text-based access to balance and history of checking and savings accounts. To use the mobile services, WaMu customers must first register through online banking to activate their phone. Up to five phones can be registered through a single online banking account.  

Chase is the other U.S. top-10 bank using a primarily text-based approach for mobile delivery. See our Online Banking Report on Mobile Banking for more information on the growing market, including a 10-year adoption forecast.

More info at the WaMu website:

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Virgin Money’s Student Payback Could be the Beginning of Something Disruptive

By Jim Bruene Posted on
Categories: P2P Lending, Student Loans, Virgin Money

image After talking to founder Asheesh Advani on several occasions, we expect Virgin Money (US) to become a disruptive force in the student loan business. And with college costs rising and financing options declining (see previous coverage here), there’s a need now for new approaches.

Against that backdrop, I was thrilled to see a link to Virgin Money’s press release (here) in a Payments News roundup this morning. I eagerly fired up the blog editor to write about it, but quickly realized it was not the product I was hoping for.

image While it’s a good line extension, it’s not so new (think Diet Coke adding lime). Student Payback is a well-named service to formalize friends & family loans to students, something the company already did with its Handshake and Handshake Plus services (see note 1).

The main difference, and why it costs $100 more, is that Student Payback allows up to 10 increases in the original loan amount with no additional fee. For example, each semester a new loan can be added without needing a new loan doc each time.

Analysis
Strategically, Student Payback appears to be right on the money. It allows VM to better target the P2P student loan market with the eventual goal of moving upstream, graduating from merely formalizing existing loan agreements to actually brokering multi-party financing deals. For example, initial seed money could come from mom and dad with help from government/school programs. Then as the student progresses through their studies, additional financing could come from Virgin Money partner bank(s) and/or individuals/organizations with an interest in helping students at particular schools (e.g., alumni) or those entering certain fields. Scholarships, grants, internships and other related activities could also be thrown into the mix.

Anyway, there’s lots of opportunity especially with the growth of social networking and the exit of several large student lenders. Two startups showed new solutions at our Finovate Startup conference several weeks ago: GreenNote and SimpleTuition. And there are others entering the market such as Fynanz (previous post here) and Qifang, a Chinese startup TechCrunch wrote about in February (here).

Note:
1. See our Online Banking Report on P2P lending for more information.

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Links from My Metavante User Conference Presentation

By Jim Bruene Posted on
Categories: Conferences, Metavante

metavante_logo I delivered a presentation on Online Banking Innovations at Metavante's annual user conference in Milwaukee yesterday. As promised, here are the links to the companies and products mentioned. Thanks to everyone that attended and thanks to Metavante for having me.

Blogs:

Personal finance:

Investment communities

Lending communities (P2P lending)

Mobile

Fees:

Lead Generation

Archives

Health Care Expense Management

Retirement Planning

Mobile Payments

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Mobile Banking Uptake: Bank of America Closing in on 1 million Mobile Users

By Jim Bruene Posted on
Categories: Bank of America, Chase Bank, Metrics & Market Research, Mobile Banking

Bank of America iphone mobile bankingIn its latest quarterly financial results (here), Bank of America said it signed up 224,000 new users during the quarter to bring its active mobile banking base to 840,000. Assuming the 75,000/mo pace continues through second quarter, the bank should be over 900,000 now and will surpass 1 million in the next few weeks.

Although it’s a nice milestone, it’s only 4% of the bank’s 23+million active online banking users (here). Given that mobile is pushed frequently in the bank’s online banking area, one could argue that 4% adoption is pretty anemic. But according to M:Metrics, less than 14% of U.S. mobile phone users accessed info via the mobile Web in February. So 4% of a 14% universe is much more impressive, indicating the bank has tapped almost 1/3 of the short-term potential for mobile Web-based services, a good start.

To really goose adoption, text-based solutions may need more emphasis (see Chase screenshot below). According to M:Metrics, U.S. text users outnumbered mobile Web users almost 4 to 1 in February, 110 million to 30 million.

Industry forecast update
These adoption rates are about what we expected. In the forecast published a year ago in our Online Banking Report on Mobile Banking, we were relatively bearish short term, projecting 900,000 mobile users by year-end 2007 growing to 2.5 million by the end of 2008.

With BofA reporting 840,000 and assuming they have about half of all users, the U.S. market has likely already passed the 1.5 million mark and will end the year at more than 3 million.

The adoption rate depends on how hard banks push mobile options. Along with BofA, Chase has been one of the most aggressive, showing mobile use in its advertising for several years now (previous coverage here). I love its “Text your account. It texts you back.” Just seven words conveying more than most 3-minute demos.

 

Chase Bank Text Mobile banking

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New Online Banking Report Published: Social Investing Communities

By Jim Bruene Posted on
Categories: Investment Products, Online Banking Report, Social Media, Social Networks

imageThe latest research from our Online Banking Report division is now available. It’s a double issue (#152/153) released today entitled:

Online Investing Communities: Will social networking revolutionize saving & investing?

We believe social networking will eventually play a large role in online investing, and evidently we are not alone. We found 54 companies involved in investment-information exchange and only six of those have monthly traffic of 100,000 or more.

So, while we like the idea, it will take awhile to catch on. Only about 25% of the U.S. population owns individual stocks, and only a small subset of those make a trade every year. Furthermore, the prime social networking demographics, those younger than 35, are less likely to own or follow stocks. As a result, we project that it will be well into the next decade before adoption passes the 10% mark.

In preparing the report, we asked 400 U.S. online users their thoughts about the idea of sharing investment info in a social network setting setting such as Zecco Share or Motley Fool CAPS (see note 1). While there was a decent amount of interest from the under-30 group, 30% were somewhat or very interested, the overall enthusiasm for the idea among all U.S. adults (21+) was only 22%. See the full report for more research results and the resulting 10-year social investing forecast.

About the report
Subscribers may download the report here as part of their annual subscription plan. Others may purchase it here. The printed version will be mailed to subscribers later this week. 

For more information read the abstract here.

Note:
1. We asked U.S. online users for their opinions about social networking for investment information (fielded April 18-19, 2008, n = 401). The top-level results are including in the report. For more detail, All-Access subscribers may download a complete summary PDF document of all questions and answers or download an Excel file of the raw data. In addition, All-Access subscribers may use our online research tools to run their own cross-tabs and filters on the dataset. The dataset will be available next week through subscriber accounts at OnlineBankingReport.com.

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Online Financial Services Scorecard: March 2008

By Jim Bruene Posted on
Categories: Compete, Metrics & Market Research

Compete Netbanker Online Financial Services Statistics March 2008

Summary
According to data from Compete’s consumer panel, March rebounded from the lower traffic in February. Every product, except standard savings accounts, posted increases in the number of applications. Credit cards were the biggest gainer (up 24% in shoppers, up 13% in applications) following sharp declines the past few months. Home loans market performed similarly, with double-digit increases in applications for both purchase (up 15%) and refinances (up 12%). 

New this month, we have valid year-over-year comparisons shown (see note 1). Compared to a year ago, both checking and credit cards applicants and shoppers have risen significantly. Home loan shoppers are up slightly, but applications are up. 

Commentary

  • Credit cards saw a large jump in both shoppers and applicants. The credit crisis seems to have benefited the credit cards market as applications, especially for balance-transfer cards, have increased. Compared to a year ago, shoppers are up 47% and applicants are up 53%. However, conversion dropped by 2% from February.
  • Deposits saw overall shopper loss in all three segments during March, but applications for checking were up 2% as were high-yield savings (up 8%). Last year at this time, deposits were increasing across all segments. In March of 2008, however, applicant levels are below what they were in 2007 with 31% drop in high-yield savings applicants and a 7% decline in all savings accounts.
  • After a terrible February, refinance mortgages posted a 27% gain in shoppers as well as a 12% gain in applicants. Year-over-year refinance applications are up 32% from a year ago. Purchase mortgages also saw a similar improvement from last month with a gain of 23% over last year. Home equity had the largest gain in applications in the month of March as leads/applications (note 2) grew 34%. Year over year, however, applications are down 32% due to the housing crisis of the past few months.

About the Financial Services Scorecard
A year ago, we introduced the Financial Services Monthly Performance scorecard produced by Compete. It summarizes the overall performance of 23 large U.S. financial institutions and lead-generation sites. Refer here for the detailed methodology as well as companies tracked.

Notes:
1. New this month: Year-over-year comparisons are now included in the monthly table. Because of ongoing methodology tweaks, the percentages in this table may be slightly different than if you went back to the data from a year ago and calculated the change. 

2. Leads/applicants = Leads or applications depending on whether the site being tracked is a lead-generation site or an actual lender.

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Prosper Kicks Off Nationwide Lending with New Slogan and TV/Radio Advertising

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

imageArmed with a new national lending capability (note 1), new slogan, “Let’s bank on each other,” and a window of opportunity to gain ground on the competition (note 2), person-to-person lending pioneer Prosper is preparing new marketing initiatives which include television and radio advertising. Prosper said in its blog Monday that the ads will begin test runs this week. 

The two television spots feature short vignettes of real lenders and borrowers (see screenshot below). Prosper has also posted brief “behind-the-scenes” videos of the borrower and lender meeting while giving gushing testimonials about the service.

There is also a series of seven 30-second radio spots:

  • Meet the lender/borrower spots featuring same pairs as the TV ads (2 ads)
  • A young student borrowing from Prosper
  • A small business person borrowing from Prosper
  • A youngish woman borrowing from Prosper for debt consolidation
  • A man borrowing from Prosper for home improvement
  • A man borrowing from Prosper for a car loan

Preview the ads here (note 3).

Analysis
It will be interesting to see how the advertising is received. From a branding perspective, I think the ads are extremely effective, doing a good job communicating the benefits to both borrowers and lenders. And Prosper positions itself as a smart bank alternative without getting overly negative (e.g., Lending Tree’s $100-million “When banks compete” campaign in the late 1990s) or going so over the top (think WaMu) that you can’t recall who made the ad (see previous coverage here). 

One thing I’m sure of: Prosper did a great job showcasing the ads on their website, including the very Web 2.0 touch of posting “behind-the-scenes” videos of the TV commercials. 

Prosper Brad and Lara tv advertisement

Notes:

1. Prosper recently changed its process so all loans are originated by Utah industrial bank, WebBank, then resold to the winning Prosper bidders. The TV ad above even carries the fine print that, “Prosper lenders are loan purchasers.”

2. Prosper’s primary competitor, LendingClub, is currently operating at limited capacity as it seeks additional licensing/authority from regulatory bodies (coverage here). It, too, uses WebBank to originate all loans made through its platform. The latest entrant, Loanio, debuted its services at our April 29 Finovate Startup conference, but is still a few weeks away from a launch. A number of other P2P startups are in various stages of development with launches expected within the next 12 to 18 months. 

3. For more information on the P2P lending market, see our Online Banking Report: Person-to-person Lending 2.0 

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