What’s Inside eWise’s Secure Vault Payments?

Have you ever cringed when entering credit card information into an online checkout form? 

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Maybe you were wondering, “Who is on the other side of this transaction? Where is my information going? How do I know this is secure?” It can also be tedious keying in all of the information, especially on a mobile: credit card number, password, user name, and CVV code. Fortunately, there are solutions such as Secure Vault Payments (SVP) by eWise to help solve these problems.

Thumbnail image for SVP Logo.jpgSVP launched in late 2009 as a new player in alternative payment solutions. It allows you to pay for goods and services directly through your online bank account. There are close to 50 banks (and counting) participating in SVP’s service and with US Bank as a new partner in this service, the availability has increased dramatically.

How It Works
  1. When checking out at a participating retailer, select the Secure Vault Payment option (see image) and choose your bank from the drop down list. SVP1.jpg
  2. SVP will redirect you to your bank where you log in using your existing username and password. 
  3. Select the account (i.e., savings, checking) from which you would like the money to be drawn and confirm the payment. You will then be redirected to your receipt on the retailer’s page. 
What’s In It for Consumers? 
  • No need to maintain an account with a third party:
    Since SVP works with your existing bank (current clients are US Bank, First Citizens Bank, and many more*) there is no need to set up an account somewhere else. This also removes the headache of remembering an additional username and password. 
  • Security you can trust:
    Since the transaction takes place at your bank’s website and not a third party, it removes the middleman and improves perceived security. 
  • Familiar user interface:
    You already know how to navigate your bank’s website, so there’s no need to learn a different interface.

What’s In It for Banks? 
  • Be a trusted advisor: 
    Being in the center of a transaction allows you to build rapport with clients. 
  • Earn additional revenue: 
    Both the consumer’s and the merchant’s banks receive a fee for authenticating the user.
Another PayPal? 
While there are many similarities between the two, such as security, the ability to pay directly

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from your bank account, and no merchant storage of account information, there are two major differences. 
  1. During a purchase, SVP directs you to your bank’s website (see image on right). 
  2. The bank controls the payment, stores the payment information, and handles dispute resolution. 
SVP is innovating on a number of fronts including a mobile app that incorporates the use of quick response (QR) codes in a payment system. To see a demo of the QR code payment system in action, visit Finovate.com. It also has other capabilities, such as providing an on-demand donation platform for non-profits. For a more in-depth look at this and other features, check out its website
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* Other Participating banks include: AFB&T, Bank of Coweta, Bank of North Georgia, Cambridge Trust Company (Cambridge, MA), CB and T Bank of East Alabama, CB and T Bank of Middle GA, Citizens First Bank (Rome, GA), Coastal Bank and Trust of Florida, Cohutta Banking Company, Columbus Bank and Trust, Commercial Bank (Thomasville, GA), Commercial Bank and, Trust Company (LaGrange, GA), Community Bank and Trust (Enterprise, AL), First Coast, Community Bank, First Commercial Bank (Birmingham, AL), First Commercial Bank of Huntsville, First Community Bank (Tifton, GA), First Bank of Jasper, First State Bank and Trust Company (Valdosta, GA), Georgia Bank and Trust, Savings Bank of Maine, SB&T Bank, Sea Island Bank, Sterling Bank (Montgomery, AL), Synovus Bank (St. Petersburg, FL), Synovus Bank of Jacksonville,, The Bank of Nashville, The Bank of Tuscaloosa, Coastal Bank and Trust (Mobile, AL), The Coastal, Bank of Georgia, NBSC, Tallahassee State Bank, Trust One Bank (Memphis, TN), United Western Bank (Denver, CO)

Op Ed: Thoughts on Google Wallet

This guest post was written by Daniel Thomas, a 25-year strategy and product development veteran of the financial services industry. He is a principal consultant with Mindful Insights LLC.

image Google’s announcement two weeks ago certainly raised a few eyebrows in the mobile payments arena and took a giant leap toward putting to rest the debate about the use of NFC.

However, there’s an interesting twist that hasn’t been explored in the many articles written in the aftermath of the announcement. How will Google’s effort impact revenues from the merchant-funded rewards programs (see note 1) banks hope will increase loyalty while softening the blow of the now-certain Durbin Amendment losses?

Citibank inside google wallet

But has Google just killed banks’ dreams of grabbing a share of the online advertising pie ?

Merchants today are offering higher discounts and rebates to bankcard users because the banks, via various rewards vendors, are letting merchants in on their customers’ spending history.  That data obviously has a lot of value and the merchants compensate the banks for it in the form of commissions on purchases made by the bank’s customers after targeted offers have been presented.  On the surface, one might think that regardless of the mobile wallet used, Google’s or otherwise, so long as the payment is made from a bank-issued product, the bank will still own the spending history data and be able to trade it for a commission.

However, Google, or whoever owns the mobile wallet (but especially Google), will be able to “see” the purchases as they take place and can begin recording its own spending history data.  That, coupled with other non-mobile spend-history gleaned from browsing on the web across multiple cards per individual or household, potentially gives Google a leg up on the richness of its data (assuming Google can tie the two together, is there any doubt?).  Combine that with general browsing history and Google has a pretty good profile of each person to offer up to merchants. 

Privacy issues aside, this seems to trump bank spending history data placing Google in a much better position to bargain with merchants and ad networks. But privacy issues may well loom large over all of this once consumers and Congress put 2 and 2 together and figure out what Big Broth… er, that is, Google is up to.

Meanwhile, not everyone will have an Android phone nor a Google Wallet. Plenty of other mobile wallets will soon hit the scene, but even so it will take a long time for mobile wallets to replace plastic (amusing thought– which will go away first: plastic or the perpetual paper check?) so merchants will still want to keep banks in the equation by compensating them for allowing them to use their spending history to develop targeted offers.

So, merchants are going to need to decide: should they allow Google to make the reward offer or the banks?  Surely, they won’t compensate both for bringing in the same purchase. That leaves the decision in the hands of the consumers. Do they want to receive points and cash back from Google or from their bank? 

Undoubtedly, consumers will decide based on which one offers the greatest value for the least amount of work. Online usability has been a trademark of Google, banks not so much.

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Citibank and MasterCard are key banking partners
On its website, Google asks prospective visitors if they have a Citibank MasterCard

Citibank and MasterCard are key banking partner

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Note: For more information, see Online Banking Report: Merchant-Funded Rewards (published  Feb. 2011)

Chase Bank’s Jot App Shows the Future of Mobile Transaction Processing

image image I’ve been waiting for something like Chase Bank’s Jot (see note 1). It’s part of the "second wave" of mobile apps that demonstrate why mobile banking will soon be better than online banking.
_________________________________________________________________________________

Mobile banking phase 1: 2008 through 2011
________________________________________________________________________________

Mobile’s first wave was all about porting the most-used online functions, balance inquiry and statement viewing, to a smaller screen. That was convenient for smartphone owners on the go, but it didn’t add much to the overall user experience. 

The test of whether you’ve nailed the mobile UX is if that even if you are within arm’s reach of your laptop, you still pick up the mobile to perform a function. Most mobile banking systems fail that test, i.e. you only use mobile banking when online access is inconvenient or insecure.
________________________________________________________________________________

Mobile banking phase 2: 2011+
________________________________________________________________________________

The second wave is much more interesting. Your mobile phone can do financial chores that simply cannot be accomplished online, for example:

  • Deposit a paper check via mobile camera (USAA, Chase, PayPal and many more)
  • Transfer money to your friend by "bumping" phones (PayPal, ING Direct)
  • Alert you to special merchant offers in your exact location that are redeemable simply by using your bankcard (BankOns)
  • Pay your bill automatically by scanning the billing statement (Mitek)
  • Upload paper receipts and append them to expense reports (Expensify)

And the latest addition to that list:

  • Receive feed of transactions and tag them with categories for future reference and reporting (Chase Jot)

________________________________________________________________________________

How Jot works
________________________________________________________________________________

Chase’s new app (announced 1 June 2011) may not be as cool as remotely depositing a check, but it’s much more useful for most cardholders. The iPhone and Android app, which is currently available only for the bank’s Ink business credit card, sends push notifications of each transaction (see inset) and enables users to (relatively) quickly append transactions with category information, i.e. "tag" transactions. 

image One key Jot feature, missing in most mobile banking services, is a running list of the transactions waiting to be tagged (see right).

That way, when the business owner has a few spare moments, they can quickly get caught up with their categorizing work. This ongoing attention will reduce the quarterly game of "what’s that transaction" played when finalizing the company books.

So not only does Jot save time, it potentially improves the quality of the accounting data, always a good thing for business management. 

The app also includes other business credit card management functions such as basic reports by tag, the ability to change employee credit limits, and info on outstanding balances and payment due dates.

While the functionality is still pretty basic (e.g., there is no way to add more than one tag to a transaction), there are only 60 days of transactions available, and login needs to be simplified, overall Jot is a winner. We are tagging it with an A-.

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Notes:
1. The Jot landing page is well done and includes a series of four short demo videos.
2. For OBR subscribers, see our previous Online Banking Reports on mobile banking and payments.

Big Funding Week for Finovate Alumni

This week, three Finovate alumni reached significant funding milestones.  


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New round
$14 million Series B from Wellington Partners, Balderton Capital, TTV Capital, and Patagorang 
Funding History
$12.1 million Series A in July 2010
Previous Investors
Balderton Capital, Stanley S. Shuman of Allen & Co., and Total Technology Ventures 
Profile
Market Position: Online Payments and Personal Financial Management
Founded: 1999
Locations: Denver, London, Australia, and China
Description 
eWise creates payment and financial management solutions for financial institutions including:
  • eWise Pay By Account 
  • eWise Pay Anyone 
  • eWise Account Aggregation
  • eWise Personal Financial Manager 
  • eWise eAuthentication
For more information on eWise’s innovations, see their FinovateEurope 2011 and FinovateSpring 2011 demos.
Prosper.jpg





New Round 
$17.2 million from Draper Fisher Jurvetson, Crosslink Capital, Accel Partners, CompuCredit, Omidyar Network, Eric Schmidt’s TomorrowVentures and Volition Capital 
Funding History
$7.5 million Series A in April 2005
$12.5 million Series B in February 2006
$20 million Series C in June 2007
$14.5 million Series D in April 2010
Previous Investors 
Accel Partners, Benchmark Capital, DAG Ventures, Eric Schmidt
Fidelity Ventures, Meritech Capital Partners, Omidyar Network, QED Investors, and TomorrowVentures
Profile
Market Position: Peer-to-peer Lending
Founded: 2006
Location: San Francisco, CA
Description 
Prosper, a peer-to-peer lending site with over one million members, has funded $236 million in personal loans. To see Prosper in action, check out their FinovateStartup 2007, FinovateStartup 2008, and FinovateStartup 2009 demos. 
SilverTailSystems.jpg






New Round
$20 million Series B funding from Andreessen Horowitz, Leapfrog Ventures, Seraph Group, and Startup Capital Ventures
Funding History
$2.1 million Series A in September 2008

Previous Investors
Leapfrog Ventures, Seraph Group, Startup Capital Ventures
Profile
Market Position: Security
Founded: 2008
Location: Palo Alto, CA
Description
Silver Tail Systems’ products detect online and mobile fraud, help investigate possible attacks, and prevent future attacks. To learn more about Silver Tail Systems’ innovative fraud detection, check out their FinovateStartup 2009, Finovate 2009, FinovateSpring 2010, FinovateFall 2010, FinovateEurope 2011, and FinovateSpring 2011 demos.

M&T Bank Adds FICO Credit Score View to Online Banking, Charges $2.99/mo

image It figures. As soon as I write a report complaining about the dearth of online fee-based services, a major bank launches one, practically the same day.

Buffalo, NY-based M&T Bank just released an upgrade to its online banking system adding:

  • Intuit’s FinanceWorks PFM
  • Equifax-provided FICO score

Both are good moves, but it’s the credit score service that’s especially novel. It’s integrated directly into online banking, so customers needn’t log in to another site to view their score. And the bank is charging for it, to the tune of $2.99 per month. 
___________________________________________________________________________________

Potential
__________________________________________________________________________________

It will be interesting to see how M&T promotes the new feature to its online banking base which numbers 700,000 to 800,000 (active monthly users) based on traffic estimates from Compete. I’m also curious to see whether the bank upsells pricier, full-featured credit monitoring and/or credit reports to the $2.99/mo base. (I’d be surprised if they don’t.)

There’s no mention of a free-trial period, but based on industry experience, that is likely to be one of the best marketing strategies available. Given all the misleading advertising in the market (“free” credit scores that cost $15/mo), I’m pleased to see that M&T is upfront about the cost, mentioning it within the first 50 words of the landing page.

With an aggressive promotional campaign, it seems possible the bank could eventually get 10% to 15% of its online base using it. Then M&T gets a dual benefit: a unique and powerful tool for its customers and $3.5 million in incremental gross revenues (if it hits 100,000 users). The bank can also upsell credit monitoring, credit scores for other family members, along with balance transfers and other credit products. 

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M&T Bank landing page for new integrated credit score (link; 6 Jun 2011)
Note: Pricing disclosed upfront (yellow highlighting is ours)

M&T Bank landing page for new integrated credit score (6 Jun 2011)

Note:
1. See our current Online Banking Report, Creating Fee-Based Online & Mobile Banking Services.

Alumni News — Week of May 30, 2011

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Betterment
Medill Reports discussed the benefits of Betterment and Currensee, claiming that the social networking craze changes the way some people invest. Link
BrightScope
BrightScope announced the top 10 treasury inflation protected securities funds in America’s 401ks. Link
ChargeSmart

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Fox News’ Studio 10 reviewed ChargeSmart, PlasticJungle, and Bills.com and found a number of money saving tools and ideas. Link
Check Point Software Technologies
Check Point Software Technologies won The Ten Best Web Support Sites of 2011 Award from The Association of Support Professionals for its exceptional web support design, implementation, and customer experience. Link
ClairMail
ClairMail announced record customer expansion with a 300% year-over-year growth in users. Link
Corduro

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The New York Times reported that Corduro’s cloud platform challenges PayPal and Square’s mobile payment services. Link
Credit Sesame
The Wisdom Journal depicted Credit Sesame’s services as more than just credit scores. Link
Currensee
See Betterment above.
doxo
  • doxo explained how to use its online filing cabinet and “due date” alerts to help organize GroupOn, Living Social, and other daily deals. Link
  • TheFinancialBrand.com discussed Oregon Federal Credit Union’s use of doxo and discussed other usage ideas such as uploading a scan of your passport prior to travelling. Link
Dwolla 
  • Credit Union Times listed Dwolla as a contender in the P2P payment space. Link
  • Dwolla rallied community efforts to gather donations for the tornado-stricken town of Joplin by selling its t-shirts and accepting donations. Link
  • Omaha World-Herald covered Dwolla’s arrival into Nebraska. Link
Enloop

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  • About.com highlighted Enloop’s business plan creation service. Link
  • Forbes blog discussed “How Not to Fail” by using Enloop to assess the potential success of a business plan. Link
Geezeo
Call Federal Credit Union, based in Richmond, VA, selected Geezeo for its PFM solution. Link
Guardian Analytics
Guardian Analytics positioned by Gartner in the “Visionary” quadrant for web fraud detection. Link
HelloWallet

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San Francisco Mayor Gavin Newsom urged residents to improve their money management by using HelloWallet. For every five subscriptions purchased, HelloWallet will give away one subscription to a family in need. Link
Hidden Levers
Financial Advisor Blog discussed using Hidden Levers to build better portfolios, highlighting risk management and accuracy of the service. Link
Lending Club
  • Lending Club exceeded a quarter million dollars in cumulative loans and is offering cash bonuses. Link
  • Wall Street Journal blog discussed growth of P2P Lending sites Prosper and Lending Club. Link
Lendio

Lendio.jpg

Lendio raised $2 million in debt financing. Link
PayNearMe
PayNearMe founder Danny Shader, in an interview with Vator News, revealed the service is used beyond the unbanked population, including teens who prefer to pay with cash and consumers who would like to keep their online transactions private. Link
Prosper
See Lending Club above.
RobotDough

RobotDough.jpg

Dow Jones Financial reports that a UCLA professor backed RobotDough. Link
SecondMarket
The Washington Business Journal discussed SecondMarket’s recent popularity. Link
Sybase

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Sybase launched the M-Commerce Guide, a publication for examining global market opportunities for mobile network operators, advisors, and FIs. Link
TradeKing
TradeKing CIO Dan Raju discussed security issues that may arise with the NYSE cloud community, citing its security. Link
Tyfone
Tyfone contracted with Star One Credit Union to use its NFC technology.
 Link

UBank

UBank.jpg

CEO of UBank examined security concerns and competitors during an interview with ZDNet. Link

What is the ROI of banking innovation?

image An executive on the front lines of product development at a major financial institution recently asked me this question:

How can I prove that innovation really matters to the bottom line?

I’ve been a “product guy” my whole career so I take it for granted that “building a better mousetrap” eventually trickles down to a boost to the bottom line. That worked at Microsoft, Apple and Caterpillar (my first job).

But they are manufacturing companies. That better mousetrap, be it Win95, the iPod, or a D10 tractor, brought in direct, usually profitable, revenues.

It’s harder if you are a retailer. If the Gap spends a million dollars to improve search and discovery on its website, will it really sell enough extra jeans and sweaters to make the investment back, let alone earn an acceptable return?

Banks are both retailers (branch and online) and manufacturers (checking accounts, loans). But today, the P&L from their digital efforts is more like the Gap than Apple. You have to sell a lot of extra checking accounts and car loans to justify even a modest website investment. This has held back digital investments for 15 years (see note 1).

But what if banks started acting more like a manufacturer when it comes to digital products, by creating new services to package and sell on their own merits.

For example, instead of spending a couple hundred thousand every year to give everyone remote check-deposit capabilities free of charge, create a new digital product called, The Magic Check Deposit Service, and sell it for $2.99/mo. This product not only reduces costs, since it will have far fewer lapsed and/or clueless users, but also pegs a monetary figure to the service, thereby increasing its perceived value even if you end up giving it away to your best customers.
______________________________________________________________________________

The Numbers
_____________________________________________________________________________

Let’s crunch a few numbers. Assume it costs $0.50/mo to support each user + $0.25 per check deposited + $20 per tech support call (I made these up so don’t quote me).

Free service:
Cost = 50,000 users x 0.67 checks/mo + 1,000 support calls per year = $420,000
Fee revenue = $0
Customer retention value = ??? (some positive number)
———————
Net = ($420,000)

Subscription service:
Cost = 5,000 x 4 checks/mo x 100 support calls per year = $92,000
Revenue = 5,000 x $2.95/mo = $177,000
Retention value = ??? (same as above)
——————–
Net = +$85,000

Change in net (delta) = $500,000
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Bottom line
__________________________________________________________________

With either approach you get to tout the benefits of the new innovation to capture the branding value. But under the subscription model, only those who really stand to benefit from the service use it, and you end up with a small profit or at least less of a loss. In the above example there is $500,000 gain compared to the free model.

Yes, this is over simplistic. Yes, you’ll take some grief for charging when others are giving it away. It’s possible you might even lose a few customers, but not $500,000 worth. And the biggest benefit of all, you can actually afford to create the new service now, instead of tabling it for five years until it becomes a competitive necessity. 

Back to the original question. Honestly, I have no idea how to prove that innovation has a good ROI. What I do know is that for the past 100+ years, clever manufacturers have created billions in value by beating the competition with new products and services. I’m pretty sure financial companies will do the same with their online and mobile offerings.

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Note:
1. See our current Online Banking Report, Creating Fee-Based Online & Mobile Banking Services.

Cash is Still King at PayNearMe

Imagine this scenario: You’d like to visit a friend who lives three hours out of town but

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your car is in the shop so you need to take the train. To purchase the ticket ahead of time, you’d like to pay online or over the phone instead of at the Amtrak station. But here’s the kicker– you don’t have a credit or debit card. How are you supposed to buy the ticket if you can only pay with cash? The solution is easy, and it’s called PayNearMe.
Founded by Danny Shader in 2009, PayNearMe is a Mountain View, CA-based company that 
enables consumers to buy online and pay offline at 7-Eleven stores. 
Using this service, consumers can pay off loans with cash, purchase goods from other retailers, and even pay for services such as transportation. To get a better idea of more possibilities, see PayNearMe’s FinovateFall 2010 and FinovateSpring 2011 demos, both of which won Best of Show awards.

Why use PayNearMe?
    • You do not have a credit or debit card (24% of U.S. households)
    • You prefer to pay with cash (most teens and 54% of adults) 
    • You do not want to divulge personal information online
    • You would like to repay a loan with cash
How it Works
Imagine you want to purchase a book that’s for sale online, but don’t have (or don’t want to use) a debit or credit card.  
You can use PayNearMe to purchase the book online using an Amazon gift card. It’s a three-step process: 
1) Complete the online form at the PayNearMe website.
Choose Merchants (step one in the visual below), select Amazon as the retailer (step two), and answer these questions: 
    • Gift card amount
    • Email addressThumbnail image for Step1n2.jpg
    • Zip code
    • Password
Then choose whether to pay with or without a printer. If going paperless, enter a mobile phone number and within seconds receive the following text message:

text1.4.png
2) Go to 7-Eleven. 

Use PayNearMe’s website to locate a nearby 7-Eleven store and, once inside, find the PayNearMe cards on the rack (see example at end of post). Following the instructions in the text message, 

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reply with the nine-digit code. 
A follow-up message will appear seconds later: 
Thumbnail image for text2.2.png

You can pay the cashier with a $20 bill and ask her to load the money onto the card. After she swipes the card and processes the payment, she’ll hand you a receipt along with the card. You’ll then receive a final text message:
Thumbnail image for Thumbnail image for Thumbnail image for text3.1.png

3) Use the claim code. 
The receipt prompts you to visit www.amazon.com/gc and enter the claim code listed on the 

Thumbnail image for Thumbnail image for GCclaimcode.jpg

receipt (see below). Login with your Amazon account, ensure the payment is loaded into the system, and click Apply to Your Account. The $20 is loaded into your account so you can find the book and pay for it with the $20 gift card balance. 
Analysis
I like that this is a completely free service for consumers; $20 in your wallet translates into $20 in your Amazon account. There are no hidden fees or surcharges. In addition to this, the PayNearMe card is reusable so you don’t need to pick up a new one each time you use the service.
On the flipside, Amazon doesn’t offer PayNearMe as one of its default payment choices so you have to start the transaction through the PayNearMe website. While this is an additional step in the process, it still makes it easy to pay for goods and services using cash.
PayNearMe card and receipt
Card and receipt.png

Alumni News — Week of May 23, 2011

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Aptys Solutions
Aptys Solutions signed with Banker’s Bank, a top check depositor with the Federal Reserve Link

Backbase
Backbase to host webinar on how to use social media in financial services Link

Betterment

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  • Betterment announced a growth of over $10M under management and over 4000 customers in first year Link
  • Betterment celebrated its first birthday Link

Bill.com
Bill.com is working to improve its mobile offering for small and midsized businesses Link

Boku
Mobile Entertainment explained how Boku will revolutionize pay-by-mobile for digital goods Link

Capital Access Network
CNBC explained how Capital Access Network solves the need to use financial creativity Link

Credit Karma
WiseBread Blog interviewed Credit Karma CEO Link

doxo

doxo.jpg

  • doxo’s first fan video was posted online Link
  • Oregon employees were the first to give its members doxo’s online file cabinet Link
  • TechFlash highlighted the benefits of using doxo to achieve paperless business Link
  • 2Minute Finance interviewed doxo at FinovateSpring Link

Dwolla

  • Dwolla was listed by inc Tech as one of three startups you must know from Big Omaha Link
  • Credit Union Times listed Dwolla as a new P2P service rivaling ‘bank giants’ Link

edo Interactive
MyBankTracker interviewed edo Interactive COO about its Prewards service Link

Expensify
Slate explained how Expensify will help the ‘frequent flier’ Link

Kabbage.jpg

Kabbage
Technorati described how Kabbage works with eBay Link

Lending Club

  • Mint.com’s blog covered what you need to know about Lending Club Link
  • San Francisco Business Times commented on Lending Club’s strong backing from both investors and lenders Link
  • San Francisco Times reported that Lending Club stated it is not planning to go public for several years Link

LendingKarma
Entrepreneur featured LendingKarma as a good tool to use when borrowing money from family or friends Link

Lendio
San Francisco Chronicle reported that Lendio offers funding opportunities for new grads Link

Lodo Software
Lodo Software was described as a startup providing jobs in the “Silicon Prairie” region, a.k.a. Omaha Link

lodo.jpg

Monitise
Monitise released a report predicting that the majority of consumers will use mobile money services within the next three years Link

Mortgagebot
Mortgagebot reached 1000 clients, one of its goals from the beginning Link

PayDivvy
2MinuteFinanced interviewed PayDivvy about its services Link

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PayNearMe
BillShrink examined PayNearMe’s cash payment service Link

peerTransfer
Mass High Tech interviewed Iker Marcaide from peerTransfer about becoming an entrepreneur Link

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ProfitStars
ProfitStars announced a new version of Margin Maximizer that’s now available as a hosted solution Link

Robot Dough
2MiniuteFinance toured RobotDough’s demo during interview at Finovate Spring Link

SecondMarket

  • Wall Street Journal stated that SecondMarket helped fuel the tech boom Link
  • CNBC interviewed SecondMarket for an explanation of the change in trading numbers Link and LinkThumbnail image for smartypig.jpg

Smarty Pig
Smarty Pig launched new sharing features, including activity sharing and goal sharing Link

Striata
Striata will host a June 2 webinar for implementing successful ebilling strategies Link

ThreatMetrix
San Francisco Chronicle covered ThreatMetrix’s research around mobile transaction activity Link

TILE Financial
TILE Financial released a Financial Identity Profile to strengthen the connection between advisors and under-30 consumers Link

tradeking.jpg

TradeKing
TradeKing divulged the lineup of its free webinars in June Link

Tyfone
Tyfone won 2010 Asia Pacific Smart Card Association Award for its NFC innovation and implementation Link

Wikinvest
Dow Jones Advisor highlighted Wikinvest as a way to analyze portfolios Link

Wonga

  • Wonga won 2011 Red Herring Top 100 Europe Award for exceptional accomplishments Link
  • Wonga won the Media Momentum Awards, a coveted award for digital media companies in Europe Link
  • Wonga’s Errol Damelin discussed consumer-centric credit Link

Xero

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  • Diversity Limited commented on Xero’s move to the US markets Link
  • Xero and Keebo teamed up to help you manage and process receipts Link
  • New Zealand Herald commented on Xero’s surging revenue Link

Zecco

  • The Wall Street Journal reviewed Zecco’s new Facebook app Link
  • Zecco launched an app for stock trades & viewing realtime market data on Facebook Link

Zopa
Zopa shows how it helps consumers protect against inflation Link

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

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

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
_____________________________________________________________________________

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
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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)

Billguard Welcome screen after first download & scan

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

 2. Initial scan results with 7 transactions marked "review"

3. Transactions are color-coded by risk assessment

BillGuard Transactions are color-coded by risk assessment

4. The transaction review page

BillGuard transaction review page

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

image

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

Spend Grow Give: TILE Financial’s New Learning Environment

TILElogo.jpg

During FinovateSpring last week, I spent a lot of time talking with demoing companies about their new products and services. I was impressed by the overall utility of the products and the friendliness of the entrepreneurs. Over the next few months, I’ll be profiling a number of the companies that presented last week. 
Amy Butte, former CFO of the New York Stock Exchange, founded NYC-based TILE Financial in 2008 with a goal to help financial institutions hold onto the $1.5 trillion in assets projected to be inherited during the next 10 to 15 years.  
Thumbnail image for WhatMoneyMeans2Me.jpg
TILE seeks to help young adults establish a financial identity, learn to follow a budget, and understand financial terms and concepts. It’s also meant to facilitate a dialogue with their parents, grandparents or other funder, and their financial advisor. 
Through TILE’s Spend Grow Give interface, the topics of money and finance are expected to transition from taboo to comfortable subjects. The unique user-interface is very visual, perfect for the target audience of 15 to 25-year-olds.  
How it works
Homepage: 
  • Account Overview
    After logging in, I see an overview of my account divided into three categories: 
Thumbnail image for SpendGrowGive.jpg
Each contains a pie chart of my spending, investments and charitable contributions. Please note that the Grow category is empty because I am using a test account without investments.
  • Reference Bar
    Pictured below, this feature has eight tabs and is located at the bottom of the user interface (see homepage screenshot at end of post). My favorite tab is TILEcasts, a unique reference tool that contains video clips of experts talking about subjects such as, “Here’s Why You Need Insurance.” The clips break down complex financial issues into bite-sized pieces with digestible language. 
Thumbnail image for RefBar.jpg
  • Alerts
    The interface includes customized alerts such as portfolio changes, budget limit approaches, and so on. Alerts are delivered via the TILE site, email, or text message.
Profile Page: 
  • My Profile
    At first glance, the profile appears similar to Facebook. I can upload my picture, update my status, and share with the TILE community, my financial advisor, my funder (i.e., parent/grandparent), Twitter, or Facebook.
Profile.jpg
  • Features
    The main part of the profile page is My Financial Identity, which features the homepage categories: Spending, Growing, and Giving, as detailed below. Each contains quizzes and tutorials that allow the user to understand what money means to them. TILE refers to this as a person’s “financial identity.”
– Spending

Here, I can see how well I know my budget. I take a quiz to test my knowledge of how much I spend on certain categories and am guided through a tutorial to help adjust 

monthly spending habits. Another lesson teaches the basics of establishing credit.Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for BudgetQuizIntro.jpg

– Growing 

In this section I can learn when to start investing, how to time financial 

markets, and take a risk profile assessment. There is an easy-to-use calculator that inputs age, investment 

graph.jpg

amount, and interest (see graph on the right) to show growth over time.
– Giving
This area features a quiz to help me discover causes I really care about and would allocate charitable giving to.  It requires much thought and in the end helped me create my own mission statement. 
My user experience documented here covers only a small section of what is available in TILE’s Spend Grow Give product. To see it in action, stay tuned to www.finovate.com to check out TILE’s demo that will be posted in the next few weeks.
TILEfullScreen.jpgHomepage View

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

image 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
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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)

Western Bank's online banking pricing matrix

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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.