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Pennyminder is Tenth Online Finance Startup to Launch/Unveil in September

By Jim Bruene Posted on September 24, 2008
Categories: Launches, Personal Financial Management

What a month for financial tech startups! Partly due to DEMOfall, TechCrunch50 and our Finovate, there’s been at least 10 online financial service launches or unveilings this month in North America alone (note 1).

That could be the sign of a bubble about to burst, or it could just be a bunch of smart people meeting very real market needs. Only time will tell.

Lucky number 10 is Pennyminder, an online personal finance startup based in Vancouver, BC. I met founder Vince Hodges at BarCampBankBC last Saturday (coverage here). Although Pennyminder joins a crowded field, the seventh personal finance manager (list below) to launch this month, it’s the first ever based out of Canada. That alone should help it gain some traction.

Vince proffered a beta invite, so I’ve had a chance to look at it. It’s a nice, clean design that allows user entries/statement import and supports an expense sharing/social angle. I don’t know if that’s enough to compete with the dozens of U.S. and international personal finance sites, many with VCs funding a wider range of features, but it’s a good start.

Pennyminder will have to figure out a way to break through the clutter, such as partnering with credit unions and/or banks.

Here are six more newcomers this month:

Thrive unveiled here yesterday and launching at Finovate NYC on Oct. 14
Rate Surfer unveiled at the TechCrunch50 DemoPit on Sept. 9 and launching at Finovate NYC, Oct. 14 (our coverage here)
iThryv from Shryk unveiled on stage at TechCrunch50 on Sept. 8 and covered here that day
Expensify unveiled at the TechCrunch50 DemoPit on Sept. 8 (our coverage here)
Rudder unveiled here Aug. 23 and launched at DEMOfall on Sept. 8
GreenSherpa unveiled here July 18 and launched at DEMOfall on Sept. 8

Note:
1. Includes the seven mentioned here plus three more I’ve yet to blog about.

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New Online Personal Finance Manager Thrive Rounds Out Finovate NYC Conference Lineup

By Jim Bruene Posted on September 23, 2008
Categories: Finovate, Launches, Personal Financial Management, Thrive

With three weeks remaining before Finovate NYC, the final company in the demo lineup is stepping out of stealth mode and announcing its participation in our second annual new-products conference. See the full list here.

Thrive will be launching its entry in the online personal finance marketplace, JustThrive.com, at Finovate on Oct. 14. The company hopes to differentiate itself with more advanced financial planning tools while still remaining free. Founder and CEO is Avi Karnani; Marc Matsumoto is CMO.

Currently, the service is in closed beta testing, but Thrive recently updated its homepage with a timely message playing off last week’s financial debacle (screenshot below).

We had a chance to meet with the NYC-based founders earlier this year and were impressed how they’d studied the current players and were aiming to leapfrog the competition. However, there’s been significant innovation in the space this year, and they enter a crowded field (more on that tomorrow).

At this point, I can’t say anything more specific about Thrive’s plans, but after it becomes publicly available we’ll be back with a full analysis.

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Notes from BarCampBankBC

By Jim Bruene Posted on September 22, 2008
Categories: BarCamp Bank, Conferences

I attended my second BarCampBank Saturday in Vancouver BC. I was part of the first North American camp in Seattle last July (coverage here).

For me, this one was more interesting. There were more people (50-60 compared to 30-40 in Seattle) and more financial institutions represented, including both credit unions and banks. HSBC Direct even helped sponsor the event.

First a note of thanks to organizers William Azaroff of Vancity; Tim McAlpine, creator of Common Wealth CU’s Young and Free program and founder of Currency Marketing; and Gene Blishen, CEO of Mt. Lehman Credit Union who has the coolest graphics in the whole world (see inset).

If you want to see session notes, check out the weekend entries at William’s blog. He did an amazing job facilitating the sessions and live blogging. You can also watch archived video streams of five of the sessions, courtesy of Brent Dixon, posted at his Open Source CU blog (turn on the embedded player and click the “on demand” button in the lower bar).

Here’s what I highlighted in my notebook:

Mobile could be more game-changing than we give it credit for. The ability to communicate in real-time as consumers engage in shopping, bill payment, and so on is so powerful, it’s difficult to grasp the long-term implications.
Social media tools like Twitter could be used to harness customers’ reactions in real time, a virtual sentiment meter as one of the campers said (was that you Brent?) Why not have a “what are you thinking” box displayed after customers login. The responses could be aggregated and trended to see how the bank is performing over time.
They could also be broadcast to all customers to build community.
Even in this progressive group, only two of the financial institutions are blogging: Vancity’s ChangeEverything which is really more of a platform for social change than a true broadcast-type blog and Verity Credit Union (note 1). Reasons for not blogging seemed to be some variation of “lack of resources.” It’s hard to argue with that. But basic blogs such as UW Credit Union or Piedmont Credit Union, both of which I think are very effective, can be put together in just a few hours per week.
Financial literacy, or lack thereof, was a common theme and there seemed to be a consensus that the industry should help schools and parents do a better job preparing youth to handle money and debt. This is what iThyrv, which debuted at TechCrunch50 last week, is using as their primary market-entry strategy (previous post here). Andrew Taylor, Jwaala CEO, participating remotely via the live webcast, threw out the the idea of a financial literacy score similar to FICO. Again, that’s part of the iThryv model. It’s a good idea if it were to catch on, although that seems like a long shot.

Note:
1. Many (most?) of the credit union representatives had personal blogs.

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Web-based Self-Service Debt Collection Makes the News

By Jim Bruene Posted on September 19, 2008
Categories: Loans & Credit, Online Resources (ORCC), Service, Washington Mutual

It’s not often that bank collection techniques make the business press, and when they do, it’s usually not a good story. But last week’s WSJ article by personal finance writer Jane Kim featured a relatively positive spin on how banks are working harder to collect revolving credit debt.

She cited two examples of Web-based self-service applications trying to turn early collection efforts into a non-confrontational, positive experience including:

WaMu’s self-service website, <wamucanhelp.com>
The Virtual Collection Agent powered by Online Resources that is being rolled out by three of the top-10 card issuers. The system was first shown to the public at last year’s Finovate conference (video here)

You can only look at the WaMu collection site if you have a WaMu credit card (screenshot below), but in perusing domain-ownership records, it appears to be hosted by Online Resources, so it likely resembles the screenshot below, a generic mockup from the Online Resources website.

Note the settlement offer listed at the bottom of the page. This offer can be produced dynamically based on input from the user as they use the self-service site.

What’s innovative?
While it won’t work for everyone, collecting past-due debts is one of the trickier areas of bank operations. Financial institutions have to be careful not to be too aggressive early on so they don’t appear heavy-handed and end up driving away an otherwise profitable customer, not to mention that customer’s friends and family.

That’s why a gentle email/text reminder with a link to a self-service support area makes so much sense. Not only can you speed repayments from delinquent borrowers, but also garner valuable goodwill by offering a positive experience via a collaborative online tool. Given the current environment, Web-based collection efforts could maintain precious account relationships.

Virtual collection agent from online resources (19 Sep 2008)

WaMu’s Web-based collection website <wamucanhelp.com> requires a WaMu card number for login (19 Sept 2008)

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Online Banking Report Looks at New Security Technologies that Promise More Peace of Mind

By Jim Bruene Posted on September 18, 2008
Categories: Authentium, Best of the Web, ING Direct, Online Banking Report, Security & Privacy, Trusteer

With bad news pouring down from all corners of the financial services world, it’s a difficult time to be a bank marketer no matter what condition your financial institution is in (see note 1).

But besides sending reassuring emails to your customers, highlighting your strong balance sheet on your website (see inset), and for the few with blogs, dropping the occasional rosy post into the RSS or Twitter feed (note 2), what’s a banker to do?

When fear is rampant, little things can make a difference. Your customers have long been nervous about banking online. Most aren’t afraid enough not to use it, but lingering doubt remains.

Now might be a great time to follow the lead of ING Direct, Firstrade, and Muriel Siebert and introduce a software solution that provides extra security for online banking. While it won’t make a Fannie Mae shareholder any happier, it’s reassuring in these times that at least there are no crooks stealing your username and password.

obr_bestofweb Online Banking Report publishes Security 4.0 (note 3)
In the latest Online Banking Report, we look at several promising software solutions that allow even malware-infested users to connect safely to their bank. Both solutions earned OBR Best of the Web designations (note 4):

Rapport from Trusteer, now being distributed by ING Direct in the United States and Canada (previous post here)
SafeCentral from Authentium, being distributed by Firstrade and in testing at several major banks (Finovate Startup demo video here)

We also take a closer look at Bank of America’s SafePass (previous post here), which is an easy way for customers to add an extra security layer to their login, although it won’t prevent certain malware to hijack the session. See the inset for the complete Table of Contents.

Online Banking Report subscribers may download it now here. Others may download abstract here, or purchase here. Cost is US$495.

Notes:
1. But be thankful if your financial institution is not in the headlines right now. I’m in the hometown of WaMu and the headlines this morning were not pretty.
2. Blog post from Verity CU on 16 Sept.; Twitter update from First Federal today
3. Our fourth full Online Banking Report on security/privacy; previous reports were #119, #93/94, and #48.
4. OBR Best of the Web awards are given periodically to pioneering online banking features. It is not an endorsement of the company or product, just recognition for what we believe is an important development. Trusteer and Authentium were the 71st and 72nd recipients of the designation since we began awarding them in 1997.

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Wachovia’s Initial Foray into Social Media is Impressive, Now Twitter That

By Jim Bruene Posted on September 17, 2008
Categories: Service, Social Media, Twitter, Wachovia

Taking a page from Wells Fargo’s playbook, Wachovia has ventured into social media, giving Twitter a try (see screenshot below and previous Twitter coverage here). The bank has sent 94 updates (aka Tweets) via its Twitter page since it began Aug. 18 and has amassed 340 followers.

But more importantly, they are leveraging the minimal customer-support expense to support Twitter (see note 1) with a nifty badge on its Contact Us page (see inset and screenshot below). That little bit of online marketing, demonstrating the Web-savviness of the banking colossus, is probably worth 1000x whatever goodwill they earn actually talking to customers via Twitter.

Analysis
I’ll admit, I was expecting the usual corporate marketing-speak. But Wachovia is actually using the medium very well. So far, the bank has provided a realistic mix of low-key promotional items such as the following “Ike update” with real customer service response (see second example below).

Example 1 (earlier today): Promotional Tweet today mentioning the bank’s Hurricane Ike response with link to more info, e.g., <tinyurl.com/4vbbyn>:

Example 2 (this morning): Responding to a customer complaint:

This last message is directed back to a customer who posted a complaint about Wachovia in his public Twitter stream. Wachovia could have sent it privately, but they elected to respond publicly.

This is surprisingly bold, considering that the bank risks elevating the issue. For example, anyone following Wachovia’s updates can click on bastille71’s username and see that she is upset about a $250 overdraft charge. It’s unlikely anyone outside bastille71’s friends would have known about that had Wachovia not responded publicly via Twitter.

But anyone who really believes in social media will argue that the bank has far more to gain by demonstrating real commitment to solving customer problems.

Looking further at the above example, bastille71 (inset) has 135 followers on Twitter, her own blog, and who knows how many friends on Facebook. What are the chances that if Wachovia ends up refunding her $250, bastille71 (aka Miss Rehobeth) will write it up in her blog, Twitter it, and even talk about it with her co-workers and friends?

And if you need more ROI than that, Wachovia has already received a good payback on its Twitter investment (note 1) with a nearly full-page article in American Banker last week during an otherwise not-so-positive news cycle for banks. In addition, the customer service innovation made several blogs and of course the bank’s been Twittered about in a positive way.

Note:
1. There’s no real cost to using Twitter other than staffing it with a social-media-savvy customer-service rep and someone in marketing/PR to look over his or her shoulders.

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Rate Surfer and MyMoney to Demo at Finovate 2008

By Jim Bruene Posted on September 16, 2008
Categories: Facebook, Finovate, Fiserv, Rate Surfer

Finovate takes place four weeks from today (Oct. 14), and we’ve already surpassed last year’s attendee total. Luckily, we booked a bigger space, so there will be more bankers and tech execs to network with and everyone in the audience will have a seat at a table to park that laptop, Blackberry, iPhone, or whatever.

But the space isn’t unlimited and if we continue the sign-up pace of the past few weeks we’ll sell out well before Oct. 14. So, don’t wait too long, register here (see note 1).

When we announced the Finovate lineup, there were three companies that chose to remain secret. Two of those are now being named (note 2):

Rate Surfer which participated in the TechCrunch50 DemoPit last week (post here)
MyMoney from Fiserv’s Galaxy unit, a Facebook application that allows users to check their bank balance and transactions from within their Facebook account (post here)

Note:
1. Clients with annual subscriptions to our All-Access Online Banking Report are eligible for a conference discount; email info@netbanker.com for your client discount code.

2. The 24th company is in stealth mode and will be revealed on or very near the conference on Oct. 14.

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Expensify Launches Decoupled Credit/Debit Card Using Prepaid Model

By Jim Bruene Posted on September 11, 2008
Categories: Expensify, Launches, Personal Financial Management, Prepaid/gift cards

Like Rate Surfer, which we wrote about yesterday, Expensify launched its new employee expense-management system from the TechCrunch50 DemoPit this week.

The San Francisco-based startup (note 1) combines a payment card with a Web-based expense manager and uses cellphone cameras to upload pictures of receipts to match against purchases. It’s a banking triple play: card, online, and mobile.

The target market is smaller businesses that want to automate expense report preparation, approval, and reimbursement to their employees.

How it works
The heart of Expensify is a prepaid, decoupled credit card. I know that doesn’t make sense, but here’s how it works:

Sign up for an Expensify MasterCard prepaid debit card.
Load it with value from any credit or debit card, Visa, MasterCard, or American Express.
Make purchases with the Expensify MasterCard.
As each purchase clears, the prepaid balance is lowered, triggering an automatic “top off” charge of an equal amount to the consumer’s credit card, thereby returning the prepaid balance back to the original level.

Metabank is the issuer; here are terms and conditions.

Analysis
At first blush Expensify sounds pretty amazing. An expense management card that rides on top of your regular card, with mobile and Web-based integration. Brilliant, until you start thinking about costs. There’s that pesky thing called interchange. What Expensify has done is create two card transactions instead of one, doubling the amount of interchange paid.

To cover the extra interchange and create some revenue for itself, Expensify levies a 3% transaction fee on the cardholder. Although the card is otherwise relatively fee-free, that’s a significant surcharge.

Why would anyone pay 3% extra in order to use the Expensify card when they already have a credit card? The company believes that small businesses will pay the fee in order to get the expense-manager features and to help employees separate business expenses from personal ones. Businesses could have multiple Expensify cards tied to different categories of expenses (see screenshot below).

A business with just $1000/mo in expenditures would pay $360 per year. In addition, the business would tie up several hundred dollars in a prepaid account, because the only charges cardholders can make must not exceed the prepaid balance held in the Expensify account.

I think the expense-management concept is good, especially with the mobile receipt integration, but it’s just too expensive in its current format. The founders should try to move to an ACH-based “topping off” process and remove the transaction fees.

But regardless of how this specific product performs, the integration of payments, online and mobile, is a huge trend. If Expensify is nimble enough, they may be able to ride the wave.

Expensify homepage (10 Sep 2008)

Note:
1. Since I didn’t see contact info on their website, here’s what the founders provided at TechCrunch50: Expensify, 548 Market St. #61434, San Francisco, CA 94104, Phone: 801.745.9064

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My Best Interest Announces Rate Surfer from TechCrunch50 DemoPit

By Jim Bruene Posted on September 9, 2008
Categories: Conferences, Credit/Debit Cards, Rate Surfer

In addition to the 51 companies chosen in advance to demo at TechCrunch’s annual conference, 120 more companies (note 1) are in the DemoPit. The DemoPit is an area outside the main hall where the companies that didn’t make the final cut to be on stage have a table where they can showcase their companies to attendees. And one lucky company, the one that collects the most tokens from attendees, will appear as company number 52 on stage in the last session tomorrow.

There were several financial services companies in the DemoPit Monday including Billeo, Expensify, and LoanKrunch. Today, there was just one, Rate Surfer from My Best Interest. Although the service will not go live until its debut at Finovate next month, the company today showed it to the public for the first time. It also added a downloadable demo program to its website if you want a sneak peek (note 2).

What it does
Rate Surfer is a credit card manager. It uses account-aggregation technology to import balance and rate data from all your credit cards. It then uses that data to help users initiate and track credit card balance transfers across their credit cards. Although not without rough edges still to work out, it could potentially save users hundreds of dollars in interest every year by helping them take advantage of transfer opportunities.

Main Rate Surfer page from its demo software (9 Sep 2008)

Notes:
1. There are 120 total companies, but each gets just a 12-hour day in the DemoPit, so there are 40 companies each day. Although, the Monday companies were given an extra day due to a wifi outage that plagued the hall much of Monday. In addition to these companies, there were 33 exhibitor tables and 22 TechCrunch alumni with tables, including Cake Financial and last year’s winner Mint.

2. It’s a 67MB download.

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Shryk Launches iThryv, Online Banking for Youth, at TechCrunch50

By Jim Bruene Posted on September 9, 2008
Categories: Conferences, Launches, Personal Financial Management

Two huge tech conferences opened today in California with 124 companies launching new products this week in front of a combined audience of more than 2,500 (see note 1). At DEMOfall in San Diego, 72 companies are launching new products today and tomorrow. In San Francisco, 52 companies launch at TechCrunch50 today through Wednesday.

Eight of the 124 companies are related to financial services:

DEMOfall: Rudder, GreenSherpa, BizEquity (Advanta)
Techcrunch50: iThryv (below), StockMood, PersonalRIA, exchangeP, and Emerginvest

We’ll cover several of these companies, plus several in the TechCrunch50 DemoPit, starting with iThryv.

iThryv kicks of TechCrunch50
I made it down from Seattle this morning just in time to catch the first demo. I’m glad I got up early because it just so happened to be the only personal finance/banking-related finalist. Oklahoma City-based Shryk kicked off TechCrunch50 (note 2) by unveiling its online banking platform aimed at the 12- to 20-year-old crowd. The new service is called iThryv and it will be marketed directly to banks and credit unions who will customize and brand it for their own customer base.

iThryv will be integrated directly to the bank, or its core processor, so that real-time banking data can be displayed in various widgets. In addition to account info, iThryv also includes the following modules and features:

Goal-oriented savings, including rewards for reaching milestones
A spending & savings score that does for savings what a credit score does for loans
Make $ area where budding entrepreneurs can learn more about starting a business
Learn area for financial education

The company has a two-fold approach to getting iThryv into the market:

Licensing the platform to banks for a fixed fee plus per-user fees
Giving the platform to schools to incorporate into their curriculum

According to the founders, the service is currently being considered by several financial institutions, but it is not yet available online.

iThryv homepage (8 Sep 2008)

iThryv savings score graphed (8 Sep 2008)

iThryv “Make $” tab (8 Sep 2008)

Notes:
1. TechCrunch reported approximately 1,700 attendees; DEMOfall, 800.

2. iThryv was originally scheduled to present third, but were moved up to first when Ashton Kutcher was late for his scheduled demo of his startup, Blah Girls.

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Person-to-Person (P2P) Lending Update

By Jim Bruene Posted on September 4, 2008
Categories: Lending Club, Loanio, Loans & Credit, Metrics & Market Research, P2P Lending, Prosper, Zopa

Now that we are well past the mid-point of 2008, it’s a good time to look at where we are with one of the most talked-about online financial subjects of the decade: person-to-person or social lending.

Currently, two U.S. companies are actively originating unsecured, multi-purpose P2P loans (note 1):

Prosper: Through July, the leader in the market is running 10% ahead of its 2007 loan-origination pace. The company has funded $55 million and is on pace to do just under $100 million for the year. Website traffic is up 15% compared to a year ago (see graph below) and through July there have been 13% more loan listings (see previous coverage here, Finovate 2007 Best of Show video here; monthly volume reports here).
Zopa: The company, which isn’t technically person-to-person (the loans are originated by six credit union partners) but definitely has a social aspect to its loan program, has not revealed any numbers, but they list 475 loans on the “browse all borrowers page.” Assuming average loan size of $8000 to $9000, they are doing less than $1 million per month. Zopa is using Google AdWords to pitch “instant approval” with a credit score of 640+ (see screenshot below), an aggressive marketing move, especially combined with the 8.49% APR touted on the landing page (see screenshot below; previous coverage here; FinovateStartup 2008 Best of Show video here).

In addition, three more P2P lenders appear very close to launching or relaunching:

Lending Club: The company, launched in May 2007, has been essentially closed to new business since March as they retooled loans into securities for regulatory reasons. However, the company is scheduled to present at our Oct. 14 Finovate conference, implying that they will be out of their quiet period by then (previous coverage here; Finovate 2007 video here).
Loanio: The startup appears to be very close to launching based on an a Sept. 3rd email sent to its house list announcing the launch “in just a few weeks” and adding in parenthesis (yes, we mean it this time!). The company will likely be the first to offer a co-borrower loan application (previous coverage here; Finovate Startup video here).
Pertuity Direct: The newest competitor in the space is Pertuity Direct which we wrote about last week. Its website claims a Sept. 15 launch, and we look forward to seeing their first public demo at Finovate on Oct. 14.

Finally, several companies are looking to launch P2P services in 2008 or 2009, including Globefunder, Community Lend (Canada) and one we just heard about today, Swap-A-Debt.

Forecast revision
Last December we published our second detailed Online Banking Report on Person-to-Person Lending. In that report, we predicted just under $200 million in originations this year. However, due to the inactive period at Lending Club, the delay in Loanio’s launch, and the more conservative approach by Prosper lenders, we are lowering the 2008 forecast by 25%, with an expected total of $135 to $150 million for the year as follows:

Prosper ($95 to $105 million)
Lending Club ($25 to $30 million)
Zopa ($5 to $10 million)
Loanio ($1 to $5 million)
Pertuity Direct ($1 to $5 million)

P2P lending traffic from Compete (July 2007 through July 2008)

Zopa AdWords ad on “loanio” search
(4 Sep 2008, 1 PM PDT from Seattle IP address)

Landing page (4 Sep 2008, link here)

Notes:
1. Specialists are involved in the student loan piece (GreenNote and Fynanz) along with Virgin Money and Loanback which help with person-to-person loan documentation and servicing.

2. Top-right graphic from April 2008 ABC News segment on Lending Club and person-to-person lending.

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Will eWallets Make a Comeback on the iPhone?

By Jim Bruene Posted on September 2, 2008
Categories: Apple, Credit/Debit Cards, iPhone, Mobile Banking, Mobile Payments

Since the July opening of Apple’s App Store, we’ve been tracking the apps in the Finance category (see previous coverage here). But there are also several apps in the Productivity category of interest to financial institutions: the eWallets.

There are two wallets available in the U.S. iTunes store:

eWallet from Ilium Software: #46 in popularity in Productivity with a cost of $9.95 and rated 3.5 stars (out of 5) across 143 reviews (see inset)
Memengo Wallet: #48 in Productivity with a $0.99 cost and rated 4 stars across 43 reviews (website)

Web-based eWallets never took off because of security concerns and because they provided only marginal improvements in desktop productivity. However, a mobile version has more utility owing to sticky notes with password reminders and credit card info, helpful to users away from their desks.

How it works
Storage of usernames and passwords for websites is the primary use of eWallet, but it also has a Finance category (see inset above) where users can store credit card numbers and contact info (see screenshots below).

That info is helpful when using a card to make a purchase online or through the mobile phone. It’s also a great place to store the info in case the card itself is lost or stolen.

Financial institution opportunities
While these apps haven’t gained an overwhelming following, a financial institution could offer a free version that highlights its own card offerings while providing storage space for other card numbers. That way, you get your logo on the iPhone instead of Mint, Wesabe, or some other financial institution.

The bank-branded eWallet could also include a financial calculator and direct connection to online banking.

Note:
1. For more info see our Online Banking Repot on Mobile Money & Payments.

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