Finovate is part of the Informa Connect Division of Informa PLC
This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
Looking for a low-cost way to generate new ideas and meet like-minded financial geeks? You have three opportunities during the next four weeks:
As of today, there are 34 people signed up for San Francisco, a dozen for New England, and 24 for NYC. Cost is minimal, max of $25. Register in advance on the respective websites.
It's been a while since we looked at the actual usage of payment, personal finance, lending, and banking apps on Facebook (previous coverage here; see note 1). And assuming the numbers provided by Facebook are accurate, it's not good news.
Overall, the banking and personal finance apps have anemic usage levels totaling just 263 daily users (for apps with more than 1 daily user). That does not include virtual currencies or stock tracking/investing applications (see note 2). In comparison, the most popular general Facebook app, FunWall, has more than 3 million daily users.
But the number will grow rapidly if major financial institutions add balance inquiry functionality such as (#4) MyMoney from Fiserv's Galaxy unit (previous coverage here) and mShift's Key Point Credit Union app discussed here (only 1 daily user, so it did not make our table). Activity in Facebook personal finance apps yesterday (13 March 2008):
| Name (parent) | Daily Users |
| 1. PayPal (eBay) | 80 |
| 2. Billmonk (Obopay) | 55 |
| 3. LendingClub* | 26 |
| 4. MyMoney (Fiserv) | 17 |
| 5. PayMe | 14 |
| 6. Debt Manager | 10 |
| 7. Prosper | 7 |
| 8. FriendFunds | 7 |
| 9. UPside Visa Card Balance Reader | 6 |
| 10. Web Money | 6 |
| 11. Buxfer | 5 |
| 12. IOU (Sanjay Madan) | 5 |
| 13. Split It (TD Bank) | 4 |
| 14. MoneyExchange (Revolution Money) | 4 |
| 15. IOU (Jonas Neubert) | 3 |
| 16. Mortgage Calculator | 3 |
| 17. BillTrack | 3 |
| 18. Insurance Marketplace | 2 |
| 19. Wesabe | 2 |
| 20. FB E-Wallet | 2 |
| 21. Intuit Tax Tips | 2 |
| TOTAL | 263** |
*See comment 1
**Does not include apps with less than 2 users
Notes:
1. You cannot make a meaningful comparison with last summer's activity because Facebook changed the way it reports usage. Previously, the company reported the number of application downloads and now it shows the much, much smaller "active daily user" total. For example, in July 2007, LendingClub had already had more than 11,000 downloads. Under the new measurement system it tallies just 26 daily users which puts it in third place (see table below).
2. The leading stock tracking app, Fantasy Stock Exchange, has 7,990 daily users. The most popular virtual currency AceBucks has 11,300 daily users.
While you don't want to overdo it and look like a hypocrite (see note 1), there's nothing like a little green to spruce up your marketing this time of year. BankServ lets users see just how much they can save by uploading checks to the bank over the Net instead of hightailing over to the branch in their Hummer (note 2).
In my case, I'm only going to save a half barrel of oil per year by forgoing those branch visits. Less, if it ever stops raining and I can get back to biking to the branch. It sounds more impressive in terms of CO2 emissions saved: 200 pounds.
It's a nice tool. Financial institutions could also use similar calculators to show the green benefits of paying bills online, receiving electronic statements, or anything else that cuts down on waste.
Note the URL: http://www.bankserv.com/greenbanking/
Note:
1. The term is new to me, but my friends over at Javelin Strategy blogged about greenwashing this week. In short, it means misleading consumers about the extent of your eco-friendly practices.
The latest financial services startups to sign on for a demo slot include: IP Commerce, SmartyPig, TradeKing and VaultStreet. They will demonstrate their latest product features April 29 at our FINOVATE Startup conference in San Francisco (previous coverage here).
This brings the total number of presenting companies to 37 (see note 1). It's going to be one jam-packed, action-filled day. And there is still time to save $100 during our March Madness/Daylight Savings Time/St. Paddy's Day/Saving o' the Green special. Register here before it's too late.
Note:
1. Forty companies is the maximum capacity.
Talk about turning the tables. Now individuals are lending to businesses. Has the credit crunch gotten to that level?
Small business lending, or the lack thereof, was highlighted in today’s Wall Street Journal in a column by Jane Kim that ran on the front page of the Personal Journal section, Where Either a Borrower or Lender Can Be: Small-Business Owners Turn to Online Networks for Funds as Banks Tighten Credit (here).
The article includes three examples of small business owners, frustrated with the stinginess of bank lending departments, that turned to person-to-person exchanges for loans. Apparently, all three had excellent credit since Mr. Walsh was able to borrow $22,500 at 10.25% and Mr. Kelley $18,500 at 10.97%, both from Prosper. And Mr. Kalempa received $15,000 from LendingClub for 9.6%. You don't get funded for loans of that size unless your credit is good and your story even better.
Small business owners may not have time to shop for credit, but they do network. And given how unique positive borrowing experience are, these P2P success stories will be told and re-told dozens of times. The credit-crunch induced conservatism of the banking community, especially towards growing businesses, could be an HUGE opportunity for the new P2P marketplaces.
It could be the crossing-the-chasm market niche that the loan exchanges need in order to gain traction and profitability as they position themselves for the mainstream consumer marketplace. The credit markets are huge and complicated and it's impossible to predict how this plays out. But if I worked in small business banking product management, I'd circulate this story to senior management and start working on my response to the P2P lending threat.
I don't know if Wells Fargo has saturated the entire Seattle market, or just the radio station I listen to, but I've heard its ad for a web-based retirement tool a dozen times in the past week or so.
I like the radio spot. It takes a complicated subject and creates interest by asking, "What is your RSI score?" Then, sending listeners to the Web to take the bank's Retire Secure Index test. It's interactive, it's timely and it makes good use of a multi-media approach.
And Wells Fargo uses search engine marketing masterfully to ensure that interested prospects find their way to the bank's retirement landing page. The bank has purchased Google AdWords for various retirement terms (see first screenshot below) and created a unique landing page (second screenshot) and URL <wellsfargo.retiresecureindex.com> that has quickly moved to the top of the organic search results (see note 1).
Retirement tool
The tool itself is good. It's not easy to make a retirement savings worksheet compelling, but the bank does about as good a job as you can expect. After a 60-second intro by the friendly virtual spokeswomen (see second screenshot), the user completes a short form that takes about two minutes. The on-screen spokesperson talks you through it, but I tuned her out since it's relatively straightforward stuff (note 2).
After a few seconds of calculation, and a clever drum roll, Wells delivers an RSI number (see third screenshot), which is the number of years you can maintain your desired income level after retiring. It's a good way to present the results, focusing on the positive. Users can go back and change the inputs or go into advanced mode to add home equity, business equity and/or part-time employment.
At the end, users are encouraged to contact the bank through a branch or toll-free telephone number to talk to an investment rep. There is also a link to open an IRA online. All in all, it's a good effort to engage users with a difficult topic.
Overall scores:
1. Google results for "wells fargo retire secure" (10 March 2008, noon)
2. Wells Fargo Retire Secure Index Landing page
3. Call to action
Notes:
1. For more information on search engine marketing for financial institutions, see our latest Online Banking Report (here).
2. The audio can be turned off, but the spokesperson cannot be made to sit down or go away (see note 3).
3. The first option on the original landing page is to choose "dial-up" or "high speed" versions of the tool. The dial-up version does away with the audio/video track and just presents the static form.
We just finished the latest from our Online Banking Report, entitled Searching for Customers 3.0 (see note 1). The report takes a fresh look at search engine marketing for financial institutions including local search, financial keyword selection, how to leverage social media such as blogs to improve your organic results, and more.
It’s 36 pages long with 11,000 words and 28 tables. The report includes overall search marketing trends and metrics. We also dive deep into the most popular financial search terms and to help you uncover new ideas for your own search marketing tactics.
Online Banking Report subscribers may download the report here. All other may purchase it for US$245 (single user) here. The abstract is available here.
Note:
1. The “3.0” in the report title means it’s the third time we’ve covered this subject during the 13-year history of Online Banking Report. We also looked at search in April 2003 (OBR 95) and June 2001 (OBR 69) when Google AdWords was just getting rolling.
Four months ago (here) I wrote about how easy it was to set up a company page in Facebook. Even a total novice like myself could create one in a few minutes.
There hasn't exactly been a rush to do it, but approximately 50 financial institutions have posted a free company page on Facebook (see note 1). Although, most are simple "white page" listings with no more than logo, address, phone number and URL, it's still better than nothing.
(Update Mar 7: Please note, I am talking only about Facebook "pages" here. There are several banking "groups," notably Chase +1 with nearly 50,000 members, that are far more active. Also, some FI pages , such as TD Money Lounge and RBC Bankbook, do not show up in my search using "bank" and "credit union." Consider these counts approximations. )
Credit unions have three times as many as banks. Credit union's can often move faster because of their size and culture. Here's the count by financial institution type:
The only banks with more than a handful of fans are Jordan's Arab Bank with 145 and HSBC Bank Egypt with 89. Silicon Valley's Valley Credit Union (screenshot below) leads in the U.S. with 45 fans.
There's also one bank branch that's taken the initiative to post a Facebook page. U.S. Bank's Beaver Valley, Ohio branch (here) is one of the few to have posted something interesting, a $100 Super Bowl contest. They've also posted their branch hours (see screenshot below).
Note:
1. I counted financial institution pages by using Facebook's site search for "bank" and then for "credit union." To qualify the FI had to at least post the bank's logo and URL. There were also a few placeholder pages with no logo.
2. For more information on social media and online personal finance, see our Online Banking Report #144/145.
Summary
According to data from Compete's consumer panel, the deposit and home loan categories experienced significant increases in both shoppers and applicants during January (with the exception of home equity). Credit cards took a big hit as both shoppers and applicants dropped by double digits. Conversion across the board stayed relatively constant across the three segments, with credit cards moving the most with a drop of 3%.
Commentary
About the Financial Services Scorecard
In April, 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.
The demo lineup at our upcoming FINOVATE Startup conference just keeps getting better. With the additions of SocialPicks, SimpleTuition, Zecco, and Tyfone we now have a total of 34 presenting companies on board. We have a few more cool startups vying for the last couple spots, which we'll announce next week.
The full lineup for the April 29th event is maintained at our website (here). If you want to be in the audience and have a chance to see and interact with these companies, please register here.
Update March 6: I added two clarifications pointed out in the comments. First, that normal ACH deposits to your own SmartyPig account are free of charge. Second, that the retailers bonus on withdrawals to their gift cards is UP TO 5% (not a flat 5%).
How about this recipe? Take a basic FDIC-insured savings account, spice it up with automated electronic transfers and email communications, mix in gift/debit cards, wrap the whole thing up in a social network, and top it with a memorable name. What do you have? SmartyPig, the most innovative financial service we've seen since Prosper launched two years ago.
The site is in the final week of private beta. To register, you still need an invitation code. The company asked me not to publish it, but it's OK if I distribute by request via email. Send a note to info@netbanker with "SmartyPig" in the subject line. Or simply wait until after this weekend when the site goes into public beta.
How it works:
1. Users create savings accounts at the site. Deposits are held at West Bank, a Des Moines, IA- based financial institution with $1.3 billion in assets. Funding is through ACH (electronic) transfers from outside bank accounts. SmartyPig currently pays a high, 4.3% APY on deposits.
2. After the account is established, users are encouraged to create savings goals funded through automatic monthly ACH transfers until the goal is met.
3. Now here is where SmartyPig diverges from a typical bank account. The savings goals can be made public or kept private. Public goals can be funded in part, or entirely, by outside contributors. Think of grandma and grandpa contributing birthday money to help junior buy a new bike. Contributions are funded through credit card charges with a maximum charge of $500 and a per transaction processing fee of $4.95. To make sure grandma's $50 doesn't go to a Mario game, the money cannot be withdrawn until the savings goal is met (or canceled by the primary account holder).
4. After goals have been met, the user can elect to take the funds out in the form of a MasterCard debit card or a gift card from a retail partner such as Amazon.com. Participating retailers add up to 5% bonus to the savings goal so that $1000 saved for the plasma TV is worth $1,050 if redeemed via Amazon gift card. That's a great added incentive to use the service.
Gift Cards
SmartyPig also sells gift cards that can be redeemed towards new or existing savings goals. These cards, issued in denominations of $25 to $500, are meant to be given as gifts or employee incentives. They cannot be redeemed outside the SmartyPig system. Physical card are produced and delivered for a processing fee of $4.95 plus delivery fees of $5.95 or more. Or consumers can deliver a virtual card through email to eliminate the delivery charge (but the $4.95 processing fee remains the same).
Summary of Fees
Analysis
Although, not everyone is going to want to go through the extra steps to save this way, we are impressed with SmartyPig and are awarding it our first OBR Best of the Web award for 2008 
(see note 1). We like how it's part gift registry, part savings account, and potentially a big help in getting users in the habit of saving for larger goals. The look-and-feel is very Web 2.0 and should resonate with teens and twenty-somethings.
There are a few rough edges that need better explanation and/or minor redesign. For instance, there is no way to simply add funds to a savings account without first setting up an automatic funding plan. But the site isn't even officially launched yet, so these issues should be ironed out during the beta period.
The processing fee for outside contributions of $4.95 per transaction is a bit on the high side (there is no fee for funds transfers from your own bank account). One could argue that it's worth price of a triple mocha for the convenience and benefits of the savings account. But for smaller deposits of $50 to $100, it's a pretty high percentage of the overall deposit.
It would be nice if the company could lower the fee, perhaps by creating an ACH funding option. Another way to reduce costs is to lower the 4.3% APR. I'm not sure the savers attracted to this account really need that high of a rate. A lower interest rate combined with lower fees might make the service more palatable overall.
The company may have to tweak its business model going forward. But the real lesson here is that savings accounts can be made stickier with automation and incentives. Leave it to the Iowans to show us the way (note 2).
Screenshots
1. The main account screen: I set up a savings account for my son. Then set a savings goal of $300 for a new bike. SmartyPig requires that the savings goal be funded in equal monthly withdrawals from the linked checking. It would be helpful if you could opt out of the automated savings plan so that the savings goal could be funded manually.
2. Public goals: If you opted to make your savings goal public, anyone can find it by searching via email address under the "Friends' Goals" tab on the top (you can see this one by searching for jim@netbanker.com). 
Users can publicize their goals with a widget (see inset, and link at bottom of screen above) or by sending email to friends.
After making a contribution, the following screen is displayed.
Note:
1. Online Banking Report (OBR) Best of the Web awards are given for products that "raise the bar" in online financial services, usually for pioneering a new feature. Recent winners are covered here. Five awards were been handed out in 2007: two for Wesabe, and one each for Jwaala, Buxfer and Obopay. In the past 10 years, 67 companies have won the award.
2. Full disclosure: I was born and raised in Iowa and my brother lives within a few miles of the SmartyPig world headquarters.
In what it hopes is a temporary set-back, Canada's IOU Central has stopped taking new loan applications or accepting bids on existing ones. The company was launched two weeks ago (coverage here). Evidently, a bit more work needs to be done before the site is fully blessed by the Canadian government.
This might explain why IOU Central seemingly came out of nowhere to become the first Canadian P2P lender. We'll let you know what we hear from the founders. Thanks to Wiseclerk, via Prosper Lending Review, for the tip.
IOU Central homepage (29 Feb 2008)
Explanation of suspension (29 Feb 2008, 4 PM Pacific)
