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Watch the First Mobile Payment Made via Starbucks Card iPhone App at Downtown Seattle Location

By Jim Bruene Posted on September 24, 2009
Categories: Apple, Credit/Debit Cards, iPhone, Stored Value Cards

John Cook, a Seattle tech blogger at TechFlash, was apparently the first customer to use the new Starbucks Mobile Card iPhone app to purchase coffee at the Seattle Columbia Center Starbucks. The video was posted at 3 PM yesterday. For more info on the app, see yesterday’s post.

He had a little trouble getting the point-of-sale scanner to read his iPhone-app-generated barcode, but after an extra few seconds (25 seconds actually) of wiggling the phone, the transaction worked (the transaction begins at about the 1:19 mark). Hopefully, with a little practice, users will know where to place their phones in front of the scanner for easy reading. He also demonstrates a card reload after the purchase (at 3:05 mark).

Notes:
1. The myStarbucks app has moved up to number 6 in the iTunes app store, while the mobile card is at number 29 (as of 4:30 PM Pacific).
2. The mobile payments capability is live at all 16 test locations as of yesterday.

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Starbucks Launches First Dedicated iPhone App for Stored-Value Cards

By Jim Bruene Posted on September 23, 2009
Categories: Apple, Credit/Debit Cards, iPhone, mFoundry, Stored Value Cards

This is a huge day, and one that I hadn’t expected for at least another couple years. The convergence of mobile payments and caffeine. What more could a mobile banking geek and coffee connoisseur want?

Starbucks pioneered stored-value cards and launched its first card in 2001. Today, it became the first company (note 1) to create an iPhone app exclusively for a payments card. Apparently, Finovate alum mFoundry helped build the app (cnet story, thanks Brandon).

Users were offered $5 extra credit on their first Starbucks card reload of $25 or more made from the new app. Registered cardholders received an email notification earlier today urging them to “turn your iPhone into a Starbucks card.” (see screenshot below).

Note, the Starbucks Card Mobile app (app store link) is in addition to the regular myStarbucks app which has a store locator, coffee/drink info and a favorites-sharing function (app store link). That app also launched today (notes 2, 3).

The app is gorgeous and shows how important design can be in creating a trustworthy and easy-to-use payment product (note 4). For example:

Home screen (left screenshot):

The card balance is immediately and prominently displayed

Reload screen (middle screenshot)

Uses big, easy-to-read buttons—remember, this is a small screen, with a giant green, full-width Continue button
Current balance repeats at the top

Mobile payment screen (right screenshot)

The bar code for mobile point-of-sale payments (test only, see below) is rendered over a background image of the card, complete with card number, a nice touch to reassure users and Starbucks baristas that this is the real thing.

Analysis
Of course, the mobile commerce and banking community will be abuzz about the mobile payments test. At 16 Starbucks locations (8 in Seattle and 8 in Silicon Valley), iPhone users will be able to pay at the counter using a barcode generated on screen (right screenshot). Luckily, several Starbucks are within a couple miles of my home so I’ll be able to report back with results as soon as the test locations are live.

But I think the stored value card management functions are more interesting for the present. Just think if you had an application that looked like this for your debit or credit card. Think of the brand-value uptick, PR notice, and word-of-mouth buzz.

Starbucks Card Mobile screenshots (23 Sep 2009)

Email announcing the new mobile card app (sent to a registered Starbucks cardholder in the mobile payments test market, 23 Sep 2009, 12:43 PM Pacific)

Notes:
1. Starbucks is the first company in the U.S. to have a dedicated app for a payments card. Although unaware of any elsewhere in the world, I would expect that card apps exist, at least in Asian markets.
2. The main Starbucks app is currently the 33rd most popular free app in the store and number 1 in Lifestyle; Starbucks Card Mobile is number 46 overall and 3 in Lifestyle (6 PM Pacific).
Update (9 PM Pacific): myStarbucks has moved to number 19 and Starbucks Card Mobile to 38.
3. The Starbucks apps are huge, 6.3 MB for the regular and 3.7 MB for the card, so makes sure you have good reception or are connected via WiFi.
4. However, I have been unable to log in to my actual Starbucks account as of 7 PM Pacific, owing perhaps to overloaded servers.
5. For more info on financial institution opportunities, see our Online Banking Report: Mobile Banking via iPhone.

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Bank of America Promotes Small Business Online Community at Logout

By Jim Bruene Posted on September 23, 2009
Categories: Advertising & Promotion, Bank of America, Login/logoff marketing, Small Business

Logging out from my Bank of America credit card account (both personal and business accounts), I was greeted with this pitch for the bank’s small business community (see first screenshot). The pitch is straightforward and emphasizes three benefits:

Get answers to your business questions
Exchange ideas with other entrepreneurs
Free

Clicking the red Join Today button drops users onto the Forums page at the small business site (see second screenshot).

Bottom line: The logout effort is a good brand-building exercise for Bank of America, and it should drive much-needed traffic to the site. According to Compete (see chart below), in August the small business community site had an estimated 70,000 unique visitors, two-thirds more than the 40,000 a year ago. But traffic was down almost a third from the springtime peak.

Bank of America logout screen (23 Sep 2009, 4 PM Pacific)

Landing page (link)

Compete traffic estimates, Aug 2008 through Aug 2009 (link)

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2009 ABA Survey Shows Online Banking is Most Frequent Delivery Channel for First Time

By Jim Bruene Posted on September 21, 2009
Categories: Metrics & Market Research

Some interesting data was released today from the American Bankers Association (press release). According to its annual telephone survey of 1000 U.S. consumers, online/Internet banking is now the most common banking method among U.S. consumers (note 1).

Here are the totals (see notes 2, 3):

Question: Which banking method do you use most often?

Channel	2009	2008	Net Difference	Percent Change
Online/Internet	32%	25%	Up 7.5 points	+ 30%
Branches	28%	34%	Down 6.6	(24%)
ATM	22%	28%	Down 5.6	(20%)
Mail (note 3)	11%	9.1%	Up 1.9	+21%
Telephone (note 3)	5.8%	4.1%	Up 1.7	+41%
Mobile (note 3)	0.6%	1.0%	Down 0.4	(40%)
Total	100%	100%	—	—

Source: American Bankers Association, telephone survey of 1000 U.S. consumers conducted by Ipsos-Reid, on August 14-16-2009

Notes:
1. Remember, this reflects households willing to take a telephone survey but who may or may not use the Internet. If you are surprised to see online usage trailing branch usage until this year, you may be thinking of research results from other surveys of online users, who have long preferred online banking over other delivery channels.
2. Unlike the ABA release, I’ve eliminated all the Don’t know, Unsure, and Other responses from the totals. So, the figures above represent the delivery-channel penetration of customers who named a single one from the list read to them.
3. The changes in mail, telephone and mobile seem odd. It’s possible that the way the question was constructed accounts for these counter-intuitive results in the lesser-cited categories. In 2009, respondents were given two new choices: “other” and “none of these.” In 2008, without those two bail-out choices, more customers chose one of the six channels read to them over the phone. In 2008, 110 respondents out of 1000 said don’t know, unsure, etc. In 2009, that number doubled to 226 respondents out of 1002.
4. Image credit: Bank of Hawaii.

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Finovate 2009 Attendance to Surpass Last Year

By Jim Bruene Posted on September 21, 2009
Categories: Finovate

Thanks to a fascinating lineup of presenters (logos below, list here), and what looks like a rosier technology outlook for next year, we are thrilled that as of this morning, Finovate ticket sales have surpassed last year’s!

With five business days remaining before the 29 Sep event, it’s certain we’ll have a record audience of more than 400 at Finovate 2009 (partial list below, note 1). There are still a few tickets remaining, so we encourage you to register ASAP.

Here’s a partial list of attending companies:

1st Mariner Bank

AARP

About.com

ACI Worldwide Inc.

Adirondack Trust Company

Advisor Software, Inc.

Aite Group

Alliant Credit Union

Ally Bank

American Banker

American Bankers Assoc.

American Express

Andera

ANZ

Bancorp Bank

Bank of America

Bank Technology News

BBVA Compass

Bloomberg Ventures

BusinessWeek

Canaan Partners

Capital One Financial

Cardinal Venture Capital

Celent

Chambliss, Bahner & Stophel

Chase Bank

Citibank

ClairMail, Inc.

CNNMoney.com

Consumer Reports

Credit Union Journal Mag.

Critical Mass

Datamonitor

Delta Community Credit Union

Deluxe Corp

Deutsche Bank

Discover Financial Services

Dow Jones MarketWatch

E*TRADE Financial

Experian Consumer Direct

Fast Company Magazine

Federal Reserve Bank

Fidelity Investments

Financial Insights, IDC Company

Flushing Bank

Flybridge Capital Partners

Frost Bank

Gartner Inc.

Glenbrook Partners, LLC

Goldleaf Financial Solutions

GRP Partners

Harland Clarke

Highland Capital Partners

HSBC

ING DIRECT

ISI-Dentsu of America,Inc.

Jack Henry & Associates

Kennebunk Savings

Lazard Capital Markets

Leadfusion, Inc

LendingTree/Thrive

LGFCU

Lincoln Financial Group

MAX Credit Union

Microsoft

Mint.com

MONEY magazine

Mortgagebot LLC

New York Times

Newsday

North Hill Ventures

NTT AgileNet

Open Solutions

Open Source CU

PayPal / Bill Me Later

PostFinance, Swiss Post

Prosper Marketplace

PSCU Financial Services

Rabobank Nederland

Randolph-Brooks Fed. CU

RBC Venture Partners

RSA

SmartMoney.com

Spark Capital

Spectrum Equity Investors

Standard Chartered Bank

SunTrust

SWaN Investors

Sybase Inc.

TD Bank

The Economist

The Hartford

Third Federal Savings & Loan

Total Technology Ventures, LLC

TowerGroup

TransUnion

Tudor Ventures

US Bank

USAA

Village Ventures

Visa Inc

Wall Street Journal

Wells Fargo

William Blair

Yahoo!

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Fast Company Recognizes Eight Financial Startups in its NextFinance Column

By Jim Bruene Posted on September 17, 2009
Categories: BancVue, Finovate, Jwaala, Launches

Really, we weren’t looking for ways to plug our Finovate conference. Usually we just come right out and tell you to register now since it’s only 10 days away. But imagine our delight when we opened up the latest issue of Fast Company (Oct 2009) and Dan Macsai’s article included six Finovate companies in his list of eight startups “brimming with hope for the financial industry” (see screenshot below; note 1).

In Dan’s words, these companies are noteworthy as:

Web-based financial startups creating services that embrace transparency (even in their largely fee-based pricing) and improve the customer experience.

Congratulations to the eight winners (in order of their appearance in the article):

Tempo Payments: Decoupled debit (FinovateStartup 2009 alum, video)
BancVue: Community bank rewards checking and Kasasa national brand (upcoming Finovate 2009 presenter; FinovateStartup 2008 alum and Best of Show winner, video)
MarketRiders: Impartial mutual fund advice for $9.95/mo
Mpower Ventures: Providing financial services to the world’s unbanked.
SecondMarket: Helps companies auction securities and other illiquid assets (FinovateStartup 2009 alum, video)
BrightScope: Independent advice for 401k plan participants (upcoming Finovate 2009 presenter)
Jwaala: Personal financial management and online banking tools for small and mid-size financial institutions (Finovate 2007 charter presenter, video; FinovateStartup 2008 alum and Best of Show winner video; 2009 Finovate Startup alum, video)
The Receivables Exchange: Real-time auctions for accounts receivables (FinovateStartup 2009 alum, video)

Fast Company’s NextFinance column (Oct 2009, pp. 76-78, ad page omitted)

Note:
1. We’ll take a .750 batting average any time. But, we’ll also try to recruit MarketRiders and Mpower to future Finovate events.

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A Cautionary Tale: T-Mobile Forced to Cancel Plans to Charge a Monthly Fee for Paper Statements

By Jim Bruene Posted on September 16, 2009
Categories: Electronic Statements, Public Relations

According to today’s Wall Street Journal, T-Mobile has backed down from its plan to start charging its customers $1.50 per month for paper statements (see my 22 Aug Tweet, inset, and T-Mobile landing page, below).

Apparently, a customer backlash prompted the reversal, coupled with the threat of government intervention over the proposed change that was to go into effect this week (note 1) .

Lesson: Banks and card issuers are working hard to eliminate paper statements from their cost structure. But, be warned that consumers are not ready for an estatement mandate. It’s better to offer various enticements to go electronic rather than forcing a new fee or paperless policy on customers. See our previous coverage for ideas to incent estatement usage.

T-Mobile landing page for estatement signup (link, 22 Aug 2009)

T-Mobile account management Billing & Payments page (16 Sep 2009)
Surprisingly, T-Mobile doesn’t currently even have an option on its billing page to turn the paper statement off.

Note:
1. New York’s attorney general warned T-Mobile that it could not impose new charges without giving customers the option of ending service contracts early.

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Thank You to our NetBanker.com September Sponsors

By Eric Mattson Posted on September 16, 2009
Categories: About Netbanker

Every month, we publish a ton of high-quality posts here at NetBanker.com. Doing so takes a lot of time and dedication and, honestly, the support of our sponsors.

Please support our sponsors (listed below in alphabetical order) so that they can continue to support us in bringing you regular insightful analysis on the latest in financial and banking technology innovation.

Digital Insight, an Intuit company — Showcasing their FinanceWorks (Online Banking + Quicken) solution. Check out their updated website.
Tier One Partners — A PR firm powered by only senior-level talent. One example of their work with a financial services client.
Trusteer — Free white paper on “Addressing Customers [Security] Concerns from Financial Trojans”. Download it for free.
New Sponsor! Worklight — Offering a free report on “Secure Widgets for Financial Services.” You can download it here.
Yodlee — Free webinar on 17 Sep at 11AM PDT, 2PM EDT about “Personal Finance Management: Drive Revenue and Deepen Consumer Relationships.” Register now.

Now, back to the regularly scheduled blogging.

P.S. If you’d like to join these companies in supporting NetBanker, please drop me an email at [email protected].

Eric Mattson is CEO of Online Financial Innovations, the parent company of NetBanker, Online Banking Report and the Finovate Conference Series. He can be reached at [email protected].

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Is Mint Worth $170 Million?

By Jim Bruene Posted on September 14, 2009
Categories: Intuit, Mint, Personal Financial Management

The rumors broke yesterday and the confirmation came today. Intuit is buying two-time Finovate Best of Show winner, Mint for $170 million (see note 1). Few people are surprised by this move or the price. Mint’s latest VC investors had just invested at a $140 million valuation a few weeks ago, so $170 mil is in line with that. It’s also a 5x return to the total VC investment of $32 million, so everyone associated with Mint has to be pretty happy, especially in an environment where most assets have fallen by double digits in the past two years.

The bigger question is whether the startup is worth $170 million? To Intuit, I think the answer is definitely yes (see below).

Intuit shareholders were indifferent with no real movement in share price today (see inset) on lower-than-normal trading volume (note 2). Because of the deal, Intuit lowered per-share net income estimates by 2 cents ($6.5 million loss) for FY 2010, and says there will be no material impact after that.

Apparently, Intuit will keep the Mint brand, at least for now. Mint CEO Aaron Patzer will be general manager of Intuit’s personal finance products, both online AND desktop.

I’m no M&A expert, but here’s why $170 million sounds reasonable to me:

At Intuit’s current multiple (20x), Mint needs to generate approximately $10 million in annual profits to break even for shareholders. With 1+ million users at Mint, that’s $10 per user per year, less than a buck a month.
While Mint isn’t likely making that type of profit today, the combination of lower costs from Intuit back-end systems and additional revenues from upselling Intuit services (TurboTax, Cuckoos, and others), should elevate Mint to a $10 million-plus business unit relatively quickly.
Intuit needs an entree to the young-and-frugal segment, and Mint can be the starting point with users migrating to Quicken Online (which can be returned to a fee-based, advertising-free service), TurboTax, and/or QuickBooks over time.
Plus there’s a bunch of intangibles that are difficult to quantify until you see how Intuit handles the Mint.com user base. Even though there’s the usual grousing from Mint users today, in reality, Intuit’s trustworthy brand name should be able to retain current users and grow the base.

Here’s how I break down the purchase price:

$5 to $10 mil >>> Assets: Code, IP, employees, etc.
$10 to $20 mil >> Brand: Name, URL, traffic, awards, etc.
$100+ mil >>>>> Customers (1,000,000 at $100 each)
$25 to $50 mil >> Option value

Notes:
1. Mint won the audience voting for Best of Show at both our 2007 and 2008 Finovate conferences. If you want to see and meet the next Mint, we have a few dozen tickets left for Finovate 2009 on 29 Sep (purchase tickets here).
2. Last week, shares fell $0.40 or 1.4%.

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Mobile Banking Awareness at Financial Institutions: The Grades Are In

By Jim Bruene Posted on September 11, 2009
Categories: Mobile Banking, Website Usability & Design

Two days ago (here), I wrote about Citibank’s smartphone banking awareness campaign on its homepage. Coincidentally, ABI Research yesterday published a rating of 17 U.S. major retail banks plus a dozen community banks (see note 1) on “discoverability” and “accessibility” of their mobile banking services (press release).

Surprisingly, ABI rated Citibank “average.” I’m not sure what Citi did wrong (note 2) to get a “C,” but one common technique of all ABI’s A-students (see table below), is a “mobile banking” link on the homepage (see screenshots below).

Observations:

Wells Fargo is the only bank to publicize a short mobile URL, wf.com (see final screenshot)
USAA is the only one of the six with an iPhone-optimized page rendered for users visiting its regular URL (see note 3) from the iPhone browser; this would be a minimal requirement for an A on our scorecard (if we were to make one)
Two of the six A-rated banks, BB&T and Northeast Bank, were also rotating a mobile banner ad on the homepage (see screenshots below).

Here are the ABI Research ratings:

Grade	Bank Names
A	BB&T, Eastern Bank, Fifth Third Bank, Northeast Bank, USAA, Wells Fargo
B+	Bank of America, Chase Bank
B	Capital One, US Bank, Huntington Bank
C	America First, Bancorp South, Citibank, PNC, Wachovia
D	Carolina First, 1st Bank, IBC Bank, Mercantile Bank, Regions Bank, SunTrust, Synovus
F	M&T Bank, Provident Bank

The A students (all screenshots from 10 Sep 2009)

Notes:
1. Another community bank with great mobile awareness is Farmers State Bank (click on inset right for a larger screenshot). Thanks to Laurie Goodlock at the bank for the tip.
2. We’ve requested the full report.
3. wf.com visitors also see a mobile-optimized site in their iPhone browser
4. Reference: Online Banking Report on Mobile Banking (Feb 2007) and Online Banking Report: Mobile Banking via iPhone (Mar 2009)

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Mobile Awareness: Let Your Customers Know They Can Bank Online via Smartphone Now

By Jim Bruene Posted on September 10, 2009
Categories: Citi Mobile, Citibank, Mobile Banking, Website Usability & Design

Yesterday, Apple announced it has shipped 50 million iPhone/iPod Touches in the past two years. And they are not even the smartphone leader. You can bet that many (most?) new smartphone-owning-online-banking-using customers haven’t a clue how to connect to their financial institution through their mobile. And even if they know how, there’s still that nagging doubt as to whether it’s a safe/smart thing to do.

Therefore, if you want to drive significant mobile usage, there are a number of steps to take (see note 1). But one of the most important is user education, especially through online information, screenshots, and demos.

Citibank recently elevated general smartphone awareness to its homepage (see first screenshot below). Yesterday, the bank was rotating an “Introducing CitiMobile for Smartphone” banner across the top of the homepage. The banner led to an educational page (see second screenshot, note 2), that led to clear instructions on how to bank via a mobile browser:

Open browser
Go to citi.com (note 3)
Log in using your same online banking credentials

While brevity is admirable, I think customers need a little more info than that. For a non-user, the process sounds almost too good to be true. The bank should elaborate on some key questions such as:

Is it secure? (see update below)
What does it cost?
Does it work on my phone?
What if I lose my phone?

Luckily, interested users can go to the well-designed demo that takes users through a semi-guided tour of the mobile banking functions. The Flash-based demo is partially interactive, allowing users to click buttons on a smartphone emulator (see third screenshot). After clicking on a new function, the demo takes over, completing the data entry and going forward to the next screen. Check it out here.

Update (22 Sep 2009): An email from a Citi Mobile employee pointed out that I missed the security and other info in the right-hand column of the landing page below. I apologize for the omission.

Citibank homepage (9 Sep 09)

Citi Mobile for Smartphones landing page (link)

Citibank mobile demo with interactive emulator

Notes:
1. For more info, see Online Banking Report on Mobile Banking (Feb 2007) and Online Banking Report: Mobile Banking via iPhone (Mar 2009)
2. The bank has separate pages for: Citi Mobile for iPhone and Citi Mobile for Other Models
3. Citi still has some work to do on optimizing the mobile Web experience (see update below). I navigated via my iPhone to its homepage (see inset) which looks terrible: The page is rendered impossibly tiny (requiring finger zooming), and because the two Flash-based animations don’t work on iPhones, the top of the page is dominated by two empty boxes.

Update (22 Sep 2009): The site is now rendering perfectly on my iPhone. I see a mobile-optimized site similar to the Citi iPhone app. I’m not sure what was going on Sep 10 when I took this screenshot. It’s possible I got the wrong page by navigating to Citi through the Google app.

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