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Zions Bank joined the very short list of major financial institutions that bother to alter their homepage during major holidays. ING Direct usually posts timely messages on its otherwise spartan homepage, most recently on Halloween (see also last 4th of July, last Christmas).
It’s 3 for 3 now. All major P2P U.S. peer-to-peer lenders have been shut down this year by the SEC (see note 1). First Lending Club in March, then Prosper Oct. 15, and finally Loanio this week (see note 1).
Here is the statement I received from Loanio founder Michael Solomon this afternoon:
In light of the recent cease-and-desist ruling issued to Prosper Marketplace by the Securities and Exchange Commission, Loanio voluntarily suspended its operations. We were not contacted by the SEC or any other government agency. The SEC ruling on Prosper, combined with the recent registration of Lending Club, removes all ambiguities as to the Commission’s legal interpretation on the issue of whether P2P promissory notes, in all of their varieties, are considered securities under current law.
Regulators have concluded that loans created in these networks are, in fact, securities and must be registered as such. You can read the SEC’s logic in its Prosper filing published this week (here).
I have mixed feelings. While I applaud regulators for taking the initiative to understand this new way of lending/investing, I find it a bit ironic that a $100-million self-regulating and relatively transparent marketplace receives heavy-handed treatment while multi-trillion dollar financial products grew relatively unchecked in recent years (see my prior editorial on the matter).
The good news is that Lending Club has proven that SEC registration need not be a death sentence. The startup successfully completed the registration process after six months, relaunching at our Finovate event Oct. 14. The company has funded $2.6 million in loans since reopening.
We are hopeful that Prosper, which has $40 million in venture funding, will be back in business in early first quarter. Angel-funded Loanio may need to raise money to finance the registration process.
Notes:
1. Last month (here), the Loanio founder predicted that at some point he’d also need to register with the SEC.
2. Fynanz and GreenNote, the P2P student loan lenders, appear to still be accepting lender funds.
BAI’s Retail Delivery Conference is an annual rite for bank tech geeks from around the world. Although attendance was down 20% or so from last year, causing some grousing on the trade-show floor, I thoroughly enjoyed it.
Here’s my personal list of highlights from the show (see note 1).
The Netbanker awards:
Best of show: Drum roll please. After dozens of amazing conversations over three days, the company that most intrigued me is alt-payments startup Moneta (note 3).
Notes:
1. I visited with only a couple dozen of the 300 or so companies in Orlando, so comments here are not meant to be an overview, just the highlights of my experience. As usual, I spent most of my time looking for new ideas and ended up spending half my time talking to mobile providers.
2. To his credit, Mr. Brown did not say bank stocks had bottomed; in fact, he said they could very well go lower. But by this time next year, he expects a substantial turnaround. It was a great presentation.
3. Moneta didn’t have a booth, but board member and investor Ashish Bahl was in attendance and briefed me on his firm. We’ll provide more details on the company later.
In April, we reported on the robust adoption of Bank of America's online personal finance manager, My Portfolio (see note 1), used by 10% of the bank's 25 million online bankers. The results are especially impressive given that it's a full-featured module accessible via online banking, but not particularly well integrated.
In comparison, Wells Fargo offers a completely integrated PFM tool, My Spending Report, that's extremely simple to use, but offers limited functionality. On Oct. 29, the bank made an important improvement, adding a basic budgeting tool, Budget Watch, to what had been essentially a list of transactions divided by category.
The bank told me last week they have 1 million monthly users, making it the second online PFM provider to break the 1-million mark (after BofA). Wells has about 15% of its online banking base (note 2) using the tool, a slightly higher penetration than BofA. Again, not surprising considering how well it is integrated. The budget tools should boost penetration.
Who'll be the next one to join the 1-million club? Mint, with about 500,000 users in its first 15 months in business, is headed that way, possibly as early as late next year. Chase/WaMu could get there in a few weeks, if they added online personal finance to their feature set. Quicken Online, now that it's free, should get there relatively quickly as well.
Note:
1. BofA's My Portfolio is powered by Yodlee.
2. Excluding Wachovia accounts.
It's a sign of the times. Instead of creating interest in auto loans by showing a sexy new convertible on a windy seaside road, Chase offers to help customers stay in their same vehicle with a lower monthly payment (see today's homepage below).
Interestingly, the $44 number in the headline is the actual average savings to Chase auto loan refinance customers in August (see note 1 for how Chase calculated the savings). That makes the whole ad much more believable than the usual what-if scenario.
Instead of burying that key fact in the fine print on the bottom of the landing page (second screenshot), Chase should make it the main headline of the landing page. The bank could go "social" with it by adding testimonials, a blog or forum, calculators (how about one for the iPhone?), a Facebook page, sweepstakes and even a scrolling activity ticker showing actual refinance savings as they happen, much like the Progressive auto insurance quotes (see note 2).
It's not going to help Detroit much, but it's smart marketing for the pre-holiday period. A $44 lower monthly payment translates into $500 in annual savings, enough to put a little something extra under the tree this year.
Chase Bank homepage (13 Nov 2008)
Landing page pop-up (13 Nov 2008)
Notes:
1. Derivation of the $44 savings:
Monthly savings figure is for illustration purposes only. $44.43 is the average monthly amount saved by customers who lowered their rate by refinancing their auto loans with Chase during the period from 7/25/08 to 8/21/08 on which we have the information to determine savings. These customers started with an average balance of $17,500, with an average remaining term of 49 months at an average Annual Percentage Rate (APR) of 10.50% and refinanced on average for 53 months at an average new APR of 7.31%.
2. An activity ticker is one of our top-rated projects for next year as published last week in our Online Banking Report 2009 Planning Guide.
Industry blog, P2P-banking.com recently compiled a list of peer-to-peer loan volumes from around the world. The chart is reprinted by permission below.
These numbers are cumulative, all-time volumes since inception. More than half is from Virgin Money USA which has helped individuals put $370 million in loans together since it began as Circle Lending in 2001.
Because these companies don't all use the same model, I've revised the tables somewhat, excluding:
So excluding the above companies, total worldwide originations are $262 million, with two-thirds of that from Prosper.
Here are the market shares of the 8 true P2P lenders that have originated more than $1 million since launch:
| Company | US$ (mil) | WW Share |
| Prosper (US) | $178 | 68% |
| Zopa (UK) | $39 | 15% |
| Lending Club (US) | $20 | 8% |
| Money Auction (Korea) | $7.8 | 3% |
| Smava (Germany) | $5.8 | 2% |
| Zopa (Italy) | $4.3 | 2% |
| Boober (Netherlands) | $3.1 | 1% |
| Other | $4.5 | 2% |
| Total | $262 | 100% |
Source: P2P-Banking.com, 28 Oct 2008
Note:
1. This does not mean I dislike Virgin Money's business model, just that its loan volume is not comparable to the others on the list.
2. For more info on the P2P lending market, see our Online Banking Report on Person-to-Person Lending
A new financial market will open Monday where businesses as small as $1.5 million in annual sales can borrow against their receivables with prices set in an auction market.
New Orleans-based The Receivables Exchange opens for trades on Monday (17 Nov) after an 18-month development cycle.
Businesses register with the exchange, a process that entails uploading financial statements and completing an application. The Receivables Exchange conducts due diligence on the potential participant to ensure that it is legitimate.
Businesses must meet the following criteria:
Upon approval, the business can list specific invoices for financing, with a minimum total value of $10,000. Then accredited investors (SEC definition here) bid to provide short-term financing until the receivables are collected. Sellers are encouraged to upload PDF copies of invoices, proof of delivery, and so on to get the best rates. However, many documentation requirements are optional.
Sellers select the terms they are willing to accept and the bidder that beats those terms by the widest margin wins the credit. If no bidder meets the minimum terms, the auction ends without a trade.
Co-founders: Justin A. Brownhill and Nicolas R. Perkin
VC backers: Prism VentureWorks LLC and Fidelity Ventures
Analysis
In an era of tight credit, it's a welcome addition to the financing tools available for small and mid-sized businesses. Larger businesses typically have more options through commercial paper and other capital markets.
The startup expects banks to be valuable sources of referrals. Although, at this point, there are no referral fees or revenue-sharing options.
So far, The Receivables Exchange has signed up sellers with a total of $2 billion in annual sales. And there's been a lot of interest. Founder Nicolas Perkin says his company has been approached by 20 $1+ billion companies.
But what about the other side of the trade, the lender/investor? The company says it has access to $8 billion deployable capital. Of course, that doesn't mean that the capital will be easily enticed into actual deals.
Starting Monday, we'll see what the buy side thinks. Are they willing to risk their capital in the unproven market? If The Receivables Exchange can drive out fraud and deliver on its promises, we think the answer will be yes.
The Receivables Exchange homepage (11 Nov 2008)
The best time to get your customer's attention is right after they log in to look at their account. That's why login-screen marketing should be in your mix (see previous coverage). But, your message is not necessarily welcome at that point, so it's a marketing option best used judiciously.
Wells Fargo makes good use of the technique this month with an open letter from CEO John Stumpf. It's been a while since I logged in to my Wells Fargo account, so I'm not sure it was posted. But it carries an October date, so it was probably later in the month after Wells Fargo prevailed in its bid to buy Wachovia.
Many financial institutions have posted we-are-still-going-strong messages during the past few months. The Wells Fargo message isn't particularly noteworthy, other than they don't beat around the bush asking, then answering, the question:
What does (the Wachovia acquisition) mean to me as a Wells Fargo customer?
Wells Fargo splash screen displayed immediately after logging in (10 Nov 2008)
I've communicated with Privier founder Charles Polanco a number of times over the years. He's a Wachovia alum who's been working on a financial startup for several years. The company launched a suite of payment services on Oct. 16 that aims to get the plastic card out of the ATM business (press release).
Privier's value prop is straightforward and compelling: Enable money transfers from any device at any time with the cash delivered through the worldwide ATM network.
The system initiates transfers in three ways:
In Privier's model the ATM card is replaced by a one-time authorization code that recipients key into the ATM to withdraw transferred funds.
Analysis
From a usability perspective, it's a great idea. After all, what's not to like? Consumers need to send cash. ATMs have cash. Why not let folks authorize a remote ATM withdrawal from the comfort of their own home or office. A proposed fee in the $7 range beats most alternatives for long-distance money transfers.
However, from a practical standpoint there are two massive roadblocks to overcome:
It will likely take an organization the size of Visa, MasterCard, or Bank of America to pull this off. To ensure that those behemoths work with it, Privier has a portfolio of patents pending on the business process.
What it means for Netbankers
It may take decades, but eventually, the Web married to mobile will eliminate the plastic debit/credit card; however, unless you are a major bank or payments company, this isn't likely anything you need worry about for a number of years.
A better short-term solution for smaller financial institutions is to enable P2P funds transfers using PayPal so you can send money to anyone with a PayPal account (see note 1).
Privier's Web-based interface for sending cash to an ATM (5 Nov 2008)
Note:
1. See our latest, the Online Banking Report 2009 Planning Guide, for more info on project priorities for this year and beyond.
With the financial crisis still in full swing, it's not easy to concentrate on the 2009 plan. But focus you must.
You can bet that companies emerging from this mess as winners are working overtime right now, plotting how they will grab your market share next year. Yes, budgets will be down, but thanks to the Web and social media, there are more cost-effective opportunities than ever to get your message out.
With that in mind, we offer the latest issue from Online Banking Report, our 14th annual Planning Guide for Online & Mobile Banking (see note 1).
It includes 72 pages of ideas, tips and tools to help you generate new ideas, plans, and strategies for 2009 and beyond. Subscribers, Online Banking Report subscribers, may download it (here) free of charge. Others may purchase (here).
While more than 500 online banking product and marketing ideas are published in the report, we hand-selected 20 projects for the 2009 hot list (in alpha order):
Note:
1. The Netbanker blog (established 2004) and Online Banking Report (established 1994), are written and published by the same company.
I check the Finance applications in the Apple iTunes store at least once per week to see which of the companies we track has posted an app. But I missed one of the most popular finance apps, because it’s categorized under Productivity.
An iPhone application called A Personal Assistant (iTunes link) from PageOnce has been downloaded more than 200,000 times according to the publisher. The application is an account aggregation service that automatically downloads balance and transaction activity from financial, billing, and other service providers.
In an interview on FastCompany TV (here), co-founder Guy Goldstein said that 65% of users are checking financial accounts through its account aggregation app. Assuming 100,000 total active users, that would imply more than 60,000 iPhone users tracking financial accounts via the PageOnce app (see inset).
That would likely make PageOnce the third largest provider of banking info to the iPhone, trailing only BofA and Firethorn (see note 1).
During the FastCompany interview, Goldstein identified one focus to be banking and bill pay transactions, and said that plans are in place to add bill pay functionality to the app.
Palo Alto-based PageOnce opened to the public in July. The company also offers a Web-based version of the account aggregation service (screenshot below), but sees its core audience being smartphone users. The company launched a Blackberry version a few days ago (see homepage below, company post here).
Implication for Netbankers
Because mobile website navigation is relatively more difficult, the allure of having all your personal and financial info in one place is stronger for smartphone users than for website users.
However, users are still very concerned about handing their passwords to an unknown startup such as PageOnce. But convenience-minded consumers will do it if there are no viable alternatives from trusted brands such as banks, credit unions and card issuers. If you work at a financial institution, and you still have development dollars available, move the iPhone app up your priority list.
Or partner with someone that already has an app and get your brand on that precious screen. PageOnce is actively looking for partners and has already announced three, none in the financial sector.
PageOnce homepage (5 Nov. 2008)
Notes:
1. Firethorn added a mobile banking app two weeks ago (post here) that has risen to fourth most popular, behind Bloomberg, Bank of America, and Check Please, a tip calculator (see previous coverage here).
2. For more info on the mobile area, see our Online Banking Report on Mobile Banking.
Overall, most major financial institutions do a good job with website design. But one thing usually lacking is timely tie-ins with events and holidays. Google is famous for doctoring its logo dozens of times each year to coincide with the national holidays and other big events. For example, for today’s big presidential election, the logo has been changed into a voting booth.
Those efforts, while not always directly driving new business, keep the website fresh and show that the bank is paying attention to the events that impact users day to day. And the best ones can increase sales. By leveraging well-hyped events such as the Olympics or Super Bowl, financial institutions can gain valuable PR and attention from customers.
I looked at 3 or 4 dozen large U.S. bank and credit union sites today and found just one riding the election hysteria to make a point. Key Bank’s Pick Your President promotion (here) has nothing to do with McCain vs. Obama but is actually a clever way to convince customers to switch to electronic statements. Customers get $1 (George Washington) for every account switched to estatements and $5 (Abe Lincoln) if they take bill pay with that. The bank is also throwing in a pair of $1,000 sweeps prizes to add a few Benjamins to the mix.
Nice job, Key; our vote is with you.
Key Bank homepage with small banner for the Pick Your President promo
(4 Nov 2008)
Key Bank Pick Your President landing page (4 Nov 2008)
