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Next up is Sybase 365, with a demo from Cameron Franks, director of mCommerce America and Carroll Cucarola, technical account manager.
In its first appearance at Finovate, Sybase will show innovations from their mobile suite for banking and payments.
Sybase showed the broad capabilities of its mobile suite including the intelligent SMS capability that uses natural language syntax so users can determine the command to text a request to the bank, e.g., “what’s my balance” or “balance.”
The fourth presenter this morning is Jordy Berson, group product manager at Check Point Software Technologies.
Check Point is a new Finovate presenter and will demo its security solution for safer online banking.
Check Point is showing their ZoneAlarm ForceField, which, when installed on users’ machines, warns them if they go to a phishing site; even more important, it keeps malicious programs from being accidentally downloaded during Web surfing. It uses a virtual sandbox to protect Web sessions even if users’ machines already contain malicious software.
The next presenter is Gabe Griego, VP marketing at Wesabe.
Wesabe was the first online personal finance company to integrate social aspects into its service. The Silicon Valley company launched in late 2006 and appeared at Finovate Startup in April.
What’s new
Wesabe has added new graphing capabilities to easier compare your personal data with the community. You can also compare spending at individual merchants based on how the user has rated the merchant: fan vs. user vs. captive.
Next up, one of the newest companies at Finovate, WeSeed. The demo will be shown by Jennifer Openshaw, president/co-founder and Steve Simoncic, creative director.
WeSeed is an investment site targeted for beginning or novice investors. Its motto is “investing for the rest of us.” They are signing up beta testers now.
Finovate 2008 kicks off with a demo of Intuit’s Quicken Online. The presenter is Todd Stanley VP/general manager of Quicken Online and Barron Ernst, product manager.
Quicken Online, the online version of the popular desktop personal finance manager, was launched in January 2008. One notable difference between Intuit’s strategy and other online PFMs, is that Quicken Online costs $3/mo. The vast majority of competitors are ad supported and free of charge.
What’s new
Intuit is removing the fee from Quicken Online; it is now free of charge, which means, of the major online personal finance companies, only Mvelopes/Finicity charges a fee.
The new user interface will be available Oct. 30.
Introducing more mobile integration.
Much of this week’s NetBanker coverage will focus on our annual financial innovations showcase in New York City, Finovate 2008. On Tuesday, we’ll post updates on all 24 presenting companies (list here). Wednesday we’ll announce the official Best of Show winners, as voted on by the nearly 400 attendees (see note).
We’d like to thank the presenters shown above and our four sponsors, Qualcomm’s Firethorn, Microsoft’s MSN Money, RBC Venture Partners, and the law firm Chambliss, Bahner, & Stophel, who also sponsored Finovate Startup.
But most of all, we applaud our attendees for continuing their focus on new technology and creative thinking during trying economic times.
Note: There are still a handful of seats remaining, if you’d like to attend click here.
As noted here last week, Loanio launched its much anticipated peer-to-peer lending exchange Oct. 1.
And we are lucky that founder Michael Solomon has agreed to take the stage this Tuesday at Finovate to show everyone the results of his nearly two-year development effort.
The reason for the last-minute addition is that another P2P lender planning to launch at Finovate, Pertuity Direct, has delayed its grand opening to ensure that regulators are comfortable with its business. Given recent worldwide events, that’s understandable. We look forward to seeing its demo at Finovate 2009.
There are still a few seats remaining at the nearly sold-out event (registration is here). The complete lineup is listed here.
Article updated at 2 PM Pacific with quote from one of Zopa’s partner CUs, Affinity Plus.
Zopa’s U.S. social deposit/lending site will be shuttered, just 10 months after its launch (see previous coverage here). The site, which delivered loan applications and CD customers to six credit union partners, apparently was closed by Zopa. At this point the exact reason is unclear (see update below). Zopa blamed the U.S. credit situation and said it wanted to concentrate its efforts in other markets.
Here’s part of the statement from CEO Doug Dolton that appeared on the Zopa forum earlier today (also here’s the official blog entry at Zopa UK):
The facts are: Due to the extremely difficult consumer credit circumstances in the US, we made the decision to focus our ongoing efforts in the UK, Italy and Japan. We have six credit union partners in the US, and we have been working with them to modify our business model to offer our customers the best possible offerings, given the poor credit conditions in the US.
We’re certainly facing unprecedented economic times worldwide right now, but I am pleased to report that our UK and Italian operations are doing better than ever, and I look forward to continuing to develop those marketplaces. I apologise for any confusion regarding our circumstances.
As of this morning, the Zopa US homepage is unchanged, but you can no longer sign up as a new member and all the Learn More links redirect to USA Federal Credit Union.
Implications
It’s surprising that the company would throw in the towel on the significant investment it made here. However, if Zopa’s CU lending partners had curtailed, or stopped, making loans through the site, something noticed last week by the Prosper Lending Review blog, the whole strategy would no longer be viable (see update below).
But this has nothing to do with what Prosper, Loanio (which launched last week) and hopefully Lending Club (expected be accepting new lenders shortly) are doing with person-to-person lending. Zopa US, unlike Zopa UK, was NOT a P2P lending site, it was a lead-generation site for six credit unions. When those CUs stopped needing loan-leads due to the credit crunch, it took the legs out from under the U.S. division. Even continuing to just take deposits made no sense, since each depositor was required to assist a borrower by gifting a portion of the deposit interest.
We wouldn’t be surprised to see Zopa back in United States in the future as a true P2P lending site, copying the model of its U.K. and Italian divisions. The social aspect of its offering certainly resonated with consumers and industry players as well. The company was one of four Best of Show winners in our April Finovate Startup conference, an award by majority vote from the audience (video here).
For more information, see our Online Banking Report on Person-to-Person Lending. And those attending our Finovate next week will see two companies demo P2P lending.
Update: 2 PM PDT, 9 Oct 2008
As one of the credit unions who were partnered with Zopa, I would like to clarify that we have no credit availability issues and have changed none of our lending practices. This decision was made by Zopa.
— Sarah Mason, SVP, Affinity Plus Credit Union
It’s not easy deciding what messages to send to customers these days (note 1), but there’s no doubt a clear email about increased FDIC coverage is a winner. For example, ING Direct does a great job with this simple and very clear message outlining the temporary increase in U.S. deposit insurance coverage.
I especially like how they demonstrate how easy it is for joint account holders to get $1 million in coverage (note 2). It’s so much easier seeing it laid out in a table. Here’s the email sent to customers this afternoon under the subject:
Subject: Your FDIC coverage just went up
Notes:
1. Jeffry Pilcher posted some interesting quotes with differing perspectives on how to approach “crisis communications” in his Financial Brand blog today.
2. Not that many people need that, but it’s still somehow comforting to know that if you had to deposit your lottery proceeds, or if you were Mark Cuban and you shorted the DJIA at 1100 with 8% of your net worth, you wouldn’t have to spend so much time opening accounts to deposit your windfall.
Providing free credit scores in exchange for viewing a credit card offer seems like a reasonable value exchange (see note 1). That’s why we gave Credit Karma our OBR Best of the Web award in August and why it is on stage next week at Finovate (see previous coverage here, video at Finovate Startup here).
It’s also no surprise that others would try the same model. Credit crisis or not, credit-worthy borrowers are still a valuable commodity. Case in point, Bankaholic’s recent acquisition by BankRate for a reported $15 million, or $50 per unique visitor (Mashable post here).
The latest entry in free-credit-score lead generation is KnowBeforeYouApply (KBYA) from Centrro, a financial-search company founded in 2006 by Ike Eze and Tuyen Vo. Eze was a founder of QSpace, an OBR Best of the Web winner in 1997 when it became the first company to make credit reports available online (archived OBR article here). QSpace was acquired by Experian several years later.
KnowBeforeYouApply launched on Sept. 3, but was put on the map with Mr. Eze’s post today in The Huffington Post entitled, “Stay Away from Me, Credit Card Crisis” (see note 2). The article discusses the value of tracking your credit score and using that knowledge to find the best credit offers. Eze mentions his company along with Credit Karma, Quizzle from Quicken Loans, two other Finovate presenters, Mint and BillShrink.
Using KnowBeforeYouApply.com
It would be difficult to make the site any easier to use. Customers type in their name, address, email address, and last four digits of their social security number. Apparently, that’s all that’s needed to access your credit file and return a letter grade of A through F.
The whole process takes about 30 seconds (there is no need to enter an entire social security number), and KBYA steers clear of those pesky out-of-wallet authentication questions. Users can get an update of their credit grade every 90 days. In comparison, Credit Karma, which provides an exact 3-digit credit score, will update it daily if the user so desires.
KBYA also has a simple and intuitive sales platform. Just two offers were highlighted in the main screen, one from Chase and one from American Express (see first screenshot below). However, clicking through to “see all offers” led to 25 pages of credit cards, displayed five to a page (121 total for A-grade credit). A handy index along the sidebar allows users to find various categories that most appeal to them such as “travel rewards” or “0% intro rate” cards (see second screenshot).
KBYA appears to use the API from CardOffers.com to build a portion of its database of card offers. CardOffers.com offers its affiliates up to $20 per application or up to $160 per approved application. KBYA also appears to be an affiliate of Credit.com and Discover Card (see note 3).
The site is focused solely on credit cards for now. But a Home Loan tab is built into the user interface, with a “coming soon” label.
Analysis
All in all, it’s a good service. The site needs to beef up its FAQs, About Us, and other educational materials so users can better understand who is behind the service and what exactly the credit grade means. But as a month-old beta service, it’s presumably coming.
While I prefer the precision and peace of mind of seeing my actual credit score, a letter grade every 90 days will be sufficient for many users and should help keep costs down. And the speed of the application process and lack of social security number are real benefits.
Financial institution opportunities
Banks, credit unions, and card issuers should consider offering similar functionality both inside online banking, where private info would already be known, and on the outside where prospective loan customers could use it. With info about the customer’s credit grade, lenders could deliver tailored offers that could lead to increased application volume and approval rates. See our recent Online Banking Report for more info on lead generation sites (note 1).
Know Before You Apply main page after login (7 Oct 2008)
KnowBeforeYouApply all-offers page (7 Oct 2008)
Notes:
1. For a thorough discussion of the topic, see our August 2008 Online Banking Report on New Models for Lead Generation.
2. Strangely, the article doesn’t specifically disclose Mr. Eze’s affiliation with Know Before You Apply, although clicking on his name does show he’s CEO of Centrro. However, it’s left to the reader to discover on their own that Centrro is the parent of Know Before You Apply. Hopefully, that oversight will be corrected.
3. The affiliate relationships
are inferred from the redirects that take place when clicking on the Apply Now arrow.
4. This is one of the ten online finance companies that launched in Sept. (post here).
Putting on a conference is nerve wracking in the best of times, but in this environment, it’s doubly so. So we are especially pleased to announce that we are within a dozen or so seats of selling out the Crowne Plaza ballroom for Finovate 2008 next week. Register here if you’d like to join us.
As we argued last week (here), current industry problems make placing the correct technology bets even more important. Granted, there may be less revenue during the next few years, but the show will go on. Fundamentally, there is still as much demand for financial services today as a year ago.
To meet that demand, financial institutions will increasingly look towards lower-cost, non-branch alternatives. And 24 of the best will be demo’ing Oct. 14 at Finovate (see here for list):
I won’t belabor the irony that the nearly $1 billion ($945 million) paid by eBay for Bill Me Later values the alternative payment and credit provider at more than Washington Mutual Bank and nearly half as much as Wachovia, at least before Wells Fargo entered the bidding.
The underlying credit product is relatively simple, a 19.99% credit account underwritten by Utah-based industrial bank CIT (terms and conditions here, see also note 1). But the distribution system, providing quick-and-easy delayed payment at the point-of-sale at 1000 online merchants, is what created the billion-dollar valuation. To use Bill Me Later at checkout, consumers simply provide their birthdate, last four digits of their social security number, and their billing address (see Amazon.com screenshot below).
According to today’s investors presentation the company will do more than $1 billion in transaction volume in 2008 and serves 4 million customers (see note 2).
I was initially surprised at the price ($945 million), but given that eBay is projecting $150 million in revenues and $50 million in profits, it makes some sense, especially if CIT is taking most/all of the credit risk. Hoped-for synergies with PayPal, which already operates a similar program, is the stated upside for the deal.
Ebay says Bill Me Later earns 4.1% on each payment transaction, which amounts to $10 per $250 purchase (note 3).
Bill Me Later’s simple signup demonstrated at Amazon’s checkout
(5 Oct 2008)
Notes:
1. CIT is not without its own problems with a market cap that has dropped more than 80% from a year ago. The company is now valued at $2 billion, just double the purchase price of BillMeLater.
2. Some historical usage numbers: An undated entry on the CIT website says that BillMeLater has served 2.5 million consumers. In a Dec. 2006 press release announcing $640 million debt-financing from Citigroup, Bill Me Later said it had served 2 million consumers.
3. Here are the revenue and cost numbers taken from today’s investor’s presentation (expressed as percent of transaction amount):
Income
Transaction fee from merchant = 2.4%
Customer interest = 6.5% (note APR is 19.99%)
Customer fees = 3.6% (note late fees are generally $29 or $39 depending on balance)
Total revenue = 12.5%
Expense
Acquisition and servicing = 2.9%
Net credit/fraud losses = 3.4%
Cost of funds = 2.1%
Total cost = 8.4%
Net profit = 4.1% of transaction amount