Highlights from BAI Retail Delivery 2008

By Jim Bruene Posted on
Categories: Alt Payments, BAI Retail Delivery, Conferences

image 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:

  • Most audacious business plan: Alt-payment startups Moneta and sister company Acculynk which are looking to disrupt online payments at the point of sale
  • Most likely to succeed: mobile anything 
  • Biggest “wow” factor: Cardless ATMs by Wincor Nixdorf  
  • Best demo of something that actually exists: Bank of Montreal’s demo of its new branch locator using Microsoft Virtual Earth (shown at the Microsoft’s booth)
  • Coolest solution looking for a problem: Microsoft Surface
  • Product most likely to be used in our company: Bankserv remote deposit integrated with QuickBooks 
  • Product least likely to be used in our company: Wii banking from Wincor Nixdorf (but it’s very cool)
  • Best presentation: Don Tapscott, author of Wikinomics and Growing Up Digital 
  • Best buzzword comeback: Push banking (mobile apps, widgets, alerts)
  • Best trade floor freebie: Free espresso from ClairMail 
  • Best financial screenshot during a keynote: PayPal CEO Scott Thompson showed PayPal Mobile from Chase Bank, a pilot program running on several college campuses (Ohio State), where Paypal Mobile is bundled with banking services from Chase Bank
  • Worst financial screenshot during a keynote: Don Tapscott used Zopa USA as an example of a promising new Web 2.0 financial company (Zopa pulled out of the U.S. market last month)
  • Biggest jinx: Second Curve Capital CEO Tom Brown, who Tuesday afternoon explained why he is so bullish on bank stocks; the NASDAQ bank stock index proceeded to drop 200 points (10%) over the next two days (note 2)
  • Most amazing stat: In his keynote, CEO Arkadi Kuhlmann said ING Direct (USA) had originated more than 100,000 mortgages worth $36 billion, and initiated foreclosures only 15 times
  • Best time: Dinner with Trey Reeme and the gang from TDECU who are not only some of the nicest people you could ever meet, but also provided absolutely stimulating conversation and some great laughs

image 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. 

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Wells Fargo is Second Online Personal Finance Provider to Join the 1-million Club

By Jim Bruene Posted on
Categories: Bank of America, Market Research & Metrics, Personal Financial Management, Wells Fargo

imageIn 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.

imageIn 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.

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Chase Bank Offers to Lower Auto Payments by $44

By Jim Bruene Posted on
Categories: Advertising & Promotion, Auto Financing, Chase Bank, Loans & Credit

image 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)

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Landing page pop-up (13 Nov 2008)

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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.

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Peer-to-Peer Lending Volumes Worldwide

By Jim Bruene Posted on
Categories: Lending Club, Loans & Credit, Metrics & Market Research, P2P Lending, Prosper, Virgin Money, Zopa

image 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: 

  • Facilitators: My definition of peer-to-peer lending excludes Virgin Money and Loanback because they do not serve as matchmakers (note 1). They do play a crucial role in putting a legal framework in place for friends-and-family loans and often end up servicing the loans as well. They are more like PayPal where Prosper/Lending Club are like eBay.
  • Microfinance markets: I would exclude Kiva as well. It's an awesome platform that allows U.S. citizens to loan money to third-world merchants at zero interest. A powerful tool for philanthropy, yes, but not really peer-to-peer. The same goes for MyC4 and Microplace.

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%

 

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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

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Receivables Exchange Launching Auction Platform for Financing Accounts Receivables

By Jim Bruene Posted on
Categories: Auction platforms, Launches, Loans & Credit, Receivables Exchange, Small Business

image 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:

  • Minimum of $1.5 million in annual sales
  • At least 2 years of operating history
  • Registered to do business in the United States

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)

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Wells Fargo Uses Splash Screen After Login to Reinforce Safety & Soundness

By Jim Bruene Posted on
Categories: Advertising & Promotion, Wells Fargo

image 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)

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Privier Launches ATMsend, a Promising Idea that Needs Banking Partners

By Jim Bruene Posted on
Categories: Alt Payments, Epayments, Launches, Mobile Banking, Mobile Payments

image 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:

  • ATMsend: ATM to ATM
  • iTransfer: Web to ATM 
  • mPayment: Mobile phone to ATM

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:

  • Retrofitting ATMs to accept a keyed-in code instead of a mag stripe for authentication
  • Convincing banks to add ATM-transfer capabilities to Web, mobile and telephone services

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)SendCash_Step1

Note:
1. See our latest, the Online Banking Report 2009 Planning Guide, for more info on project priorities for this year and beyond. 

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New Online Banking Report Published: 2009 Planning Guide

By Jim Bruene Posted on
Categories: Business Planning, Marketing, Online Banking Report, Planning, Strategic Planning, Strategies

image 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):

  • Activity ticker
  • Balance conversions
  • Credit score/report zone
  • Flat-fee mortgage
  • Green banking
  • High-yield deposit accounts
  • Home equity center
  • iPhone/Android native app
  • Long-term archives
  • Micro/small-business services
  • Peer-to-peer loan facilitation
  • Personal finance functionality 
  • Premium/VIP online services
  • Prepaid/gift cards
  • Problem mortgage resource center
  • Retirement center
  • Service standards/guarantees
  • Social media/blogging
  • Usage-based contests/rewards
  • Widgets

Note:
1. The Netbanker blog (established 2004) and Online Banking Report (established 1994), are written and published by the same company.

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Key Bank Runs Timely "Pick Your President" Promotion

By Jim Bruene Posted on
Categories: Advertising & Promotion, Electronic Bill Payment & Presentment, Electronic Statements, Key Bank

imageOverall, 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.

image 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)

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Key Bank Pick Your President landing page (4 Nov 2008)

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PNC Mobile Banking Offered through Verizon’s Website

By Jim Bruene Posted on
Categories: Firethorn, mFoundry, Mobile Banking, PNC Bank

Verizon Wireless mobile phone users can now download PNC Bank mobile banking directly from the Verizon Wireless site (here). The free service, powered by mFoundry, is housed in the Features & Downloads area (see first screenshot below).

However, unlike Firethorn's mobile banking app which carries a "recommended" endorsement from the wireless carrier (see second screenshot), the PNC Bank app is found only via site search (see last screenshot). The PNC app is currently not available via browsing the business apps.

Users may click on the Send to Phone button, a shortcut that sends an application directly to their mobile phone for easy downloading. Both mobile banking applications are free.

PNC Mobile Banking app on Verizon Wireless site (3 Nov 2008)

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Search results for "banking" at Verizon's Tools & Applications area
(3 Nov 2008)

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Firethorn's mobile banking app is recommended at the Verizon site
(3 Nov 2008)

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Note:
1. For more information on the market, see our Online Banking Report on Mobile Banking.

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ING Direct Delivers a Small Online Banking Treat with Halloween Homepage Animation

By Jim Bruene Posted on
Categories: Advertising & Promotion, ING Direct

image I’ve written about ING Direct’s holiday animations before. While they won’t win any new business by themselves, they are part of a brand image that ING Direct cultivates. And it works because many consumers respond positively to a sense of humor even from institutions that are supposed to be serious.

With consumer confidence at an all-time low, and banks not exactly on anyone’s holiday-card list, it’s probably not a good time to create a whimsical branding campaign. But if you are ING Direct, which has built its image on bright-orange graphics and hip advertising, you can still have a little fun with the bank’s favorite orange holiday, Halloween.

Visitors to the direct bank’s homepage this week initially see white space where the bouncing orange ball normally does its thing. Within a few seconds an orange-eyed ghost comes out of the background (see first screenshot below). It comes towards you, then reveals the orange ball underneath the white “costume” (see second screenshot). Then it ends with the usual homepage (see third screenshot; note 1).

Very clever (I’d even say LOL, but I’ve vowed to never to use that term professionally).

ING Direct homepage (28 Oct. 2008)

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Notes:
1. The animation runs just once. That’s an important element of restraint to preserve the viewing experience. Don’t endlessly cycle animations or you’ll annoy your visitors. They can refresh themselves if they want to see it again. 

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