Here is a monster infographic from our friends at Mindful Insights LLC, a boutique consulting firm in the digital finance space (previous post). You can click on the image for a larger version, or better yet, grab the PDF version here. We appreciate the opportunity to publish it.
We recently looked back at Finovate’s Best of Show Awards archives and wanted to share the list of the 41 award-winning companies.
Here’s the Best of Show history that stretches back to 2007, the inception of Finovate:
- Seeking Alpha and Cortera had the highest traffic in September with 2.1 and 2.0 million unique visitors, respectively. Cortera also had the highest increase in number of unique year-over-year visits with over 1.5 more visits in 2011 than in 2010.
- Kabbage had the highest percentage growth year-over-year, up 280x.
- Weemba saw the highest monthly growth percentage with more than 7.5 times the number of unique visitors in September compared to August.
- SmartCredit.com had the highest increase in number of unique year-over-year visitors, growing by 126,000.
- CheckFree had the highest percentage growth year-over-year, with over 7 times the number of visitors this year than last year.
- Intuit had a notable increase in number of unique, year-over-year visitors, increasing by 300,000 visits.
- Check Point had the highest month-over-month percent growth, with 41% more visitors in September than in August.
- Seeking Alpha — the most-trafficked in August with 2.5 million unique visitors — also had the highest increase in number of unique month-over-month visits with 300,000 more visits in August than in July.
- Budgettracker.com saw the highest monthly growth percentage with more than 6.5 times the number of unique visitors in August compared to July.
- Betterment had the highest percentage growth year-over-year, up 88x.
- Cortera had the highest number of unique year-over-year visitors, growing by 1.5 million.
- FreeMoneyWisdom blog interviews Jon Stein, Betterment CEO.
- Silicon India Startup blog lists Expensify as a good app for busy CEOs.
- National Review Online holds BankSimple up to Richard Bronson’s new ethics initiative.
- Bremer Bank to add CheckFree RXP from Fiserv.
- Yaron Samid of BillGuard & Jon Stein of Betterment to show how their products help solve #occupywallstreet issues.
- Check out Finovate Alumni Website Traffic in August.
- mFoundry & SecondMarket Hit Deloitte’s 2011 Technology Fast 500 list.
- TSYS signs payments agreement with Imperial Bank.
- The Baltimore Sun mentions BillFloat & Prosper.com as two companies that are assisting cash-strapped consumers.
- LearnVest launches LV Mom’s Newsletter & 2 new products: Baby On Board Bootcamp & LV Discussions.
- Weemba gives small businesses simple, direct pipeline for raising financing pre-holiday season.
- Morningstar recommends CheckFree to help control your bills by setting up automatic payments.
- Continuity Control buys Compliance Services Group of Iowa & Kirschler Peterson & Associates of Atlanta.
- Crain’s New York Business.com mentions BillGuard, BankSimple, Betterment, SecondMarket, On Deck Captial & Plastyc.
- Jemstep launches out of beta to offer custom investment advice & guidance.
- Dwolla hit $1 million in payments per day and Ben Milne, CEO, shared a sneak peak of future plans. Link
- Ace Community Credit Union provided customers with access to Dwolla through its site.
- Dwolla CEO Ben Milne explained why starting a business in Iowa isn’t hard. Link
- Dwolla introduced a new Autoload feature. Link
- Dwolla was listed on The Next Web as one of eight awesome ways to pay with your phone. Link
alternative payment methods. Link
As conference host, I haven’t quite recovered from the whirlwind of activity yesterday. I’ll post a final conference wrapup tomorrow, but I wanted to get in a quick update with the Finovate 2008 Best of Show winners.
We had planned to award it to the top three, but there were four companies in a virtual tie at the top (note 1), so we named four winners this year.
In alphabetic order, the winners:
- CheckFree which demonstrated its new online banking platform packed with new features
- Credit Karma which showed several new features including a tool allowing “what-if” calculations with your credit file
- Mint which announced its move out of beta and demo’d several new investment management functions
- Neosaej which showed its unique MoneyAisle real-time, reverse-deposit auction service
Congratulations to these four companies and to everyone else who made the day so interesting.
About the voting
All attendees not affiliated with the presenters rated each demo on a scale of one to six. The ballots were turned in at the end of the final demo session. Approximately 70% of eligible voters turned in complete ballots.
The companies didn’t finish with the same average scores, but rounding to the nearest tenth created a four-way tie.
It comes as no surprise to anyone that online banking and bill pay customers are more profitable than non-adopters. This correlation, driven by the favorable demographics and lower attrition of online adopters, has clearly been established since the early days of the Web.
What's far more difficult to prove is causation. Does online banking/bill pay actually lead to more profits? The main hypothesis: by locking customers into an electronic service, they are not only less likely to move their accounts, they will also consolidate deposits and other financial activity at the provider of the online services. We'll get back to that.
It's not surprise that ebill users are more profitable
But first, here's some new correlation data from SunTrust that can help you benchmark your own performance or serve as a proxy for your business case. The study was released in late 2007 and was underwritten by ebill provider, CheckFree. The research company, Aspen Analytics, published a short white paper on the project here. And Forrester's Cathy Graeber published a research note three weeks ago here. The two companies presented their findings in a webinar this week (replay here).
One interesting aspect of this study is that ebill customers were segmented into casual users that viewed one or two ebills per month and heavy users that looked at 3 or more ebills each month. The heavy users owned 5% more SunTrust products and were 20% more profitable to the bank (see chart 1 below).
Even more dramatic was the correlation between online product usage and attrition, defined as the closure of the primary SunTrust checking account. Offline customers were six times more likely to close their accounts in the six-month observation period
than heavy ebill users (see note 1). Source: Aspen Analytics/CheckFree, Nov. 2007
The bottom line: 5-year NPV for heavy ebill users was 36% higher than those that used bill-pay only and nearly double the online-banking-only population (no use of bill pay
But does ebill use CAUSE profits to increase?
The correlation data above illustrates the importance of taking good care of bill pay/ebill customers. However, to justify incremental investment, you need to know the expected payback, i.e., how much more revenue/profits can you expect by moving customers into ebilling.
This study made a concerted effort to determine if the use of free ebilling services can leads to more profits. The researchers normalized the population across hundreds of product, tenure and demographic variables drawn from SunTrust's own CRM files and from appended Equifax info. But absent full before-and-after interviews with the subjects, it's still just a model it hard to fully test. There could be important factors outside the SunTrust/Experian datasets that account for lower attrition. For example, perhaps the well-heeled online banking customers who closed their primary SunTrust checking account in late 2006 stayed away from ebills because they had a sense they would be moving in the near future, so why bother setting up ebills.
But with these caveats in place, it does appear this study demonstrates that moving customers into the heavy ebill category causes them to be more loyal, at least in the short term. Cathy Graeber, the Forrester VP participating in the webinar, certainly thinks so.
The following chart shows that about half the decline in customer churn (36 points) has nothing to do with ebill usage but should be attributed to the favorable customer profile of ebill users. However, the remainder of the decline (32 points), is attributable to being heavily involved in ebills (viewing 3 or more per month). Put another way, ebilling decreases the expected attrition of this type of customer household by almost 50%.
Source: Aspen Analytics, The E-Bill Effect: The Impact on Customer Attrition from Banks that Offer E-Bill, Nov. 2007
Note: Ebill customers in this example are heavy users looking at 3 or more ebills per month.
If those results hold true for other banks' customer bases, it could justify significant investment in ebilling activation programs. For example, if you value an active checking account at $200 per year and it costs $100 to convert them to ebilling, and you achieve a 33% reduction in attrition, the net gain is $230 per new ebill account over five years. Convert 10,000 users and the NPV would be more than $1.5 million (see note 2).
Even if you discount the results due to research bias (it was after all underwritten by the leading ebill provider) or you take issue with the methodology, it does appear that the companies have proven a material reduction in attrition by frequent ebill usage.
And to give it the final "co
mmon sense" test. It does seem logical that someone who's taken the trouble to set up online banking, online bill pay, and register three or more bills for delivery, would tend to be less likely to ditch their checking account for that sexy deal across town.
Definition of customer segments:
- Overall = Entire SunTrust customer base
- Offline = SunTrust customers that do not use its online banking or bill pay/ebills
- Online = SunTrust customers who use online banking but NOT bill pay/ebills
- Bill pay only = SunTrust customers who use its online bill pay system, but NOT ebills
- E-bill = SunTrust customers who use its ebill service and view 1 or 2 bills per month on average
- 3+ E-bills = SunTrust customers who use its ebill service and view 3 or more bills per month
1. Attrition was defined as anyone who closed their primary SunTrust checking account between Sep 2006 and Feb 2007 and did not open a new one during that period. It's a pretty short window, so that's one limitation of the findings that you should be aware of. Over a two or three year period, their could be much different results.
2. $200 saved x 5 years x 33% attributed to the ebill program = $330 gain less the $100 cost to convert to ebilling = $230. Across 10,000 customers the total net gain would be $2.3 million. Discounted at 12%, the NPV is more than $1.5 million.
- USAA has offered in-home scanning, called Deposit@Home, for more than a year (previous coverage here), but its customer base is limited to current and retired members of the military.
- DepositNow, a unit of BankServ, allows anyone to use remote deposit services, but it's geared towards businesses and costs at least $29/mo, far above what consumers or even smaller businesses will pay.
- A number of banks also make it available to small businesses and the very wealthy, but consumer rollouts have been nonexistent. The cost of a dedicated scanner makes it uneconomical for the mass market.
CheckFree aims to change that with a new service targeted to consumers and very small businesses (press release here). The key is using existing consumer scanners and multi-function printers. USAA has proven that this technology does indeed work, so we expect CheckFree's service will pass technical hurdles.
It's hard to predict consumer demand, but given that around 20% of U.S. households maintain a full- or part-time business endeavor, we expect strong demand if the price is reasonable and technology is extremely easy to use.
Remote deposit services could be used as the cornerstone of a premium online banking offering (note 2) attractive to microbusiness (note 1) owners and consumers who still receive paper checks a few times per month.
- We define a microbusiness as one with $50,000 or less in annual revenue, typically a part-time, home-based business. For more information see Online Banking Report #107/108: Small and Microbusiness Banking Online.
- See Online Banking Report #109 for ideas on how to create a premium online banking channel.
September, October and November are traditionally great months for new product announcements. True to form, at least five major U.S. mobile banking announcements appeared last week. Brandon McGee posts a quick synopsis here.
Of special interest were the announcements by Firethorn/CheckFree and Monitise/Metavante, all of which will be presenting at our upcoming FINOVATE conference in New York City on Oct. 2 (see note 1).
Firethorn ended a relatively quiet stretch with an important announcement, the addition of Ogden, Utah-based America First Credit Union to its mobile banking consortium which includes Wachovia Bank among others (see previous coverage here). The top-10 credit union has more than 400,000 members and gives Firethorn a reference account in the credit union and non-mega-bank categories. The service is expected to go live in early 2008.
We've had the pleasure of hearing the Firethorn story several times, but going into the critical fall marketing period, it will be interesting to hear an update on the Firethorn rollout with AT&T and Verizon Wireless.
Monitise/Metavante Joint Venture
Although disclosed in March of this year, the Monitise and Metavante joint venture was officially announced last week (here). Monitise crosses the Atlantic with mobile banking and payment solutions already widely deployed in its United Kingdom home market under the MONILINK brand. Its client list reads like a who's who of U.K. financial and telecom players: BT Global Services, T-Systems, HSBC, First Direct, Alliance & Leicester, Royal Bank of Scotland, NatWest, Vodafone, Orange, O2, T-Mobile and Hutchison 3G. The JV's Oct. 2 presentation at FINOVATE marks the first time the new entity, Monitise Americas, will be on stage to DEMO the new service expected be available by year-end.
1. Our FINOVATE 2007 DEMO conference is expected to sell out some time next week, so if you want to reserve a place you should register ASAP at www.finovate.com.