Launches Archives - Page 2 of 6

Launching: Automatic Location-and-Merchant-Based Prepaid-Card Reloading with Spending Controls

By Jim Bruene Posted on October 3, 2012
Categories: Credit/Debit Cards, Launches, Mobile Payments, Prepaid/gift cards

That’s a lot of buzzwords in one title, but they’re all necessary to describe the payment innovation being tested by MoviePass.

MoviePass is a new service designed to do for physical movie theatres what Netflix did for rentals, turning movie-going into an all-you-can-eat subscription service. For $25 to $40/mo (depending on where you live), MoviePass allows you to attend as many movies as you like (but no more than once per day; note 1).

However, the company has had trouble getting theatres on board, who are rightly concerned about cannibalization. So the startup has been working on ways to get around the need to have theater partners. They tried in-home voucher printing, but it proved cumbersome and still required some level of theatre participation.

So MoviePass invented a clever workaround using a proprietary prepaid debit card. The new system allows subscribers to go to any movie at any theatre in the country, as long as they accept debit/credit cards. The service is in private beta with 1,500 users. You can add your name to the 75,000-person wait list here.

Here’s how it works:

1. User goes to the theatre location and checks in using the MoviePass app (inset). The check-in only works within 100 yards of the theatre.

2. MoviePass then adds the price of the movie to its prepaid card.

3. Consumer walks to the window and purchases a ticket with the MoviePass card using up the entire balance (note 2).

It’s a clever mashup of GPS, point of sale, mobile and payment technologies.

Relevance: No word on who’s powering the card, but hopefully we’ll see it used in other applications. It could be a solution for youth spending (parents preapprove locations/amounts), employee purchases (employers preapprove locations/amounts), or rewards/offers (money appears on your card only when you check in at specific locations).

——————————–

Notes:
1. Clearly, the company won’t be able to make a return at $40/mo unless they cut deals with theatres for discounts (especially to fill second-run and weeknight seats), which is the end-game here. At a cost of $5/ticket, it probably works. At $10 per ticket, movie buffs hitting theatres two to three times per week are going to kill the model.
2. Presumably, MoviePass has controls that limit the purchase to the theatre where the checkin occurred. And it must be limiting checkins to the registered phone only, otherwise the card could be passed to friends and the biz model won’t work. I also assume MoviePass will confiscate any unused balance if the ticket price is less than what was advanced or if the customer doesn’t buy a ticket.
3. It would be interesting if they also partnered with RedBox so you could get unlimited DVD rentals AND theatres in one monthly price.

Share this:

Send Post Twitter LinkedIn Facebook

Two Card-Linked Offers/Rewards Startups Launch at TechCrunch Disrupt

By Jim Bruene Posted on May 24, 2012
Categories: Alt Payments, Credit/Debit Cards, Crowdfunding, Launches, Rewards Programs

While I’ve read TechCrunch since its beginning, I’ve only been able to make it to their semi-annual event, Disrupt, once before. It’s usually just too close to our own Finovate. But this year I made the trek to Pier 94 in Manhattan to see what was going on in tech in general and to meet with the fintech startups in the Startup Alley or Battlefield launch competition.

There were six fintech companies in total. Three offered variations on card-linked offers, one has developed an alternative payment system, one was a newer payments gateway, and surprisingly there was just a single crowdfunding platform.

Startup Battlefield competitors from fintech: TechCrunch selected thirty companies in advance. All have agreed to launch their companies on stage at the event.

Cardify: Card-linked loyalty/offers geared toward local merchants. Sean Rad is CEO and of the West Hollywood company which has raised $750,000.
Mirth: Same as above. Jeremy Philip Galen is Founder. The NYC-based company is bootstrapped.

Startup Alley participants from fintech: These are companies less than two years old that qualify for a table in the networking hall. Each day one of the Alley companies is voted to the stage to compete in the Battlefield.

LocalBonus: A card-linked offers platform focusing on the local market
Payintele: An alt-payments company using barcodes to pass info between merchant and payee (I’ll do a whole post on them shortly)
PayLeap: A payments gateway from two previous Authorize.net execs
The Crowd Funds: A crowdfunding startup from former E*Trade CTO, Joshua Levine

Observations: It was interesting to see three new card-linked rewards companies all going after the local market. But if you look at what Groupon’s done with local merchants and where Square is headed, you can see there are huge opportunities here.

And the payment APIs available from Cardspring (which both Mirth and Cardify use) are making it relatively easy for startups to tap into a merchant’s card transaction streams to make offers, tally rewards, identify frequent customers, and communicate with them.

As a side note, Cardify has a gorgeous UI. It’s very hip and high-end looking like something you’d see at more well-funded companies such as Square, Simple or Mint (screenshot below). Kudos to the design folk there.

———

Cardify homepage (24 May 2012)

—————————-

Notes:
1. While not a fintech company, as an auction junkie, I was intrigued by Outbid’s social mobile/online auction platform. The company said it’s talking to four banks looking to host live auctions on their site to use for promotions and social gaming. I think it’s a promising idea, one I’ve explored a few times over the years. But with Facebook Connect you can actually get a critical mass of customers involved very quickly. The company had the cheesiest demo I’ve ever seen (and that’s saying something), but that shouldn’t impact your decision.

Share this:

Send Post Twitter LinkedIn Facebook

Launching: EFTGuard Provides $500k in Online Fraud Protection for Business Banking Customers

By Jim Bruene Posted on April 24, 2012
Categories: Deposits, Checking, Savings, CDs, Insurance, Launches, Security, Security & Privacy, Small Business

That was fast. Just two weeks after my latest appeal to the industry to provide small business owners with more security options, a new product launched today aims to do just that. And it’s packaged as a turn-key, fee-based service that could be sold by banks at a $10+ per month profit (MSRP is $25/mo).

That all sounds too good to be true. When I was first contacted by Greenway Solutions last week, I was more than a bit skeptical. But after speaking with CEO Jerry Tylman and Managing Consultant Jon Meyer, I was convinced they had something that as a business owner, I’d definitely buy.

The product, EFTGuard, is a joint venture between Greenway Solutions and Royal Group Services. They say it’s a “win-win-win” for banks:

Helps banks meet “UCC requirement for commercially reasonable security and their FFIEC requirement for customer education and awareness”
Provides peace of mind to bank clients
Protects both the bank and each client up to $500,000 in unauthorized online transfers
Helps differentiate checking and deposit offerings

____________________________________________

How it works
____________________________________________

EFTGuard provides protection against fraudulent online-account withdrawals of $100,000 per account (with no deductible), with a maximum of $500,000 per customer. And because it’s not true “insurance” (it just behaves like it), there is no underwriting hassle and the product can be purchased in just a few minutes via online form (demo here). There is, however, the usual list of coverage exclusions; for example, it doesn’t cover insider theft.

The catch? To qualify, business customers must download and install anti-malware software from Trusteer, Iron Key, or Webroot. And every computer accessing the business account must be running these protective software programs. For the time being, that appears to leave out any mobile access.

Initially, banks looking to offer EFTGuard will need to work with one of these three malware-protection vendors in order to qualify their clients for the fraud protection. Other than that, EFTGuard is turn-key and comes with marketing support, a co-branded signup page, and full claims management.

The $500,000 coverage is backed by Chartis Specialty Insurance Company.

__________________________________________

Bottom line
__________________________________________

Your business customers are rightly concerned about fraud. Offering them an option to protect themselves is a great way to differentiate your deposit offerings while preventing you from getting bogged down in messy litigation with your customers.

I still have questions about how often the list of exclusions will invalidate claims when actual fraud occurs. But the company assures me that the protections are very real.

Assuming EFTGuard delivers on its protection promise AND creates a small profit center, what’s not to like? I, for one, will be the first business owner in line to buy it.

——————-

EFTGuard homepage (24 April 2012)

———-

Note:
1. I believe insurance is one of the best growth areas in retail banking, especially in niche lines that can be explained and delivered online (see our December Online Banking Report for more about banks delivering insurance online).

Share this:

Send Post Twitter LinkedIn Facebook

Launching: Circleup Taps Your Inner Shark Tank

By Jim Bruene Posted on April 19, 2012
Categories: Crowdfunding, Investment Products, Launches, P2P Lending

If you dream of being Mark Cuban, Mr. Wonderful, or one of other Shark Tank investors (note 1), a wave of new angel-investing platforms are springing up all over the world.

TechStars, a NY-based incubator, said it had more than 30 applications from crowdfunding startups for its summer 2012 class.

In the United States, the recently enacted JOBS Act has spurred interest since it is expected to expand the market to several million more investors. But more importantly, the new legislation will lift the ridiculous “quiet period” rules that are supposed to keep companies from openly soliciting investors (note 2).

Once companies can openly look for investors (expected by early summer), private-placement investment platforms have a lot more to offer to companies seeking capital, namely a marketing opportunity.

Think about it. If you need $500,000 to launch a new line of organic granola bars sold nationwide, would it be better to get it from a couple local angels, or from 100 investor-fans kicking in $5,000 each? The latter approach gives you 100 evangelists in all corners of the country. And with only $5,000 invested, each investor has far less ability to meddle in your affairs.

In the past, the paperwork involved in booking $5k investments made it prohibitively expensive, even if you could find the investors under the old quiet period rules. But the new investment platforms promise to standardize the paperwork, reporting, and sales of small blocks of company shares.

So, who are the leaders in the space? AngelList certainly, but it focuses on tech only. Of the newcomers, CircleUp which is launching this week, seems to have the most traction, at least measured by press mentions. Co-founder Ryan Caldbeck has recently been featured in the WSJ, NY Times, TechCrunch and the other tech blogs (note 4).

I’ve been using the beta version for a week, and am impressed. Circleup is focused on consumer products, and three companies are currently featured within the site, raising $100,000 to $500,000 each. I’m itching to drop the minimum investment ($3,333) into one of them just for fun. However, my wife wonders if that will be the same “fun” we had the last time I thought I could pick stocks (note 5). So, I’m still just an observer for now, but a very interested one.

How it works
Circleup is a lot like a simplified version of P2P lending. Companies seeking capital post their investor deck, introductory video, and any other info they deem important to their story. An online forum allows investors to ask questions that the companies can answer publicly (though this was little used during private beta).

Investing is as simple as clicking on a button, agreeing to the terms, and pledging the funds. Once the minimum investment round is reached, the money is taken from investor bank accounts.

Relevance to Netbankers
If it’s allowed to flourish without being crushed by the SEC when the inevitable scams appear, crowdfunding could eventually provide stiff competition in small business lending. Probably not in its current form, where the investments are speculative, ill-liquid equity bets.

But fast-forward a few years and imagine a marriage of crowdfunding with P2P lending, and with the liquidity issue fixed through secondary markets. Small- and mid-sized businesses could use a crowdfunding platform as one safe source to get a mix of equity, debt, and receivables financing.

Banks should also consider getting involved in crowdfunding by partnering with the platforms to provide debt and other banking services to the small business participants. Banks could even start, or at least invest in, crowdfunding initiatives of their own.

———————————-

Company info page
Note: Fictitious listing; note investment button in middle-right.

Investing page
Note: For $25,000 (the max allowed), I get 134,000 shares, or 0.51% of the company.
Actual company seeking capital through Circleup, name masked due to the soon-to-be-ending prohibitions against soliciting investors.

Notes:
1. Shark Tank is the U.S. version of Dragon Den. It’s my favorite show on television, though I don’t like how founders are sometimes ridiculed by the celebrity investors, whose egos struggle to fit on the same soundstage.
2. Though Shark Tank, watched by millions on prime-time network TV, demonstrates it’s not a well-enforced rule.
3. Ryan Caldbeck’s 10-minute discussion of the JOBS Act is worth watching if you want a quick overview of its impact. TechCrunch covers the launch 18 April 2012 here.
4. Our policy at The Finovate Group is to NOT invest in fintech companies.
5. For more ideas on innovating in the small-biz banking market, see lengthy report on the subject, written 2 years ago.

Share this:

Send Post Twitter LinkedIn Facebook

Launching: SmarterBank, a Virtual Bank Aimed at Student Loan Holders

By Jim Bruene Posted on April 9, 2012
Categories: Bancorp Bank, Direct Banking, Launches, P2P Payments, Rewards Programs, Student Loans

Startups are advised to find pain-points, then build businesses to profitably solve them. Despite the current wave of very bad publicity around banks, especially the big ones, everyday banking isn’t a huge pain-point for the 80% of households currently served by existing players.

Sure, I’d like to have more security options, fewer unintelligible messages, and a Cash Tank. But most of these are feature/function improvements, not “must-have” issues that need to be solved.

What are the acute pain points in banking and personal finance?

Debt management, especially credit card and student loans
Home financing
Small business financing
Insurance
Retirement planning/saving

Three of these five have to do with the debt side of the consumer’s balance sheet. Yet, much of the talk about online/mobile banking innovations centers around spending management, payments, checking and savings accounts, and account access technology.

So I get pretty excited about innovations on the debt front. And last week, there was an interesting launch on the student-loan-management front, SmarterBank from Finovate alum, SimpleTuition. Its tagline says it all:

It’s a truly free, full-featured checking account, with debit card, paper checks and all the usual (but no branches, of course). And it’s powered by The Bancorp Bank, which has its hands in many of the new direct banking initiates we are seeing, including (bank) Simple.

But the special sauce is a built-in rewards program tied directly into student loan payback.

___________________________________________________________

How it works
___________________________________________________________

It’s actually two separate accounts, rewards and checking. You don’t need to buy the checking account to participate in the rewards program. But you must be in the rewards program before you can get a SmarterBank checking account.

SmarterBucks: rewards piece (see first two screenshots below)
SmarterBank: the checking account

Users accumulate cash to accelerate student-loan payback in three ways:

Deals/offers (note 2)
Banking rewards (from linked SmarterBank checking account)
Direct contributions from family and friends

SmarterBucks dashboard (8 April 2012)
Note: (1) Link to SmarterBank in upper right
(2)The deals piece is marked “coming soon”

SmarterBucks reward activity

_________________________________________________________

Sign-up process
_________________________________________________________

1. Sign up for SmarterBucks, which as a non-financial account requires only name and email address

2. Add a student loan that SmarterBucks rewards are credited to

3. (Optional) Add a SmarterBank account so that non-PIN debit purchases earn SmarterBucks rewards

4. (Optional) Invite family to contribute money directly to the SmarterBucks account

SmarterBank application hosted by The Bancorp Bank (link)

______________________________________________________________

Analysis
________________________________________________________________

Marrying rewards, checking/debit, P2P family contributions, and student loan repayment is brilliant. It not only provides a tangible benefit for the 37 million Americans with student loan debt (see note 1), but also is a great customer-acquisition tool for a very important segment, recent college grads. Financial institutions looking for more twenty-something customers should consider building similar capabilities or partnering with SimpleTuition.

———-

Notes:
1. Figures are from the company. It also said that 10 million students owe more than $50,000, and 2 million owe more than $100,000.
2. Friends and family will also be able to link their own SmarterBucks account to the student’s.
3. We covered family/student banking nine months ago in our Online Banking Report (here).

Share this:

Send Post Twitter LinkedIn Facebook

New Online Banking Report Published: True Virtual Banking Has Arrived

By Jim Bruene Posted on November 3, 2011
Categories: Launches, Online Banking Report, Personal Capital, Simple, Strategies

I still remember the day in early 1999 when I met with Elon Musk and his 3-person team in a borrowed conference room in Palo Alto. They were plotting the complete and total disruption of the banking industry and fully expected to be one of the largest five U.S. banks by now.

The startup was named X.com and its original business plan was to acquire one or more existing banks to provide the credibility, and deposit insurance, of a traditional bank. While I was in awe of their ambition, I thought the plan had a flaw. I told them they’d be better off staying virtual, with no bank ownership slowing down their decision making and ability to take risks.

I’ll never know if they would have listened to me, because soon thereafter X.com began experimenting with P2P payments via email, and they saw that it was going to be huge. So they jettisoned banking, merged with PayPal, and the rest is history.

Why the reminiscing? That was the last attempt by a major tech startup to take on the U.S. retail banking industry via virtual channels (note 1).

Fast-forward to 2011: At this year’s FinovateFall, we saw the launch of not one, but two well-funded attempts at disrupting the incumbents. One through debit/checking/savings and the other through wealth management:

BankSimple: DNA from Twitter, analytics, and consulting
Personal Capital : DNA from Intuit, PayPal, Everbank and Fidelity Investments

Both companies are what I call True Virtual Financial Institutions, meaning they are complete front-ends to your money, including transaction capabilities and customer service, but they outsource the actual holding of customer funds to fully-regulated partners which pass FDIC/SIPA protections. This allows the newcomers to focus on user experience and service while moving much faster without the regulatory friction experienced by traditional financial institutions.

Others well-known companies using virtual models: Betterment (also profiled in the report), iBankUp.com (Plastyc) and Perkstreet.

Note to bankers: True virtual banking needn’t be limited to tech startups. These techniques can be employed by traditional companies to expand beyond regional or industry boundaries. The report outlines seven models for doing just that.

__________________________________________________________________

About the report
__________________________________________________________________

True Virtual Banking Has Arrived (link)
BankSimple, Personal Capital, Betterment and others go branchless,
paperless and “bank-less”

Author: Jim Bruene, Editor & Founder

Published: 1 Nov 2011

Length: 48 pages

Cost: No extra charge to OBR subscribers, $395 for others here

____________________________________________________________________

Notes:
1. I should add that Lending Club, Prosper, Zopa qualify as major entrants bound on disrupting banking from the lending side.
2. BankSimple, Betterment, Personal Capital and Plastyc FinovateFall 2011 demo videos are available here.

Share this:

Send Post Twitter LinkedIn Facebook

Launching: Cake Health is a New PFM for Healthcare

By Jim Bruene Posted on September 12, 2011
Categories: Launches, Personal Financial Management

Healthcare expense management continues to be a pain-point for most consumers. Today, Cake Health launched a “Mint for healthcare” which uses similar technology to automatically download healthcare transactions and use the data to manage insurance reimbursements and other aspects of healthcare.

The company also launched a mobile app that syncs with the desktop version and uses the camera to upload documentation to the system (screenshot below). The startup impressed the expert panel at TechCrunch Disrupt, where it launched today.

Share this:

Send Post Twitter LinkedIn Facebook

Launching: Openbucks Gift Card Payment Network

By Jim Bruene Posted on September 12, 2011
Categories: Alt Payments, Launches, Prepaid/gift cards

Today at TechCrunch Disrupt, Openbucks announced its “gift card” payment network which works like an ATM switch; you can use whatever value you have in a participating gift card to buy something at any participating online retailer.

For example, you could use the $20 in your Subway card (a beta participant) to buy virtual goods at online games. Eventually, they want to expand beyond the purchase of digital goods.

The product is targeted to those that don’t have debit or credit cards, especially heavy game-playing teenagers. “Gift cards” would be added to the payment options at checkout at the gaming site.

Share this:

Send Post Twitter LinkedIn Facebook

MoveNbank: Can it Out-simplify BankSimple?

By Jim Bruene Posted on July 11, 2011
Categories: Launches, Mobile Banking, Mobile Payments

I’ve been accused of falling for the Bank Simple hype. Just to prove that I don’t discriminate, I bring you MoveNBank, a mobile-optimized banking startup founded by Bank 2.0 author and consultant Brett King.

From what little is disclosed on its Facebook page, Twitter feed and Startuply profile I’ve assembled the following facts:

Timeline:

Founded July 2010
Private beta to begin soon (per 1 July 2011 Tweet)
Soft launch scheduled for July 2012

Company:

Global startup with HQ in NYC (Madison Square Park, 25 W. 31st)
Founder and Chairman is Brett King
8 employees

Product description:

Mobile only, with no paper or plastic
NFC-enabled app
Incorporates “gamification” in UX
According to Startuply, “reinventing credit scores and more with an open, social transparent, and viral model” (sounds P2P lending-esque)

Bottom line: MoveNbank is looking to leapfrog the competition by removing all vestiges of old-school banking. No branches (of course). No paper (no surprise). And no plastic (what?).

That’s how ING Direct got its start (they did have paper statements), so it’s not unprecedented. But if MoveNbank plans on offering payments, it will be harder to pull off. But with a soft-launch still a year away, it should be able to ride the NFC wave expected to roll across the globe in the next five years.

Are there any other remote banking startups I’m missing? Drop me an email (jim@netbanker.com).

————————————–

MoveNbank placeholder page (11 July 2011)

Share this:

Send Post Twitter LinkedIn Facebook

Launching: BillGuard’s “Anti-virus for Credit Cards”

By Jim Bruene Posted on May 26, 2011
Categories: Credit/Debit Cards, Launches, Personal Financial Management

Fintech made a good showing at TechCrunch’s semi-annual Disrupt conference in NYC. Of 32 startups that launched on stage, three were financial-related:

Spenz: A mobile PFM (Disrupt demo)
InvoiceASAP: A mobile invoicing app with accounting integration (Disrupt demo)
BillGuard: A transaction-monitoring service (Disrupt demo)

And both InvoiceASAP and BillGuard (discussed below) were selected to come back on the third day and compete, along with four other startups, for the top prize in front of an all-star panel of judges. The judges selected BillGuard runner-up behind GetAround, a clever peer-to-peer car rental service which wowed the crowd, also taking home the People’s Choice award. _____________________________________________________________________________

BillGuard overview
_____________________________________________________________________________

The TechCrunch judges and analysts went gaga over BillGuard. Everyone wanted to use the service, and most wanted to invest in the company.

However, the company recently landed a $3 million Series A round (February 2011), so they’ll have to wait. Investors include: Bessemer Venture Partners, Chris Dixon, Ron Conway, IA Ventures, Howard Lindzon and Yaron Galai. The Israeli company has 12 employees. The founders are Yaron Samid, CEO, and Raphael Ouzan, CTO.

Currently, BillGuard is free for the first card and can be upgraded to monitor an unlimited number of cards for $4/mo, a classic freemium model.

In the two days following the company’s Monday launch, users added 10,000 cards to the alerting service. In the initial scans, looking back through 30 days of transactions, the company identified potential nuisance charges on 20% of the cards analyzed. The flagged transactions ranged in value from $2 to $6,000 with the latter described as “fraud on a very wealthy person’s card.” ______________________________________________________________________________

How it works
_____________________________________________________________________________

1. Register at the site with just your email address and ZIP code

2. Enter your username and password for a credit card account into the Yodlee-powered aggregation engine

3. The past 30 days of transactions are immediately downloaded and analyzed for potentially fraudulent or unwanted charges (see screenshot 2)

4. Charges are color-coded by risk assessment (green = good, orange = review, red = flagged) (see screenshot 3). Much like anti-virus companies, BillGuard relies on its user base (crowdsourcing) to identify nuisance and fraudulent charges.

5. You can quickly call up the “reviewable” transactions and choose to mark them “good” or wait for more information on the merchant from BillGuard and its user base (screenshot _______________________________________________________________________________

Analysis
_______________________________________________________________________________

In my case, the service did not find any bad transactions in the 85 it reviewed from my primary business and personal credit cards. All seven marked “unsure” were fine. None were flagged red.

But according to the company, the average American loses $300 per year in unwanted charges, and I’m way over that. Just last year, I lost more than $1,000 because I had the wrong plan on my mobile phone. But that was a legitimate charge from an existing merchant of mine. BillGuard doesn’t guard against stupidity, yet, but it wouldn’t take a whole lot more intelligence to start flagging this type of out-of-bounds charge as well.

The potential for financial safeguard services is huge. Just look at the multi-billion credit-monitoring industry, or Mint.com for that matter which alerts users to bank fees and keeps a running total. The question isn’t whether consumers want this type of protection, certainly they do. The issue is whether anyone will take the time to set up the service, pay for it, and then take the time to monitor their accounts.

BillGuard knows that and is actively pursuing deals with large banks to package the service into online banking. In its Monday demo, the company said it was in talks with three top-ten banks (on Wednesday they said, “Make that 4”).

Distributing BillGuard would be a mixed blessing for banks. Earlier detection of fraud would be useful, but the labor involved in working through increased dispute resolution, especially false positives, would have to be factored in. But again, BillGuard understands the dilemma and is developing dispute-resolution capabilities that will SAVE issuers time and money.

I predict we’ll be seeing a lot more from this company so keep them on your radar. I know we will.

—————————————-

1. Welcome screen after first download & scan (26 May 2011)

2. Initial scan results with 7 transactions marked “review”

3. Transactions are color-coded by risk assessment

4. The transaction review page

5. TechCrunch finalist demo (click to watch on TechCrunch site; )

—————————

Note: For more on online personal financial management (OFM/PFM), see our Online Banking Report.

Share this:

Send Post Twitter LinkedIn Facebook

Launching: Balance Financial Introduces Hybrid Billpay/PFM/Bookkeeper

By Jim Bruene Posted on March 3, 2011
Categories: Bill payment, Launches, Online Resources (ORCC), PayTrust, Personal Financial Management, Small Business

Internet-enabling every service and device on the planet creates fascinating new business opportunities. And we are seeing our share of them in the fintech space (note 1). Knowing how to deliver the proper blend of personal service and automation is an area of extreme importance to financial institutions: The optimal solution varies by customer, by product, and even by time of day.

One relatively neglected area involves premium services that offer state-of-the-art tech married to specialized human service, for a fee. Large banks have private banking departments that handle the bills and day-to-day finances of households with millions in assets. But those that fall outside the private banking threshold are generally offered free, self-service tools available to everyone.

Back when only 10% to 20% of households were online, that distinction was necessary. But now that 60% to 70% or even more of a bank’s households use the Internet, there are enough customers to slice and dice financial management services into a variety of offerings and price points. There’s a lot of revenue available for service offerings in the wide range between free and private banking.

Enter the newest player in high-end bill payment: Balance Financial, an angel-funded company based in Seattle that launched its new service this week. CEO Devin Miller was also involved in the launch of one of our favorites new services of 2010, Finsphere’s PinPoint mobile location-aware fraud-alert service (previous post).

___________________________________________________________________

How it works
_______________________________________________________________

Balance is a unique mixture of automatic bill pay and human bookkeeper, with an online PFM thrown in to help keep track of it all. The company has built a rich PFM, added billpay powered by Online Resources, and given each customer their very own actual person who oversees the account.

Unlike previous generations of billpay and the scan-and-pay offerings from PayTrust and others, Balance Financial does everything for you. It receives the printed or electronic billing statement, it uploads the docs to its website, and then the most important piece, it pays the bills automatically based on your prior instructions, just like the private banking officer. The end user is only contacted if the bill falls outside the preexisting parameters.

Sound too good to be true? Maybe, if it were free, but it’s far from it. The company tested a variety of pricing options and settled on a price that’s borderline ridiculous for the retail banking mindset: $75 per month.

___________________________________________________________________

Analysis
______________________________________________________________

Are they crazy? Maybe, but probably not. The company has been delivering personal bookkeeping services for seven years, and has paid more than 100,000 bills for its clients (note 3). It knows from experience there are affluent households and small businesses that are happy to offload this task for much more than $75 per month. When paying larger bills, the late fees alone can easily be in this range (note 2).

Balance admits the audience for $75/mo is tiny. But as its technology gets better, and its bookkeepers can take on bigger client loads, it believes it can push this price down, maybe even way down. So if you are interested in finding a new way to serve your mass affluents with something they can’t get anywhere else, take a look at Balance.

Balance Financial integrates the human side throughout the Web-based app (3 March 2011)

——————————–

Notes:

1. From the look of the applications for the upcoming FinovateSpring, the number of startups is growing at an even faster pace.
2. Our record penalty for paying a bill late at our business is $1,100. We’d just made a huge charge and by being that one day late, our APR was bounced to 25%, and we went into revolving mode over two cycles. Even though we paid the balance off within 7 days of making the charge, it still cost $700 one month and $400 the next. Anyway, that one incident alone would pay for Balance for 1.25 years, not to mention avoiding the huge frustration of making a thousand-dollar blunder.
3. The original bookkeeping service was founded in 2004, by Devin’s wife, Rebecca Miller.
4. For more on online personal financial management (OFM/PFM), see our Online Banking Report.

Share this:

Send Post Twitter LinkedIn Facebook

Launching: Hearst’s Manilla Wants to be Your Online Hub for Bills, Statements, Rewards and Subscriptions

By Jim Bruene Posted on February 28, 2011
Categories: Bill payment, Electronic Bill Payment & Presentment, Electronic Statements, Launches, Personal Financial Management

Manilla, a new account aggregation service from Hearst Corporation, launched today at Demo. Here’s the official announcement and its demo video is embedded below.

Manilla currently aggregates accounts in four categories (more are on the way):

Household for keeping track of bills
Finance for keeping track of bank accounts and credit cards
Subscriptions for keeping track of magazine subscriptions
Travel for tracking mileage programs

In the first screenshot below, I’ve added an account in the finance category (American Express, which is shown as pending) and one in the travel section (American Airlines, which displayed the account balance immediately). I have yet to add a household bill or a magazine subscription.

In the second screenshot, you can see what it will look like after the account has been populated with many accounts (this is an example directly from the Manilla website).

The service will not show third-party advertising. Like Doxo, it will display marketing messages only from participating billers. And also like Doxo, billers will pay the freight, sending the company a small fee for each electronic bill it sends through Manilla (more on its business model here).

Analysis
As I’ve mentioned in several posts about Doxo, there is a huge need for a secure, easy-to-use hub to help households organize their bills and statements. While Doxo is currently focused on delivering bills only from participating billers, Manilla allows users to aggregate bills and statements from virtually anyone supported by its Yodlee-powered aggregation engine.

So, if you are willing to sit down and enter usernames and passwords, the service can begin delivering value immediately. Consumers have been reluctant to do that unless they trust the company. But with Hearst Corp. backing it and with the credibility of two major billing partners, Comcast and Citibank, Manilla may be able to get over the trust hurdle.

1. Initial Manilla homepage prompts new users to add accounts in four categories (28 Feb. 2011)

2. Manilla homepage after the user has set up accounts
Note: The icons are for bills, statements, notices and offers

3. Reminders area

Demo video (link)

——————————————

Note:
For more info, see our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.

Share this:

Send Post Twitter LinkedIn Facebook