Finovate Alumni News

On Finovate.com

  • Blackhawk Network Acquires Grass Roots for $118 Million
  • FutureAdvisor Brings RoboAdvisory to U.S. Bank Wealth Management

Around the web

  • Avoka reports record levels of orders for fiscal 2016. Join Avoka in New York for FinovateFall 2016 next week.
  • Financeit earns spot on the TechVibes’ Fintech Five.
  • Chain CEO Adam Ludwin warns against “blockchain hype” on Fortune.com.
  • Narrative Science teams up with Franklin Templeton Investments to bring Quill technology to their fund commentary process.
  • SmartyPig switches to Sallie Mae Bank to enable partial withdrawals, direct deposit, and to offer a higher interest rate.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

BECU Helps Parents Teach Savings Ethic with 6.17% APY

smartypig_retailgiftcardBack when my kids were able to save—both are in college now, so that’s not happening—ING Direct and others offered interest rates that actually created an incentive to save. My oldest even enjoyed 5% rates for a while, quite helpful in showing how the “free” $5 to $10 per month he earned at the bank grew his total over time.

But today’s middle-schoolers and younger teens have come of age in an absurdly low interest-rate environment (see note 1), with little chance to experience the joy of compound interest. SmartyPig (inset, note 2) and others have created savings bonuses centered around merchant gift cards. That’s a clever way to add value, but it can also send a mixed message, “Hey Junior, save $250 and you’ll get an extra $5 if you spend the whole thing at Best Buy.” For parents who’d like their kids to hold onto that cash (at least until college), few options exist, other than bribing your kids with parent-funded bonuses.

But a few financial institutions have addressed the forlorn kiddos and their disappointed parents by dramatically boosting the rates paid on the first few hundred of a balance. For example, in the greater Seattle area, BECU pays 6.17% on the first $500 deposited in its Early Saver account (see screenshot below). Granted, the rate reverts to pretty much zero (0.1%) after that, but kids at least get enough interest every month ($2.50/mo on $500 balance) to make it feel like it’s worth holding the money at the credit union (note 3).

Bottom line: Your customers’ children are your future. It’s worth investing in services to keep them at your FI for the next decade or six. If the $30 annual subsidy is beyond your budget, enable parents to pay for the rate bonus. Let parents “boost” the interest paid on their child’s account as much as they want. To provide an extra incentive, you could match parental contributions up to a certain point (e.g., $10/year).

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BECU Youth Savings landing page (link, 11 Jan 2016)
Note: BECU has elevated Youth Banking to one of six choices on its Everyday Banking primary navigation item.

becu_kidssave

 

 

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Notes:
1: For example, Bank of America currently offers 1 basis point interest on a child’s account, which means your child’s $1,500 average balance earns 1 cent per month!
2. Social Money, owner of SmartyPig, was acquired by Q2 Holdings last month (Dec 2015).
3. BECU offers a similar boost for the first $500 banked by 18+ year-old members as well, but the rate is only 4%.
4. Off topic: BECU has done a great job optimizing its homepage for responsive design. Open it in your browser and then shrink the window and watch how it resets. Very nice!

Finovate Alumni News

On Finovate.com

  • Rippleshot Raises $1.2 Million in Round Led by KGC Capital”
  • SocietyOne Offering Car Loans to Uber Drivers in Australia”

Around the web

  • Xero adds two-step authentication to its accounting platform.
  • CAN Capital teams up with iPayment to help SMEs get access to working capital.
  • Let’s Talk Payments features Klarna, Holvi, BehavioSec, Trustly, Meniga, and Tink in a roundup of top Nordic fintech startups. Remember FinovateEurope 2016 comes to London on February 9 and 10.
  • Check Point Names Julie Parrish as Chief Marketing Officer”
  • MyBankTracker names Mint, SmartyPig, Lending Club, Coinbase, and Loyal3 on its list of companies every millennial should know about.
  • ayondo CEO Robert Lempka Explains Innovative Trading Solutions Live on CNBC Asia”
  • TechCrunch looks at TransferWise’s growth.
  • PaymentEye interviews Daniel Abrahams, CEO and co-founder of CurrencyTransfer.com.
  • Bankless Times talks with Encap Security CEO Thomas Bostrøm Jørgensen on current trends in authentication technology.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account

Mobile Monday: Turning Spending Management Into a Positive Experience

moven_wheelMany people closely track their spending because they have to. They live paycheck to paycheck and there is no choice. A few track it because they are masters of control, and they love the sense of order that results from processing each transaction. But almost no one tracks spending for fun or fulfillment.

If a bank, card issuer, or fintech startup cracks that barrier into entertainment, they would surely be en route to fame and fortune (or at least a demo slot at Finovate). If I knew how to make expense tracking fun, I wouldn’t be writing about it here. I’d turn it into a startup, or at least a consulting practice.* So for what it’s worth, here’s my five-point plan for making banking fun.**

1. Go all-in on mobile
This is probably obvious to most readers. But I still encounter people who still believe that money management is best done on a desktop. True, it’s easier to design for the big screen, and real keyboards are nice, but it’s just NOT how people interact with digital providers today. For example, 76% of Facebook’s and 88% of Twitter’s ad revenue last quarter was on mobile (source). What more do you need to know?

2. Remove the login
You cannot engage mobile users multiple times per day with a standard username/password system. Thankfully, logging in via fingerprint is becoming a handset standard. Bank of America said last week it was about to adopt TouchID on iOS, so the log-in problem should eventually be going away. And for non-biometric handsets and/or users, a 4-digit PIN entry is a pretty good workaround.

3. Stream the transactions
Users should not have to do any work to see each new transaction in reverse chronological order. It should be just like an email system showing new transactions at the top. Unread ones should be super-easy to identify by staying boldface until viewed. For extra credit, adopt the gmail standard, identifying Priority transactions at the top of the stream.

4. Gamify the spend
Once you’ve laid the groundwork with #1, #2 and #3, it’s time to do the tough part of making tracking fun, or at least interesting enough to hook users. I look to Fitbit and Starbucks for inspiration. I probably look at my Fitbit app 7 to 10 times per day to see how I’m doing against my weekly goals; in comparison, I probably open a mobile banking app about 1 or 2 times per month. Why does Fitbit get 20x the engagement? Because it’s a POSITIVE experience. Every time I open it up I’m literally steps closer to my goal. That’s positive reinforcement. In comparison, every time I look at my banking app, I’m one more step removed from my goal of spending less. That’s a negative.

Banking is never going to be as fulfilling as step tracking, but it doesn’t have to be a downer at every login. FIs need to provide positive reinforcement instead of negative. Moven does as good a job as any along these lines by showing a red/yellow/green color-code rating on each expenditure to help users instantly understand what they are doing. And there are lots of ways to begin quantifying spending once users stop being afraid to log in for fear of always getting bad news.

5. Reward the save
Once users start seeing tracking as a positive experience, positive behaviors can be rewarded. Starbucks does a great job getting me to change my behavior by delivering custom offers and rewards to the mobile app. Before the mobile app, and more importantly, mobile ordering, I was a once-or-twice per-month customer. Now, it’s my seventh day in a row inside a store in order to win “14 bonus” stars (value about $7 if I use them to score a sandwich).

Until interest rates get back to something that you can actually measure, financial institutions need to overhaul their rewards programs to provide incentives for beginning savers. I realize how challenging that is based on the near-zero margins currently in the deposit and debit-card business. But there are ways to do this, such as providing retailer discounts when savings goals are reached. See SmartyPig/Social Money (post) or Finovate demo.

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*Just kidding, Finovate employees do not invest in or advise fintech startups (outside the Finovate event-coaching process).
**By “fun,” we are not saying money management will compete with television or Facebook. The aim is to make banking useful on a daily basis, perhaps the equivalent of checking the weather forecast.

Alumni News– October 6, 2014

  • Klarna partners with Digital River; brings Klarna Invoice’s online payment solutions to 7 European countries.
  • ACI Worldwide enters strategic partnership with Shaw Systems.
  • PayStand launches API to empower one-click payment acceptance of Bitcoin, eCheck and credit cards.
  • MasterCard teams up with Newgen to digitize Procure-to-Pay and Order-to-Cash services.
  • Infomilo lists 12 Finovate alums among its top 25 hottest fintech startups.
  • SmartyPig’s Social Money collaborates with TMG to provide prepaid payment options for millennials and underbanked.
  • Union Square FCU hires Insuritas to launch insurance agency.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News– May 12, 2014

  • Xero and ASB launch business to bank payments.
  • Bancbox and Kingdom Trust Company partner to streamline the crowdfunding and P2P lending platform for the IRA investor.
  • Actiance tops Forrester’s social risk and compliance product list.
  • Strands hires new CEO, Erik Brieva.
  • Dealstruck and Entrepreneurial Finance Lab named finalists in Core Innovators Challenge.
  • FIS announces launch of FIS Instant Card to accelerate FI’s ability to provide new or replacement cards.
  • Chris Skinner highlights the relationship between SmartyPig and ICICI Bank in a feature on Banking-as-a-Service.
  • ZDnet takes a look at ShopKeep POS, including its recent $25 million investment form Thayer Street Partners.
  • The Motley Fools calls Loop, the invention that “will change the way you pay for everything.”
  • The Rock Trading Ltd. partners with Jumio for real-time ID verification services.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Generating Deposits by Working with Fintech Startups

image

While the number of U.S. banks working with tech startups is very small, their numbers seem to be growing. Just this week I learned of two:

  • imageSocial Money is using Iowa-based Lincoln Savings Bank ($630 million assets) to hold deposits generated through prepaid card issuers and other clients of its CorePro, API for savings (more on that below).
  • image Zions Bank is holding funds transmitted through stealthy mobile payments startup Clinkle. For a sneak peek at its UX, see this supposedly leaked video.

In addition, the 800-lb guerilla is driving deposits to smaller financial institutions. BancVue, just announced that its clients have refunded $10 million in ATM fees through various rewards checking programs including Kasasa.

Banks working with startups potentially benefit in a number of ways:

  • Unique source of deposits, independent of their traditional customer base/geographic footprint)
  • Exposure to new methods of marketing to younger segments, who often gravitate to startup offerings
  • Access to modern tools and design expertise that would be otherwise unattainable

Finally, it can be an interesting project to work on, benefitting all involved.

Bottom line: Does working with a startup have a positive ROI? Not necessarily. There are many pitfalls, not the least of which is making sure that everything satisfies compliance and regulatory watchdogs. But that just means you’ll have less competition and can negotiate better terms. 

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Social Money’s new CorePro API

image The Des Moines, Iowa-based company has been a leader in the online savings space, launching SmartyPig back in 2008. In total, about $5 billion in transactions have been processed. That has helped add deposits to its partner banks, primarily Compass BBVA, the 15th largest U.S. bank.

Social Money is now offering its powerful savings platform to developers and non-bank financial companies as a Savings API. Features include:

  • Multiple goals within a single savings account
  • Real-time funds transfer (savings account “issuer” must maintain reserve account at Lincoln Savings)
  • Configurable via client admin site
  • 1099 filings

Its simple pricing is fully disclosed on the website:

  • $495 setup
  • $0.39/mo per savings account
  • $0.02 per ACH transfer
  • $3 to $6 per new account authentication

The startup has had interest from other non-bank financial companies such as prepaid card issuers. It’s also getting good feedback from mid-size ecommerce companies looking to offer customers an easy way to save money to make a later purchase (think Christmas Club).

The system is currently in final beta testing and is expected to go live in Q1 2014.

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Picture credit: Savings page at Lincoln Savings.

Notes:
1. Watch Social Money demo GoalSaver at FinovateSpring 2012
2. For more insights into how to leverage your online/mobile channel to boost deposits, see our Online Banking Report (Nov 2008, subscription)

Finovate Alumni News– October 3, 2013

  • Finovate-F-Logo.jpgValidSoft releases latest addition to the VALid suite of telecommunication based security products, Zero Latency Correlation.
  • Kabbage partners with Xero to provide SMBs capital based on their online accounting data.
  • Faces of Innovation features Wade Arnold, Banno CEO.
  • FIS Global signs agreement to market ARM Insight’s Prepaid Management Platform.
  • MasterCard announces partnership with Parkeon to provide merchant offers, loyalty services via smart parking terminals.
  • PYMNTS.com interviews ZooZ VP for business development, Noam Inbar.
  • ISO & Agent talks about Moolah LLC’s deployment of Leaf’s LeafPresenter POS tablets.
  • SmartyPig announces CorePro, the next generation of its savings solution which helps companies integrate savings accounts into their existing solutions.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News– January 22, 2013

  • Thumbnail image for Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgNetbanker reports: SmartyPig Launches OneClick, Goal-Based Savings Account Browser Plugin.
  • Bridge Community Bank becomes first in the U.S. to adopt TASCET’s Financial ICONN.
  • EZBOB offering interest-only small business loans to online merchants.
  • Fenergo‘s FATCA solution featured in Datamonitor.
  • ING BusinessMobile for iOS and Android leverages Comarch Mobile Banking.
  • Corduro wins partnership, investment from Shopforbags.com.
  • Standard Chartered Bank launches “Remote Causes” to promote charitable giving through Internet Banking.
  • Ribbit Capital initiates $100 million venture capital fund.
  • Dwolla brings government payments partnership to Iowa.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

SmartyPig Launches OneClick, Goal-Based Savings Account Browser Plugin

smartypig_oneclicklogo.jpg

It’s not easy making savings accounts sexy, but Social Money, with its GoalSaver and SmartyPig brands, is trying. The latest innovation? A Google Chrome browser extension called SmartyPig OneClick (link), that allows users to create savings goals on the fly while shopping online.

The service launched last week and can be found in the Extensions: Shopping section of the Chrome app store. The app has 30 users according to stats displayed in the store. In comparison, the most popular shopping extension, from Amazon, has more than 600,000 users.

The SmartyPig OneClick system can be licensed by banks looking to juice their savings account feature set.

How it works
smartypig_browserbutton_300.jpg1. Install from Google Play app-store (see screenshot 1 below)

2. A SmartyPig icon is added to the upper right of the browser (see inset)

3. When shopping online (at any website), users click on the SmartyPig icon in the upper right, which launches a popup (screenshot 2)

4. After logging in (screenshot 3), users establish a goal and automatic savings plan to fund the purchase of the desired item (screenshots 4 & 5). SmartyPig automatically imports the item’s price and image and stores it for the user at SmartyPig.com. 

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Analysis
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Goal-based savings is an important feature to add to online banking (note 1). And shopping helpers are a relatively popular browser extension (Amazon’s Chrome extension has 600,000 users). So marrying the two is an interesting play.

Will this boost savings-account balances? Perhaps a little. But the more important FI benefit is getting a branded button in the corner of the user’s browser (whether anyone will remember it’s there is another matter). That’s a bit of a Trojan Horse that can be used for a variety of services (note 2).

Bottom line: I like SmartyPig’s move. Smartphones have conditioned users to look for specialized apps. I believe consumers will use full-featured online banking via direct desktop links (see also Mint’s QuickView). Although, it will take education and marketing support.

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1. Installing browser extensions is a painless process (Chrome store link)
Note: Users must allow SmartyPig to “access your data on all websites” and “access your tabs and browsing activity.” The first one is likely to give users pause.

smartypig_jan21_1.jpg 

2. Creating a goal on the fly while shopping

smartypig_jan21_2.jpg 

3. Login to SmartyPig via popup box

smartypig_jan21_3.jpg

4. Confirm the savings goal

smartypig_jan21_4.jpg

5. Customize the savings goal

smartypig_jan21_5.jpg 

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Notes:
1. For more info, see our Online Banking Report (Nov. 2008, subscription) detailing various ways to leverage your online/mobile channel to boost deposits.
2. Long ago, we wrote a report (Aug 2002, subscription) on ways to put your bank onto the computer desktop. The strategy is still the same, though the specific techniques are somewhat different today.