I check the Finance applications in the Apple iTunes store at least once per week to see which of the companies we track has posted an app. But I missed one of the most popular finance apps, because it's categorized under Productivity.

An iPhone application called A Personal Assistant (iTunes link) from PageOnce has been downloaded more than 200,000 times according to the publisher. The application is an account aggregation service that automatically downloads balance and transaction activity from financial, billing, and other service providers.

In an interview on FastCompany TV (here), co-founder Guy Goldstein said that 65% of users are checking financial accounts through its account aggregation app. Assuming 100,000 total active users, that would imply more than 60,000 iPhone users tracking financial accounts via the PageOnce app (see inset).

That would likely make PageOnce the third largest provider of banking info to the iPhone, trailing only BofA and Firethorn (see note 1).

During the FastCompany interview, Goldstein identified one focus to be banking and bill pay transactions, and said that plans are in place to add bill pay functionality to the app.

Palo Alto-based PageOnce opened to the public in July. The company also offers a Web-based version of the account aggregation service (screenshot below), but sees its core audience being smartphone users. The company launched a Blackberry version a few days ago (see homepage below, company post here).

Implication for Netbankers
Because mobile website navigation is relatively more difficult, the allure of having all your personal and financial info in one place is stronger for smartphone users than for website users. 

However, users are still very concerned about handing their passwords to an unknown startup such as PageOnce. But convenience-minded consumers will do it if there are no viable alternatives from trusted brands such as banks, credit unions and card issuers. If you work at a financial institution, and you still have development dollars available, move the iPhone app up your priority list.

Or partner with someone that already has an app and get your brand on that precious screen. PageOnce is actively looking for partners and has already announced three, none in the financial sector.

PageOnce homepage (5 Nov. 2008)

Notes:
1. Firethorn added a mobile banking app two weeks ago (post here) that has risen to fourth most popular, behind Bloomberg, Bank of America, and Check Please, a tip calculator (see previous coverage here).

2. For more info on the mobile area, see our Online Banking Report on Mobile Banking.

While making the rounds in the Finovate networking room last week, I saw an intriguing graphic on Yodlee's big-screen monitor (see inset). It turns out to be Qi (pronounced "key"), the robot mascot for Yodlee's latest aggregation client, Australia's ANZ Bank, which launched that day (press release). The new service is called MoneyManager (see screenshot below; note 1).

The cute little beast also appears in the bank's new iPhone promo on the ANZ website (here). The webpage features the app running in a full-size iPhone emulator. But that's not what you notice first. The bank uses a little programming trick to turn your curser into a GIANT robot hand (see screenshot below). It's a little disconcerting at first, but it does get your attention and proves you are dealing with a creative enterprise. I like it.

According to Rob Findley, blogging at The Bank Channel, MoneyManager can be used by any Australian and does NOT require an ANZ account relationship.

ANZ's iPhone webpage with giant robot hand curser (19 Oct 2008)

ANZ's MoneyManager webpage features a less intrusive view of Qi, the robot mascot (19 Oct. 2008)

Note:
1. For more info, see our Online Banking Report on Account Aggregation.

Apparently, Citibank has been testing a new investment advisory service this summer, myFi, targeting certain Citibank credit card customers. Its first online mention appeared in a frequent-flyer forum, FlyerTalk, May 31 (here) and in the personal finance forum, FatWallet, June 13 (here). The bank has been testing mileage premiums for opening a myFi account and/or increasing spending on a Citi card.

The service consists of a Web-based investment area which will include trading and account-aggregation services later this year (see note 1), combined with telephone and in-person help from non-commissioned Citi Smith Barney advisors. The NY Times's Your Money columnist Ron Lieber tested the human portion of the offering in a Long Island branch and reported on it in his column today.

myFi's director of financial advice is Jonathon Clements, a long-time Wall Street Journal personal finance writer who recently left the paper. If he can instill his pragmatic personal finance outlook to Citi's offering, it would help differentiate it from similar offerings. Andy Sieg is managing director of the service.

The initial creative approach is to use a "financial wellness" theme. Today, the website is bare bones (screenshot below), with a few PDF files available for download. It's clearly a work in progress. The bank should slap a "beta" tag in the upper-right corner so that it's not unfairly judged as a complete offering.

Notes:
1. For more information, see our Online Banking Report on Account Aggregation.

We first discussed the usability advantage of direct-to-the-desktop information delivery in the 1998 Online Banking Report, Creating the Amazon.com of Financial Services  (see note 1). We called it a "meter" instead of today's widget or gadget, but its essential function was to show balance levels on the user's PC without requiring a login each time.

Last week, Wesabe became the first company to implement that concept with its Mac Widget shown below (Wesabe link here). The widget displays the balances in the various accounts tracked through the company's personal finance platform:

Several other personal finance companies have previously launched widgets including ClearCheckbook which released a Google Gadget on March 14 (here) and  Mac Widget a few days later (here). Other financial widgets are offered by billQ, Buxfer and Mortgagebot (see previous coverage here and here).

However, Wesabe is the only one streaming real-time balance updates thanks to its automated downloading of account data from linked financial accounts (aka account aggregation). Without the automatic updates, a widget is more window dressing than functional tool.  

Therefore, we're giving Wesabe its second OBR Best of the Web this year in recognition of its new widget which once again raises the bar for financial information delivery (note 2), if only for Mac users. 

Notes:

1. We last covered desktop technologies in a 2002 Online Banking Report, Grabbing Desktop Mindshare (# 85).

2. Recent OBR Best of the Web winners are covered here. Five awards have been handed out this year: two for Wesabe, and one each for Jwaala, Buxfer and Obopay. In the past 10 years, 67 companies have won Online Banking Report's Best of the Web awards. Only five companies prior to Wesabe have won the award twice: Bank of America, Citibank, E*Trade, Everbank, and Wells Fargo.

Joining the increasingly crowded online personal finance space is Banzai, the brainchild of Morgan Vandagriff (LinkedIn) who envisioned the system while working for a wealth management-advisory firm, SEI Investments.

Vandagriff, a 2002 Wharton biz school graduate, is positioning his firm as a financial assistant, not just a financial automation tool. Rather than sit back and let users put their finances on autopilot, Banzai induces them to spend 5 minutes every day tracking and categorizing their spending. And unlike Web 2.0 companies hoping to scale to millions of users with a handful of employees, Banzai assigns a personal coach to each user and actively encourages users to make contact.

How it works
Banzai uses "jars" as the metaphor for budget categories. Users establish jars for every bill, spending category, and income item. Transactions are uploaded from previously downloaded bank and credit card statements using a proprietary uploader similar to Wesabe's. Entries can also be made manually.

Banzai then forces users to take money for every transaction from one of the pre-established jars. It believes that it's important for users to "touch" every transaction to see how it impacts their pre-established spending plan. If a jar is empty, say groceries, then users must take money from another jar to cover the transaction. It helps users see the tradeoffs in spending. It's not a zero-sum game. Users can have their "reserve" jar go negative, signifying debt spending.

Take the company tour here.

The company
The four-person company is headquartered in Provo, UT, coincidentally just 10 miles from their most similar competitor Mvelopes, a personal finance site established in 2002 and run by Finicity (formerly In2M). The company has been in development mode since early this year. It is planning an official launch (to public beta) on Nov. 12, but anyone can sign up now at its website.

The company also competes with newer players, Wesabe, Mint, Buxfer, Jwaala and others and the big packaged-software players, Intuit's Quicken and Microsoft Money (note 1). Like its most-similar competitor, Banzai's business model calls for modest monthly or semi-annual fees; in this case, $4.95/mo or $29.70 for six months. The $30 fee includes a copy of a 120-page book, The Banzai Way.

First impressions
Banzai has a great logo, user-friendly layout, vibrant color and easy-to-read copy. The company has developed a good product tour, YouTube video, and blog - all the usual trappings of a Web startup, circa 2007. And the founder sounds very customer focused. It's unfortunate that a video game occupies the primary URL <banzai.com>. The company's  <banzaiway.com> address along with the unusual spelling, will make it somewhat harder to find.

I like what Banzai is doing, but I wonder, as I always do, how the company will attract users. Few people have the discipline to spend any time, let alone 5 minutes a day, managing their finances, and most of those already use Quicken or Money. And the $5/mo fee puts Banzai at a disadvantage compared to the free sites. 

However, Mvelopes has survived at double that rate, and if customers can be convinced it works, one caramel macchiato per month is not much to pay to keep your financial house in order. In fact, a site is somewhat more trustworthy when its business model is obvious, an important benefit in online finance. Finally, putting a a face on the product with a personal coach on call may help differentiate Banzai from the free sites. 

Screenshot: Transaction sorting

Screenshot: Jar setup wizard 

Note:

1. See our recent research on personal finance in Online Banking Report #142/143 and #131/132.

It's dangerous to hype a startup while they are still in stealth mode. After all, given the average life expectancy of a Web-based startup, this blog post could outlive Mountain View, CA-based Mint.com (see note 2). 

But just knowing that the company snagged $5 million in VC money, which is huge in this space, means they will be interesting to watch, even if they don't catch on. And with that kind of money, Mint has a deeper bench and can be more aggressive than other newly minted personal finance startups such as Buxfer and Wesabe (see previous coverage here).  

Here's what we know so far:

1. $5 million in funding (confirmed by company Monday)
2. Planning a full-service personal finance manager with alerts (see posted elevator pitch below)
3. Adopted a short, real, and catchy name and had the resources to buy the primary .com address (it had been using mymint.com until very recently)
4. Appear to be hiring aggressively (see here)
5. Founder Aaron Patzer has been working on the company since late 2005
6. The company received money from ex-Google sales manager Aydin Senkut and first-round funding from First Round Capital. Other investors include current or former execs from Intuit, Charles Schwab, and Yahoo.
7. It's active blog now totals 50 articles with many lengthy how-to posts on personal finance and related interests  

Elevator pitch (posted at Mint.com):

Mint is building a free, simple, and secure personal finance web-app. Designed to be effortless, Mint consolidates your financial life in one place. Easily see how much you have, how much you owe, and where you money goes. Advanced alerting notifies you before you bounce a check or forget to pay a bill. Patent pending algorithms even show you personalized ways to save and make more money. If your finances could use organization without effort, or a big improvement without a lot of work, Mint is for you.

NetBanker translation: Mint will use account aggregation tools, much like Quicken, Yodlee, and more recently Buxfer and Wesabe, to load bank and credit card transactions into its web-based personal finance manager. The company will layer in meta-alerts, that will look across all accounts and notify you when balances are low, crooks are pinging your account, and so on.

So far, that's no different than Yodlee's current product in use at Bank of America and many others. But the company's name, as in "minting money," along with this key phrase in the above pitch (emphasis added) makes it clear that is will focus not just on cutting down your Starbuck's bill, but also on how to improve your personal top-line:

(will provide) personalized ways to save and make more money

If you want to keep closer tabs on Mint, you can take its online survey and request to be in the private beta. And you should grab the feed to the company blog. Finally, you can see from its job postings that it is serious about finding top talent to run the company. There are positions open for both VP Marketing and Senior Product Director among others (here).
-----

Notes:

1. *Sorry, for some reason, I needed to be the first to write that headline. From now on, I promise to steer clear of mint-related puns.  

2. This statement is not meant as a criticism of the company, which looks very promising. I have not seen their product yet, nor do I want to since I am currently writing a report on this space and would not want to inadvertently share any of their secrets. The report, Personal Finance & Social Networks, will be posted by the end of the month at Online Banking Report.  

The latest entry in the mobile banking space is Geezeo, who unveiled an account aggregation/mobile banking mashup Sunday called Geezeo Mobile. Take a few minutes and watch their screencast (here), which does a good job explaining how it works. Geezeo recently changed its name from DebtFolio and still operates a credit card selector at debtfolio.com. The company also offers a student loan consolidation service, called Geezeo Student.  

 Here's how it Geezeo Mobile works:

1. At the Geezeo website, list the usernames/passwords and challenge answers if necessary, to any credit card or bank account you wish to track (see screenshot below)
2. Register your mobile phone with Geezeo
3. Send a text message to Geezeo, and it will return a text message listing your current balances at all the tracked accounts (see inset)

The account aggregation is powered by CashEdge, which has considerable credibility in the banking industry, but is an unknown with consumers.

Analysis
As much as I personally love this service, it's probably ahead of its time, at least as a standalone product. It's a combination of two little-used services, text message banking + account aggregation, offered by an unknown company. Furthermore, massive security and privacy concerns are barely addressed, and it doesn't work in IE6. But it is a beta offering in its first week, so those things will be fixed. And the mobile service is just a piece of a larger personal finance offering according to the email sent to Geezeo registrants May 13:

Geezeo Mobile and Geezeo Student are part of a much larger online personal finance manager that's soon to be released. Geezeo will feature solutions to help you manage your money, keep track of where your money goes, provide suggestions for improvement, help you meet your financial goals and connect with others.

We have yet to connect with the founders, but according to MobileCrunch, the business model is contextual advertising. If that's true, Geezeo will need to appeal to the youth market, where bank account balances are lower, security concerns are fewer, and texting is the norm. But a better business model might be licensing the tool to banks and credit unions. In one fell swoop, the Geezeo app would give a financial institution a unique mobile banking offering, an entry into account aggregation, and an appealing platform for younger customers.

Bank of America is the first major U.S. bank to provide full online personal financial management (PFM) within its online banking service. It's an important development and one we predicted in our detailed look at online personal finance (Online Banking Report #131/132, published in September). So, in conjunction with our sister publication, we are awarding it the fifth and final OBR Best of the Web for 2006 (click here for other recent winners).

The bank uses its Yodlee-powered My Portfolio account-aggregation service to deliver the PFM functions. BofA is the first financial institution to use Yodlee's new MoneyCenter module since its launch six months ago (see our coverage here).

The bank has chosen to offer the full MoneyCenter suite with Net Worth Summary, Investment Detail, Transactions, Rewards, Email, and Search on the main page (see screenshot below).

My Portfolio also includes basic personal finance functionality, including budgeting, categorizing and a nice array of preformatted reports including:

• Cash Flow Analysis
• Expense Analysis
• Budget vs. Actual
• Credit Card Utilization
• Get Transaction Reports
• Set Budget Goals

See Online Banking Report 131/132 for more details on Yodlee's MoneyCenter.

Analysis
Overall, we believe the new PFM functions are a great addition to the bank's online banking program. However, it still feels a bit "bolted on" to the core online banking service. For instance, My Portfolio does not yet warrant a place on the primary top navigation bar. Instead, users must click on a link in the middle of the main Account Overview screen.

Once the Yodlee-powered service has loaded (which took 10 to 15 seconds in our tests at broadband speeds), it's relatively well integrated. A second My Portfolio navigation bar is loaded under the main online banking navigation. Finally, a third row displays the options available for each function in row two (see screenshot below).

The pages load relatively fast as long as you stay within the My Portfolio area. However, moving back and forth between BofA-served online banking functions and Yodlee-served My Portfolio functions is a bit clunky with the 15-second delay. But the overall experience will be fine once My Portfolio is incorporated into primary navigation.   

The main My Portfolio page is automatically pre-filled with applicable BofA accounts; however, in my case, I was unable to update older credit card information. When clicking Update All Accounts in the upper right, error messages indicated that my Bank of America credit cards could not be updated (see screenshot below).

Today's New York Times (p. A8, national edition) has a half-page, red-and-blue ad for Bank of America dominated by the headline:

If you have a computer, you have a bank.

The visual is a generic laptop with a generic browser displaying Bank of America's homepage. Text copy and sub-heads emphasized that 20 million are now using BofA online banking.

The ad-copy emphasized three benefits:

• Instant and free funds-transfer to anyone with a BofA account
• My Portfolio, the bank's account aggregation service
• Security features

Call to action: visit www.bankofamerica.com/yourownbank (see screenshot below).

Screenshot: Bank of America's landing page
(click to enlarge)

Analysis
There are several interesting things about this ad.

1. No offer. The bank, which recently tested the richest new account bonus we'd ever seen costing it as much as $300 per new checking account, offers NOTHING. And this is an ad on black Friday, where stores typically offer monster loss-leaders to lure customers into their stores early on the biggest shopping day of the year.
2. Account aggregation featured: I can't recall the last time a major bank featured account aggregation as one of the three biggest benefits of banking online. Could this mean that BofA is going to begin emphasizing the feature more in its national advertising? If so, it could reinvigorate the service.
3. Customization deja vu : The "yourownbank" landing page is reminiscent of the bank's late-90s website-customization engine called Build Your Own Bank (see 1999 screenshot below). Given the landing page URL, we thought BofA might be pitching customization again, but it's really just a play off the ad's headline, that your computer is now your bank.

Taken together, it's an interesting effort, although it looks more like corporate branding rather than an effort that will generate enough accounts to justify the five-figure tab to the NY Times.

Screenshot: BofA's Build Your Own Bank from 1999
(click to enlarge)

Gift cards are hot, accounting for nearly 5% of holiday spending last year. How can banks leverage this interest?

There are two broad categories to consider:

1. Prepaid MasterCard/Visa
2. Single-merchant gift cards

Most discussions in the industry are centered around prepaid MasterCard/Visas, but we think there is a significant opportunity in the second category: merchant cards. Here are ways for financial institutions to jump onto the gift-card bandwagon:

Easy (requires little investment, primarily customer education):

• Purchase education: Provide consumer education on the pros and cons of merchant gift-card purchases and urge customers to charge the cards to your credit or debit cards. Emphasize built-in protections such as fraud guarantees, tracking, and so on.
• Purchase incentives: If your systems allow it, add an incentive such as a 1% rebate, sweepstakes entry, or purchase protection.
• Directory: Publish a list of stores that are selling gift cards and/or create an online directory where cards can be purchased online.

Harder (requires programming, employee training, and more)

• Integrate gift-card account-access into online banking: Using account-aggregation technology, such as that offered by Yodlee, CashEdge and others, link to the merchant's gift-card account-management area such as <starbucks.com/card>. The integrated view would provide a secure and easy way for customers to manage their gift card accounts.
• Offer automated reloading via your debit/credit card: When gift-card account balances get low, offer to automatically reload from your credit/debit card. Reloading could be manual or automated, e.g., "Add $25 to my Starbucks card whenever it dips below $5."
• Send low-balance alerts when gift-card accounts dip below a set amount.
• Resell merchant cards via shopping cart such as The Card Cafe <cardcafe.com> (see screenshot below)

Hardest (requires customer training, sales, and website programming)

• Issue gift cards on behalf of merchants
• Sponsor your own gift card network with a stored-value card that can be used at multiple sources. For example, the Northampton Chamber of Commerce <northamptonchamber.com> markets a gift card that can be used at 50 local merchants (see inset). The card, which can be purchased, reloaded, and tracked online is powered by Swipe It Technology <swipeit.com> which offers turnkey gift and loyalty packages beginning at $299, plus a $12 monthly fee and $0.23 transaction charge. Other vendors include eCardSystems <ecardsystems.com>, Valutec <valutecardsolutions.com> and Value Gift Card <valuegiftcard.com>.

The business case
There is a surprisingly good business case for integrating gift cards into your online banking service with not one but three potential revenue streams:

1. Interchange from loading/reloading: Provided customers load the card via debit/credit, you can earn 1.5%+ on the load, for a $50 card, that's $0.75 per load
2. NSF/OD income: Every debit card purchase increases the chance of an NSF/OD item; assuming one of every 300 cards loaded results in an NSF/OD fee, the profit per load is $0.10 ($30/300).
3. Merchant commissions: Selling cards at your website could earn $5 or more per card sold.

The program also brings in the usual intangibles: new customer accounts, positive PR, branding benefits, retention and so on.

--JB

As the rest of the country watched fireworks, Yodlee <yodlee.com> which snagged two mentions in the Wall Street Journal during the last week of June (NB June 28), launched its biggest product improvement since the company went live with account aggregation in 2000 (see OBR 63, "Does Yodlee Make Quicken Obsolete?").

Yodlee's new MoneyCenter is a full-featured PFM operating on Yodlee's server. It allows banks to offer the key budgeting and reporting functions much loved by Quicken and Money users. Throw in real-time bill pay at card-accepting merchants, a suite of triggered alerts, a dose of account aggregation, and lifetime statement archives (the feature that inspired the Saturday June 24 WSJ column entitled, "A financial-data vault online) and you have a feature-set that deserves serious consideration in your 2007/2008 plans.

It's an important online banking development, and we'll take an in-depth look at it in the next issue of Online Banking Report (available in early August).

--JB

In the musical world, a mashup combines music from one song with lyrics from another, often mixing two very different genres. One of the more famous examples is the Grey Album by DJ Danger Mouse that put words from Jay-Z's Black Album on top of chords from The Beatles White Album.

Programmers have their own definition: combining content seamlessly from two different sources. For example, Kayak <kayak.com> is a powerful travel site that pulls price quotes out of hundreds of websites and displays them in tabular format and locates them visually on a Google Map (click on the inset to see a Las Vegas hotel search). 

In online finance, we have seen mashups from Yodlee, uMonitor, and others that marry account information from a number of sources to create an aggregated view. But the most successful financial mashup yet is PayPal, which put an email/Web interface in front of two established electronic payment mechanisms, ACH and MasterCard/Visa.

Who will launch the next successful mashup? There is quite a bit of activity in the payments space, many trying to mimic PayPal's success using a cell phone interface. For example Obopay and TextPayMe (NetBanker, April 26), and BillMyCell from Black Lab Mobile <blacklabmobile.com>.

Another company, BillMonk <billmonk.com> has created a Web-based system of sharing expenses designed for the work-hard, play-hard urban singles set. Users can send expenses to be shared to their account at BillMonk using text messages, and then log in later to finalize the payment split and let everyone know who owes what (see example right). The company doesn't yet facilitate the actual payment, but they are looking for a partner to power the financial transactions.

We're still not convinced the market for "splitting expenses among friends" is big enough to sustain one, let alone four service providers (see NetBanker, April 26). But we ARE sure the enterprising founders of BillMonk will find a niche somewhere in the payments space.

BillMonk has added more new features to its bill-sharing platform in the past four months than most companies implement in four years. It reminds us of the pace at another small payments company that we were watching closely six years ago as they morphed from a closed PDA-to-PDA payment system to the primary platform for eBay buyers (see Online Banking Report #54 for a view of PayPal in the early days).

To get an idea of the pace at BillMonk, read a few entries from their blog <billmonk.wordpress.com>. Then realize that this is not the work of a vast team of programmers, PR agents, and marketers. It's just two guys in a Seattle apartment who are also answering customer queries, paying the bills, building the website, taking out the trash, and talking to reporters (see the profile in the Seattle Times, April 24).

Action Items
My advice for financial institutions:

1. Hire these guys
2. If that's not practical, then behave like them; constantly improving your website and to the extent you control it, your online banking and bill pay system

I will bring you an update on the company as soon as I can corner one or both of the founders in a coffee shop.

--JB

In a blow to the future of account aggregation, Wells Fargo, the second largest online bank in the United States, is discontinuing its OneLook account aggregation service which ran on software from Teknowledge (click on the email message from Wells Fargo to customers, left). The Wells Fargo in-house account aggregation service, installed in November 2002, was the first to be integrated into its online banking services with its own tab.

For more information on the subject and the Wells Fargo service in particular, read Online Banking Report, #96/97 Account Aggregation 3.0.

--JB

If a picture is worth a thousand words, what’s a Flash demo worth? Even though we go to great lengths to describe innovative new services, it doesn’t really sink in until you’ve personally sampled it. To loosen the cobwebs, we recommend a hands-on session running an innovative online service through its paces. If you need ideas, see Table 2, below. These are the innovative services we’ve selected each of the past six years. You can find more information about each by consulting the appropriate OBR back issue.

Table 2

OBR Thinking Exercises

1999 through 2004

Source: Online Banking Report, 9/04

2004 Exercise:
Integrated Account Aggregation

Direct banking pioneer Everbank (Jacksonville, FL; $2.7 billion) has raised the bar again with its new online banking platform (screenshot left). There is
much to be learned from its implementation, the culmination of three years of effort. We’ll be reporting on it in depth in an upcoming report. But don’t wait for us to tell you about it. Get out a pad of paper, study its website, and take notes. If you really want to see it in action, you’ll need $1500 to open an account, and you’ll need to wait a week for your paperwork to be processed. Either way, pay special attention to the degree of integration occurring with the account aggregation technology.

Time Needed:

-          60 to 90 minutes

Material Needed:

-          paper for note taking

-          (optional) $1500 to fund an initial deposit

-          (optional) username/password for at least one outside account to aggregate at Everbank

Instructions:

1.       Visit the bank  www.everbank.com

2.       Navigate to online banking demo and follow the instructions. Optional: Open an actual account ($1500 needed). Note how Everbank’s account opening process works compared to yours; jot down ideas for improvement.

3.       Observe how the bank displays its online banking options. Pay special attention to how account aggregation plays a role throughout the service.

4.       Finally, look closely at the boxed content on the right. Note the features and functionality and think about what you would put in a similar box within your online banking application.

Simple money-movement between accounts at different financial institutions has been an elusive goal for consumers. Their alternatives have been primarily limited to checks (a slow process) or expensive wire transfers. ACH electronic transfers, although a common procedure for corporate accounts, are not readily available for consumer use and are not widely promoted for this application.

Banks and their respective card associations are the dominant and most recognized brands for guaranteed, rapid money movement worldwide. Banks need to recognize that they must anticipate and capitalize on emerging technologies and service offerings to extend this dominant position to new applications for money movement in new channels such as the Internet.

Financial account aggregation and Me2Me funds transfer is potentially one such offering.  Today, account aggregation enables customers to access a consolidated view of their online financial accounts at different financial institutions – as well as other content such as email accounts and reward program balances.  Although it first appeared just three years ago, account aggregation has captured the attention of investors and their service providers, including Internet banking solutions providers, traditional financial institutions as well as non-financial companies.

There is strong evidence to suggest that account aggregation promises to alter the funds transfer playing field. Driven by user demand, aggregation is swiftly moving beyond current view-only functionality and has set the stage for promoting interbank money movement. A recent Dove Consulting survey of online households reported that 89% said it was very or somewhat important for an aggregator to offer this service.

As consumers come to expect their financial institution to support interbank Me2Me funds transfer through the Internet, they will also demand this functionality at physical locations as well, such as ATMs, agent networks, banks, nonbanks and the like. Another recent study, sponsored by NYCE, found that almost 40% of consumers are interested in performing interbank funds transfers at ATMs.

Simple money-movement between a household’s asset accounts will lead to significant new revenue opportunities that some sources estimate at more than $2 billion annually. Banks are well positioned to ride the wave of interbank Me2Me funds transfers because they are currently the only player possessing the infrastructure to fill the wide-open gap within existing money movement options (see above chart).

Boston-to-New York Document Delivery Options

Source: FedEx, 4/22/02    *Dropped off and shipped to business address, does not include 1% fuel surcharge    **Not guaranteed

Our research indicates that account aggregation is going to highlight for consumers and small businesses the “timing” and “price” gap that exists in the market today between paper checks, and wire transfers. The FedEx business proposition, which first came to market in the mid-1970s, was designed to fill a similar gap. Today their service offering has grown further in that space, with a number of different price/service bundles (see table above).

Banks are uniquely positioned to fill this pricing and settlement gap and seize the new $2+ billion market opportunity from providing interbank “Me2Me” funds-transfer capabilities. This service has the potential not only to significantly leverage their payment networks, but also to carry them into new markets by being the “transfer agent of choice” for account aggregation services and ATM networks. 

However, there is a very narrow window of opportunity to successfully position a bank’s product and service suite to capitalize on this opportunity.  In addition to an expeditious marketing and sales effort, care will need to be taken with the final processing approach and promotional packaging selected. These factors will dramatically impact the profit equation, settlement risk, and the ultimate motivation for consumers to conduct Me2Me funds transfer through Internet interfaces, agents, remarketers and other nodes in this new and evolving network.

Yahoo’s year-old interbank transfer service, powered by CashEdge, continues to be one of the most sophisticated available online. It now offers two payment options: “Standard” for transferring up to $2,000 per week is free, while “Jumbo” for up to $10,000, is priced at $5.95. Both move through the ACH system with a 2 to 3 day time lag.

Understanding these factors and their respective benefits is a critical aspect of adding incremental and profitable transaction volume to the Retail and Wholesale banking service suite. Done correctly, banks will quickly dominate this segment of money transfer, and begin repositioning their online debit brands in an umbrella fashion in a way that is equally as credible with upscale products and services as it is with their traditional paper-based payment products.           

Richard K. Crone is VP at Boston-based strategy firm Dove Consulting, where he helps clients create market-driven growth strategies. Contact him in his San Carlos, CA office at (650) 592-4006 or rcrone@consultdove.com.

Bank of Dreams

Despite our less-than-rosy forecast for short-term adoption , we think that long-term –  probably within the next 36 to 48 months – account aggregation will become a standard online banking feature.

Banks desiring a state-of-the-art Web image (such as Net-only banks) and traditional banks looking to grow via the Net, will want to add account aggregation no later than year-end 2001. But others can defer the project until 2002 or later, leaving it to the pioneers to educate the market. No matter which camp you are in, you need to understand and personally use aggregation services now so that when the time is right you are prepared to act quickly.

Table 1

Account Aggregation Timeline

Source: Online Banking Report, 8/00

To ensure that you are not simply building an account aggravation service, consider the user benefits. We’re not certain consumers are ready to see account information from multiple providers in one spot. Research shows that consumers prefer to have financial accounts diversified across providers. A reporter recently confided to us that he would never have his loans and deposits at the same bank because he fears that the bank would dip into his deposit account to repay the loans if a problem arose.

So what are the real benefits of account aggregation for the mass market? It’s a good question, and one that we haven’t quite put our finger on just yet. Table 2 shoots down several widely touted aggregation benefits.

Table 2

The Shaky Value Proposition

Source: Online Banking Report, 8/00                                                         ð

The bottom line – simply aggregating a bunch of financial data – provides little real benefit to the user. If you are thinking about simply dropping a link on your site to Yodlee, forget it. Do yourself and your customers a favor and add the weather forecast instead. It’s much easier to use and provides more benefits for the vast majority of users.  

Yahoo’s account aggregation is tightly integrated with its popular Yahoo! Finance site (see Accounts in the center of the page).

While we aren’t thrilled with the plain vanilla version, value-added aggregation integrated with your existing services is another matter. Once users receive obvious tangible benefits such as money savings, peace of mind, and/or time savings, we think it will catch on big time.

We believe the key to making it work is how tightly it’s integrated into your existing offering. Users should be able to add an outside account just as easily as adding a new account from your bank. Notice how Yahoo has simply posted an “add a bank” link on top of its popular Finance section . It makes it sound easy to set up and users don’t have to go through a lengthy purchase decision to give it a try.

Another important factor is seamless funds transfers across all accounts, not just internal ones. It should be just as easy to transfer funds from a Citibank account to your checking account (and vice versa), as it is to move funds from your checking to your savings. Finally, the key ingredient for profitability is a tightly bundled credit lines so users can easily transfer loan balances from competing companies to yours. You’ll also want enough flexibility in the system to offer price incentives for balance transfers.

Table 3

Building Value into Account Aggregation

Minimum requirements for account aggregation

• Bank branding: a “Powered by YourVendor” logo is acceptable, but your brand must dominate or users won’t trust the service
• Plain language security and privacy statements
• Integration behind your online banking password
• Integrated line of credit: a credit line that can be tapped to take care of cash shortfalls in any aggregated account*

Advanced personalization and automation features

• Interbank funds transfer*
• Quicken-like budget and categorization of transactions
• Report writing across all accounts
• Email alerts across all accounts
• Fraud and privacy protection features/alerts
• Bill payment integration and scheduling
• Loan payment integration
• Financial planning features
• Personalized financial “recommendations”
• Small business modules
• Meta-customer service: help users resolve problems even at other providers*
• Downloadable in QIF, ASCII
• Deal finder: Notifies users of savings opportunities quantified with the user’s actual balances; for example “You are carrying a $3,000 balance at Citibank at a 17.9% APR. To save $38.12 per month, we recommend transferring the balance to your MBNA card where you have a 3.9% introductory rate. Press TRANSFER to move the money now.”

Automation Features

• Automated interbank sweep
• Automated bill payment
• Automated asset allocation via mutual funds and/or equity baskets

Optional Features

• Monthly/quarterly/annual paper statements covering all aggregated accounts
• Tax preparation
• Scan-and-pay bill pay options

Source: Online Banking Report, 8/00

*good cross-sales tool

Naming

One problem with pioneering a new feature is educating the market on its benefits. It took more than a decade to educate consumers on the benefits and safety of microwave ovens. Account aggregation has many of the same educational issues, without the obvious benefit of a steaming plate of lasagna. Users want to know: What is it? What does it do for me? Is it safe?

To help the education process, the service needs a better name than statement/account aggregation or screen scraping. One of the best names we’ve seen is Virtual View from VirtualBank.com, but that works primarily with their unique bank branding. We’re not sure what to call it: uni-statement, one-click statement, build-your-own-statement, Quicken (oops, that’s taken)? So we pose the question to readers. Do you have a great idea on what to call this thing? If so enter send it our way. The winning entrant will receive a DVD player or 13” TV/VCR. Send your ideas to namethething@onlinebankingreport.com  (in the case of a tie, the first entry wins).

Most of the talk about account aggregation is feature based. The program does X, Y, and Z. But users need to know what it will do for them right now. Table 7 (right) provides ideas on how to position aggregation as a consumer BENEFIT rather than a product or technology FEATURE.

On Aug. 30, Yahoo launched an account aggregation service powered by VerticalOne.
The same day, Wells Fargo announced, it too, had signed with VerticalOne to build an account aggregation service to be available by year-end.

Table 4

Product Positioning

*The service could have its own URL, such as www.MyEverbanker.com , or it could be used with the regular URL, such as mybanker.everbank.com, or both

So far, account aggregation has been positioned as a free service at the few companies who’ve launched it. While that fits the pre-April Internet model of providing free services to attract eyeballs, we believe that strategy is flawed.

Here’s a service that can and should demand monthly or annual fees. We think users will have more trust in the service if they are required to pay a nominal fee (see Table 5). If it’s free, users will suspect that service quality is shoddy, or that account data will be sold to the highest bidder. * It’s like surgery; do you want the lowest cost provider handling your surgery? No, you want the best. The same goes with safeguarding your financial data. OK, so account aggregation isn’t brain surgery, but you get the point.

Think like Federal Express. You can be paid well for taking care of the customer and providing comprehensive tracking tools. Also, by charging a fee, users will be motivated to follow the 16 steps to become an active user While fees will discourage trial, that can be mitigated with special offers.                   

*We like how Stacie Zoe Berg, writing in TheStreet.com, put it: “

If a complete stranger approached you on the street and offered to take care of all of your household chores -- free of charge -- if you would just hand over your house keys, would you?  www.thestreet.com/funds/investing/987002.html

Table 5

Account aggregation Pricing

It’s pretty clear that most banks will outsource the core technology. Even the largest U.S. banks such as Citibank (Yodlee, see screenshot right), Chase (Yodlee), and Wells Fargo (VerticalOne) have signed on with vendors. Building a “scraping engine” and keeping it current against an ever-changing database of 50,000 content providers is something best left to specialists who can share the costs among a large pool of clients. Table 9 contains a list of the current suppliers of account aggregation technology. Jeff Runnfeldt, of Dain Rauscher Wessels (650-234-4163, jrunnfeldt@dainrauscher.com   ) has been researching this space and gives high marks to Yodlee and its proprietary scraping technology that uses fuzzy logic to capture a data field even if it’s changed positions since the last visit. We will look at the vendors in more detail in a future issue.

Even if you are not planning on launching your own account aggregation function in 2001, there are things you can do now to prepare for its growing popularity:

1.       Beef up security procedures on monetary transactions: The simplest way for banks to thwart hackers and frustrate screen scrapers is to require periodic password changes. But this is tough on users and a burden for customer service. A better approach is to require an additional “transaction password” whenever users want to move money out of an account. Customers would be encouraged to NEVER give their transaction password to anyone or any Web site.

2.       Educate consumers on how to avoid fraudulent virtual banking services and Web site spoofs: We recommend a low-key approach enlisting the support of the customer, but not threatening to leave them high and dry if there is a problem. For example: “Please be aware that we cannot guarantee the privacy of your info if you give your password to a third party.”

3.       Review your Web site design in light of the fact that users arriving from aggregators may already be logged in and will miss any marketing or navigation messages displayed on earlier pages.

4.       Work with aggregators to ensure that customer data is safe; forge partnerships for favorable placement on third-party sites.

5.       Lobby for oversight of statement aggregators and e-payment companies (license requirements, bonding, SAS 70 audits, etc.).

6.       Train your e-reps on EXACTLY what to tell customers about specific aggregator sites.

7.       Flag accounts being scraped and send periodic “warnings” to customers notifying them that a third party is downloading their account data.

8.       Develop fraud detection algorithms to watch for unusual withdrawal activity; and potentially seek confirmation from the customer before processing any large or suspicious withdrawals.

9.       Send an email to the user each time their account is accessed.

10.    Monitor your log files to see how much activity is coming from aggregators.

11.    Most importantly, plan to offer account aggregation yourself, so that the activity takes place on your turf, not a Web site in Azerbaijan.

It took awhile but Citicorp finally came out with a world-class Web site, www.myciti.com , which is built around Yodlee’s account aggregation engine. www.Myciti.com  is more than just account aggregation however. The site also does an excellent job selling financial products using a benefits-oriented approach. For example, users can enter their age and income for a customized list of appropriate products.

Table 6

Account aggregation Suppliers

Table 7

Screen Scraping Scorecard: Who’s Playing with Whom

Source: company and industry reports, 8/00; TBA = to be announced

Sizing the Market

Definitions

Account Aggregation (aka statement aggregation): Downloading statement data from multiple providers and arranging it on a single Web page in an easy-to-understand format allowing users to quickly get a sense of their overall financial situation, and take action to optimize returns and/or minimize expense

Account Aggravation (aka data dump): Downloading statement data from multiple providers and dumping it on a single Web page and letting users figure out what to do with it all

Table 1

Prior Articles on Account Aggregation

We’ve been a long-time advocate of account aggregation, first discussing it in general in early 1998 and using it as a core feature in our Building the Amazon.com of Financial Services report published in mid-1998 (see Table 1 for back issue references). But, before we go any further, let’s step back for a moment and think about what it takes to become an active user of an account aggregation services. Table 1 is a typical 16-step decision and activation process for new users.

Table 2

Steps to Becoming an Active Aggregation User

1.        Have secure and private Internet access

2.        Be interested in “account aggregation” (whatever that is)

3.        Figure out who offers it

4.        Determine whether it fits your needs

5.        Trust the provider to keep data private

6.        Trust the provider to keep data secure

7.        Trust the provider to offer reliable technology

8.        Trust the provider’s customer service staff to resolve problems in a timely fashion

9.        Feel confident the service provider will be around for the long haul so the setup time is not wasted

10.     If transactions such as interbank funds transfer are provided, users must trust service quality

11.     Trust the provider not to peek at the data, or allow others to do so, for self-serving reasons

12.     If free, decide if the risk is worth the benefit; i.e. if there is no fee, users know there is some catch, either poor service quality, lack of privacy, intrusive advertising, etc.

13.     Go through the initial sign-up process

14.     Enable multiple accounts to be aggregated

15.     Go to the individual service providers and set up Web account access if it’s not already been established

16.     Remember to use it

Source: Online Banking Report, 8/00

At each step of the 16-step process, a certain number of prospective users drop out. Many will come back later and resume the decision process. But in this example we are only estimating first year adoption.

Multiple these probabilities together:

0.4  x  0.2  x  0.5  x  0.5  x  0.33  x  0.5 = 0.3% usage

or about only 1 out of every 300 HHs at your bank

A 0.3% penetration would yield 300,000 U.S. households if every bank offered it. But since only a handful of major banks will offer the service by year-end, actual usage will be approximately 125,000 to 150,000 this year*.

*We are forecasting active users; the signup numbers released by early adopter financial institutions will be far higher.

Account Aggregation 2.0

It’s been one year since we first profiled financial account aggregation pioneer VerticalOne  . Account aggregation, aka statement aggregation, which we named the number one milestone of 1999, has generated an unusual amount of controversy during its first year, especially given how few customers actually use it (see Table 1 below).

If you are thinking about adding the service within the next 12 months, first ask yourself these questions. Will account aggregation:

1.       Drive new business?

2.       Cement our relationship with users?

3.       Increase profitable cross sales to existing users?

4.       Improve service quality and/or reduce service costs?

We think that for 2000 and 2001 most banks will answer no to all four questions. Does that mean you shouldn’t push forward with an aggregation service? Not necessarily. Account aggregation will be a critical online banking feature in the future. Yahoo’s launch of account aggregation on Aug. 30 certainly boosts awareness of the feature. But with a forecast of only 600,000 users prior to 2002 (3% of online banking HHs), it’s a question of priorities. Before you add a relatively unknown service such as account aggregation, make sure you offer the features with proven customer demand, such as email statements, email alerts, interbank funds transfer, fraud protection, quick online loan decisions, and so on

households using account aggregation services

Source: OBR estimates plus or minus 50%, 8/00; Celent Communications www.celent.com , 3/20/00 & 8/1/00, Celent will be updating their forecast in a new report published by 9/30/00, includes those that have used or signed on in last 30 days

¹Total online banking HH estimates from; ²VerticalOne claims 250,000 aggregation customers but we believe a large portion will remain inactive; ³In April, Piper Jaffray estimated there would be more than 25 million users in 2003.

Many of the ideas in this issue require executive approval, capital budgeting, I/S negotiations, and so on. If you are looking for ways to boost traffic in 2000, within your existing budgets, here are some low-cost ideas we’ve dubbed “50/50 projects,” ones that can be completed within 50 days for less than $50,000 and usually without any extensive internal systems work.

Source: Online Banking Report, 6/00

Statement aggregation, aka screen scraping, has become a big issue. Considering that a bank you can mine up-to-the-minute customer data from your competitors, it’s no surprise the first law suit was filed just a few months after S1’s VerticalOne unit pioneered the practice But, with banks jumping on board, Fleet (Yodlee), First Tech CU (Corillian), Hibernia (Corillian), and Virtual Bank it’s only a matter of time before statement aggregation is a common Net-banking feature.

For more than two years we’ve forecasted an upsurge in truly virtual banking services, products that don’t require a bank charter, just HTML and an entry point to the ACH system (see Creating the Amazon.com of Financial Services, OBR 38/39). After a slow start, they began arriving on the scene in mid-1999, accounting for six of our top 10 developments of 1999 But there have been a few bumps on the road. January saw two of the pioneers bloodied, but they both recovered well.

1. First Union sued PayTrust for screen scraping customer data (with user permission). It’s probably not a coincidence that PayTrust is competing with First Union and Spectrum in the bill payment space.

2. X.com was vilified by John Markoff in the New York Times for “permitting customers for almost a month to transfer funds from any other account in the nation’s banking system”. We were surprised how little play the story got. We expected the first confirmed fraudulent activity at a Net bank to be blasted across every paper in the country. Perhaps X.com benefited from being a newcomer. If it had been Citibank, the repercussions would have been more severe. Also, Bill Harris, media-savvy X.com CEO, did a good job putting the situation into perspective, believably saying it wasn’t so much a security problem, but rather an example of where the company’s desire to provide an easy-to-use product was exploited by a few small-time crooks.

Who is Liable?

The $64 billion dollar question: Who pays if a screen-scraped bank account is plundered?

a.) the bank

b.) the third-party pulling the data

c.) the end-user

d.) it depends

We think the only acceptable answer is, (a.) the bank. No other response makes business sense. Even if a third party was negligent, how are you going to prove it? Since most users use the same codes at multiple sites, a compromised password could have been lifted from dozens of places. Banks must step up and protect their customers from monetary loss. Period. Later, the bank can go after the third party to recoup its losses. But all that should be transparent to users.

You should take aggressive steps to educate users about the dangers of handing over the keys to their accounts, but also make it clear that you are on their side should an abuse occur. For generations, customers have looked to banks to safeguard their assets. Whether it’s gold bullion in the vault or bits on your network, you have the responsibility to thwart cybercrooks just as you do the Jesse James variety.

OnePage, a statement aggregation service in formation, was founded by the team that started BillPoint, the person-to-person payments company sold to eBay in 1999.

First Union’s Warning on Screen Scraping

First Union posts a warning telling customers not to share access codes with third-party Web sites.

First Union has posted the following message on its Web site, accessible via a link from the login page (above). The non-threatening message is a good first step in educating customers about the very real danger of providing account access codes to fraudulent third parties (our italics):

First Union offers Online Banking, Brokerage and Bill Pay services to our customers. These services allow you to access your deposit and brokerage accounts through an authentication process which uses personal access codes and passwords such as Customer Access Numbers (CANs), PINs, and Codewords. We employ a number of measures, as described in our Security Statement, to provide these services in a secure manner. These measures allow us to properly authenticate your identity when you access our services and protect your information as it traverses the Internet between your PC and First Union.

Our security measures must rely on these access codes remaining confidential. Please do not share these codes or other personal identifiers with others. Certain third party providers such as bill pay and bill presentment sites, financial aggregator sites, brokerage sites or other e-commerce sites may offer to provide services to you by accessing your accounts through our site. We cannot guarantee the security of your account when you allow third parties to access your accounts.

Furthermore, the bank’s account agreement requires users to keep access codes confidential.

Use of these Access Codes is the agreed security procedure to access the Services. You agree to keep these numbers and codes confidential to prevent unauthorized access to your accounts and to prevent unauthorized use of the Services.

What to Do Now

Be glad that First Union (Charlotte, NC; $253 billion ) stepped up to be the bad guy by suing PayTrust. It may become an important precedent in establishing business rules for ecommerce. EBay is embroiled in a similar suit against auction aggregators such as AuctionWatch, a partner of X.com. These aggregators mine eBay listings and present them on their sites aggregated with similar listings from 300+ auction sites. eBay has been trying to prevent this practice with technical and legal roadblocks, a move that triggered counter-suits and Justice Dept. scrutiny into whether eBay’s efforts violate anti-trust laws.

We don’t know how the courts will rule on eBay or First Union’s cases if they ever make it to trial. But we advise against basing your business plans on a swift resolution in favor of the content originators. Instead, control your own destiny as follows:

1. HIGH PRIORITY — Beef-up security procedures on monetary transactions: The simplest way for banks to thwart hackers and screen scrapers is to require periodic password changes, an approach used by NextCard. But this is tough on users and a burden for customer service. A better approach is to require an additional “transaction password” whenever users want to move money out of an account. Customers would agree to NEVER give their transaction password to anyone or any Web site.

2. Educate consumers on how to avoid fraudulent virtual banking services and Web site spoofs: We recommend a low-key approach enlisting the support of the customer, but not threatening to leave them high and dry if there is a problem. For example, “please be aware that we cannot guarantee the privacy of your info if you give your password to a third party.”

3. Work with aggregators to ensure that customer data is safe; forge partnerships for favorable placement on third-party sites.

4. Lobby for oversight of statement aggregators and e-payment companies (license requirements, bonding, SAS 70 audits, etc.).

5. Train your e-reps on EXACTLY what to tell customers about specific aggregator sites.

6. Flag accounts being scraped and send periodic notices to the customer that their data is being grabbed by xyz.com; develop fraud detection algorithms for these accounts to watch for any unusual withdrawal activity; and potentially seek confirmation from the customer before processing any large or unusual withdrawals.

7. Send an email to the user each time their account is accessed.

8. Monitor your log files to see how much activity is coming from aggregators.

9. Most importantly, offer statement aggregation yourself, so that the activity takes place on your turf, not a Web site in Azerbaijan.

While other statement aggregators pitch their services as one-safe-place to view email, bills, travel accounts, and so on; eBalance¹ appears to be aimed squarely at banks. Its tag line is, “the best way to manage money” and the home page touts “automatic account balancing and consolidation.” Finally, its privacy statement discusses optional BILL PAYMENT and CREDIT BUREAU ordering.

Statement aggregation is inevitable. Don’t waste energy and resources fighting it. Use it as catalyst to improve the services at your own Web site. Your customers want to bank with you online, but you must offer a complete package. And we think statement aggregation will soon be a must-have Net banking feature.

¹eBalance is not talking openly to the press right now, but if you sign the NDA you can get an online demo from the company. Contact: Roger Bertman, Chairman; Myles Suer, CEO, (925) 904-2000.

As much as we’d like to believe otherwise, many customers don’t think much about their bank, much less its Web site. So it’s up to you to get them hooked on your Web before someone else comes along with an enticing offer. Here are twenty activation ideas. See if you can find a couple worth trying at your bank. The most exciting ones, in our opinion are marked with the light bulb symbol (at left).

1.

ACH Initial Transfers

Allow customers to fund their account immediately and on an ongoing basis with ACH transfers from other institutions. USAccessBank (OBR 2/99,
) is using this approach with good results.

2.

Bill Payment Guarantees

Guarantee that users won’t incur a late charge for any bill set up on automatic recurring payment. CyberBills), because they are in control of the billing statements, is the first to make such a clear-cut guarantee.

3.

Bill-life Insurance

Create a credit life-type program guaranteeing that any bill set up on automatic payment will continue to be paid for a period of time in the event of death or disability.

4.

Cash Bonuses

There is a certain cache to cash, especially when it’s a $75 bonus to become a new Discover Brokerage customer. Note: The bonus applies only to online applicants (screenshot above right).

5.

Contests, Sweepstakes, and Premiums

Even upscale users are attracted to freebies, look at the success of frequent flyer programs. We think a sweepstakes or ongoing premium program tied to bill payment usage could be very powerful. Once per week/month, pay someone’s bill for them, or give away a PC, whatever grabs users attention. Or set-up a frequent payers club with rewards for active usage of bill payment.

Discover is paying $75 for new accounts brought in by their button on Yahoo! Finance.

6.

Customer Courtesy Calls

It might sound expensive at first, but calling the customer to see if they have questions might be one of the most effective, and ultimately least expensive, activation techniques. New bill pay vendor, Call Me Bill LLC for example, calls new bill pay registrants on behalf of client banks to help them get started with the service.

7.

Customize Accounts at Initial Sign Up

Allow users to start personalizing their account as they sign up. This will increase user involvement, make your Web more memorable, and improve the odds that users will come back for more.

8.

Demo on Site

Cascade Bank finds it effective to send business banking officers to client sites to demo Net banking with live customer data.

9.

Deposit Auctions

Having been one of the early eBay junkies using the online auction when they had just one hundred thousand lots on the block (today = 2 million), we’ve long thought banks should tap into the phenomena with money auctions (OBR 11/97). To generate a buzz, you could put some money up for bid on eBay, or even work with the company to set up a whole new category devoted to it. Or you could do it on your site. Either way, it’s bound to generate good PR, interest from branches, interest from customers, and interest from prospects.

Bidding could be established in three ways:

•  By Interest Rate: Bidders enter the lowest rate they would accept for the deposit product on the block; for example a 5.5% interest rate for $10,000 1-year CD, lowest bidder wins.
•  By Dollars Returned at a Future Date: Bidders enter the lowest amount they would accept in the future for a given amount deposited today; for example, $10,500 returned in one year for $10,000 deposited today; lowest bidder wins.
•  By Dollars Deposited Today (i.e. zero coupon CDs): Bidders enter the highest dollar amount they would pay today for a set dollar amount returned in the future, similar to how U.S. Treasury securities are sold at auction; for example, a bid of $9,500 deposited today for $10,000 in one year; highest bidder wins.

The most intuitive auction process is the last choice, dollars deposited today, since it allows the highest bidder to win. But in terms of publicity and perceived benefits, bidding by rate may be the most exciting method. It allows you to set a high rate as an opening bid, say 20% for a 1-year CD, in the same manner Net auction companies start the bidding for $1,500 PC systems at just $1.

Imagine the power of the following banner (upper right) running across the top of Yahoo! whenever someone searched on bank rates:

www.YourBank.com/auction/

Bid now on 1-year FDIC-insured CDs with starting bids of 20% APR*

Hypothetical banner ad.

*One can only speculate on how rate disclosures and other Truth in Savings issues will be addressed.

Eventually, as more people participated, winning bids would likely be within a couple basis points of market rates. In the short term, you might end up paying a hefty premium. But if you consider the publicity benefit, that’s probably a good, even desirable outcome. Can’t you just see the stories blasted across the Net on CNNfn, MSNBC, and so on?

In Yourbank.com’s first-ever auction of FDIC-insured CDs, the lucky winner will receive an 8.7% rate on a 1-year CD… double what Citibank is paying today.

A schedule of weekly auctions could add intrigue to your Web site, not to mention the following benefits:

•  Users could sign up for an email list that announced each auction and/or recapped the winning bids.
•  Since users would have to register with you to bid, you would have a ready list of prospects.
•  Other types of auctions could be established, such as real-estate owned, repossessed vehicles, surplus equipment, charity auctions, and so on (see OBR 3/98 for more on charity auction hosting).
•  You could leverage the program with banner ads containing real-time updates on the latest similar to Net auction pioneer OnSale’s banners produced by Lot21 Interactive Advertising Group of San Francisco.
•  The auction could be used to test/launch more exotic CD products, such as rates tied to a stock market index or the price of Beanies on eBay.
•  You could allow users to resell their CDs via the auction allowing users to cash in on interest rate fluctuations, or bail out of a deposit if they need the money.
•  The auction, if successful, could be licensed, co-branded, or sold to Amazon.com, eBay, Yahoo!, or other Web auctioneers.

10.

Email Encouragement

Program your server to automatically send a series of email reminders to non-active registrants. Each message should contain HTML links into the appropriate area of your Web.

Example: Email series to activate new users

*Time after initial application is submitted.

11.

Email Lists

Put every retail information database you have on a server, and allow users to query it and sign-up for automatic email updates. For example:

•  loan rates
•  deposit rates
•  loan promotions
•  community info
•  real-estate owned
•  repossessed vehicle inventory
•  new Certified Merchants
•  new eBillers
•  new ATMs/branches
•  seminars, speaking engagements
•  charitable opportunities
•  newsletters
•  new Web areas
•  promotions
•  press releases and “in the news” notices
•  investor information
•  small business information and tools

Employee Sales/Activation Incentives

Provide incentives to branch sales people that are heavily weighted to putting active users on the books. For example, divide a $50 bonus as follows:

12.

Everyday Essentials

Weather is the fourth most popular activity on the Web, used by 46% of users, and stock quotes are in seventh place, used by 26%. This stuff is so inexpensive to offer, why make users look elsewhere for it? As simple as it sounds, a good weather forecast delivered via your Web could be one of the most powerful activation tools around.

13.

Exit Polls

Find out where your service is weak or confusing the old-fashioned way, by asking customers. Simply pop-up a three-question survey as new users exit after their first session and get some candid feedback. Have each survey, or every nth one, emailed to you so you can see the raw data weeks in advance of the marketing department’s PowerPoint presentation.

14.

First-visit Transactions

Encourage users to make a transaction during their first visit. DLJ Direct, the online discount broker, allows new users to buy up to $5,000 in stock as soon as their online application is submitted and approved online (subject to credit approval). The company has used this approach since their days on Prodigy (as PCFN) in the early ‘90s, so it must be working. DLJ has the risk that you won’t pay if the stock goes down, but if a new user has a solid credit history, there’s a slim chance they will try to renege on the deal. And with customer acquisition running $250 or more in the industry, it must be cost effective. ð

What type of transaction could a bank encourage on a user’s first visit?

•  Immediate usage of a newly acquired credit card. First USA allows its Yahoo! co-branded cardholders to go Web shopping with its card immediately following online card approval (OBR 2/99.
•  Offer bonuses for deposits initiated online via an ACH form (see Telebank’s $25 offer, OBR 2/99.
•  Allow users to schedule a bill payment immediately using a credit card or ACH entry.
•  Allow immediate bidding in money, REO, or repossessed auto auctions on site (see #9).

15.

Free Money Samples via Email

What better way for a bank to get free publicity than by opening its virtual vaults and handing out free samples? Your customers would hand out the cash via email and bill pay. It’s the type of “viral marketing” that put HotMail and other free email services on the map (see “Send a Buck,” OBR 6/98).

16.

Pepsi Challenge

Remember the Pepsi challenge? Coke drinkers were challenged to taste both beverages and choose their favorite. How could Pepsi lose? Either they converted a customer to Pepsi, a positive outcome, or the consumer remained a Coke drinker, a neutral outcome. It’s a classic marketing strategy for taking on the predominant brand.

Virtual bank up-starts could to the same, e.g., “The Virtualbank.com Challenge.” Users would be encouraged to compare the email response time, bill pay support, credit approval turn-time, or whatever service you were pitting against MegaBank. If you win the comparisons, you publicize it. If you lose, you go back to the drawing board.

This encourages activation by giving users a reason to put your services through their paces. And if you’ve done a good job, they will like what they see.

17.

Statement Envelope Teasers

Wells Fargo puts a message on the front of the envelope that goes something like this:

You could already know what’s inside. www.wellsfargo.com

Concise, powerful, and brilliant.

18.

Stock Giveaways

This is for start-ups only. Give customers shares of stock in the new bank. Shares
could be tied to number of accounts opened, e.g., one for checking, savings, credit card, and so on. Or they could be tied to balances, e.g. one share per $1,000 of credit card balances transferred or one share for each $1,000 deposited (deposit premiums may count as taxable interest, consult your compliance dept.). For the first couple banks, this could bring a windfall. It feeds on the Internet hype while still delivering genuine value to the bank, its customer-shareholders, and other investors. Several companies have pioneered this concept including TravelZoo.com with 700,000
“co-owners” and Exit23b.

Although no one in the banking sector has tried it, we hear rumors of at least one virtual bank in formation that is looking to give it a shot. And why not? Any public, or hoping-to-go-public (who isn’t at this point?) Net-only financial institution can create a buzz online with a group of customer-shareholders that have a vested interest in seeing that the bank is successful. They will email your story across the world, advertise your bank on Internet message boards, and if you make it easy enough (for example with a preapproved eBillPay account, OBR 2/99), they may even use your products.

19.

Zero-risk Guarantees

If Net banking is so safe, why don’t the big players say so? Because they can’t afford the legal liability if something does go wrong. That creates an opportunity for newcomers to offer clear-cut, unequivocal guarantees that users won’t lose a cent to fraud or error. Period. The words can be backed by insurance from Travelers (OBR 9/97).