Fair Isaac's popular forum (powered by Lithium; screenshot below) which supports its myFICO retail credit score/report unit, took first prize among 16 entrants in the Business-to-Consumer Supporting category in the recent Forrester Groundswell awards (winners list).

The Groundswell awards are based on business results using various social technologies. In total there are 16 categories.

The myFICO forum is currently receiving:

• 120,000 unique visitors in Sep 2009, up almost three-fold from a year ago (see chart below)
• 20,000 new posts added each month...with more than 500,000 posts archived
• 400,000 searches per month
• 10,000 new registered users per month

According to information supplied with the application, the forum is helping Fair Isaac in the following ways:

• Lowering call-center volumes: Total call center volume was down 1% in 2008 compared to a 23% gain the prior year.
• Reducing call-center talk time: 10% of callers are referred to the forum for more information and/or help from other users.
• Driving traffic: Traffic to myFICO.com from the forum equals about 40% of the volume from search engines.
• Improving sales: The average amount spent by a customer grows by two-thirds after they join the forum and 13% of all myFICO sales online involve a forum view.

While myFICO was the only financial services winner, Bank of America was one of four finalists among 23 entries in the B2C Talking category for its Morris on Campus student-banking campaign as was MasterCard Brazil for What's Priceless to You? 

Significance to Netbankers: myFICO's busy forum shows that despite the proliferation of blogs and social media, an old-school online forum is a good way to build a community and off-load the tech support burden. Of course, forums don't run themselves, and you'll spend a considerable time moderating them. But considering the alternative, it's an expense worth considering, especially if community-building is part of your strategic goals. Intuit has also had great success with its community forums, attracting 130,000 monthly unique users (see chart below).

myFICO forums (link, 29 Oct 2009)

Website traffic for myFICO and Intuit forums from Compete (link, 29 Oct 2009)

For more info:

• Online Banking Report: Credit Report Monitoring (Aug 2007)
• Online Banking Report: Bank 2.0 (blogs and social media, Oct 2006)

If you haven't been following Twitter the last few months, you may not realize it now has almost eight million monthly unique visitors according to Compete. That's almost double the traffic it had just two months ago and a nearly a nine-fold gain from a year ago.

To put that traffic in perspective, it's more than half that of the NY Times and slightly more than banking giant Wachovia (see Compete chart below).

Banking activity
Financial institutions are pretty new to the micro-blogging platform. In a search today, we found 15 U.S. banks and 22 credit unions with active Twitter feeds (see notes 1, 6-8). There were also and nine international banks for a total of 46.

See the table below for the non-inclusive list ranked by number of Twitter users that follow the bank's feed (note 2). Wachovia (now owned by Wells Fargo), the only major bank that has promoted Twitter on its main website, leads with 2,000 followers (see previous post on Wachovia's foray on to Twitter).

Opportunity 
Participating in Twitter is a low-cost entry into social media that can actually help save a customer relationship or three. Compared to blogging, it is much less labor intensive. It's also less of a marketing platform given the 140-character limit in posts. But in the current environment, perhaps less truly is more. By all means, find a gung-ho Facebook devotee in your bank and let him or her get you into the Tweeting game.

Table: Banks and Credit Unions using Twitter (updated 16 March 2009)

Source: Online Banking Report, 13 March 2009 (see notes 6,7,8)

Notes:
1. To be considered active, the bank or credit union had to have set up a Twitter account, customized it with its logo, have made more than 1 update or "Tweet," and have at least 10 followers. 
2. This is not a complete list. With a few exceptions, we only looked for financial institutions with "bank" or "credit union" in their name.
3. Wells Fargo's Twitter page says it will be launching soon.
4. Twitter URL = www.twitter.com/<shown below>
5. For more on bank blogging, see our Online Banking Report on Banking 2.0
6. List and totals updated with ING Direct and First Federal on 16 March 2009
7. Searched on "CU" and found eight more credit unions on 17 March 2009. Thanks Gabriel Garcia.
8. Added NAB's Ubank from comments, unsure why it didn't show up on "bank" search

What better way to start the new year than to blog about a blog. And it's big news. Bank of America, through its Center for Future Banking (see note 1), launched a blog called The Future Banking Blog. The blog, quietly began after Thanksgiving (note 2), has averaged about 2 posts per week,  about right for a banking blog (note 3).

The content so far has been wholly unrelated to Bank of America or its products. The blog is part academic, part strategic, bringing insights from the Center's joint team of MIT academics and BofA business execs.

The design however, is pure Bank of America (see below). It uses the BofA color palette and includes a prominent powered by logo in the upper right. It's also housed under a bank URL <futurebanking.bankofamerica.com>.

All in all it's a good effort, positioning BofA as a thought leader in the upside-down world of commercial banking circa 2009.

Note:
1. The Center is seeking an Executive Director. The position was posted on Dec. 16, but given the holiday, it's not too late to toss your name in the hat.

2. Hat tip to Colin Henderson at The Bankwatch for writing about it.  

3. For more info on financial institution bloggin, see our Online Banking Report on Banking and Social Media.

Just when you thought Mint, Wesabe, and Geezeo had a lock on all the headlines for Gen Y personal finance, along comes a truly inspired effort from a major U.S. retail bank. Furthermore, it's not from Wells Fargo, Bank of America, Chase, or even ING Direct.

Pittsburgh, PA-based PNC Bank, the 15th-largest U.S. retail bank with $83 billion in deposits (see note 1), today launched a new online combo account called PNC Virtual Wallet.

The account comes with a checking account, bill payment, and two types of savings accounts. It also features several unique personal financial management features with an emphasis on functions most likely to appeal to a 20-something audience:

• Cash flow: debit card, checking, online bill pay, financial calendar, recent transaction report
• Savings: two types of savings accounts, automated savings options, wish list, and a random video-game-inspired savings tool called "punch the pig" (see below)

Finally, the account is priced well:

• No fees (except $0.50 per written check after the first 3 per month and the usual penalty fees)
• Free overdraft protection among linked accounts
• 3% APY on the growth savings component
• ATM-free rebate (but only if there's a $2000 average monthly balance in the checking account portion)

What's innovative? (note 2)

• Package of three deposit accounts: Spend Account (e.g., checking), Reserve Account (e.g., savings) and Growth Account (e.g., high-yield savings or money market deposit account)
• Ability to move money among the three accounts by moving a slider across the screen, called the Money Bar
• Automated savings function called Savings Engine that allows users to set up time-triggered (e.g., once per week) or event-triggered (e.g., each debit card use) automatic savings transfers
• Savings game called Punch the Pig, a video-game-inspired savings gimmick: Each time the pig appears on screen, users can elect to "punch" it to automatically move money from checking to savings
• Wish List with savings goals and progress reports

What can be improved?
Four areas that are noticeably absent, or at least not mentioned:

• Mobile functionality, especially text banking and alerts
• Online customer support: Customer can apply online through the Andera-powered app; however, there is no link to any online-support options such as chat, IM, text, or even a Web-based input form or old-school email address
• Social aspects: forums, reviews, blogs, or even testimonials (note 4)
• Credit: credit cards, line of credit, auto loans, and so on

The website design is impressive and very un-banklike, yet it lacks some basics:

• No demo: There are several Flash instructional videos that show most of the key features, but there is no all-encompassing demo for users wanting a tryout before buying.
• Lame homepage videos: Granted, I'm not in the Gen Y target market so I could be wrong, but if I think the videos are lame, what do you think a 22-year-old will make of them? I say lose the "man on the street videos" or reshoot them in a less-scripted manner. 
• Extensive FAQs: The FAQs need to be expanded tenfold. Currently, only 16 questions and answers are up, but with so many unique features, that number doesn't come close to answering many basic questions, such as "Are there account alerts?" or "What's the rate of interest on the reserve account" (note 3), or "How long are transactions stored?"

PNC Bank virtual wallet homepage (14 July 2008)

Explanation of "Punch the Pig" savings feature

Notes:
1. Deposits as of 31 Dec 2007; deposits were up 25% compared to $66 billion as of year-end 2006.

2. PNC has applied for a patent on the account and tools.

3. Eventually, I did find a link to interest rates and fees on the "how to apply" page

4. See Online Banking Report on Social Personal Finance for more info

One thing hard to approximate online is the hubbub of a busy branch, retail outlet, or event. Other than the occasional popup inviting you to chat about whatever financial product you're viewing, most financial websites are lonely experiences. Sure, Web-based video can personalize the online experience, but that's still a one-on-one experience. That's why building an online community is so important in the long run (see note 1).

One way to demonstrate just how much activity takes place at your website or through electronic banking, is to show a stream of real-time activity. For example, Zillow's new mortgage marketplace shows realtime mortgage quotes as they come in from the mortgage brokers using the site (see above).

Geezeo recently added a public news feed to its site, similar to what social media users experience at Facebook.

And ING Direct has counted up the interest in pays customer in a little meter within online banking, as of a few minutes ago it was $4.5 million shy of $9 billion. 

But the most daring example is Progressive Insurance which displays actual specific rate comparisons to its competitors in the center of its homepage
(see screenshot below). 

Financial institutions could show streams of activity in the following areas:

• credit/debit card transaction data: $63.42 at JC Penney's Minneapolis, MN
• bill payment transaction data (only to major merchants): $124.22 to PGE, LA, CA
• funds transfers: A.C. transferred $1500 from checking to savings
• results from online calculators: $15,000 vehicle at 6.5% for 5 years = $432/mo
• mortgage quotes/locks: $572,000 purchase mortgage locked today at 6.375% with 1% fee
• insurance quotes: $1,000,000 10-year level term for 42-year-old nonsmoker for A.E. in  Tampa for $1123/yr
• interest paid on deposits, checks processed, loans funded, website visits, online banking login, bills paid
• comments in blogs/forums
• search terms used on-site and possibly the top results
• questions asked/answered online

Of course, you'll need to make certain there is absolutely no data streamed that could be traced back to an individual user.

Note:
1. See the following Online Banking Reports for more information:

• Bank 2.0: Remaking your financial website for a Web 2.0 world
• Social Personal Finance
• Online Investment Communities

As a marketer you have to love WaMu. They are bold, quirky, and not afraid to poke fun at conventional wisdom. I haven't liked all their advertising campaigns, but that doesn't matter as long as the bank is reaching its target markets and delivering results.

While the bank has its challenges cleaning up the mortgage mess, its marketing department and ad agency are still producing good work. Case in point: WaMu's new Facebook page (below).

I realize that all banking pages in Facebook will appear lame to just about every 20-something that happens to stumble across them (see previous coverage here). But 20-somethings do still need checking accounts, debit/credit cards, vehicle loans, and so forth. So they will buy banking services. And what brand will they choose? The one that is at least making an effort to meet them on their turf with Facebook pages, text messaging, and humorous advertising, such as the talking banner campaign shown below.  

WaMu's Facebook page, which looks like it was posted April 17, contains videos, a crossword game, a branch finder, a checking account application form, a fan area and a communications app (note 1) that can be added to your Facebook profile. Take a look yourself here.

Excellent work: A

WaMu Facebook Page (23 April 2008) (note 2)

Notes:
1. Even though I added it to my profile, I'm not sure what the WaMu Facebook application does. It appears to be a way to communicate with friends on Facebook and has 49 daily users.

2. The bar across the middle of the page is unrelated to the WaMu page; it's the new Facebook chat feature, that appears along the bottom of all screens, and messes up my screenshot. It does show you where the "fold" exists on a 13.3 high resolution laptop screen.

One perk of working for a large company is being recognized, or winning prizes, for contributing useful suggestions. While employees can be pretty cynical about the whole process, overall, it's good for employee relations to solicit and reward suggestions. Employees appreciate the opportunity to voice their ideas to senior management and do their part in making the company/products better. And if they win a free dinner, it's all that much better. 

The same concept can work even better with customers where you don't have to worry about favoritism and corporate politics. But how do you solicit meaningful suggestions without getting bogged down in an expensive and time-consuming evaluation process? And more important, how do you prevent the really innovative ides from getting killed in the marketing/customer service/IT department, where the not-invented-here bias rules?

Interactive suggestion box from Starbucks
Amidst a sweeping round of innovations announced at its annual shareholders meeting today (see note 1; press release here), Starbucks provided a glimpse of the future of customer feedback with its MyStarbucksIdea, a user-generated discussion forum revolving around product and service suggestions (see screenshot below).

By involving users every step of the way, the system helps remove the inherent bias that plagues most company-run programs. The key is allowing registered users the power to vote on each idea, the best rise DIGG-like to the top, where other customers, along with the Starbucks top-brass, are likely to see them. Other than light moderating of the forum, Starbucks only has to process the very best ideas.

To provide the all-important company feedback to the community, the Starbucks site (note 2) has an area that will showcase the ideas that are actually implemented. The site says there are no monetary rewards, but I would expect that wining ideas will receive some small token of the company's appreciation such as a $50 Starbucks card or t-shirt. You don't want the incentives to be too high, or the system will be gamed and its appeal damaged. 

The most popular idea at Starbucks has to do with providing discounts...no surprise there. But the company has wisely introduced a dozen idea categories to help spur discussion in other areas. For instance, in "Other Product" section (second screenshot below), I found two that I voted for: microwave ovens to re-heat coffee and providing small stickers to keep the coffee from sloshing out the drinking hole while driving.

Implications for financial institutions
I believe that every financial institutions should have some type of suggestion program even if it's just an email address (suggestions@yourbank.com). And I think the open Starbucks approach could work very well. However, if there are no ground rules, most banks and credit unions will be innundated with "ideas" to lower fees, raise savings rates, and so on. As much as you don't want to stifle discussion, you may have to restrict or even forbid suggestions about pricing. Most people will understand that your pricing decisions are not made via the consensus of a public user forum no matter how many votes "interest-free loans" receive. 

To help spur ideas outside the usual complaints, create a list of categories such as online banking, wire transfers, checking accounts, branches, and so on to generate ideas for your different product lines.

MyStarbucksIdea homepage (19 March 2008)

Top ideas in "Other Products" category

Notes:

1. Starbucks also announced a set of rewards for users of its prepaid card including free premium drink upgrades such as soy milk, free beverages with the purchase of coffee beans, and the big one for the WiFi set, 2 hours of free Internet access with a purchase.

2. Interestingly, Starbucks new app is built on the Force.com platform from SalesForce.com.

Update March 6: I added two clarifications pointed out in the comments. First, that normal ACH deposits to your own SmartyPig account are free of charge. Second, that the retailers bonus on withdrawals to their gift cards is UP TO 5% (not a flat 5%). 

How about this recipe? Take a basic FDIC-insured savings account, spice it up with automated electronic transfers and email communications, mix in gift/debit cards, wrap the whole thing up in a social network, and top it with a memorable name. What do you have? SmartyPig, the most innovative financial service we've seen since Prosper launched two years ago.

The site is in the final week of private beta. To register, you still need an invitation code. The company asked me not to publish it, but it's OK if I distribute by request via email. Send a note to info@netbanker with "SmartyPig" in the subject line. Or simply wait until after this weekend when the site goes into public beta.

How it works:

1.  Users create savings accounts at the site. Deposits are held at West Bank, a Des Moines, IA- based financial institution with $1.3 billion in assets. Funding is through ACH (electronic) transfers from outside bank accounts. SmartyPig currently pays a high, 4.3% APY on deposits. 

2. After the account is established, users are encouraged to create savings goals funded through automatic monthly ACH transfers until the goal is met.

3. Now here is where SmartyPig diverges from a typical bank account. The savings goals can be made public or kept private. Public goals can be funded in part, or entirely, by outside contributors. Think of grandma and grandpa contributing birthday money to help junior buy a new bike. Contributions are funded through credit card charges with a maximum charge of $500 and a per transaction processing fee of $4.95. To make sure grandma's $50 doesn't go to a Mario game, the money cannot be withdrawn until the savings goal is met (or canceled by the primary account holder).

4. After goals have been met, the user can elect to take the funds out in the form of a MasterCard debit card or a gift card from a retail partner such as Amazon.com. Participating retailers add up to 5% bonus to the savings goal so that $1000 saved for the plasma TV is worth $1,050 if redeemed via Amazon gift card. That's a great added incentive to use the service.

Gift Cards
SmartyPig also sells gift cards that can be redeemed towards new or existing savings goals. These cards, issued in denominations of $25 to $500, are meant to be given as gifts or employee incentives. They cannot be redeemed outside the SmartyPig system. Physical card are produced and delivered for a processing fee of $4.95 plus delivery fees of $5.95 or more. Or consumers can deliver a virtual card through email to eliminate the delivery charge (but the $4.95 processing fee remains the same). 

Summary of Fees

• Your own deposits: Free (via ACH transfer)
  
• Public contributions: $4.95 flat processing fee for each contribution made by an outside contributor. Contributions can be from $25 to $500 and are funded via credit card.
• Gift cards: Gift cards incur a $4.95 processing fee and an optional $5.95 shipping fee. The shipping fee can be avoided if a virtual gift card is chosen which is fulfilled via email.

Analysis
Although, not everyone is going to want to go through the extra steps to save this way, we are impressed with SmartyPig and are awarding it our first OBR Best of the Web award for 2008 (see note 1). We like how it's part gift registry, part savings account, and potentially a big help in getting users in the habit of saving for larger goals. The look-and-feel is very Web 2.0 and should resonate with teens and twenty-somethings.

There are a few rough edges that need better explanation and/or minor redesign. For instance, there is no way to simply add funds to a savings account without first setting up an automatic funding plan. But the site isn't even officially launched yet, so these issues should be ironed out during the beta period. 

The processing fee for outside contributions of $4.95 per transaction is a bit on the high side (there is no fee for funds transfers from your own bank account). One could argue that it's worth price of a triple mocha for the convenience and benefits of the savings account. But for smaller deposits of $50 to $100, it's a pretty high percentage of the overall deposit.

It would be nice if the company could lower the fee, perhaps by creating an ACH funding option. Another way to reduce costs is to lower the 4.3% APR. I'm not sure the savers attracted to this account really need that high of a rate. A lower interest rate combined with lower fees might make the service more palatable overall.   

The company may have to tweak its business model going forward. But the real lesson here is that savings accounts can be made stickier with automation and incentives. Leave it to the Iowans to show us the way (note 2). 

Screenshots

1. The main account screen: I set up a savings account for my son. Then set a savings goal of $300 for a new bike. SmartyPig requires that the savings goal be funded in equal monthly withdrawals from the linked checking. It would be helpful if you could opt out of the automated savings plan so that the savings goal could be funded manually. 

2. Public goals: If you opted to make your savings goal public, anyone can find it by searching via email address under the "Friends' Goals" tab on the top (you can see this one by searching for jim@netbanker.com). 

Users can publicize their goals with a widget (see inset, and link at bottom of screen above) or by sending email to friends.

After making a contribution, the following screen is displayed.

Note:

1. Online Banking Report (OBR) Best of the Web awards are given for products that "raise the bar" in online financial services, usually for pioneering a new feature. Recent winners are covered here. Five awards were been handed out in 2007: two for Wesabe, and one each for Jwaala, Buxfer and Obopay. In the past 10 years, 67 companies have won the award.

2. Full disclosure: I was born and raised in Iowa and my brother lives within a few miles of the SmartyPig world headquarters.

Update: Quicken Loans has also published a recruiting blog for the past year (thanks Ann-Marie, see comments below and NetBanker post here).

I've been a big proponent of blogging. In my Online Banking Report on the subject published last fall (here), I predicted there would be 300 financial institution blogs by the end of this year. While there is no definitive listing, OpenSource CU's blogroll lists just 15 CU company blogs. Even if you add the CU employee blogs, MySpace pages, and four blogs from Wells Fargo, the grand total is less than 100 today, and unlikely to get much higher than that by year-end.

Why the slow start? Having worked inside several banks, I do not underestimate the difficulty in creating a new communication channel. And from what I've heard, many banks and credit unions just don't believe the benefits, which are largely intangible, will outweigh the costs. And with so few banks blogging, Wells Fargo being the only major in the U.S., it's hard to show examples to demonstrate the power of the blog.

That's why we were happy to see one of our favorite companies, eBay's PayPal unit, launch a blog a few weeks ago (here). As you can see it's not too fancy, and they post to it only a few times each week. But it really hits the mark, in my opinion.

Here's why:

1. Humanizes the organization: The initial posts are by various department heads or senior staff and discuss briefly what they do and a major initiative each is involved in. Each post has a small head shot in the upper left that increases the credibility of the posting (see screenshot below).

2. Educates in a more interesting way: PayPal managers are obviously excited about their projects as their enthusiasm comes across in the writing and makes the reader interested in the subject. For instance, last week CIO Michael Barrett posted seven paragraphs (here) on improving the safety of your online computing experience. It's a good way to get a simple message across, that users should use up-to-date operating systems and browsers. Usually, that advise is buried  five layers deep in a security FAQ.

3. Sells with a more "consultative" approach: Several of the blog entries are designed to "sell" but again, when the head of consumer marketing blogs about the latest program, as Hillary Mickell did about PayPal's back-to-school shopping portal (here), it's much more believable than a banner ad slapped onto the homepage (see screenshot below).

4. Communicate during an outage or severe service problem: The most recent entries (here and here), both posted on the Sept. 2 holiday, informed and reassured customers about the problems with subscription services.

The challenge is generating readership. Would I subscribe to the blog if I was a consumer making an occasional PayPal purchase? Unlikely. But if I'm a merchant, and the PayPal system is an integral part of my livelihood, you can bet I'll pore over every word (note 1).

So, financial institutions, if you want to get into blogging, find the communities where you really make a difference and start speaking to them (see note 2).

Note:

1. The press and analysts will subscribe, spurring articles on your company such as this one.

2. Although perhaps just a shade too critical of the industry for my tastes (see the first comment for some balance), Verity Credit Union's latest post (here) speaks from the heart about the sub-prime lending fiasco and the CU's "Keep the Dream" fund to help at-risk borrowers keep their homes. Great post. Great program. Unfortunately, I couldn't find anything on the website about it.

Note: Read part 1 and part 2.

Many articles and blog posts will tell you that the cost to enter into the world of blogs, wikis, RSS, podcasts, social networking (Facebook or MySpace), social bookmarking (del.icio.us or ma.gnolia), or  Application Programming Interfaces (or APIs) mean that you can start a blog or social media project for your bank or credit union at a total cost of zero. Right?

Well, sort of.

One of the critical, but often unsung factors of success of a social media project is the resourcing. If you're going to invite the public to play, make sure you have someone who can help create the kind of community you want.

As we planned ChangeEverything.ca at Vancity we had many discussions about how to create a vibrant and postive community. We have all seen online bulletin boards, discussion forums and blogs degenerate into the kind of name-calling no one wants associated with their brand. This was one of our worst fears. Since then, we've learned a great deal about community building.

In my first part of this post, I mentioned nine success factors for a social media project. An important one is hiring someone who knows how to nurture and grow an online community. Here's why.

Whether or not hard dollars are spent launching a social media project, someone needs to manage the initiative and ensure that it achieves its goals. This is a very specific skill-set with the following requirements:

• Someone who can inspire visitors to come back, readers to register, and registered users to add good content.
  
• Someone who knows when to get involved in discussions and threads that are degenerating, going off topic, or just going nowhere.
  
• Someone who can elevate good material to the homepage so it will hook like-minded people, as well as delete remarks you don't want on the site.
  
• Someone with good taste.
  
• Someone who understands the business goals of the site and can act appropriately and decisively.

Recently I have seen a few interesting posts speaking to the issue of good online community moderation. One was on Jeremiah Owyang's excellent web-strategist.com: For the Community Managers. I also saw a very good piece on Seth Godin's blog: Jobs of the future, #1: Online Community Organizer. So it seems that more and more people are catching on that this free revolution has some resourcing costs built in if you want to achieve success.

Here are three examples of financial institutions that blog and how they manage their resourcing.

Wells Fargo

Wells Fargo has a total of four blogs, the most for any financial institution. According to their VP of Social Media, the amazing Ed Terpening:

Although we have an Experiential Marketing group dedicated to social media activities for Wells Fargo, all of our bloggers are team members who have other full time jobs. They add blogging - writing, posting, reading, replying - on top of those jobs, and our lead bloggers take a more active role than others. The culture of blogging is unique and we strive to connect with that culture through many different voices at Wells Fargo. Finding the person with the right passion + knowledge is our goal, whether they have a professional communications role or not (most do not).

Verity Credit Union



Verity was the first financial institutions to blog, beginning in late 2004. It recently received an excellent facelift and functional overhaul. It's a highly usable and readable blog. According to their CMO and VP Shari Storm, they staff their blog with volunteer employees from around the credit union. Employees who want to blog go through a quick 10-15 minute training on the dos and don'ts of blogging, and they are allowed to spend no more than an hour a month blogging so their managers won't get upset with the project. This is a nice way to save money on resources. Until their recent overhaul, their blog was even hosted for free at Blogger. Says Storm, "One of the unexpected successes of our blog is how much employees like writing for the forum. We’ve heard from employees that it provides extra job satisfaction and a sense of employee pride."

Vancity



One of the key success factors of ChangeEverything.ca was the investment in a full-time Online Community Moderator, Kate. Kate has been instrumental in nurturing the community, providing them with contests and activities, connecting the site to the press to get earned media exposure, moderating comments and understanding the needs and wants of the site's registered users. Not an easy job, and I always say that Kate is one of the key reasons why the site has grown and excelled in the way it has. She has an amazing balance of clearly knowing the purpose of the site, and also being open to where the community wants to go. She deserves amazing credit and her skillset will only make her more and more valuable. (NOTE: no poaching!)

So, by all means try out social media. There are many low-cost, even free, options. But realize  that for a site to achieve longevity and success as a communications vehicle, branding tool, community platform, or whatever you have planned, you may need to invest in social media management. This means either tapping good people internally to devote time to the project or hiring a community moderator to ensure your project develops to its full potential.

William Azaroff is the Interactive Marketing & Channel Manager at Vancity where he develops interactive marketing initiatives, and pioneered ChangeEverything.ca, the groundbreaking change-themed online community. William also plans strategy for the online channel, with a view to its potential to help Vancity, its members and the community. William brings nine years of experience in Vancouver, Seattle and Los Angeles producing web projects for such clients as Honda, Disney, Intuit Canada and Nike Jordan. He writes about the intersection of online branding, social media and the world of banking on his blog at azaroff.com/blog

A recent article in Bank Systems & Technology looked at the question of whether or not banks were reaping Web 2.0's potential. The subtitle of the article—"some institutions aren't realizing all that Web 2.0 has to offer"—is generous beyond belief.

The article takes the form of a panel discussion, with participants from Wells Fargo, Adobe Systems, Tower Group, and Hurwitz & Associates addressing questions about which banks are implementing Web 2.0 technologies, and why banks aren't embracing them more than they have.

The Tower analyst had some interesting things to say, while the rep from Wells Fargo understandably focused on internal initiatives, although (probably reflecting the part of the organization he works in) he made no mention of WF's blogging efforts.

What had me shaking my head in disbelief was the comments from the Adobe person. Her reply as to why banks aren't embracing Web 2.0 technologies more: "The main obstacle seems to be that institutions are hesitant to improve one section of their website too drastically for fear of making the other sites look even more out of date."

Robin Bloor of Hurwitz better captured reality with his response to the same question:

"It may simply be a matter of where to invest. A Web 2.0 project is very difficult to define in terms of specific business objectives. There are no obvious corporate successes to imitate, and no easy way to calculate payback."

My take: There are three major forces holding banks back from capitalizing on Web 2.0:

1) ROI. Despite all the talk about building customer relationships, most banks invest in sales, not in relationship building. If there's no clear link between the investment and a sale, most banks are reticent to make the investment. An example: Personal financial management. NetBanker now tracks more than 20 online personal financial management sites. Why is it that most banks (with the exception of a select few like Wells Fargo) aren't making an investment in a PFM or Wesabe-like capability? Because they can't see how it ties to making a product sale.

2) History. Besides "no obvious successes to imitate," there are past failures to avoid. Plenty of bankers still remember the online community efforts that banks dabbled in seven, eight, nine years ago. They jumped into those initiatives feet first back then and found that they were jumping into empty pits. This time around, they're more cautious and asking, "What's different this time?" Well, there are plenty of things different this time, but they still need to be educated about, and convinced of, these differences.

3) Banker say what? Ask 100 banks if they could launch a successful social media campaign, and 95 will say, "Huh?" (4 will say no, and 1 very deluded individual will say yes, unless she's from Wells Fargo). Even if some banks were willing to take a longer term view of the ROI on these investments, it's still not clear to many exactly what Web 2.0 is—and isn't. I, for one, wouldn't suggest tossing around words like "wiki" or "facebook" with senior execs at most financial firms.

So is Web 2.0 dead when it comes to banks? No. But the needle isn't going to move until one or both of the following happens:

PFM sites influence consumers' choice of institutions. Wesabe's Jason Knight has said that his firm doesn't compete with banks. And he's right, of course. But if (or when) Wesabe starts becoming an influence on its members' choice of firms in any significant manner, the banks will sit up and take notice. And then start, however belatedly, to get on the Web 2.0 bandwagon.

P2P lending makes a bigger dent in the big banks' business. Firms like Prosper can crow about the dollar volume of the loans being made on their sites, but, for now, many banks assume (rightly or wrongly) that these transactions are not cannibalizing their business. If this view changes, however, banks will start whistling a new tune regarding Web 2.0.

Ron Shevlin is vice president of client solutions at Epsilon. Prior to that, Ron was an analyst at Forrester Research. He opines (translation: rants) about financial services marketing at Marketing ROI: Whims From Ron Shevlin. The opinions expressed here are Ron's, not those of NetBanker, his employer, or any other sane person or party for that matter. 

This past weekend, NetBanker sponsored an event called BarCampBank in Seattle. It's an unusual name for an unusual event. The name derives from an international network of events, which Wikipedia defines as "open, participatory workshop-events, whose content is provided by participants." It usually refers to "early-stage Web applications, and related open-source technologies and social protocols." In this case it was a loose, collaborative unconference about "innovation in banking, credit unions, social lending, or finance." It attracted close to 40 people—credit unions, banking experts, consultants and suppliers across the United States and Canada. It was unfortunate that there was no representation from actual banks.

The topics discussed included the use of social media, credit relief for third world countries, branching strategy, expectations of Gen Y and Millennials, mobile banking, and open-source core processors. Over the weekend, as discussions opened and progressed, the ideas were distilled down to a few themes.

• Banks and credit unions don't really know what it means to be customer-centric.
• The disintermediation that the industry has been seeing on the horizon for years seems to be occurring, and financial institutions had better get on board or lose market share.
• Are social media (blogs, social networks, wikis) an effective way to market and promote banks?
• What would a bank look like if one was built from scratch today?

There was a lot of talk that banks and credit unions only look after their own needs and don't pay enough attention to serving their customers effectively. There is a lack of bravery and responsiveness to their customers' needs. To most consumers, banking is a chore like going to the grocery store or the post office (and in the worst examples, the dentist). People want easy access to their money and sound financial advice; in many cases, that is not what they receive.

There were some very interesting and disruptive ideas. One big one that kept coming up was the banking equivalent of local number portability. You get an account number the first time you create a bank account, and you can move it from bank to bank to bank. An amazingly customer-centric idea. You neither have to change your bill-pay info, nor your direct deposit or pre-authorized payments. This is one of the main factors that keep people where they are, and would force the banks to differentiate based on service and product innovation. The pain of switching would be eliminated and people could change banks when they found a better option for them and not wait until they get so frustrated with their existing bank that they overcome their inertia.

Another theme that emerged, which will come as no surprise to NetBanker readers, is the brilliance of Wesabe.com's model. There is real passion in the way the founder and CEO Jason Knight describes the mission of his organization, which helps consumers make better decisions with their money. With a focus on showing consumers where their money can get them the most value, he doesn't see himself competing with banks at all, but offering a complimentary service. I wonder how many banks see the value Wesabe adds, and will work with it to give customers deeper insights into how they spend their money.

The people in the room were keenly aware of the echo-chamber effect created by being surrounded by those who feel similarly about social media. We were mostly proponents of the relevant use of social media to further the goals of a financial institution. But adoption of blogging, social networking tools and Web 2.0 technology by financial institutions is slow at best, and the number of successful implementations of these tools is few and far between. That honesty was refreshing.

There was an overwhelming feeling in the room that banking is ripe for a revolution. Interesting to come back from BarCampBank and see this insightful article on GonzoBanker about the demise of the banking industry as we know it. Many of these same themes were reflected in our dialogue. Money is too crucial in our lives to avoid big shifts ahead in the financial services sector. BarCampBank demonstrated that this is definitely an interesting time to be in banking.

As Web 2.0 meets personal finance (see note 1), we are seeing for the first time, tiny one- and two-person startups entering the online banking and personal finance space. Back in the bubble days, there were numerous startups such as X.com, dotBank, and PayMe, but they usually required a bankroll of $10+ million just to push something out the door. Today, an innovative personal finance site can be created in a programmer's spare time (eg. BudgetTracker) or for less than $100,000 if the principals take their salary in stock.  

Despite being overly fascinated with issues of shared expenses, such as splitting the dinner bill (see Buxfer main default page at login below), there is much to be learned from the newcomers (note 2). They tend to be refreshingly designed and clever in their use of modern navigation and communication techniques, something that cannot always be said about typical banking sites.

And the newcomers are also trying to ride the "social networking" wave, and expense-splitting provides a so-called "social money" benefit for use in elevator pitches and press releases. And for couples with his and her checking accounts that divide bills and expenses between the two, expense-splitting features could be a marriage saver. 

We'll be looking at a number of these sites during the next few weeks as we prepare a follow-up to our August 2006 Online Banking Report on Personal Finance 2.0 (link here). Wesabe is the best known of the bunch, having received a considerable amount of press as a social money site. But before we get to them, take a look at one of their competitors, recently featured on TechCrunch (here).

Buxfer is similar in many ways, but has not had near the attention. The company which recently relocated to Silicon Valley as part of the Y-Combinator program, came out of beta in September, but has recently added several new features. 

They have several impressive features that no bank or credit union has offered to date:

• Login via third party authentication APIs from Google, OpenID, AOL, Yahoo and Facebook; really helps get users past the "do I really want to give this company my personal info" stage (see note 3)
• Transaction import, via simple browse/upload function (see note 2)
• Transaction input via custom email address: Buxfer provides users with their own email address that can be used to send new transactions into the system (see inset) 
• Auto-tagging: users can select any key word in a transaction description and have it auto-tagged, for example, say Fred works for you, and when you have a transaction called "lunch with Fred" you can have it auto-tagged with "business" 
• File append: You can easily add note or attach files, such as receipts, to individual transactions
• Widget/gadget that shows expense breakdown that can be displayed directly on the desktop (see screenshot above) 

Weaknesses:

• If you enter an email address for someone who you are setting up as a participant in a shared transaction, eg. splitting the dinner tab, Buxfer prompts you to save them as a new contact. In doing so, an automatic email is generated from the user, inviting them to join the service. That's fine, but the user needs to have more control over the invitations. Buxfer's blog provides a work-around, suggesting using something other than an email address, but spamming your friends should never be the default.
• The main page (screenshot above) focuses on who you owes money to whom, instead of the more common issue of what bills are due and when.
• No support for transactions. Other than being able to import transaction files that have been previously downloaded from banks and card issuers, it's all manual data entry. Helper tools such as "copy", "repeat entry" and "auto-tagging" help a bit, but to be an effective tool the service needs to integrate more closely with the actual bill and the payment. That's why these companies need to forge close ties with financial institutions to move beyond the outlier Tracker 2.0-user into the mainstream market.

Notes:

1. For more on online personal finance, see our full report on the subject, Online Banking Report #131/132 (here)

2. I suspect the expense splitting priority is a result of founders who are young, single, frugal, and obsessed with tracking personal finance details. They are the types that worry about whether the bar tab was split equally, and go home and code solutions to it, while the rest of their group is sleeping it off.

3. When logging in through a third-party service, users are not required to provide ANY personal info, i.e. there is NO registration process, an amazing experience. 

4. Screenshot of file import:

Several banks, including PNC in the bubble days and WaMu through eBay in early 2004, have tried auctioning certificates of deposit (see Online Banking #104). Those first attempts were aimed at retail depositors, an unlikely audience for a several reasons. First, the demographics of retail CD buyers is decidedly older and they tend to be fiscally conservative, not the right group for a new-fangled way to buy from the bank. On the other hand, CD auctions are a great way to introduce a bit of Web 2.0-style innovation into what is mostly a commodity.    

So Zions Bank, through its Zions Direct division, has chosen a different path. Instead of creating an eBay-like environment for retail investors, it is using its non-bank investment division to sell CDs like the Treasury Dept sell t-bills. The certificates are sold at a discount to par, resulting in an acceptable yield for the bidders. 

Analysis
While PNC and WaMu's efforts were clearly just market tests that were shuttered after a few months, the Zions auction platform is full-featured. It appears to have staying power provided the bank is comfortable with the prices its paying. 

Clearly, this is not a retail playground. There were 20 bidders making a total of 28 bids with a median bid dollar amount of just $10,000. However, there were three huge bidders, all playing with $2 million in cash, that set the final prices. Most likely it was someone in a large company treasury department looking to increase its yield on excess cash by a basis point or two.   

But even though the big money sets the rates, the small depositors can still win since everyone received the same "market-clearing" rate. For example, four of the 14 winning bidders in the March 27 auction were small CDs of less than $5,000:

Winning bidders by size of deposit:

• 4 had $1,000 to $4,000 
• 5 had $8,000 to $20,000
• 2 had $90,000 to $100,000
• 1 had $200,000
• 1 had $536,000 (partial fill of $2 million bid)
• 1 had $1 million (they also had non-winning $2 million bid)

It makes sense to set rates for large deposits this way. It mimics the way the capital markets already function. And it allows motivated smaller depositors to join the "action," receiving what they are likely to perceive as a fair price since it was set on the open market. Some day, the majority of CD dollars will be sold this way.

Finally, an added bonus for the first-mover, it positions Zions as innovative, fair, and looking out for its customers. The word of mouth and press attention should quickly pay back the investment Zions made in the platform.

More information:

• Press release here
• American Banker article here
• Online Banking Report #104 here

-------------------------------------------------------------------------------------------------------------------

Zions March 27 CD Auction Results
(see screenshot right or view archived page here) 

Product: $2,000,000 in 5-month CDs

Bidders: 28 bids from 21 bidders

Final Price: 5.506% rate

Start date: 20 Mar 2007

End date: 27 Mar 2007 (6 PM EDT)

Discussion: Two $2 million bidders tied at the market-clearing rate, one ended up with a partial funding of $537,000 and one ended with zero, so had Zions made more money available, it could received total deposits of $3.6 million at 5.506% rate.

Wells Fargo marked the one-year anniversary of its first blog, Guided by History, with a Q&A today with the bank's Social Media VP, Ed Terpening. The post appeared in the the bank's Student LoanDown blog (post here), which just made it past the six-month mark. I've already weighed in on its blogging strategy (see previous coverage here), so I won't repeat myself.

The bank is experimenting with a number of social media outlets to extend its brand and see what works and what doesn't. Not all of these will pan out. The MySpace presence seems like a long shot, but then again, the cost is negligible so it's worth a try. Wells Fargo has wisely not posted a pure "banking" presence, but instead used one a character from its StageCoach Island game (see screenshot below). 

Bottom line: The bank's willingness to try new things has created an impressive lists of "firsts:"   

• First U.S. bank with a blog (though Verity Credit Union beat them to it by more than a year)
• First bank with a student loan blog
• First bank with a business banking blog
• First bank in the world with a Second Life presence
• First bank on MySpace at <www.myspace.com/stagecoachisland>, really more an extension of its StageCoach Island game which also has its own blog here (see below; though several credit unions beat them to it)
• First bank with 2, 3, and 4 blogs
• First bank with an avatar persona on MySpace
• First bank with a VP Social Media (who appears to be proactively reaching out to the blogging community)

I've been an Expedia regular for 10 years, so I only check Orbitz on occasion. But I was there today and was impressed with what they are doing in mobile alerts. You'll have to read the next Online Banking Report for all the details (note 1), but I wanted to pass on one idea that could be used by banks and credit unions today.

I call it an alert ticker. What it does it track the number of OrbitzTLC alerts sent to customers (see it in action here). The odometer-like counter rolls over about once per second and currently reads 87,794,309 (see inset). ING Direct has done the same thing for many years with the total interest earned by its savings customers. 

Below the ticker is another feature that financial institutions supporting voice-mail alerts should consider, a quick trial entry form. Users can type in any phone number, landline or mobile, to receive a sample voice message alert (note 2). Those entering a mobile number can also receive a sample text message by checking the lower box (note 3).

Notes:

1. Online Banking Report #140 will be available in early April.

2. They didn't ask for mobile phone carrier, so Orbitz must send a message to all the major carriers, e.g., yourphone#@cingular.com, yourphone#@verizon.net, and so on figuring the right one will get through eventually.

3. It's been three hours and I've received neither a voice message or text message. 

4. Banks should also take a page from Southwest Airline's Ding service (see coverage here and here).

The nascent market of online social or person-to-person (P2P) lending turned two as its pioneer, UK-based Zopa, celebrated its second birthday today. In addition to slapping a this enormous "2" button on its homepage (see screenshot below), the company marked the occasion with an open house at its headquarters, an online lunch-time webcast, and an online giveaway of ten iPod shuffles (see the text of the email message sent to Zopa lenders and borrowers here).

The Latest Numbers out of Zopa

According to Easier Finance (thanks to PaymentsNews for the link):

• Zopa has 135,000 members
• Zopa lenders have received on average 6.75% before-tax annual return after fees and defaults
• Zopa borrowers have obtained loans at rates as low as 4.2% APR
• The current default rate is only 20 basis points, 0.2%

Zopa continues to create a considerable buzz in the UK. The company's homepage links to 42 articles from a diverse range of publications, most recently The Sunday Times and The Daily Mirror. And my favorite, an awesome piece from the UK's public-service Channel 4, that is unlike anything I've ever seen on U.S. news (click the play button below). 

The YouTube replay of the 4-minute feature was posted to Zopa's blog March 1 along with TV clips from CNBC and Fresno, CA news. The Channel 4 piece covers the topic of "social lending" in general and primarily covers Zopa, but near the end, another UK alternative lender is interviewed, Fair Finance <fairfinance.co.uk> is interviewed. We'll look at Fair Finance in a separate post.

Evidently, Wells Fargo has found blogging religion. Not only is it the only major U.S. financial institution with a blog, but it now has not one, not two, but FOUR public blogs.

Here's the lineup:

Previously reported:

• Guided by History: The bank's first blog, a community service resource that began in March.
• The Student LoanDown: An excellent blog launched in September to support the bank's student loan business. We've reported on it here and here.

Launched in August, but not previously reported:

• Commercial Electronic Office (CEO) Blog: This B2B blog supports the bank's Commercial Electronic Office business portal. It launched August 10, but is not listed on the bank's blog index page <blog.wellsfargo.com> or on the bank's main website. Our initial reaction: The CEO Blog is an all-business affair with 39 posts in four months, a good rate for a business blog (see screenshot below). We'll take a closer look in a future post.

Newcomer:

• Stagecoach Island Community: Another good-looking blog (see screenshot below) launched Nov. 27 supporting the bank's Second Life-inspired virtual world Stagecoach Island (see our coverage here).

Since its September launch,  Your Credit Advisor <yourcreditadvisor.com> has posted several trendy lists to attract traffic to its credit card application portal. The latest entry, "Top 25 Web 2.0 Apps for Money, Finance, and Investment."

The article includes helpful summaries of each site's capabilities. It's a good jumping-off point to do a little outside-the-box thinking about Web-based finance (see also, Online Banking Report #135/136, "How to Web-2.0 your Online Banking").

This list includes:

• Two loan sites: Zopa and Prosper (see previous coverage here)
• Six personal finances sites: Three we've covered: Dimewise, foonance, ioweyou (see our previous coverage here) and three new entrants: NetworthIQ, MedBillManager and Wesabe, a fascinating social money site we'll cover later this week
• Five real estate sites: Homethinking, iiProperty, Rentometer (owned by iiProperty), Trulia, and Zillow (see our Zillow coverage here)
• Two miscellaneous sites: PayScale, cFares
• Ten investment sites: BullPoo, Motley Fool's CAPS, DigStock, FeelingBullish, GStock, MoneyTwins (foreign currency), SaneBull, StockTickr, WikiFinancial

Royal Bank of Canada (RBC) launched a blog Tuesday, becoming the second largest North American bank in the so-called blogosphere. Wells Fargo was the first (see coverage  here). Thanks to Colin at BankWatch for the tip.

The RBC blog is part of a larger effort, The RBC Next Great Innovator Challenge, a marketing campaign aimed at rewarding innovation among Canadian college students (see main page below, note the Second Life-like avatar on the right).

The team of college students that develops the most innovative idea in the area of "teens and financial services," in 2,500 words or less, wins CDN$20,000. The top five teams will present their ideas to RDC management. Runnerups receive CDN$1,500 to $10,000 (total prize pool is CDN$40,000). Registration closed Oct. 31, with final presentations scheduled for early 2007.

Analysis
From a marketing perspective, there is much to like about this effort that:

• Positions the bank as innovative and striving to be even more innovative
• Generates a tremendous amount of positive press, both at the outset of the program and later as finalists are selected, then as winners are announced
• Drives traffic to its website
• Brings in new student accounts (it is no coincidence that the program launched during back-to-school time)
• Impresses the parents by rewarding creative teamwork by their kids
• Provides a large number of ideas that RBC can use in future bank products and student banking efforts
• Identifies potential future employees among the contestants
• Impresses Canadian businesses with the bank's support of young entrepreneurs

It's surprising that the bank didn't start a blog until the content closed, but better late than never. The blog will still serve as a great way to continue the momentum as the contest moves through the selection process. We'll take a closer look after it's been running for a few weeks.

For some time now, branch/ATM locators have been standard feature on banking websites. They began in the late 1990s as crude lists providing an address and maybe a phone number.

Today, locator tools are more robust, with branch hours, maps, pictures, and more. Still, many provide a simple listing instead of the locations pinpointed on a map. 

For example, here's the output from a search at Sovereign Bank for all branches and ATMs in zip code 10019 (click on inset for closeup).

The list is well laid out, but you must wade through it to find the closest branch, then drill down through the links to find more details and a map.

Compare that to the tool at Bank-Anywhere.com <bank-anywhere.com>, a mashup of Google Maps and the FDIC branch location database <www.fdic.gov>. Here's a list of all banks in my zip code 98115. Clicking on the bank icon or the list on the right side triggers a pop-up callout with additional info.

Branch-Anywhere is in public beta after a Sept. 15 launch (see its blog). The company behind it is Dash Space, a Vancouver, BC-based developer with such a low profile they don't appear on Google searches. They did respond promptly to our email questions (email here).

Analysis
Financial institutions should consider using a similar approach on their websites and either program the function themselves, or outsource it to Bank-Anywhere.com or others. It is important for this logical link to make a good first impression with potential customers of your bank. The Ajax-based map not only looks more sophisticated and up-to-date, but also is easier to use.

We are starting to see RSS feeds used at public financial institutions, primarily to keep shareholders up-to-date on new filings and press releases.

Consumer feeds are still relatively rare, but are growing quickly. By this time next year, we predict as many as half of all major U.S. banks and credit unions will be producing feeds as part of their online marketing mix.*

One bank in front of the curve is Beverly Hills-based City National Bank <www.cnb.com>. The bank has seven RSS feeds and three podcasts (see below). They've even added an RSS feed button on the bottom of most website pages (see End Notes). The podcasts are just read-throughs of the articles. That's OK, but the bank should let customers know not to bother subscribing to both. 

Newsfeeds
The newsfeeds are geared primarily towards business users (2 feeds) and shareholders (3 feeds), but there's also a Personal Finance feed and a Market Perspectives feed. The bank has published three Personal Finance articles so far: the first on Aug. 16; another two weeks later on Aug. 30; then, after a two-month hiatus, a third one today.

Podcasts
The bank is also podcasting more thoroughly than we've seen before, with not one but two monthly podcasts: personal finance and international business. The company also produces a weekly market perspectives podcast (see list below). Users can subscribe to the audio reports via a newsfeed (RSS) or directly into Apple's iTunes using the appropriate button.

*Preliminary forecast. See the final forecast numbers in our upcoming report, Online Banking Report #135, Web 2.0-itizing your Bank (to be published in early November).

End Notes (click on link below for more screenshots)

City National homepage includes links to newsfeeds (lower left)
Note also: link to remote deposit capture service (mid-page)

RSS page loads whenever clicking on an RSS link from another City National page (see RSS button in lower-right corner)

City National podcast directory (note the integrated iTunes button)

Mortgagebot LLC, the online mortgage spinoff from M&I, has introduced an online widget for its clients (see Fairwinds CU version inset). The widget allows users to keep current mortgage rates visible on their desktop.

Typically, it would appeal primarily to someone currently in the market for a mortgage or refi where an 1/8 difference in rate can add up to thousands over the life of the loan. 

So far, seven of Mortgagebot's 600 clients have posted the widget at Yahoo's widget center; however, many more offer the service through their websites.

The first widget posted on Yahoo was uploaded Aug. 28 for Northwest Savings Bank and has been downloaded 711 times. In total, the Mortgagebot widget has been downloaded 2,200 times.

• Northwest Savings Bank (national), 711 downloads since Aug. 28
• Fairwinds Credit Union (Florida), 215 downloads since Sept. 27
• Vista Federal Credit Union (California), 330 downloads since Sept. 27
• Gateway Community Bank (Iowa, Nebraska), 275 downloads since Oct. 2
• Northwest Bank (national), 351 downloads
  since Oct. 3 
• Macon Bank (North Carolina), 216 downloads
  since Oct. 12
• Riverside Bank of Florida, 127 downloads
  since Oct. 12

For more information on creating a desktop presence, read Online Banking Report #85, Grabbing Desktop Mindshare. Also see our previous coverage here.

Toronto Electrical Utilities Credit Union <teucu.com>, the ninth North American financial institution blog, and third in Canada, debuted Aug. 15 at <teucu.ca/blog>. The other eight are listed here.

The CU has done a reasonably good job keeping the blog alive with 11 posts in its first two months. The posts have been all business, ranging from notice of an ATM service interruption to a discussion of loan options.

The CU allows comments, and so far 13 have been posted. None were particularly interesting, mostly "thanks for the info." That will change as users understand what blog comments are for (i.e., furthering the "conversation" or adding some informational value).

The blog runs on Google's free Blogger platform (see screenshot below). It's an OK start, but the CU should invest a few hundred dollars in upgrading the template as soon as possible.

TEUCU publicizes the blog in a prominent spot on its homepage (see inset).

Thanks to the guys at Trabian for the scoop.

Although you may have little interest in the niche market for person-to-person loans (previous coverage here), you should keep tabs on the websites of Zopa and Prosper to see how they build a community of borrowers and lenders.

The new Zopa homepage (see screenshot below) features several interesting community-involvement devices:

1. "I'd like to meet..." tool in upper left
2. Community factoid ticker running across the middle of the screen (see list of factoids below)
3. Community tab in primary navigation (top)

"I'd Like to Meet" tool
This tool, placed in one of the most-viewed areas of the homepage (upper left), allows users to find like borrowers and lenders. Using drop-down boxes, users may narrow their search to just borrowers in a single city, or those of a certain age or age range, and so on (see inset). 

Unfortunately, we were unable to see the results since our search queries just showed an endless "search in progress" graphic image.

Community factoid ticker
Even though scrolling tickers are annoying, they do draw attention. Since Zopa must make prospective users comfortable with its novel service, it makes sense to be mildly annoying to get the point across that Zopa is a vibrant and fast-growing community. However, the 3-minute cycle time (before stopping) is too long; a 30-second scroll along with a link to more factoids would be better.

In our test at 7:00 PM London time Oct. 18, there were 17 items running across the screen in this order: 

• 1,571 Johns have joined since we launched ...
• 4,350 members have registered so far this month ...
• 480 Zopa members have logged into their accounts today ...
• 553 Sarahs have joined Zopa so far ...
• Adrian from HULL has just joined ...
• In the last hour, 8 new members joined ...
• Lorraine just offered 50 to Zopa borrowers ...
• Mark from OXFORD just had a loan reserved in the B market ...
• More members come from London than anywhere else ...
• The average age of a Zopa member is 36 ...
• The last member from the Isle of Wight to lend was Laurence ...
• The last person to join from Aberdeen was Clare ...
• The most common name amongst Zopa members is David ...
• There have been 4,875 requests for loan quotes in the last 24 hours ...
• Thomas recently paid in using their debit card ...
• We have 595 members from Leicester ...
• Yesterday, 251 new members signed up ...

Community tab
The Community tab in the site's main navigation leads to a page jammed with more community-building features and tools including (see screenshot below):

• Company blog
• Member discussion board
• Finance news as gathered by "Zopa and friends"
• Zopa newsletter
• Member story (monthly feature)

Summary
A good effort by the person-to-person lending pioneer. We look forward to the company's U.S. launch while passing along our regrets to the recent passing of its founder Richard Duvall (memorialized in this Oct. 17 Zopa blog entry).

We've come a long, long way since the dawn of the commercial Web, which in banking began in May 1995 when Wells Fargo posted the first customer statement on a website.

Back then, when we talked about virtual banking, we meant Internet banking. Now, there's the very distinct possibility that banks and credit unions will set up shop in virtual worlds such as Second Life from Linden Lab <secondlife.com>.

Let's call it truly virtual banking. Second Life, with more than 940,000 users, allows the exchange of virtual Linden dollars for real greenbacks, currently at a rate of L$273 to US$1. Due to the possibility of real profits from virtual activities, this metaverse has attracted more than 10,000 businesses including Starwood Hotels and others (see Analysis below). 

Apparently, the first real-world bank with a truly virtual presence is none other than Wells Fargo, whose Stagecoach Island debuted in Second Life late last year. However, after a few months the site was moved to a standalone site with no connection to Second Life <stagecoachisland.com> (see screenshot below).

In Second Life, the private island was accessible only to Wells Fargo customers who received an invite from the bank. Normal Second Lifers could not gain entry. Users were given a $30 stake in virtual cash. Although the island tempts them with various ways to spend it, the goal is to save, with interest paid at the rate of 10% per day. Users can earn additional cash by taking finance-oriented online quizzes.

The stated purpose of Stagecoach Island is financial education. It is part of a larger program aimed at younger adults. The We Take the Fun of Money Seriously program was piloted in Austin and San Diego last year. Here's an excerpt from the Sept. 14, 2005, press release:

Wells Fargo is hosting a series of live "We Take the Fun of Money Seriously" events throughout Austin and San Diego during September and October where young adults can participate in various activities — from karaoke and trivia games to athletic challenges and photo booths — and win prizes while learning about banking basics. Event participants will receive the Web address and a unique log-in code for the Stagecoach Island software and will have the opportunity to play the online game at home for 30 days.

Apparently, the pilot was successful. This year, the program was used at summer rock concerts, primarily a dozen venues of The Warped Tour, and at 19 college campuses this fall. The first stop was Aug. 20 at the University of Nebraska and the tour ends Nov. 1 at Central Washington.

The bank was assisted by Swivel Media, a San Francisco-based marketing firm which hosts a Web page and short video devoted to the game at <www.swivelmedia.com/fun_money.htm>. According to a July blog post at Clickable Culture, the company paid $17,000 to Second Life freelancers to build the game.

Analysis
Online gaming, or advergaming as it's sometimes called, is a good way to make an impression with younger users, even though it may be difficult to create a game not considered totally lame by the target audience. We recommend keeping it simple, and bribing the target audience with numerous prizes.

The bigger issue, whether to create a presence in Second Life and/or other metaverses, is more complicated. Several major brands have recently taken the plunge including American Apparel, Starwood Hotels, and others.

The Starwood's program is interesting. They are using the Second Life hotel project, aloft, to create a buzz for a real-world brand they intend to introduce in 2008 under the same name. The hotel's Second Life effort is chronicled in its own blog, <virtualloft.com>, which includes a virtual grand opening featuring Ben Folds scheduled Oct. 19.

Financial institutions, looking to create some buzz, should consider a presence in Second Life. With an expected population of one million by year-end, the marketing opportunities within the metaverse are intriguing. But more importantly, a Web-based blog and marketing campaign could yield millions of free impressions for online and offline media.

However, this is not as easy as it seems. There are numerous risks and obstacles that must be overcome. The largest banking operation in Second Life, Ginko Financial <ginkofinancial.com> which lends Linden dollars at 44% interest, has been plagued with accusations of fraud, specifically of being a Ponzi scheme (read Reuters article here). There have also been recent incidents of Second Life hacking that have caused problems.

But the biggest risk is to your reputation. Not only are you vulnerable to the whims of the game players, you also risk being associated with the more adult-themed activities in Second Life. Before taking the plunge, you should have a staffer join the metaverse and consult with seasoned players for advice on proper "game etiquette" (remember "netiquette" ten years ago?). You want to make sure you position yourself as "less lame" than the average financial institution.

But those risks are manageable; in fact, they are similar to the problems you deal with in the real world. And given the potential buzz from a successful Second Life brand, it's worth your while to investigate the potential.

P.S. If you think this is all a fad, consider the source of the Ginko Financial article cited above. It was written by a new full-time reporter from Reuters who works IN Second Life (see NY Times story here).

Resources:

• Sept. 2005, CNET article on Wells Fargo's Second Life promotion (15 Sep 05)
• Aug. 2006, BusinessWeek article on Starwood Hotel's virtual hotel in Second Life
• June 2006, BusinessWeek article on American Apparel's store in Second Life
• Oct. 2006, brief article on the overall economics from Silicon Vally Bank
• Today's Reuters story on Ginko Financial

While the number of external blogs at U.S. banks and credit unions can be counted on your fingers today, that won't last. Here's the eight we've heard about:

• Bank of Internet (MyRVBank and Senior BofI)
• First Tech Credit Union (began April 2006; see screenshot below)
• Forum Credit Union
• Savings & Loan Credit Union (Australia)
• Service One Credit Union
• Vancity Credit Union (Canada)
• Verity CU (began Dec. 2004)
• Wells Fargo Bank (began March 2006)

Source: OpenSourceCU.com, Online Banking Report

Trends
The New York Times reported last Wednesday on the expected explosion of business blogging. Citing statistics from Nancy Flynn, director of the ePolicy Institute and author of Blog Rules, it is estimated that only 4% of major corporations operate external blogs today. However, 85% more plan to do likewise. Among small business, 10% have already incorporated blogs into their marketing plans. 

Bank blogging forecast
We are in the process of developing a blogging forecast for release in November's Online Banking Report. Our preliminary estimate is that within two years, there will be at least 500 bank and credit union blogs.

It's no suprise that credit unions would jump on this trend; it fits right in with their membership and community focus. For example, Seattle's Verity CU has been blogging for almost two years (see 29 Aug 06). The unexpected first mover among major financial institutions is Wells Fargo (see 23 Sep 06), which has two blogs and six months' experience under its belt.

Action Items
If you pride yourself on having a state-of-the-art website, you'll want to add a blog in 2007. You can start with something relatively simple, such as First Tech Credit Union's news and announcement service. Then you can graduate to the more advanced versions with real personality, such as Verity Credit Union's and Wells Fargo's Student Loandown.

In mid-August, Facebook, the popular social networking site aimed at college students, alums, and now a few select corporations has released a simple personal finance application. The original name was FaceBank (see screenshot at bottom of article), but recently it was renamed MoochSpot (click on screenshot below for closeup).

MoochSpot allows Facebook users to loan (i.e., spot), borrow (mooch), and settle debts with other Facebook users. At this point there is no payment capabilities, so the money must change hands through other methods.

Here's how it works:

1. Create a "piggy bank" to track the funds
2. Select a Facebook friend from the list that automatically shows in the MoochSpot list (note, in our screenshot below, we don't have any predesignated friends, so the list is empty)
3. Enter the amount of the loan
4. (Optional) Enter a reason for the loan

Analysis
MoochSpot was developed, not because of huge user demand to track personal debts, but to showcase the type of application that can be built by outside developers using the recently released Facebook APIs. MoochSpot is highlighted on the Facebook developer's page <developers.facebook.com>.

BillMonk, the self-proclaimed "social money" site which allows debts to be split and tracked via website or mobile phone (see NB Apr 30), is the first financial services provider to jump on the bandwagon and create Facebook integration (in inset, see Facebook login in lower-right of BillMonk's homepage). We tried on several computers to get it to work and were unable to get past the Facebook login. We'll check back in a few days to see if they have the bugs worked out.

Financial institutions looking to create online banking sites that click with college students should pay close attention to BillMonk and MoochSpot. It would be relatively simple for a bank to use the Facebook API to develop even more powerful payment applications that combine the loan-tracking benefits of MoochSpot with actual epayment capabilities to move money back and forth among friends. While it wouldn't do anything that Paypal doesn't do today, the integration within online banking is important.

But the biggest reason to integrate with Facebook, MySpace, or any other 20-something social network is because it positions yourself as a bank or CU that understands the younger generation. And make sure you have genuine 20-somethings designing the marketing and writing the blog copy.

Appendix:

Below is the original FaceBank application prior to changing the name to MoochSpot:

According to Web-design firm Trabian <trabian.com>, one of its clients, Lower East Side People's Federal Credit Union <lespfcu.org>, is redesigning its website to include many so-called Web 2.0 features including RSS, blogging, and integration with the photo-website Flickr and Upcoming.org, a user-fed events calendar owned by Yahoo.

So far, the most common Web 2.0 feature is an RSS feed, since it requires minimal programming or repurposing of content. Just about any timely content posted online can be delivered directly to the user's browser or newsreader through RSS techniques. For example, in Canada, Vancouver's North Shore Credit Union <nscu.com> now publishes rate updates through RSS (see above), and Madison, WI-based UW Credit Union <uwcu.org> offers 10 different feeds in its education area (see inset).

Analysis
It's encouraging to see financial institutions begin to embrace newer collaborative technologies available online. We are not surprised to see credit unions lead the way. During the very early days, circa 1995/1996, many of the online pioneers were credit unions, notably Stanford FCU <sfcu.org> which posted account information online in 1994 and Boeing Employees Credit Union <becu.org>, which had the tenth largest online banking-user base in the world in early 1996.

While financial institutions still need to act like "grownups" on the Web (see note 1), younger banking customers in the "MySpace generation" (15- to 24-year olds) will grow up expecting certain things from the businesses they choose to patronize. For example:

• Instant-messaging access to customer service
• RSS feeds for service-related messages, such as holiday closures or systems maintenance
• RSS feeds for bill reminders and other alerts
• Open forums to post questions and review answers to others' questions
• Aggregating content from other sites, including competitors'
• A modern Web 2.0 design (see note 2)

Endnotes:

1. That's why we don't think it's such a great idea for financial institutions to post profiles on MySpace (e.g., Land of Lincoln Credit Union <myspace.com/llcu>). To prospective customers over 30, it looks rather silly. To those under 30, I suspect it looks incredibly lame. 
2. According to Seen Creative Group's <areyouseen.com> Nick Adams, a Web 2.0 look includes "large fonts, lots of white space, and big shiny buttons."
3. See also, Banking the MySpace Generation, (NB Mar. 16)

Verity CU <veritycu.com>, a large Seattle-based credit union with a field of membership spanning the entire state, has been operating a public blog using Google's Blogger since December 2004 (click on inset for closeup), making it perhaps the oldest-running financial institution blog (let me know if you have one that started prior to Dec. 13, 2004).

Fourteen contributers are listed, more than 10% of the 105-person employee base. Each author has a profile posted online, making it a great way for members to get a better understanding of the behind-the-scenes activity.

Posting activity varies. In recent months, we've seen four or five lengthy entries. This month, there are 17 articles so far. Subject matter varies from the personal ("My trip to the dentist") to more salesy stuff about the credit union.

Comments are open, but little used. There were only two non-employee comments left in August.

The website counter shows 6,613 visitors.

Analysis
Offering a blog is an excellent way to show that you care about customers/members and that you are Web-savvy. We applaud Verity for their pioneering efforts over the past 18 months. But it's time for the CU to upgrade its blog.

1. Improve the design with a masthead, better archive options, and graphic images that link back to the CU. Users expect more than the basic free blogger template from their credit union.
2. Shorten the entries and add graphics and pictures.
3. Keep the postings relevant. It's OK to have the occasional rant about Seattle traffic, but stick to things that matter to the reader. Most come to your financial institution to learn more about your company or your products. Let them go to a million other blogs for entertainment.
4. Highlight the author of each entry. Currently, the Verity author is listed in small, faint type near the bottom of each posting. You want readers to get a sense of the people doing the writing, so it's important they see the name at the top of the posting.
5. Improve the author profile info. Some author-profiles are quite skimpy. If you want credibility, the authors need to fully disclose their role at the credit union.
6. Close the comments. Blog-comment areas are fine if they are used; however, a big ZERO down there just makes it look like you're visiting a ghost blog. If you do use them, make sure they are fully moderated, i.e., no comment goes live until approved by the blog administrator.

Blog address: veritycu.blogspot.com

Launched May 16, Moneytrackin' <mo.neytrack.in> is a Web 2.0-inspired personal finance application from a Spanish developer. The free service, in public beta (looks more like alpha), has just one function, storing and categorizing transactions (click on screenshot below for a closeup). However, much more functionality is in the works (see blog here).

It's ultra-simple to use. Users can set up sub-accounts/projects on the fly then add transactions to each. Transactions can be "tagged" with as many categories as desired. A "tag cloud" runs on the bottom of the screen allowing users to click easily on any category to view the transactions. Finally, a pie chart shows a breakdown of expenses by tag.

The multi-language service is offered in English, Spanish, French, German, and in what must be unique in the personal finance space, Catalan, a Spanish dialect spoken by 10 million Southern Europeans.

For a complete run-down of personal finance functionality for online banking, check out our next Online Banking Report, available mid-August.

--JB

In today's Wall Street Journal, personal finance writer Jane Kim does a roundup of what she calls "the next wave of online banking." The impetus for the article was Yodlee's new MoneyCenter that will be available to consumers in early July. I was interviewed for the article and provided several of the examples along with the market size estimate.

In addition to Yodlee, the following developments were chronicled in the article:

• Citibank's <citibank.com> 50-fold increase in online interbank transfer limits from around $2,000 to $100,000 this summer. In what may simply be a self-serving comment made to a reporter, the bank cites the demand for its new e-Savings account as an impetus for the change.
• Commerce Bank's (NJ) Virtual Private Bank <virtualprivatebank.com> for customers with $1 million or more in investable assets.
• Wells Fargo's My Spending Report, a simple integrated spending report we discussed last year. (NB Feb. 17, 2005)
• Bank of America's <bankamerica.com> account aggregation and recently expanded account alerts.
• Chase's <chase.com> next-day bill payment.

Analysis
Although most of these examples are relatively minor improvements, it's good to see the mainstream press recognizing online banking innovations. The last few years have been dominated by security concerns, and we believe it's a great sign that reporters are looking for "what's next." It would be wise to have an answer to that question when your local paper calls.

We believe the Virtual Private Bank (VPB) from Commerce and the Yodlee system deserve closer examination. We'll cover Yodlee's new product when it goes live next month. And, although we won't be able to drop a million into Commerce Bank, we'll take the VPB for a test drive later this week.

--JB

If you'd like to learn more about the future of online banking, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.