One of the biggest themes at our upcoming FINOVATE 2007: DEMOing the Future of Online Finance (here) is the interesting developments in the online personal finance space (see lineup below).

As we mentioned last week, the race to add personal financial management (PFM) features to online banking sites is just getting started. To some extent, every bank and credit union supporting online banking already offers extensive personal finance functionality. Think back on how the average person managed day-to-day finances prior to 1997: telephone calls, ATM slips, or in my case, the moment of terror once per month when opening the monthly bank statement.

But now that everyone offers base level PFM, the new race is to provide advanced features to hold on to customers, attract new ones, and potentially cross-sell complimentary products such as debt consolidation, mortgage refis, insurance and so on (see note 1). We also hope to see some fee income from the new features, either through elevated checking account fees, or with premium online banking surcharges (note 2). The latter appears unlikely to happen in the United States unless Bank of America starts charging fees.

At FINOVATE we'll see demos from five key players:

• Two industry veterans, both two-time OBR Best of the Web winners, will be launching significant new versions this fall: Digital Insight (Intuit) and Yodlee
• Two "class of 2007" new startups: Jwaala (coverage here) and Mint (coverage here)
• And Geezeo, which recently changed its name and moved aggressively into personal finance (coverage here)

Digital Insight (Intuit)
One of the most intriguing acquisitions in online banking in the past ten years was Intuit's purchase last year of online banking platform provider Digital Insight (see coverage here and here). Everyone expected the merged companies to push hard on personal finance, the core of Intuit's much-admired brand. I've had a chance to see the Personal FinanceWorks and Small Business FinanceWorks demos several times and came away impressed. Combined with the depth of Digital Insight's client base, these products have a chance to become the online banking standard within a few years. Intuit is a two-time OBR Best of the Web winner with its Web-based tax services.

Yodlee
Yodlee used to be known as "that account aggregation company." But over the years they've worked hard to shed that image and morph into a full-service financial tools provider. The company offers account-opening tools, bill payment services, personal financial management, long-term archives, and, yes, account aggregation, although it's now more integrated with the company's other services, especially its MoneyCenter personal financial manager. MoneyCenter is the engine behind Bank of America's MyPortfolio which helped Yodlee win its second OBR Best of the Web (see coverage here).    

Notes:

1. For more info on online personal finance, see Online Banking Report #132/133 and #142/143.

2. For more info on premium online banking pricing, see Online Banking Report #109.

Yesterday, I participated on a panel that delivered a program called Extreme Online Makeovers to community bank execs at ABA's National Community Bank Convention in Palm Springs. The star of our panel was Valley National Bank of New Mexico <vnbnm.com> CIO Richard Carlisle.

He described how his 25,000-customer bank took their website from an IT-designed animation-heavy site to a slimmed down, Web 2.0-inspired gem with the help of Digital Insight. See below for before and after screenshots.

The redesigned website, quietly launched online at the first of the year, has already tripled site visits, increased online banking registrations by 20%, and increased average time on the site by 50%. The bank is so happy with the website they intend to feature it in multi-media advertising campaigns later this year.

Before                                                                      After 

Analysis
Here's what we like about the new site:

• Extremely limited use of text on the homepage, about 50 words. That's a few more than Google, but still 75% less than a typical banking homepage.
• Good use of color: The blues are very soothing, and the restrained use of two shades of orange add life to the site while directing attention to the key area for most users, the online banking login.
• Fits easily on a single screen: This is a no-scroll homepage on nearly any computer, and the liquid design means it will shrink or expand to fit most-common monitor sizes and resolution scenarios.  
• Rotating image: Today, the site rotated through four different graphical images, each connected to a different area or bank promotion. And they are not all just "happy family" pics, but make good use of local imagery to showcase its position as the home-town bank (see after screenshot above).
• Large and prominent search box: Although the site-search box is not located in the standard, upper-right corner, its large size and prominent position make it much easier to find for most users.

There is still work to be done (Business Banking, Giving Back and Community Calendar are all under construction), but overall, it's an excellent example of why you should consider making your homepage simpler and more focused. 

1View Network

www.1viewnetwork.com

The latest entrant in the statement aggregation business, 1ViewNetwork was snapped up by Digital Insight in a $50 million stock deal, just days after it first appeared on our radar screen; founder Mike Lanza was CEO of ebilling pioneer Just In Time Solutions

Home banking vendors are beginning to release business modules for their Net banking platforms. Four are currently available or about to ship. Many more are in the wings.

Digital Insight

www.diginsite.com

26025 Mureau Road
Calabasas, CA 91302
Phone: (818) 871-0000
Fax: (818) 878-7555

Key Execs:
Paul Fiore, EVP & Co-Founder
John Dorman, President & CEO

The Company: The privately held company was founded in July 1995 by Paul Fiore and Daniel Jacoby. The company employs 76 and had 1997 revenues of $5 million. Historic strength in building turnkey Web sites for credit unions. Launched Web banking services in March, 1996. Of 243 live clients, 235 (97%) use Digital Insight to host their Web sites, 187 (77%) used the company to build their Webs, and 125 offer transactional Web banking through the company. Total Web banking enrollment is 236,000 for an average of 1,900 members per financial institution.

Business Banking Program: Prizm Internet Cash Management was launched in April, 1998, with Community Credit Union (Plano, TX; $500 million; 125,000 members) as its first client.

Edify

www.edify.com

2840 San Tomas Expressway
Santa Clara, CA 95051
phone: (408) 982-2000
Fax: (408) 982-0777

Key Execs:
Jeffrey Crowe is President and Co-founder
Bill Soward is VP Product Marketing

The Company: Edify is a public company (EDFY) founded in 1990. For the 12 months ended Sept. 30, sales were $67 million, profits were $655,000, and total employment stood at 349. The company has 1,100 clients worldwide, 150 in financial services. It’s Electronic Banking System is a full-featured online banking platform priced at $150,000+ and used by pioneers Net.B@nk, CompuBank, Harris Bank and others.

Business Banking Program: Edify announced the Business Banking Suite on Sept. 23. It runs on top of the company’s Electronic Banking System and is scheduled to ship in Q4 1998.

Home Financial Network

www.homeatm.com

55 Green Farms Road
Westport, CT 06880
Phone: (203) 341-7000
Fax: (203) 341-7442

Key Execs:
Daniel Schley, CEO; Eric Jacobsen, President & COO
Tom Dittrich, VP Marketing

The Company: The privately held 52-person company was founded in Sept. 1995 by two MECA Software executives, Daniel Schley and Eric Jacobson. According to the company, its clients have achieved 9% penetration (percentage of customers using online banking) with 87% activation rates, and support costs under $0.30 per customer per month. The company’s first product, HomeATM, a direct-dial program, was launched in March, 1997. Six months later the product was ported to the Web and dubbed HomeATM-Internet Version. The company offers flexible pricing options including a pay-as-you-go model and has seven clients live, six in beta, and others in various stages of development.

Business Banking Program: The company is in the launching a business version of its software called, what else, BusinessATM. It is expected to ship in fourth quarter.

Q-UP Systems

www.qup.com

8303 N. Mopac, Suite B450
Austin, TX 78759
Phone: (512) 342-9910
Fax: (512) 342-9921

Key Execs:
Dan Martin is President
Wade Sanders is Director of Sales

The Company: The privately held company was founded in 1995 and employs just 30. Its total client base stands at 97, with 78 licensing its Internet Banking System launched in Nov. 1996. See the demo at www.secure-banking.com Besides the usual online banking functions, Q-UP includes a number of value-adds such as stock quotes, weather forecast, radar and time of day.

Business Banking Program: Q-UP was an early entrant in business banking, launching the Cash Management module in Sept. 1997. It features wire transfers, ACH origination, direct deposit, tax payments, and more. So far, 52 banks have licensed Cash Management, making it the leading seller in the category.

Digital Insight released its latest user counts for Internet banking across its 38 credit union clients offering Web-based account access. At the end of March, 27,000 households were signed on to use its AXIS Home Banking System, double the number of users four months ago. The total has been growing at 3,000/mo clip. Two DI clients provided detailed results:

Digital Insight has 145 clients live on the Web, 70 of those already offer, or plan to offer, Web-based account access through Digital Insight. Separately, the company received a $6 million cash infusion from Menlo Ventures, a Silicon Valley’s VC firm with $710 million under management.

The Web dominated the news throughout 1996. As well it should have. We completely agree with David Weisman of Forrester Research that the Internet is the fourth channel for delivering financial services. Joining in-person, mail and telephone channels as an essential part of every financial institution’s marketing and delivery mix.

The following chart summarizes what we think were the year’s most significant developments in Web banking. From Liberty Financial’s WebSaver annuity to Carolina First’s newest division, Atlanta Internet Bank, these new products, services, and strategies provide a glimpse of how the fourth channel will be leveraged in the future.

Top Story
Top honors go to APL Federal Credit Union (Laurel, MD; $97 million) which in July used Digital Insight’s turnkey Web services to become the fifteenth financial institution in the world to offer online account access. Why is that so significant? APL has only 8,000 members! Yet, because Web-based services can be implemented so inexpensively, APL was able to beat giants such as Citibank, Chase, and Nations to the market with Web-based checking account access.