NetBanker

First Look: Google Wallet "Pay by Gmail" (and the Pain of Authentication)

2013-05-23T04:38:37Z

As you probably already know, last week Google launched P2P payments via Gmail (and through the Google Wallet mobile/online interface). Once authenticated, users simply "attach" funds to an email message (see inset).

Bank transfers (eg. ACH) are free while card-based payments will cost senders 2.9% of the amount, with a $0.30 minimum. However, all transactions are free for an unspecified time during the launch period.

With an estimated 400 to 500 million global Gmail users, the service has the potential to become an important method of sending money (it's only available to U.S. users at this point). However, like all U.S.-based P2P services, it's easy to send money, but not always so easy to receive it.

In my first test, I was able to claim the funds relatively easily with my four-year-old Google Wallet account. There was a short authentication process with a login, name, address, birth date and last 4 digits of my social security. After claiming the funds, I was then able to send money out of the system (note 2).

After sending my 2 cents over to Larry Page congratulating him on the launch (see screenshots below), I then sent money to my work email account. It was drop-dead simple to send the money, but I was unable to claim the money, despite already having an active Google Wallet associated with that email address.

After receiving the email notification, I went through the same authentication process as above. But after logging in and providing my personal info, I was hit with four additional out-of-wallet authentication questions, apparently pulled from public databases (I think NOT my credit bureau due to the errors..see below).

But apparently there was an error in the out-of-wallet Q&A served to me. The first two questions were obviously about me and I answered them correctly. The final two had nothing to do with me (note 6), so I answered "none of the above." But Google didn't believe me, and I was told my answers were "inconsistent" and that I could not be authenticated online.

I was invited to upload three pieces of documentation since I failed the Q&A (all required):

Picture ID (eg. drivers license)
Proof of address (eg. utility bill)
Social security card

Unfortunately, I haven't laid eyes on my social security card for several decades and haven't a clue where it is. And in 18 years of testing online account opening, no one has ever asked for it. So I'm stuck. Had someone sent me a real payment, I would be extremely frustrated, and would have to ask them to send me a check or use PayPal.

Bottom line: This is a brilliant play by Google, taking everyone by surprise. However, P2P payments (in the USA anyway) are a still a pain to receive the first time which dampens their viral growth (note 6). I understand the reasons for good authentication, though it still seems like overkill given that I was only claiming a one-cent transfer via a pre-existing and active Google Wallet account (used for more than $400 worth of purchases this year). And especially after I provided the correct name, address, birth date, social security number and two additional out-of-wallet questions.

But I know the folks from Mountain View will work the risk procedure kinks out quickly (there is a reason it's called "beta"). And if they stick with it (RIP Google Reader), Google should be able to build a critical mass of financially-authenticated users, making "gpay" as easy as using PayPal.

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How Gmail Pay works

Step 1: Craft email message and click on the "$" icon at the bottom of the compose screen

Step 2: Attach funds via Wallet balance, bank transfers, or card; then add memo if desired

Step 3: Press send

Step 4: Final chance to review

Final: Confirmation copy is place in your inbox (note 8)

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Notes:
1. During the beta test, you can only become a P2P user by first receiving funds from an existing user.
2. I have two Google Wallet accounts, one set up in 2009 and the other established in January when I got a Nexus NFC phone with built-in Wallet support. The credit card associated with both accounts was stolen earlier this year and I had to add a new card to both wallets before I could use them. This could have triggered additional authentication requirements on the second Wallet account.
3. The payment appears as a "card" within a Gmail. There is no indication in the title of the message that it might contain money (user controls the rest of the email).
4. The transaction fee was waived for my Discover Card-based payment. I assume it would be on other card types, but I didn't test that.
5. Users have the option to add a memo to the payment (in addition to what's included in the email message).
6. Ironically, if the recipient was mobile-deposit-enabled, it would be easier the first time to send a high-res image of a check that the user could take a picture of and then deposit via mobile banking. Or, for Capital One 360 users, they could simple upload the emailed image directly into their account (see post).
7. Though I suspect they could have been drawn from online info about my brother, who has a different first name and lives 2,000 miles from me.
8. Yesterday, confirmation emails went to my inbox when I sent a payments. Tonight, I am not seeing that. It's only showing in my Sent messages.
9. For more info, see our recent Online Banking Report: Digital & Mobile Wallets (published Feb 2013, subscription).

FinovateSpring 2013 Best of Show Winners

2013-05-16T16:27:23Z

After the final demos wrapped up on two fintech-packed days at FinovateSpring 2013, the audience voted for their favorite demos to ultimately decide who would be named Best of Show. The top 5 overall took home the trophies.

The winners (in alphabetical order):

FamZoo, for its prepaid card family pack

LendUp, for its LendUp Ladder loan platform that helps the underbanked build credit

MoneyDesktop, for its Target and Insight back-end data analytics and marketing platform

PayNearMe, for launching the white-labeled version of its cash payments platform

TipRanks, for its solution that brings transparency to individual investors, helping investors decide who to trust

We'll have the videos of all 72 demos posted on Finovate.com in a few weeks.

Thanks to everyone who joined the audience and came to be a part of our largest show so far. And thanks to the 77 innovators* who braved the Finovate stage.

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*Five demos hosted a co-presenting company, including Visa, MasterCard, USAlliance Credit Union, Intuit, and Paydiant

Notes on methodology:
1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.
2. Attendees were encouraged to note their favorites during each day. At the end of the last demo, they chose their three favorites.
3. The exact written instructions given to attendees: "Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed."
4. The five companies appearing on the highest percentage of submitted ballots were named Best of Show.
5. Go here for a list of previous Best of Show winners.

Mobile Marketing: USAA Embeds Preapproved Loan Offers within Mobile App

2013-05-09T18:33:31Z

Now that the U.S. personal credit crisis of 2008 to 2010 is in the rear-view mirror (but still visible), banks and credit unions are getting more aggressive with credit. And guess what new marketing vehicle is available in 2013 that didn't exist 5 years ago? Yep, mobile this and mobile that.

So far, the sales component in mobile banking has been minimal. Generally, users must already be a customer of the bank and even pre-registered with online banking. And cross selling? About the only thing you can buy remotely is an ATM withdrawal.

But that will change as more customers only deal with their bank and cards through mobile apps, a number that is already pushing 30% of the online banking base of Bank of America (see previous post).

Eventually, most financial products will be sold through the mobile app. Not convinced? Look internationally where mobile was a thing even before the iPhone. I still remember Bankinter's 2007 BAI Retail Delivery presentation where they said 20% of their retail interest-rate swaps where done via mobile phone.

In the United States, we are starting to see banks pushing the envelope. USAA has been the leader in most areas. So no surprise that they are the first (that I know of) to place preapproved credit offers within their mobile app (see screenshots below).

In the bank's Dec. 2012 update (see inset), it added the ability to:

Accept pre-approvals in the app
Apply for checking and savings accounts in the app
Apply for life insurance after getting a quote in the app

Bottom line: The power of the preapproved credit offer is well known. Traditionally, snail mail has been the medium of choice. But that's expensive, time consuming, and often times not delivered at the optimal moment. Delivering offers via mobile phone can solve all those problems.

And as an added bonus: The sales results will create a better business case for your entire mobile initiative.

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USAA delivers preapproved credit card offer within its mobile app (Dec 2013)
Note: Screenshots from customer with an existing USAA life insurance relationship.
Price disclosures (right screenshot) displayed after clicking "Rates and Fees" under "Accept Offer" (left screenshot)

Source: comScore Q4 2012 Mobile Financial Services Advisor

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Note: We cover online mobile delivery and marketing in depth in our subscription-based Online Banking Report.

Metrics: Mobile Banking, Payments, Insurance and Investment Usage

2013-05-08T23:18:33Z

comScore is compiling a wealth of digital usage data, both for desktop and mobile (see previous post). And luckily, they have agreed to let me share some of it here (see note 1).

The following chart is financial services usage data across 230 million U.S. mobile phone users aged 18 or older (note 2) in the United States as of year-end 2012. It includes any type of financial content, secure or public (i.e. this is not limited to secure access by account holders).

The data shows that 62 million (27%) of mobile users accessed financial content during the prior month (Dec. 2012 figures). The vast majority of those (87%) accessed bank content. Credit card or electronic payments (e.g. PayPal) were each used by about half the segment. And brokerage or insurance content was accessed by about 20% of mobile financial users.

Observation: The banking numbers have been widely circulated, but I hadn't seen recent breakouts in insurance and brokerage. Both were surprisingly high, especially insurance. If you assume there is generally one mobile financial user per household, that means that about 10% of all U.S. households are using mobile insurance info. Same on the brokerage side.

Source: comScore, compiled Dec. 2012

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Notes:
1. If you have requests, drop me a line and I'll see what I can find.
2. Users of any type of mobile phone, smartphone or otherwise. Also includes text-message queries.

Discover Card's Email Balance Alert is a Thing of Beauty

2013-05-08T05:50:58Z

While it will never hang in the Louvre, Discover Card's email alert is a true masterpiece (at least to fintech geeks). The message is nicely laid out with plenty of white space and it's chock full of links to get more information.

Here's eight specific elements I like (in no particular order). See the corresponding number on screenshot below:

1. Personalized with first name, last name and last four digits of account number; an important anti-phishing security precaution

2. Big orange button that leads to detailed transaction info

3. Table outlining the key data (yellow highlight is ours):
     - Date of notice
     - Balance limit set by user
     - Current account balance
     - Total credit line

4. Email subject line that explains exactly what's in the message (important for scanning email messages), "Your balance exceeds the limit you set". Also, note how they ease your fears by saying it's over the limit "YOU SET," which is much less of a problem than if it was over the card limit

5. Brief explanation of factors that might be impacting the balance (such as car rental holds)

6. Concise pitch for Discover's mobile app, with text message option

7. Link to log in to adjust alert settings

8. Navigational links to: Statements | Payments | Rewards

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Discover Card email balance alert (4 May 2013)
Note: Yellow highlighting is ours

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Notes:
1. We previously blogged about Discover Card alerts here
2. For more info see our report, Email Banking: Revitalizing the Channel (published 2010, subscription).

The Complete Sneak Peek of FinovateSpring 2013

2013-05-06T19:23:02Z

FinovateSpring 2013 is just 7 days away and it's now clear that the event will be our largest conference to date with more than 1,200 leading fintech innovators in attendance.

Over the last several weeks, we've finally revealed the full roster of innovative presenters (including all the companies that had been in stealth) that will take the stage to demo their latest and greatest technology.

The presenting companies have authorized us to release tantalizing tidbits about their new innovations and our research team has been slowly revealing them over on the Finovate blog.

In case you haven't seen those sneak peeks you can review them all via the links below:

From mobile to biometric security, from big data to Bitcoin, the cutting-edge of financial technology will debut next week. If these sneak peeks have whet your appetite to attend, tickets are still on sale for a few more days.

We'll see you in San Francisco in a week (or NY in September or Singapore in November)!

FinovateSpring 2013 is sponsored by: Financial Technology Partners, Hudson Cook LLP, Intuit Partner Platform, Microsoft Advertising, The Bancorp, Think! Finance, Visa & Yodlee

FinovateSpring 2013 partners include: American Bankers Association, BankersHub, Bay Area FinTech Startups, BayPay Forum, California Bankers Association, Celent, Filene Research Institute, Finance on Windows, Hotwire, IvyExec, & Western Independent Bankers.

FinTech at TechCrunch Disrupt

2013-05-04T16:18:08Z

This past week, NYC hosted TechCrunch's semi-annual tech event. TechCrunch Disrupt covers the entire tech spectrum from software to 3D printers to gaming and ecommerce. Generally, the financial vertical accounts for 2% to 3% of the companies involved. That said, several notable fintech companies have done well there. Notably, Mint won the first event in 2007. And in 2011, both InvoiceASAP (demoing at Finovate next week) and BillGuard (see post) made it to the final round, (with BillGuard finishing second overall).

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Startup Battlefield
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This year, three of the 30 "battlefield" companies that made it one stage were in fintech. One of those, Zenefits, was one of seven finalists called back to demo again to the judging panel. Enigma a public-dataset discovery and analytics startup, was the eventual winner.

1. OK'd by PaidPiper (description | demo)

Kids payment tracking and authorization service
Partnering with Vantiv
Mobile first...team has mobile background
Can also be used by small biz with their employees
Charging parents 5% of value transferred (non-starter...needs to get to monthly subscription)

2. Trustev (description | demo)

"Social fingerprinting" to provide a "Trustev score" pulled from social media and other data sources
$20 billion lost in 2012 by online merchants
27% of all online orders are reviewed by humans for potential fraud
Call themselves "Stripe for fraud"

3. Zenefits -- Battlefield Finalist (description | demo)

Free, comprehensive HR-benefits platform, monetized with health insurance commissions only
Displaces client company's health insurance broker to fund the free HR services
Co-founded by Wikinvest's Parker Conrad
Y-Combinator alum
Typically, small customers can pay up to $2,000 per year for similar services

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Startup Alley Tradeshow
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The "startup alley" is the tradeshow floor where more than 100+ startups and event sponsors have tables to talk to interested parties. There were eight more fintech companies there:

ePaisa: Mobile POS startup
EXP Commerce: Futures market for consumer products
PayTango: YC company authorizing payments with fingerprint biometrics
Peela: Brazilian gift card provider "gift cards on steroids"
Purchext: Parental spending control system using sale receipt capture/OCR (now) and/or NFC (soon)
Taclaro.com: Brazilian online insurance supermarket
TouchtoPay : Fingerprint-based payment system
YourCapital: Algorithmic financial advice for DIYers

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Panel Discussion
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Financial subjects come up throughout the program, for example three VCs over the three days mentioned that they were putting money into Bitcoin. But there was only one focused financial-services session, a panel entitled, Show Me the Money.

Panel members: PayPal (Hill Ferguson, VP), Stripe (John Collison, Co-founder), Gumroad (Sahil Lavinga, Founder)

PayPal launched "login with PayPal" today
Stripe is powering Walmart's new Goodies food-subscription service
PayPal used to buy $7 billion annually in digital goods (music, online gaming, etc)

Announcing FinovateAsia 2013 -- Register Now to Watch the Future of Asian Fintech Debut in November!

2013-05-02T18:37:01Z

We're very excited to announce that on November 14th we will be returning to Singapore to showcase the latest innovations in Asian financial technology at our second annual FinovateAsia conference.

Last year, FinovateAsia welcomed an inaugural crowd of 350 executives who witnessed 35 new fintech innovations debut via our signature demo-only format. The feedback from both presenters and attendees was overwhelmingly positive and we expect the event to grow significantly this year.

The videos of the last year's FinovateAsia demos are in the Finovate Archives if you want to revisit the 2012 innovations and whet your appetite for this November.

If your company is interested in debuting your latest and greatest at the premier Asian event for fintech innovation, please email us at asia@finovate.com for more details.

If you're interested in attending FinovateAsia to watch the future of fintech unfold live on stage, tickets are now on sale for the event at the lowest price that we'll offer.

We'll see you in Singapore in November!

P.S. If you can't wait until then to learn about the latest in financial technology there are still a few tickets left for FinovateSpring (less than 2 weeks away in San Francisco!).

FinovateAsia 2013 is sponsored by: The Bancorp, Citi Ventures, Financial Technology Partners, Standard Chartered Bank, and Visa

FinovateAsia 2013 is partners with: BankersHub, Celent, Finance on Windows, and The Emerging Finance

Mobile Monday: Insurance Companies Expand App Functionality to Keep Users Engaged

2013-04-29T01:42:45Z

Insurance companies have put together some of the more engaging mobile apps in the financial space. But then, really, they have little choice. Unlike banks, insurance carriers (not including health) don't have the luxury of a locked-in audience checking their account multiple times each week (note 1).

Unless you are in the middle of a claim, how often are you going to pull up your provider's mobile app? (If you even remember you downloaded it). Maybe when the bill is due, if you are in the minority not on automatic payment. Maybe every few years when you switch out a vehicle or decide to tweak your coverage. But on average, it's just not going to be top of mind (or phone).

Yet, insurance companies have a big incentive to get you to use it:

Process improvements, cost savings and a better customer experience when filing a claim

Smartphone users can do much of the claims process, including online monitoring, right from within their app (see USAA inset). They can even use the smartphone to snap pictures and shoot video right at the accident site. This could have a dramatic impact on claims management and fraud protection. Smartphone apps can also be used to track driver performance to improve underwriting and fine-tune prices.

So, insurance companies go over the top to make the app memorable and engaging. The examples below provide a glimpse of the breadth of insurance company mobile services.

GEICO has eight apps. Besides the usual functionality is its main app, users may choose from three different skins (see #1 below). Either the famous gecko lizard, or the newer baby pig, or the standard corporate logo.
State Farm has four apps including MoveTools for planning and scheduling a household move (#2 below).
Allstate has eight apps ranging from typical policy holder stuff, to apps that track your home inventory (#3 below), driving performance (#4) and motorcycle trips (#5).

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1. GEICO lets chooser change the app "skin" (26 April 2013)
Note: The default app uses the famous lizard in the background. But I changed it to the pig which is now shown on the main screen.

2. State Farm MoveTools helps plan a household move (iPad)

3. Allstate's Digital Locker for tracking home inventory

4. Allstate's Drivewise app syncs with special hardware to track driving performance

5. Allstate's GoodRide is designed for motorcycle enthusiasts

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Note:
1. This is one of the reasons why we believe banks have a huge opportunity in all types of insurance. See our full report here (Dec 2011, subscription)

FinDesign: Making it Easy for Visitors to Find Online/Mobile Banking Features

2013-04-25T02:04:17Z

I know our readers have passed graduate level coursework in digital banking. But sometimes, even the PhD candidates need a refresher in the basics. Here's a fundamental that too many financial institutions neglect:

Make it super easy for visitors (non-customers especially) to find information about online and mobile banking

Just about every bank has an obvious login button in the top-right or top-left corners (or Chase who has it plastered in the middle). That's fine for existing customers. But what about those simply shopping banks? You would think that online/mobile capabilities are pretty important to someone checking you out online!

The big-four U.S. banks do a good job exposing online and mobile features. Citibank is especially focused with its "bank online....make memories offline" tagline mid-page (screenshot below).

But finding the online banking features often requires menu hunting (see BofA, Chase, and Wells below) and/or promotion scanning (see Citibank, Wells and Atlantic Regional FCU below). And sometimes, it's below the fold (Sterling Bank, BECU) or a screen away (see Comerica below).

Bottom line: You don't want to get too cute with the fundamentals. That's why we like the direct approach of both U.S. Bank and Bank of American Fork who position Online Banking as the first tab in their primary navigation (screenshots below). Alternatively, startups Moven and Simple use page-dominating screenshots of their mobile app to position themselves with mobile bankers (see below).

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Bank of American Fork
No, that's not a typo. This community bank blankets American Fork, Utah, with its 13 branches. It places online banking in its own tab, plus it launches a huge mega-menu detailing all the personal and business online and mobile features. (Plus it has cookies, the kind you eat, in one of the four rotating promotions).

US Bank
US Bank is the only one with an "online banking" tab. And it's positioned in the pole position. Mobile banking is listed in the mega-menu.

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The big 4 (alpha order)

Bank of America
While it's not in the main tab, both online and mobile are mentioned on mega-menu displayed when you hover over the "Bank" tab. And there is an online banking promo in the lower left.

Chase
Similar approach to Bank of America. However, online and mobile are buried pretty far down the popup mega-menu.

Citibank
Citi does not beat around the bush. Their entire homepage is devoted to driving users to online banking (first screenshot). And those that launch the mega-menu, see online banking, billpay & Popmoney at the top (second screenshot). However, the bank has no mention of "mobile" anywhere.

Wells Fargo
Online & mobile have the top position under "Banking" on the homepage. In addition, there are promotions and links scattered about the homepage.

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Other examples

Atlantic Regional Federal Credit Union (link)
If you don't have online banking in the main nav, you need to compensate elsewhere. Atlantic Regional's BancVue-designed site uses the fashionable full-page graphic to draw attention to its four rotating promotions. Number 2 leads shown below leads directly to online banking info. The CU is also running a mobile banking announcement across the top of the page.

Bank Simple
Simple turns the double-play with an excellent welcome video and a snazzy shot of its iPhone app in action.

Moven Bank
Moven is all about the mobile, and visitors can't miss that with the page-dominating visual.

Comerica
The bank currently has no mention of online banking on its homepage. However, once a visitor goes to the Personal or Small Business page, it is listed on the drop-down mega-menu.

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Note: We cover financial website and mobile design issues periodically in our Online Banking Report (subscription).

In Defense of Bank Branch Doubters

2013-04-23T01:31:16Z

Since I became an online banking proponent twenty years ago, literally betting my family's future on it by starting Online Banking Report, I've been a bit pessimistic about the future of branch banking. My personal experiences both as a consumer, and small biz owner (one of the segments that supposedly needs the branch the most) have ranged from pleasant to mind-numbingly frustrating.

Yes, consumers like having branches around. Yes, consumers still go there to open checking accounts. And yes, consumers still value branch location when deciding where to bank.

All those things are nice. And even the biggest branch bear recognizes that those are powerful positive attributes. And for the record, I've can't recall anyone saying that branches will quickly disappear or "die" (at least not in the pre-Brett King era). Most of the doubters have simply said they expect branches to become less relevant over time (note 1).

My main problem has always revolved around the branch's cost effectiveness. Sure, you open a few accounts every week at the branch, but what would happen if you had 50% fewer branches? Would you lose 50% of your new accounts? Or would 90% of those would-be-customers just go to one of your other branches or open via online/mobile (especially if you offered state-of-the-art online account opening technology). What's the ROI of a branch network with 50% lower costs that opens just 5% fewer checking accounts? And could those cost savings be moved into efforts that more than made up for the 5% fewer accounts?

There isn't a single answer to that question. Some segments need the branch more than others. As Ron Shevlin pointed out two weeks ago, it depends on your strategy and execution.

But for the mass market, especially the next generation of parents, homeowners, and car buyers, the branch's ROI (if it's positive at all) will lag a similar investment made in alternative channels. Can I prove it? Nope, there are too many variables. It's an exercise that must be carried out by each and every participant based on your market and strategies.

Bottom line: The bank branch will still be relevant for another few decades at least. But I'm willing to bet a copy of Bank 4.0 that the number of United States bank branches will fall at least 20,000 (20%) by 2020. Although, it's not really about the number, it's about reducing their overall cost. So if banks dramatically downsize the footprint, such as Wells Fargo's new 1200 sq. footer in Washington DC, the total number of branches may stay at a relatively high level.

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Note:
1. In my 2006 report, The Demise of the Branch, I called it a "40-year cycle," specifically projecting a 40% decline in number of U.S. branches by 2025, with total square feet falling by 55%.

StreetOwl Gamifies Driving to Improve Safety and Lower Insurance Premiums

2013-04-19T21:07:58Z

During the past few years, I've unleashed two teenagers on the streets of Seattle (sorry). They are careful drivers, but they are very inexperienced. Both would rather hop on the bus, or let me drive, than navigate the congestion, curves, and freeways of Seattle.

The younger one is still in the permit stage, so he doesn't have free rein quite yet. But once he becomes fully licensed, I'd love to get tangible feedback on his driving to make sure he continues to play it safe. And I bet our insurance company would like that info even more.

So, the smartphone-based auto-tracking systems seems like a win-win, at least for the parents and their insurance company. But San Francisco-based StreetOwl (note 2) has figured out a way to make it a win for the kids too. The company uses an age-old tactic: bribery.

Its RefuelMe iPhone app tracks driving behavior, earning points for proper speed, acceleration, braking and cornering (see below left). It's a lot like the Fitbit exercise tracker, which I've become ~~obsessed~~ ~~with~~ quite fond of recently.

Young drivers earn awards established by their parents. In the example below right, you can see that the driver is about 1% of their way to earning a $25 Chevron card. Results are tracked both in app (parent and child versions) and at the RefuelMe desktop dashboard.

The company plans on keeping it free and is looking to partnerships with high schools and others to get it in the hands of more teens (and their parents).

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Analysis

While I think most parents see the value here, it's also a difficult concept to monetize. There is a real education challenge to get trial, and an even harder problem of getting people to pay for it.

So the company has developed a version that is more tied into insurance savings, which has universal appeal. The idea is that the app can prove to the insurance company how super safe your driving habits are, then you can be rewarded with a lower price. And since Smart Owl is serving as a value-added matchmaker, they can be rewarded handsomely by the carrier (see last screenshot below).

Initially StreetOwl sees this a lead-gen program. But the startup is also in discussions with insurance companies about using the technology in place of dedicated hardware to power usage-based insurance. It could also be bundled with youth banking programs and/or PFMs as a value-add.

You can give RefuelMe a test run now. But the insurance lead-gen product is still in private beta and is expected to be released wider within a few months.

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RefuelMe iPhone app (18 April 2013)
Left: scoring system Right: Dashboard with rewards

StreetOwl website

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Notes:
1. Hat tip to Venture Beat
2. StreetOwl is currently raising $750,000 in seed capital through Angel List. Ofer Raz and Jason Hovey are co-founders.
3. For more on banks offering insurance, see our full report here (Dec 2011, subscription)

Chase Delivers Prepaid Liquid Cards Instantly In-Branch

2013-04-17T01:20:59Z

While I'm not a branch banking proponent, most of my experiences have been pleasant. But, I can't remember a complex transaction or problem resolution that was handled "beyond my expectations." That said, the crew at Chase Bank (Wedgwood), treats us very well and even reads this blog (hi Ben), and that's saying something.

But the Chase branch did beat expectation this past Saturday. My son was leaving on a school trip that night. I wanted to send him with a prepaid card for unforeseen travel expenses. I had a collection of cards in a drawer that I'd tested over the years. But for a variety of reasons they were all unusable (expired, dormant or just not working).

So, I figured I'd just buy him a throwaway card at Safeway. But I really wanted one that was easy to reload online in case he ran in to a cash jam (note 2). Since there is a Chase branch next to my usual Saturday coffee stop, I dropped by on the off-chance they could issue them on the spot.

I was ~~shocked~~ pleasantly surprised to find out the bank's relatively new Liquid card was in stock and the opening process took less than 10 minutes, faster than a trip to Safeway. And the card was immediately linked to my online banking where I could transfer funds into the card.

It was the ultimate in convenience: no new passwords to remember, new UI's to traverse, or complex reloading procedures to figure out. The card does have a $4.95 monthly fee, but with no reloading costs, I think that's fair (note 1).

Bottom line: While I can't speak for the overall ROI of the branch on Saturday mornings (I was the only person there during my 10-15 min visit at 9:30 AM April 13), I was a very happy customer, who added another service to my Chase banking relationship, and created positive word of mouth (note 3).

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Notes:
1. After I'd already committed to buying, I found out the monthly fee would be waived based on our business relationship. But that wasn't part of my purchasing decision.
2. My son has apparently lost the card before I could even publish the blog post. So I will soon be experiencing Chase's lost card customer service.
3. Disclosure: We do not accept blog advertising or affiliate deals, so this is not a paid endorsement. Chase is a Finovate customer (newsletter, event tickets) like many of the companies mentioned here.

Duke Energy Advertises Savings Account Alternative on NYTimes.com

2013-04-15T17:13:46Z

Above a Paul Krugman Bitcoin commentary on NYTimes.com today, Duke Energy is pitching Premier Notes, a liquid savings account alternative that pays 1.5% for "deposits" of $50,000 or more, 1.3% for $10,000, or 1.1% for less than $10,000 (see screenshot below). Minimum opening amount is $1,000. There is no online application, but you can print a PDF and mail it back with your check.

The timing of the advertisement is no coincidence. March and April are the months when deposit balances swell temporarily with tax refunds.

The Duke Energy rate is pegged at 0.25% higher than the taxable money market average, though that benchmark is essentially zero right now (2 basis points last week). So, it's hard to know whether this is a promotional rate that could decline to 27 bps in the near future, of if Duke Energy will keep it above the highest bank rates. That will likely depend on how much money they attract.

The notes were introduced in early 2011, and have carried similar rates since for at least the past year. A May 2012 post at DepositAccounts.com lists the top rate at 1.6% and lowest tier at 1.25%. Apparently, GE and Ford offer similar programs. Those two are both paying 1.0% (for $10k) and 1.1% (for $50k+).

Bottom line: Banks have been competing for deposits with non-insured money market vehicles for decades. So, this isn't a new threat, nor one that you are going to lose sleep over. But it could become a material issue if more non-financial companies target the retail saver.

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Duke Energy banner ad in today's NT Times website (link, 15 April 2013)
Note: Capital One 360 maintains its NYTimes.com presence in the small upper-right-corner logo

Duke Energy Premier Notes landing page (link)

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Note:
1. For more info, see our Online Banking Report (Nov. 2008, subscription) detailing various ways to leverage your online/mobile channel to boost deposits.

Fees: Regions Adds Time-Based Charge to Remote Deposits

2013-04-12T01:05:59Z

Retail bankers, we've had a sighting of that very rare bird, the North American Newfee. It was thought to have gone extinct in the fall of 2011, when anti-bankers shot down the last breeding pair, a malformed $5 debit card fee at Bank of America.

But surprise. Regions Bank has gone out on a limb and put a fee on the newest banking feature to sweep the nation, remote check deposit. And the bank didn't settle for the standard per-use fee (in trial at U.S. Bank), Regions got creative with a tiered price dependent on how fast you want the money (see note 1 for exact wording):

Immediate >>> 1% to 3% of check amount, with $5 minimum
Same night (8 pm cutoff) >>> $3 per check
Two days >>> $0.50 per check

There is also a potential $1 additional fee to temporarily raise your daily deposit limit to deposit a large check.

My take: I think Regions is smart to add fee(s) for the huge value mobile deposit delivers, though I think it would be better as part of a feature-laden bundle sold on a monthly subscription fee (note 2).

But tiered pricing is a novel idea worth trying. And I like the three options. But its probably too complicated for new users, at least the way it's presented in Regions FAQ (note 3). Also confusing matters, is the extra buck for checks larger than the user's limit. It's asking a lot for customers to decide among three options, especially when having to decipher jargon and timing rules such as "Funds are available during posting."

The multi-choice pricing scheme is an example of the paradox of choice. A theory (and direct marketing rule of thumb) that says you should keep choices to a minimum otherwise recipients become overwhelmed and just give up.

I think the bank would be better off starting with just two tiers, normal and expedited. Then introducing the third tier in v2.0 next year.

But overall, congratulations to Regions for braving the unknown to see if this newfee has wings (note 6).

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Notes:
1. Here's how the fee is explained in the FAQ:

A somewhat better explanation is included on the mobile banking page:

2. For more info on fee-based banking services, our Online Banking Report on fee-based online services (subscription, May 2011).
3. Hopefully, the choices are better explained within the mobile user interface, which I was unable to see.
4. As expected, the initial reviews from Apple app users are harsh. Currently the bank has just a 1.5 star rating on the new version of the app containing mobile deposit. Down from 2 stars previously.
5. Sorry for the prolonged bird metaphor. Sometimes you get bored at the keyboard (keybored?). It's also our second bird-themed post on fees. What's that about?
6. American Banker: http://www.americanbanker.com/issues/178_66/regions-offers-mobile-deposit-for-a-fee-1058090-1.html?