One problem with most websites, as compared to the offline world, is that they are relatively static experiences. Unless you are already familiar with the brand, you don't know if you are the first visitor this year or if 10,000 others are banging away on the servers right now. There's no online equivalent to the "line out the door" that signals you arrived at a popular restaurant or night club.  

That's why I like online tickers that show user activity. In financial services, the best example, active for many years, is Progressive Insurance's scrolling window of rate quotes (see inset). Geezeo, Zillow and ING Direct (see note 1) have also used the technique (see previous post).

And just this month, two financial providers added similar tickers to their homepages:

• BillShrink: The personal finance tool, and FinovateStartup 2009 Best of Show winner, shows potential savings in its "live feed" in the middle of its home page (screenshot below).
• MoneyAisle: The online deposit auction site, and Finovate 2008 Best of Show winner, scrolls auction results with a 15-minute delay (screenshot below, see note 2)

Both newcomers have neglected to "time stamp" the activity to demonstrate how recent it was. That's an important aspect for credibility.

BillShrink homepage with Live Feed (16 July 2009)

 MoneyAisle's Live Ticker was recently added to its homepage
(16 July 2009)

Progressive's Rate Ticker (16 July 2009)

Notes:
1. Behind the login screen, ING Direct used to have a counter showing the total amount of interest paid to depositors. But it was discontinued last year at about the $9 billion mark. 
2. Industry participants can purchase MoneyAisle's real-time deposit pricing data stream for $1,500/year (here).

CD laddering is a great way to increase yield without sacrificing liquidity. Sophisticated savers have used the strategy, often at the suggestion of personal or private bankers. It's not rocket science, but it takes a bit more planning.

It's a trivial bit of logic to program a ladder tool into a computer or website, so it's surprising that it's rarely featured on banking sites (note 1). That may be because most financial institutions have dozens of product lines to nurture, and it's difficult to justify the resources for speciality features.

That's just the kind of thinking that creates market opportunities for startups like MoneyAisle from neoSaej. The Boston-area company, which made its public debut at Finovate 2008 (demo video here), is totally focused on deposits and can justify the investment in advanced features. In fact, their livelihood depends on it.

So it makes sense they'd be first to market with an automated CD-laddering tool. But what makes it especially impressive is that MoneyAisle users can run up to 30 simultaneous auctions placing funds in up to 30 different financial institutions (see note 2).  

In our test of a relatively simple, but typical, four-rung ladder (see below), four different financial institutions won the bidding:

• MetLife paying 2.1% for a $25,000 3-month CD
• First National Bank of Florida paying 2.3% for a $25,000 6-month CD
• Wainwright Bank paying 2.5% for a $25,000 9-month CD
• KeySource Commercial Bank paying 2.93% for a $25,000 12-month CD

And by distributing our funds into four different maturities, 3-month, 6-month, 9-month, and 12-month, we were able to increase the yield by 0.36% compared to putting it all into 3-month certificates. And we are still able to withdraw 25% of our funds every 3 months without penalty. To further increase yield, the shorter-term CDs could be reinvested into longer-term CDs at maturity, e.g., each CD could be rolled into one-year CDs at maturity to create a ladder of four 12-month CDs with one maturing every 3 months.

Advanced option: The advanced ladder is designed for users that want to spread their deposits around. The money designated for each CD maturity can be spread to two or three different banks if desired. Users may also choose up to 10 banks they want excluded from the bidding.

Simple CD ladder tool at MoneyAisle (11 Feb. 2009)

 Results from the above auction: Four $25,000 CDs of varying maturities
(11 Feb. 2009)

MoneyAisle's Advanced laddering tool (11 Feb. 2009)

Notes:
1. Bank of America has a Java-based laddering calculator here as does Citizens Bank (here) and Safe Credit Union (here).

2. The maximum number of simultaneous auctions in the simple ladder program (shown above) is 10.

3. For more information on MoneyAisle and other new lead-gen programs, see our Online Banking Report on Lead Generation and our recent report on Growing Your Deposits Online.

It's so refreshing to have some real numbers to go on, even if they are self reported. Aside from Prosper, Lending Club (here), and most recently SmartyPig (here), few of the startups we track provide meaningful metrics on their operations. That's why we use Compete website traffic estimates as a proxy for success.

Yesterday, MoneyAisle, the reverse-deposit-auction marketplace from neoSaej, released the following results for fourth quarter 2008 (press release): 

• $1.65 billion in auctions run by consumers, up three-fold from Q3 2008 (note 1)
• $100 million in deposits generated

That's not a lot, but we can make a few estimates from that info (note 2):

• Assuming 80 active bank partners, the average take per bank in Q4 was $1.25 million
• But applying the 80/20 rule to those results means that 16 banks generated about $80 million in deposits, or $5 million each
• And conversely, the remaining 64 banks brought in just $300,000 each
• Assuming the average deposit balance auctioned was $20,000, five thousand separate auction winners funded a deposit
• Assuming a commission of $37 per funded auction (note 2), neoSaej would have generated $185,000 in commission income in Q4, this is in addition to license fees and monthly maintenance fees

And for those of you who still want traffic numbers, MoneyAisle's website usage (monthly unique visitors) has been trending upwards after suffering a post-launch dip in November. In December, visitors totaled just under 20,000. 

Bottom line: It's a promising start for the company which earned an OBR Best of the Web this summer, was picked by the audience as Best of Show in October's Finovate (video here), and was recently chosen as a top-10 innovation of the year in our most recent Online Banking Report (here).

When MoneyAisle adds integrated online account opening (powered by Andera), results should be even stronger. 

Notes:
1. Deposit-generated total is 6% of total auctions run, because consumers are not obligated to make the deposit after they run the auction.

2. My speculative estimates, not provided from the company.

3. We outlined the company in a June blog post and in the pages of our Online Banking Report on New Models for Lead Generation and Online Banking Report on Growing Deposits in the Digital Age. 

As conference host, I haven't quite recovered from the whirlwind of activity yesterday. I'll post a final conference wrapup tomorrow, but I wanted to get in a quick update with the Finovate 2008 Best of Show winners. 

We had planned to award it to the top three, but there were four companies in a virtual tie at the top (note 1), so we named four winners this year.

In alphabetic order, the winners:

• CheckFree which demonstrated its new online banking platform packed with new features
• Credit Karma which showed several new features including a tool allowing "what-if" calculations with your credit file
• Mint which announced its move out of beta and demo'd several new investment management functions
• Neosaej which showed its unique MoneyAisle real-time, reverse-deposit auction service

Congratulations to these four companies and to everyone else who made the day so interesting.

About the voting
All attendees not affiliated with the presenters rated each demo on a scale of one to six. The ballots were turned in at the end of the final demo session. Approximately 70% of eligible voters turned in complete ballots.

Note:
The companies didn't finish with the same average scores, but rounding to the nearest tenth created a four-way tie.

Next up is MoneyAisle from NeoSaej. Mukesh Chatter, president & CEO, will demonstrate.

The Burlington, MA-based company launched its auction-based deposit service this summer.

MoneyAisle demonstrated a reverse auction for a CD with a winning bid of 4% APY by Commerce State Bank. The company emphasized that it's fully transparent with no ads, and the consumer can choose at the end whether they want to accept the bid and purchase the deposit.

Our parent publication, Online Banking Report, has published a new report: New Models for Lead Generation: How auctions, community recommendations, product placements, and specialized search provide alternatives to Google AdWords.

Not only is this the longest report title in our history, it's the first time we've looked specifically at lead gen sites (click on the Table of Contents right, to download the abstract).

The report was inspired by MoneyAisle, an auction-based retail deposit market, that debuted June 9. Although a few kinks need to be worked out, we are impressed by its work and are awarding it the second OBR Best of the Web this year (see note 1 and Credit Karma below).

But auctions were not the only new lead-gen model we looked at. Others included:

• Community-based deal finders such as Credit Karma, the winner of our third OBR Best of the Web award for 2008 (see screenshot below, watch Finovate Startup demo here), SmartHippo (demo), and FiLife which also launched in June
• Specialty financial search services such as BancVue/FirstROI's CheckingFinder (coverage, demo) and Mortgagebot's Mortgage Marvel (coverage, demo) both Best of Show winners at Finovate 
• Product placement in financial tools such as Mint (coverage, demo), Credit.com, FindABetterBank (demo), and Credit Karma

The report, which includes a 10-year forecast for auction and personal finance community involvement, is available as part of an annual Online Banking Report subscription or it can be purchased individually for $495 here.

Next month: New security technologies your customers are going to love, or not.

Screenshot: Credit Karma offer page: Countrywide's high-yield savings offer is rated positively by 53% of Credit Karma users and earns a composite score of 63% which also factors in clickthrough rates and exclusivity, see box in upper right (9 July 2008)

Note:
1. The first winner in 2008 was SmartyPig (here). Best of the Web awards are given for new products/features that "raise the bar" for online banking. It is neither an endorsement of the company, nor the product itself. See previous coverage here.

If you were to sit down with a blank piece of paper and design the perfect friction-free system for determining deposit rates, your invention would almost certainly include some type of competitive bidding. Over the years we've seen several banks test eBay-style auctions including PNC Bank, WaMu, and most recently Zions Direct. Those incorporated a traditional auction model, with the bank putting a deposit up for auction and selling it to the highest bidding consumer.

The latest entrant into auction-style finance, is MoneyAisle, a deposit marketplace from neoSaej, that launched today. MoneyAisle employs a reverse auction, where the consumer offers to buy an item, in this case a deposit of a certain size, and sellers bid against each other to offer the best price, in this case the highest interest rate.

In theory, MoneyAisle comes closest to the perfect deposit-pricing model. It's right out of the Economics 101 textbook. If they can get enough buyers and sellers to make it work, it could cause a serious disruption in the market for so-called high-yield savings accounts and certificates of deposit (CDs).

I really like the auction model, but there are some obstacles for it to overcome on its way to market dominance. Here are a few that come to mind: 

1. How to convince users that it's in their best interest to take the rate offered at the end of the auction? The first thing I did after seeing the 3.1% offer was to type in www.ingdirect.com and see how it compared. And given that ING was just a bit less, 3.0%, it's hard to get excited about opening a new account with an unknown bank for just 10 more basis points. Or worse yet, type "high yield savings rates" into Google and see five advertisers that can beat the 3.1% (see Google screenshot below).

2. How to make the auction's feel "real?" It seems like a game, which is not necessarily bad. Users choose a deposit product, $ amount, and their state of residence, then spin the dial. Then in real time you watch the results as banks bid against each other for your money (see Step 2 screenshot below). Then after 60 seconds or so, the winner is displayed (see Step 3 screenshot below) and you can proceed to make your deposit, provided you are satisfied with the rate and the bank making the offer. 

3. How to keep one bank from dominating the bidding? If the lowest-cost bank, or the one most skilled at cross-selling, or the one most in need of deposits, consistently bids "above-market" rates, will the remaining banks stay in the game?

4. How do you compete with the offers available via Google AdWords, another type of auction (see below)?

How it Works
After registering with a bare minimum of info (username, password, and security question only), it's a simple three-step process that couldn't be easier:

1. Decide whether you want a high-yield savings account or a CD (see step 1, screenshot below)

2. Start the auction (see step 2, screenshot below) and participating banks bid in real time via a preprogrammed, proxy bidding system

3. A few minutes later, accept the winning rate and arrange for account opening with the winning bank (see step 3, screenshot below)

In testing today, 51 banks bid on my high-yield savings account (at just after midnight Pacific Time) and 72 bid on a 1-year CD (at 5 PM Pacific Time). We were offered identical 3.1% APYs for a $5,000 savings account in Washington state and a $50,000 one in New York. When we ran an actual savings-account auction after registering, the winning bidder was Massachusetts-based Beverly National Bank with again, a 3.1% rate (see note 1). A $25,000 1-year CD in Washington earned a top bid of 3.90% by Michigan-based Isabella Bank, similar to the best rate advertised on Google.

MoneyAisle step 1: Choose a deposit product

Step 2: Watch as banks go through several rounds of bidding to reach the final rate

Step 3: Confirm you want the rate within 30 minutes and complete the rest of the form; the winning bank then contacts the customer to complete the transaction

Note:

1. The bank's bid was more than double its published rate for a $20,000 deposit. But Beverly does currently pay 3.0% APY on $100,000 balances. When I reran the auction at 5PM Pacific Time, the bid was 30 basis points higher, 3.4% from Umbrella Bank.