As conference host, I haven't quite recovered from the whirlwind of activity yesterday. I'll post a final conference wrap-up 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 that allows you to conduct "what-if" calculations with your credit file
• Mint which announced its move out of beta and demoed 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 exact 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 do the demo.

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, just 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, it has a few kinks to work 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 ten-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 not an endorsement of the company or even 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 few obstacles 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 are 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 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.