Every time I visit Quicken Loans, I find something else to like about this lender's online efforts (previous coverage here). Here's the two latest from today's homepage:

• News flash on homepage announcing today's rate action at the Fed, complete with brief mortgage sales pitch (middle of page). This screenshot was taken at 3:30 PM Pacific Standard Time, about four hours after the Fed decision was announced.
• Call center wait times posted. Each time I've checked (today and last week), it said "Wait time is less than 10 seconds." (upper right corner ... see also closeup below). The 800-number is part of the header across every page.

Close up of call center area in upper right:

Last week, I may have jumped the gun when I thought I'd found a bank using Twitter (post here). It's pretty apparent that E*Trade is not officially involved with that Twitter account.

But the ever diligent Ann-Marie Murphy was quick to add to the comments that her company, Quicken Loans, is *really* using Twitter to support its Quizzle personal finance site (see Quizzle coverage here). Beginning Feb. 22, the mortgage lender has posted 52 updates through last week (those would be called "tweets" if you are a real geek). That's about one per day, a good steady flow, without inundating the follower. 

Here's Murphy's rationale for using Twitter:

We've found it to be a great way to chat with our site visitors, get honest and helpful feedback to make the site better and give interesting home-related tips to followers. I especially like the instantaneous feedback. Ask a question, get a bunch of answers from folks who enjoy helping others.

Now this is what a real Twitter update stream looks like, complete with custom design. Nice.

In August 1997, QSpace (now owned by Experian) was first to bring credit report data to the Web. The cost was $12 per report (see note 1), a price that has changed little over the ensuing 10 years.

Three years later, in October 2000, WorthKnowing.com introduced the concept of ad-supported (i.e., free) credit scores (see Online Banking Report, #66, article reprinted here). But the company failed to make it through the dot-com crash and ceased operations (note 2). Both QSpace and WorthKnowing earned OBR Best of the Web awards for their innovations.

It took seven years for the concept to reemerge, but now two Bay Area rivals are offering free credit bureau info in exchange for permission to present credit and other product offers. And just as I was about to finish this post yesterday, Quicken Loans introduced Quizzle, a personal finance/credit portal that also offers free credit bureau info (yesterday's post here).

Here are the players:

•  Credit Karma: This San Francisco-based startup, with backing from Prosper's Chris Larsen, is delivering an actual credit score computed by TransUnion, one of the three major U.S. credit bureaus. It does not precisely match the commonly used FICO score from Fair Isaac. And the scale is different, with a top score of 900 instead of 850. The credit score service is still in closed beta, but we'll see if we can get some invites from the company. Credit Karma will be presenting at our FINOVATE Startup conference April 29 in San Francisco, if you want to meet the team behind this new service.
•  Credit.com: Another San Francisco company, but one that dates back to 1995, recently launched a similar system, called the Credit Report Card. Credit.com CEO, Adam Levine, presented his other company, Identity Theft 911, at our inaugural FINOVATE conference last fall in NYC (video here). Credit.com provides a full evaluation of your actual TransUnion credit report and assigns letter grades to five different components of the overall score (see third screenshot below). The score is shown on a chart at the top that appears to top out at 850. The report is extremely well done. Like Credit Karma, the company earns fees from targeted offers. In our case, we were given a choice of applying for two Citibank cards.   
• Quizzle powered by Quicken Loans: Quizzle's business model is completely different because it's run by a financial institution instead of a lead generation site. The idea here is to get customers and prospective customers to use Quizzle frequently so that when the time comes for a new mortgage, the user remembers to apply at Quicken Loans. See yesterday's post for a complete overview.

Credit Karma homepage (15 Feb. 2008)

Credit.com Credit Report Card homepage (15 Feb 2008)

Credit.com Credit Report Card (top portion, detailed analysis of each section not shown)

Note:

1. QSpace charged $12 for the first credit report, then $5 each to reorder. Data was from Experian (see Online Banking Report #28).

2. TransUnion now owns the WorthKnowing domain name.

Two years ago, computerized personal financial management was a two-horse race: Intuit's Quicken vs. Microsoft Money. Both full-featured. Both relatively easy to use. But both were packaged software apps, clearly not the future of consumer computing.

Fast forward to 2008: We now have two dozen startups, several banks, and other financial stalwarts, offering online personal finance of every size and shape (see Online Banking Report 142/143 and 131/132).

The latest entrant: Quicken Loans, which launched an open beta of Quizzle, an online budget and personal finance portal that features home values, mortgage advice, and free credit reports/scores from Experian (see note 1).

Quizzle also calculates what it calls your Quizzle score based on your credit score, home value, savings, debt, and household income/expenses (see second screenshot, below). Debt payments are imported from credit report data, but users can edit the information or add other items to improve the results.

Quizzle also provides home-value estimates calculated from public records, but in my case, it's no Zillow, and listed a home value that was significantly wrong (see note 1).  But it's simple to edit the number with your own estimate. Quicken Loans should consider tapping Zillow's API to provide a second opinion.

The sign-up process
Signup is simple with users providing name, address, birth date, email address, income, and home-purchase date. Email address is verified with a message that must be confirmed. Then identity is verified online using data pulled from the Experian credit bureau.

This is the same procedure used by every online credit-report provider with one huge exception. Quicken Loans DOES NOT REQUIRE A SOCIAL SECURITY NUMBER, a huge usability and privacy gain. The company is allowing credit-report access based on a name/address/birth date match. That's a welcome improvement for the user.

Analysis
There are a few rough edges in the tool. The home-equity portion is not well explained. In my example, my home value was shown to be about $50,000 more than the loan balance. However, in the equity portion of the tool, it showed that my home equity to be zero. Evidently, the site uses an 80% LTV criteria to calculate the amount of home equity available to lend against. While that's a perfectly reasonable assumption in today's credit environment, it should be spelled out in detail.

But overall, it's a great tool. The really free credit report and score alone are enough of a payback to gain consumer usage. The rest of the Quizzle score is less useful, but still interesting. And seeing it all in one place is fantastic. It will be interesting to see how Quicken Loans pulls me back to the site in the future.

Quizzle is off to a great start, and I look forward to seeing more companies, including banks, credit unions, and card issuers, integrate credit scores/reports into their online offerings (see note 2).

Overall scores:
    Look and feel (user interface) ==> A
    Credit information ==> A+
    Other tools ==> B
 

Quizzle home (18 Feb. 2008, prior to entering a ZIP code)

Overview pages showing the makeup of the overall Quizzle score
(upper right)

Note:

1. Quizzle uses a 900-point scale for credit scores, padding 50 points to everyone's score compared to Fair Isaac's FICO that tops out at 850. This makes you feel a little better about your score. No doubt, credit score inflation will continue, with someone using a 1,000-point scale in the near future. 

2. WaMu has provided free credit scores to credit card customers for several years.

An interesting aspect of blogging is that when you get something wrong, you are quickly called on it, oftentimes through public comments. While I hate making mistakes, I like the fact that it's easy to correct the record with an update to the original entry.

So I was glad to see the comment yesterday from Ann-Marie Murphy (here) informing me, and the world, that Quicken Loans has been publishing a blog for more than a year. Making them, not PayPal, the second major U.S. financial-services company to blog. And after looking at it, I was doubly glad she took the time to comment, because it's a top-notch blog and it gives me the chance to do something I've always wanted to do, work Dave Matthews Band into a blog post. I figured if Ron Shevlin can blog about the Grateful Dead four times (here), I can at least slip in one DMB mention.    

The well-designed Quicken Loans blog is called "What's the Diff" and is run under its own URL <www.whatsthediff.com>. It features stories written by employees, and guest bloggers, about making a difference in the world. Published entries win a slick t-shirt.

It just so happens that the most recent entry chronicles the experience of Quicken summer intern, Mark Messing, as he helped push stuck vehicles out of the mud-filled parking lot at the Cuyahoga Falls DMB concert (see note 1). It's well written and exudes a positive, can-do attitude that leaves the reader with good feelings about the company.   

The Quicken Loans blog is more of a recruiting tool than a marketing device. Notice the big red button on the right asking, "Are you the difference?" That's designed to attract high-achievers to apply for a position with the company. Clicking on the button brings job candidates to an attractive "careers" landing page that carries the same "The Diff" theme, and has its own URL <www.quickenloanscareers.com>. It's very well done. That attention to detail in the recruiting process no doubt helps it achieve its position in the Fortune and ComputerWorld 100 best places to work. 

The only gripe I have with THE DIFF is the 3-column layout with the blog entries in the middle. While not uncommon, blog readers tend to expect the posts to be in the far-left column. This non-standard layout makes it slightly harder to navigate for first-time visitors. But this layout does help expose more content, so it's not a terrible tradeoff.  

Grade: A+

Note:

1. Like Mark, I've been stuck in the endless line out of the parking lot at The Gorge here in Washington state, most recently this past Sunday night. But instead of waiting in line for an hour, we got out of our car and visited with some friends we'd met that night. Now that's not a good enough story to make the What's the Diff blog, but it does help me win a bet!

On Tuesday, Google began publishing usage information for its popular gadgets here. That's Google's name for widgets that can be imbedded on personal start pages including, but not limited to, the personalized version of Google's homepage at <google.com/ig> or PC desktops running Google desktop. 

For example, I have three Google gadgets running on my XP laptop, a snow globe displaying the crummy Seattle weather conditions and forecast, a Weatherbug widget showing the conditions where I'd rather be, and a calculator (click on inset for a closeup). 

Listed below are the most-popular gadgets last week (note 1) and their approximate pageviews (note 2). The only one related to financial services was a currency converter, which surprisingly was the 19th most popular gadget, with an estimated 2.8 million views last week. In addition, two other currency converters had another 1.1 million page views, bringing the category to just shy of 4 million. Use this list to generate ideas on non-financial content that could be added to your website to increase its appeal.

In the Finance category, only 10 English-language gadgets had more than 100,000 pageviews. After currency conversion, the two biggest were a stock tracker with 900,000 and a loan calculator with 500,000 (see Table 2, below).

Analysis
The growing popularity of gadgets and widgets provides an opportunity for financial institutions to develop branded gadgets for various functions, such as monitoring rates, calculating exchange rates, and tracking stock and commodity indexes (for more info, see note 1). We looked at several widgets last year including the Mortgagebot-produced mortgage rate tracker and the Mac-only bill pay tracking widget from billQ (see previous coverage here). 

Most of the gadgets at Google were developed by outsiders. In its instructions to developers, the company claims you could write a gadget in five minutes (see instructions here). Even if it took five days, the payoff could be impressive. For example, the only financial brand with a Google gadget is Quicken Loans <quickenloans.com> which posted an attractive rate tracker and payment calculator (see inset). Although its gadget had only 7,000 pageviews last week, that's still 350,000 annualized. An impressive return for a trivial programming expense.

Table 1: Most popular Google Gadgets across all categories

More than 100 million
131 million >>> Date & Time (only "default" gadget on Google's personalized start page)

More than 10 million
39 million >>>> Driving directions
27 million >>>> Daily horoscopes
27 million >>>> Wikipedia
14 million >>>> Word of the day
13 million >>>> Dictionary.com

More than 5 million
9.5 million >>> Search YouTube
8.9 million >>> Current moon phase
8.1 million >>> PacMan v2.0
6.2 million >>> NASA image of the day
5.5 million >>> Babelfish

More than 2 million
4.9 million >>> Google Maps
4.5 million >>> Free Sudoku puzzles
3.6 million >>> Art of the Day
3.4 million >>> Bible verse of the day
3.2 million >>> DIGG viewer (posted by Digg.com)
3.0 million >>> Simple calc
2.9 million >>> World clocks 
2.8 million >>> Currency converter
2.7 million >>> IP address lookup
2.6 million >>> Hangman (word game)
2.4 million >>> National Geographic photo of the day
2.4 million >>> Calendar
2.2 million >>> My webcam
2.1 million >>> Famous optical illusions
2.1 million >>> Countdown

More than 1 million
1.9 million >>> Crossword of the day
1.9 million >>> Free text messages
1.7 million >>> Interesting photos of the day
1.6 million >>> A joke a day
1.6 million >>> To do
1.6 million >>> Local NWS radar
1.5 million >>> Google docs and spreadsheets
1.5 million >>> This day in history
1.4 million >>> Mighty optical illusions
1.4 million >>> Romantic quote of the day
1.4 million >>> Your daily horoscope
1.3 million >>> Local gas prices
1.3 million >>> Search eBay
1.3 million >>> Spellcheck
1.2 million >>> Brain teasers
1.2 million >>> US Traffic info
1.2 million >>> My Google groups
1.1 million >>> Weather by Weather.com
1.1 million >>> My IP
1.1 million >>> Today in history
1.1 million >>> Terror alert level
1.1 million >>> Braingle - daily brain teaser
1.0 million >>> Frogger
1.0 million >>> Yahoo mail

Table 2: Most popular Google gadgets in the Finance category

2.8 million >>> Currency converter (pixelmedia.nl)
910,000 >>> Stock portfolio
800,000 >>> Currency converter (donalobrien.net)
500,000 >>> Loan calculator
300,000 >>> Stockchart
270,000 >>> Currency converter (ac-markets.com)
210,000 >>> Crude oil watch
160,000 >>> Bombay stock exchange
120,000 >>> Mortgage rate watch
110,000 >>> Live gold

-----------------------------
Source: Online Banking Report search at Google, 1 March 2007

Notes:

1. We looked at traffic levels of the first 264 gadgets listed under "popular" at Google's gadget directory: http://www.google.com/ig/directory?synd=open&source=gpvl&num=24&cat=finance

2. Google's explanation of the pageview count:

Gadget pageview statistics are approximate only-- for precise statistics, we recommend the use of Google Analytics inside your gadgets. Gadget pageviews represent the number of times that the gadget was rendered, including Google Personalized Homepage, Google Pages, Blogger, Google Desktop, and across thousands of independent pages around the web.

3. For more information on the broader subject of delivering financial services direct to the user's desktop, see our Online Banking Report #85, Grabbing Desktop Mindshare, which is a bit outdated, published in 2002, but still worth a look.

Account Aggregation 2.0

It’s been one year since we first profiled financial account aggregation pioneer VerticalOne  . Account aggregation, aka statement aggregation, which we named the number one milestone of 1999, has generated an unusual amount of controversy during its first year, especially given how few customers actually use it (see Table 1 below).

If you are thinking about adding the service within the next 12 months, first ask yourself these questions. Will account aggregation:

1.       Drive new business?

2.       Cement our relationship with users?

3.       Increase profitable cross sales to existing users?

4.       Improve service quality and/or reduce service costs?

We think that for 2000 and 2001 most banks will answer no to all four questions. Does that mean you shouldn’t push forward with an aggregation service? Not necessarily. Account aggregation will be a critical online banking feature in the future. Yahoo’s launch of account aggregation on Aug. 30 certainly boosts awareness of the feature. But with a forecast of only 600,000 users prior to 2002 (3% of online banking HHs), it’s a question of priorities. Before you add a relatively unknown service such as account aggregation, make sure you offer the features with proven customer demand, such as email statements, email alerts, interbank funds transfer, fraud protection, quick online loan decisions, and so on

households using account aggregation services

Source: OBR estimates plus or minus 50%, 8/00; Celent Communications www.celent.com , 3/20/00 & 8/1/00, Celent will be updating their forecast in a new report published by 9/30/00, includes those that have used or signed on in last 30 days

¹Total online banking HH estimates from; ²VerticalOne claims 250,000 aggregation customers but we believe a large portion will remain inactive; ³In April, Piper Jaffray estimated there would be more than 25 million users in 2003.

It’s way too early to write the definitive history of credit cards on the Net,
but here are the leaders in the online movement (so far).

First USA launched an answer to NextCard, e.card, “E-Commerce Services from First USA.”

While E-Loan and NextCard have pioneered Web-based sales and marketing tools and techniques, First USA (Wilmington, DE; $65.2 billion; 60.5 million customers), a division of Bank One (Columbus, OH), through massive marketing expenditures, has captured the lion’s share of business online. The Brittain study found that First USA’s share of online buyers was three times higher than its nearest competitor, MBNA, which is advertising on 500 of the 4,500 Web sites hosted by its affinity partners. MBNA has experienced a 20% approval rate online.

First USA’s online reach is remarkable. One analyst estimates First USA will have more than 1.5 billion online advertising impressions next year. Besides co-branded efforts with Yahoo! launched in Feb. (OBR 2/98 ) and AOL (launched in June 1996; OBR 7/96 ), the card giant has a $90-million, five-year exclusive pact with Microsoft, and will likely be part of parent Bank One’s $125-million deal with Excite.

While the company has primarily relied on co-branded offerings to build its Web-based portfolio, the company has just released its own Net-branded product, the e.card (screenshot above). The card has a great name, although the ecard.com domain is currently owned by Internet Outfitters in Santa Monica (310) 664-4800. The card features a 5% cashback feature from Amazon.com and several other merchants including eToys. Initial rate is 3.9% and normal “go to” rate is 9.9%.

The First USA e.card site www.getecard.com is obviously a work in progress as it only includes three pages: home page (left), online application, and regulatory-required terms and conditions.

NextCard (San Francisco, CA) continues to lead the race to become the first Amazon.com of financial services. Through November, the company has received more than 750,000 applications. According to the company, approval percentages are, “consistent with industry averages.” The company’s animated “2.9%/Apply Now” banners are seemingly everywhere on the Net, not surprising considering the company is now a top-20 banner advertiser and has some 2,000 affiliates pitching its product for a $10 per approved application.

Bottom line, less than 9 months from start-up, NextCard
is pulling in more than 10% of total online credit card applications—a phenomenal performance considering its deep-pocketed competition. As a result, NextCard bagged an immense $38 million round of financing in Nov. from three blue chip Silicon Valley VC firms. The money will be used to continue the company’s aggressive online marketing efforts and capitalize an Internet banking operation. We wouldn’t be surprised if they simplified the process by purchasing an existing bank or thrift.

American Express (New York; 42.7 million cardholders) has clearly been the leader in online card services, first offering online account access in February 1995 via America Online (OBR 5/95 ) and the Web in April 1997. The company’s early 1995 AOL offering also included online card member and merchant account applications. The company was also the first to integrate value-added non-financial info, primarily travel-related, into its online presence (on AOL) in 1995 and on the Web in 1996 and 1997. Finally, and most significantly, industry sources unofficially peg AmEx’s registered online base at one million. 8

Source: Online Banking Report, 11/98

Portal Banner Advertising: 1998 vs. 1997

Abbreviations: AmCent = American Century; AmDebt = AmeriDebt www.mercuryseven.com CCC = Consolidated Credit Counseling Services www.debtfree.com CityLend = City Lending, a division of City National Bank of West Virginia www.citylending.com ConsInfo = ConsumerInfo.com; DataTransAssoc = Data Transfer Association www.evsistore.com MM Int’l = Money Management International www.mmintl.com Mtg Net = MortgageNetwork.com; Mtg Qte = MortgageQuote.com; Nations CC = NationsBank credit cards; Wells = Wells Fargo

Portals, previously referred to as search engines, are used by the majority of Web users (87% in one survey). Financial services companies have been advertising on these sites since they first accepted advertising in 1995. But even as recently as 12 months ago (see table right), less then half of the lending “inventory” was used. The times have changed. This month, we found 95% usage. Of thirteen loan-related search terms across the five largest portals, only three weren’t at least partially sponsored by financial companies (“auto loan on InfoSeek, “credit card” and “personal loan” on HotBot). If you factor in partial sponsorships, financial company share of the loan terms was 86%.

The most interesting result of this research: portal advertising is dominated by non-banks including mortgage brokers, Web-based loan marketplaces, and other specialty lenders. The day we tested, only two traditional financial institutions were advertising: NationsBank was pitching its card under “credit card” on Yahoo and Infoseek; while Wells Fargo was a partial sponsor of various “loan” phrases on HotBot (see table below).

*Number of loan terms with a financial services banner ad appearing
in at least one out of 10 searches of 13 loan terms at five portals
(65 total sponsorship opportunities)

**Taking into account partial (rotating) sponsorships of certain words, the actual financial services share of loan terms is 56.1 of a maximum 65 sponsorship opportunities, or 86%.

If this trend continues, it will have profound implications on Web-based lending. In this new world, it will be necessary to partner with one or more of the new loan marketplaces: The Lending Tree, Get Smart, Quicken Mortgage, iQualify, MortgageAuction.com , eStudentLoan.com , and others.

Few companies dominate a sector the way Intuit dominates small business accounting software. According to the company, five of the six million small businesses using computers to do their books use Intuit products. Two million use QuickBooks, which accounts for eight of every 10 retail accounting software sales (source: PC Data). But with an 80% market share, Intuit must look elsewhere for growth; and financial services are a natural fit. With Intuit aggressively integrating banking and Internet functionality into QuickBooks, bankers should be on notice. Intuit and its bank partners are after your clients.

Source: Intuit, 9/98 * Online banking is available from 40 participating banks (9/4/98); online banking debuted in Quicken in Oct. 1995.

After nearly four years as a small business, we are beginning to appreciate Intuit’s strategy. QuickBooks is becoming not just an accounting program, but a place where small businesses can manage their entire customer file
. The program still suffers from the slow development cycles associated with shrink-wrapped software. But as Intuit ports the functionality to the Web, businesses will be able to log in to QuickBooks.com to manage all types of paperwork; from billing to payment processing to tax preparation; those repetitive, non-revenue producing activities that can be a continual thorn in the side (we speak from experience).

Fortunately, there are several ways to play in this game: pay Intuit for a direct connection to QuickBooks; work with other software providers; or build your own service on the Web . We believe business owners will pay considerable sums to off-load financial operations if the service provider is 100% trustworthy, has adequate capital, and a fiduciary responsibility; like a bank for instance. And we’re not talking about raising checking fees by a
buck or two. A business might conceivably pay hundreds or even thousands per month if it improves their bottom line and simplifies back office operations and paperwork . We’ve dubbed this service offering, The Virtual CFO, and we expect to see it on Web sites in late 1999.

After reviewing the latest research and projections from various technology companies and research organizations, we are sticking close to our January 1998 (OBR 1/98) forecasts for online banking usage, although we’ve slightly broadened and clarified the definition of “online banking household.”

In the past, we only counted users that had banking or bill payment activity during the past months. We’ve lengthened that window to 90 days. We also now include the relatively small number of users who access credit card and loan data online, but are not yet hooked up to their checking accounts. These changes had the effect of increasing projections by 5% to 10%.

Definition: Online Banking Household

For the purposes of our forecast, we consider a household to be using “online banking” if they have done any of the following during the past 90 days*:

•  Registered for online** access to checking, credit card or loan (including mortgage) data.

•  Signed up to pay bill(s) online.

•  Paid a monthly fee for an online banking or bill pay program.

•  Accessed balance or transaction data online for a checking account, credit card, or loan (including mortgage).

•  Authorized a bill payment online.

* Households that haven’t used the system for more than 90 days are considered non-users.

** Online is defined as any use of a computer and modem connection through a private line, proprietary dial-up connection, Quicken, Money, Managing Your Money, or the Internet; access can be from home, work, school or public terminal.

It looks like we are on track to hit our mid-range projection of 7.5 million U.S. household users by year-end 1998. Here’s what’s going on:

Negative Impacts to Forecast:

•  Bill presentment looks like a non-starter this year. We figured MSFDC, Checkfree and other bill
  
  presentment providers would have contributed a half million new users by year-end 1998.
  (Note: To fit our definition, a user need only pay a single bill online every quarter to be counted). Next year should be different, barring any unforeseen catastrophes. We figure 1 to 1.5 million incremental users industry-wide by year-end 1999.

•  Y2K debugging/hysteria is sapping more resources than anticipated.

•  The merger mania among the banking titans has diverted resources from some of the larger online banking programs, especially NationsBank, Bank of America, and Bank One.

Positive Impacts to Forecast:

•  Low mortgage rates and the proliferation of solid mortgage and home buying sites such as GetSmart, QuickenMortgage, and NextCard have resulted in higher-than-expected adoption of online lending services (see OBR 5/98).

•  Despite merger uncertainties, Internet banking has finally arrived at a number of major banks including NationsBank in February, First Chicago and Citibank in June, Fleet, PNC and National City in July; and BankBoston in August.

With the usual annual fall marketing blitzes, total online banking enrollment will likely near 10 million by year-end, resulting in 7 to 8 million households meeting our definition of “online banking” (see sidebar at left). When and if the enrollees are converted to actual users depends on how well the industry executes activation and education programs.

More importantly, migrating your online program from a pain-in-the-budget cost center to a growing profit center hinges on marketing and delivering credit products, preferably on a preapproved basis, to your captive audience of Web users.

Intuit

www.quickenmortgage.com

Intuit gets right down to business with a three-step process and a $225 discount for online applications.

Intuit’s (Mountain View, CA) QuickenMortgage site has attracted more than 1.2 million visitors and 13,000 prequalification forms since its Oct. 1997 launch (Source: company 3/97). We wonder how many were distracted by the advertising across the top of the page. You can’t have it both ways. If you are trying to engage prospects and get them to apply online, you don’t want them clicking on an ad for Quicken 98.

Two important conferences were held the third week of April. The first, sparsely attended by bankers, dealt with an issue fundamental to the future of checking accounts: Internet Billing. The second, Microsoft’s third annual Internet Banking and Brokerage conference, was attended by most major financial institutions and covered subjects crucial to the future of the banking industry itself. Here’s our notes from both.

IQPC’s first conference on Internet bill presentment was held last November in Chicago. It attracted many of the nation’s top billers but just two bankers. The second conference, held April 14-16 in San Francisco, attracted twice as many attendees but still only a couple dozen bankers from just six banks. For better or worse, most financial institutions are apparently willing to delegate the R&D in this area to vendors, consultants, and the occasional newsletter editor.

Here are the conference highlights:

•  Florida Power & Light www.fpl.com is the only biller currently presenting bills in Quicken 98, but several more companies are expected to begin within the next few months.
•  Florida Power & Light has only 2,500 online bill paying customers out of their base of
  3 million despite being the first utility to present bills on the Web beginning the summer of 1996 and being one of the first to present bills on Checkfree’s Ebill site beginning in April 1997.
•  EF&D www.efd.com launched the first bank-branded bill presentment program at Suffolk County National Bank (Riverhead, NY; $843 million) www.scnb.com The bank has two clients up on EF&D’s Billsite www.billsite.com the water company and a major lumber yard.
•  EF&D believes there is an excellent opportunity for banks to serve middle-sized billers with bill presentment services. The company reasons that large billers will be served by MSFDC and Checkfree; tiny billers will use their existing accounting programs such as QuickBooks that will be enabled for bill presentment in the near future. Mid-sized companies will be the only ones left without a cost effective presentment alternative.
•  Intuit is forecasting that 60% of U.S. households will have a PC in 2002 (up from 41-42% today).
•  Bill presentment will be available on Quicken.com by year-end; Checkfree, partially owned by Intuit, will process payments.
•  According to Intuit, within Quicken software, the bill is biller branded and the payment is bank branded (for participating banks). It’s unclear if that model will hold on Quicken.com.
•  The best lines came from Gary Craft, EC analyst with BancAmerica Robertson Stephens: “If a bank wants (to do EBP) they can knock everyone off…but we haven’t seen that happening yet;” and “Banks already have two of the three linchpins for bill presentment: eyeballs and good funds, all they need are the bills.”

Microsoft’s invitation-only event attracted some 400 banks, brokerages and solution providers. Microsoft’s presentations were well balanced, offering pros and a few cons for doing things the Microsoft way. They didn’t put Gates on stage this year. Instead, Microsoft luminary Pete Higgins ran through the “Web lifestyle,” Microsoft’s current Powerpoint du jour.

The Key Points

•  Microsoft is taking a software approach to its Web-based businesses, selling their underlying platforms as tool-kits and/or turnkey systems. Microsoft Investor www.investor.com will be made available for licensing this summer. Financial institutions will be able to use all or part of the platform to build their own stock info/trading services. Speakers hinted that other Web businesses, Expedia and the soon-to-be-released Home Advisor, would follow a similar route. (Expedia is already available on a co-branded basis, see American Express. That bodes well for banks looking to implement MSFDC’s program.
•  Microsoft Home Advisor www.homeadvisor.com is coming this summer. By partnering with Realtors, multiple listing services, and lenders, they expect to be the first Web site to offer a complete home buying experience including:
  – getting started (educational)
  – finding a neighborhood
  – finding a home
  – finding a loan
  – offer and closing
  
  Program Manager Larry Cohen, (larryco @microsoft.com) described the business model as “similar to Quicken.com,” with two revenue streams: advertising and prequalified/preapproved mortgage applications delivered to lenders for a finder’s fee. He also said there is a strong likelihood that the HomeAdvisor will be licensed for private-label versions.
  


•  MSFDC won’t be vaporware much longer. Co-president Chuck White said MSFDC has “more billers wanting to do this than we can handle.” He also released a revised implementation schedule that calls for launch of bill presentment in Q4 1998 and pay-anyone bill pay in early 1999.

  Mr. White promised that its pay-anyone service would be more compelling because it would address many of the “timing” issues associated with current programs. During the Q&A he predicted that 15% of U.S. households would be using online bill presentment in some form within five years and MSFDC would be processing 750 million payment transactions per year, 5% of the 15 billion bills paid each year. (Editor’s note: this is 10 times the current volume of transactions processed by industry leader Checkfree. At $0.30 per transaction, which is probably not sustainable, that would equate to $225 million per year in transactions, with $20-30 million of that going to banks for payment authorization. That doesn’t include licensing and advertising revenues.)

  
  
•  Downloading Web transactions into Microsoft Money should still be part of your game plan. The PFM will ship on 9 million PCs this year. By simply adding ActiveStatement downloading to your Web, a free feature available from Microsoft, you become one of 150+ financial institutions listed on Microsoft’s Web site. You also have the option of distributing a co-branded version of Microsoft Money to customers, though the $15-20 per copy price has discouraged all but five financial institutions from following this strategy (see table below right).

Some Numbers

Intuit
mortgage.quicken.com

Intuit’s latest financial services emporium features mortgages from six major originators.

Intuit’s new mortgage site, QuickenMortgage, which officially opens Nov. 4, creates a new standard for cyberspace mortgage brokers. It’s also a who’s who of non-bank competitors, from the American Express banner on the top of the page (see below), to six of the country’s 22 largest mortgage lenders offering loans through the site (see table below).

American Express banner ads on QuickenMortgage.

The mortgage emporium is a logical move for Intuit, and a good opportunity for the lenders to ride the coattails of Intuit’s superb brand name. We think it will be successful for Intuit, though competition from other Web-based providers will be fierce.

Initially, the site will focus on providing users with a quick snapshot of mortgage rates as well as mortgage resources both on the Quicken site and around the Web. Serious mortgage shoppers can take a 15-minute online interview which results in a list of recommended mortgages from the six participating lenders, and a mortgage prequalification letter for use in home purchase negotiations. The latter has great appeal for the harried homebuyer who wants to act quickly on a home for sale, but hasn’t been in touch with a lender yet. Expect to see cybersavvy Realtors bookmarking this site for their clients.

Contact: Bill Harris is EVP at Intuit, 415.944.6000.

Personalized loan option summary.