While making the rounds in the Finovate networking room last week, I saw an intriguing graphic on Yodlee's big-screen monitor (see inset). It turns out to be Qi (pronounced "key"), the robot mascot for Yodlee's latest aggregation client, Australia's ANZ Bank, which launched that day (press release). The new service is called MoneyManager (see screenshot below; note 1).

The cute little beast also appears in the bank's new iPhone promo on the ANZ website (here). The webpage features the app running in a full-size iPhone emulator. But that's not what you notice first. The bank uses a little programming trick to turn your curser into a GIANT robot hand (see screenshot below). It's a little disconcerting at first, but it does get your attention and proves you are dealing with a creative enterprise. I like it.

According to Rob Findley, blogging at The Bank Channel, MoneyManager can be used by any Australian and does NOT require an ANZ account relationship.

ANZ's iPhone webpage with giant robot hand curser (19 Oct 2008)

ANZ's MoneyManager webpage features a less intrusive view of Qi, the robot mascot (19 Oct. 2008)

Note:
1. For more info, see our Online Banking Report on Account Aggregation.

Two months ago we published a table (here) showing active users at the leading online personal finance startups. Below is the table, updated with March traffic and the addition of one more player: Bank of America.

The bank, which offers a full-featured online personal finance management solution called My Portfolio, powered by Yodlee, has 2.5 million active users, according to BofA exec Marina Moore (note 3). That's an impressive 10% of the bank's online user base, and about 6x the total user base of all the online startups combined (note 4). 

For more information:

• Online Banking Report (131/132): Personal Finance Features for Online Banking
• Online Banking Report (142/143): Social Personal Finance
• Our FinovateStartup Conference April 29 in San Francisco, where Buxfer, Expensr, Jwaala, Mint, and Wesabe will present the latest in online personal finance features

Notes/Sources:

1. Users: per BusinessWeek Online, Feb 2008, figures are reported by the companies and may include inactive users; Mint has been updated to 180,000 from 130,00 based on new figures reported in the Bank Technology News article published in April 2008

2. Traffic: per Compete estimates of website traffic for March 2008, retrieved April 21, 2008. Compete estimates traffic from its online data and can be off by a factor of two or three-fold for smaller websites.

3. As reported in a Bank Technology News article published in April 2008.

4. This table does not reflect all the players, such as Intuit's new Quicken Online, just the ones highlighted in the BusinessWeek article.

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

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

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

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

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

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

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

Notes:

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

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

The Wall Street Journal published an extra section yesterday on personal finance entitled, Your Money Matters. Online financial tools were highlighted in Jane Kim's, "Check it Out: New online tools from financial institutions can help consumers manage their money." 

Here's the back story on several of the items mentioned in the article:

• Our sister publication, Online Banking Report, was cited as the source of the following statistic: "About 16% of U.S. households used some personal-finance feature at least once in 2006. That percentage is expected to climb to an estimated 33% by 2016, with nearly three-quarters of those households using personal-finance tools offered by their financial institution online."
  
  The information cited in the WSJ story was contained in the report we published last fall in Personal Finance Features for Online Banking (OBR 131/132; see Table 3, p. 3, lines 4 and 10). Current usage estimates were based in part from data provided by Javelin Strategy as shown in Table 2 on the same page. 
  
• In the article, Bank of America's My Portfolio was the first of two existing personal finance tools mentioned. The service, powered by Yodlee, was quietly launched in December and was covered in NetBanker at the time (link here) and received an OBR Best of the Web award in our final report of 2006 (OBR 137) where it was rated the third most important development of 2006.   
  
• The second example cited was Wells Fargo's MySpendingReport (see inset and previous coverage here). The service, which is basically just a consolidated view statement data across the bank's transaction accounts, is a great example of positioning online banking features in a way that resonates with users. It was awarded an OBR Best of the Web in 2005, finishing the year as the tenth most important new development of the year (report here).

The story finished with hints of new services planned for later this year at Everbank, Bremer Financial (powered by Corillian), and a Digital Insight tool that allows users to hand enter additional bill payments in order to their entire payments picture in one place.

Bank of America is the first major U.S. bank to provide full online personal financial management (PFM) within its online banking service. It's an important development and one we predicted in our detailed look at online personal finance (Online Banking Report #131/132, published in September). So, in conjunction with our sister publication, we are awarding it the fifth and final OBR Best of the Web for 2006 (click here for other recent winners).

The bank uses its Yodlee-powered My Portfolio account-aggregation service to deliver the PFM functions. BofA is the first financial institution to use Yodlee's new MoneyCenter module since its launch six months ago (see our coverage here).

The bank has chosen to offer the full MoneyCenter suite with Net Worth Summary, Investment Detail, Transactions, Rewards, Email, and Search on the main page (see screenshot below).

My Portfolio also includes basic personal finance functionality, including budgeting, categorizing and a nice array of preformatted reports including:

• Cash Flow Analysis
• Expense Analysis
• Budget vs. Actual
• Credit Card Utilization
• Get Transaction Reports
• Set Budget Goals

See Online Banking Report 131/132 for more details on Yodlee's MoneyCenter.

Analysis
Overall, we believe the new PFM functions are a great addition to the bank's online banking program. However, it still feels a bit "bolted on" to the core online banking service. For instance, My Portfolio does not yet warrant a place on the primary top navigation bar. Instead, users must click on a link in the middle of the main Account Overview screen.

Once the Yodlee-powered service has loaded (which took 10 to 15 seconds in our tests at broadband speeds), it's relatively well integrated. A second My Portfolio navigation bar is loaded under the main online banking navigation. Finally, a third row displays the options available for each function in row two (see screenshot below).

The pages load relatively fast as long as you stay within the My Portfolio area. However, moving back and forth between BofA-served online banking functions and Yodlee-served My Portfolio functions is a bit clunky with the 15-second delay. But the overall experience will be fine once My Portfolio is incorporated into primary navigation.   

The main My Portfolio page is automatically pre-filled with applicable BofA accounts; however, in my case, I was unable to update older credit card information. When clicking Update All Accounts in the upper right, error messages indicated that my Bank of America credit cards could not be updated (see screenshot below).

This week Yodlee announced its new Bill Pay Account Accelerator, a bill-pay-switching tool designed to help banks attract active users of competitive bill payment services. Not only does Yodlee's wizard move payee information, it also can cancel and move previously scheduled payments, including recurring ones.

The service will be piloted in fourth quarter and launched in early 2007.

Analysis
If it works, it could reduce the "retention benefits" of electronic bill pay by making it easier to switch banks. The American Banker article reporting the new service hit hard on that aspect. However, we think the concern is overblown. It's not that time-consuming for most people to move their payee information, requiring 10 or 15 minutes of "cutting and pasting" or "scribbling and retyping," then a few more minutes to reschedule upcoming payments.

What's MUCH harder for the user is making sure outstanding paper checks have cleared and, more importantly, unwinding preauthorized debits such as important insurance and loan payments. Those require contacting the payee directly and hoping that your instructions to change the debit are processed in a timely fashion.

But the biggest issue is motivating users to make a checking account switch in the first place. And that's where Yodlee solution could provide a big boost, offering the perception of radically simplifying the switchover. And if Yodlee expands the tool to also transfer the entire account history, not just the bill pay history, it could become an important industry tool.

Since it doesn't ship until next year, we'll refrain from superlatives until we've had a chance to test it. But Yodlee has a good track record in hooking accounts together, and we expect the new service to be functional. However, whether banks will adopt it is another matter. It will have to be drop-dead simple to use or banks will not want the ensuing customer-service nightmare.

As the rest of the country watched fireworks, Yodlee <yodlee.com> which snagged two mentions in the Wall Street Journal during the last week of June (NB June 28), launched its biggest product improvement since the company went live with account aggregation in 2000 (see OBR 63, "Does Yodlee Make Quicken Obsolete?").

Yodlee's new MoneyCenter is a full-featured PFM operating on Yodlee's server. It allows banks to offer the key budgeting and reporting functions much loved by Quicken and Money users. Throw in real-time bill pay at card-accepting merchants, a suite of triggered alerts, a dose of account aggregation, and lifetime statement archives (the feature that inspired the Saturday June 24 WSJ column entitled, "A financial-data vault online) and you have a feature-set that deserves serious consideration in your 2007/2008 plans.

It's an important online banking development, and we'll take an in-depth look at it in the next issue of Online Banking Report (available in early August).

--JB

In today's Wall Street Journal, personal finance writer Jane Kim does a roundup of what she calls "the next wave of online banking." The impetus for the article was Yodlee's new MoneyCenter that will be available to consumers in early July. I was interviewed for the article and provided several of the examples along with the market size estimate.

In addition to Yodlee, the following developments were chronicled in the article:

• Citibank's <citibank.com> 50-fold increase in online interbank transfer limits from around $2,000 to $100,000 this summer. In what may simply be a self-serving comment made to a reporter, the bank cites the demand for its new e-Savings account as an impetus for the change.
• Commerce Bank's (NJ) Virtual Private Bank <virtualprivatebank.com> for customers with $1 million or more in investable assets.
• Wells Fargo's My Spending Report, a simple integrated spending report we discussed last year. (NB Feb. 17, 2005)
• Bank of America's <bankamerica.com> account aggregation and recently expanded account alerts.
• Chase's <chase.com> next-day bill payment.

Analysis
Although most of these examples are relatively minor improvements, it's good to see the mainstream press recognizing online banking innovations. The last few years have been dominated by security concerns, and we believe it's a great sign that reporters are looking for "what's next." It would be wise to have an answer to that question when your local paper calls.

We believe the Virtual Private Bank (VPB) from Commerce and the Yodlee system deserve closer examination. We'll cover Yodlee's new product when it goes live next month. And, although we won't be able to drop a million into Commerce Bank, we'll take the VPB for a test drive later this week.

--JB

If you'd like to learn more about the future of online banking, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

In the musical world, a mashup combines music from one song with lyrics from another, often mixing two very different genres. One of the more famous examples is the Grey Album by DJ Danger Mouse that put words from Jay-Z's Black Album on top of chords from The Beatles White Album.

Programmers have their own definition: combining content seamlessly from two different sources. For example, Kayak <kayak.com> is a powerful travel site that pulls price quotes out of hundreds of websites and displays them in tabular format and locates them visually on a Google Map (click on the inset to see a Las Vegas hotel search). 

In online finance, we have seen mashups from Yodlee, uMonitor, and others that marry account information from a number of sources to create an aggregated view. But the most successful financial mashup yet is PayPal, which put an email/Web interface in front of two established electronic payment mechanisms, ACH and MasterCard/Visa.

Who will launch the next successful mashup? There is quite a bit of activity in the payments space, many trying to mimic PayPal's success using a cell phone interface. For example Obopay and TextPayMe (NetBanker, April 26), and BillMyCell from Black Lab Mobile <blacklabmobile.com>.

Another company, BillMonk <billmonk.com> has created a Web-based system of sharing expenses designed for the work-hard, play-hard urban singles set. Users can send expenses to be shared to their account at BillMonk using text messages, and then log in later to finalize the payment split and let everyone know who owes what (see example right). The company doesn't yet facilitate the actual payment, but they are looking for a partner to power the financial transactions.

We're still not convinced the market for "splitting expenses among friends" is big enough to sustain one, let alone four service providers (see NetBanker, April 26). But we ARE sure the enterprising founders of BillMonk will find a niche somewhere in the payments space.

BillMonk has added more new features to its bill-sharing platform in the past four months than most companies implement in four years. It reminds us of the pace at another small payments company that we were watching closely six years ago as they morphed from a closed PDA-to-PDA payment system to the primary platform for eBay buyers (see Online Banking Report #54 for a view of PayPal in the early days).

To get an idea of the pace at BillMonk, read a few entries from their blog <billmonk.wordpress.com>. Then realize that this is not the work of a vast team of programmers, PR agents, and marketers. It's just two guys in a Seattle apartment who are also answering customer queries, paying the bills, building the website, taking out the trash, and talking to reporters (see the profile in the Seattle Times, April 24).

Action Items
My advice for financial institutions:

1. Hire these guys
2. If that's not practical, then behave like them; constantly improving your website and to the extent you control it, your online banking and bill pay system

I will bring you an update on the company as soon as I can corner one or both of the founders in a coffee shop.

--JB

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.

As you can see from the chart below, many of the most interesting Internet banking products can easily be offered by non-banks. During the past five years in OBR, we’ve looked at all of them, but it was mostly theoretical. No matter how good they looked on paper, without being able to point to real-life examples, making a business case was difficult (see OBR 7/99 and 7/98).

All that is changing very fast. Fueled by an unprecedented pool of venture capital, innovative startups are swarming to the relatively untapped financial services and payments space. In second quarter, we witnessed the launch of three scan-and-pay bill management companies, CyberBills, PayMyBills.com and PayTrust. In third quarter, we saw the launch of three financial statement aggregators, VerticalOne, Yodlee, and PayTrust. And now in fourth quarter, we are watching at least one person-to-person payment company go live, PayPal.

Person-to-person (P2P) payments are not new. In fact, the paper payments business (personal checks, money orders, cashiers checks) continues to grow. According to The Green Sheet www.greensheet.com 68.8 billion paper checks will be processed in 1999 (U.S.), up 2.2% from 1998’s total of 67.4 billion; and an increase of 30% from 1989 (52.9 billion).

What is missing is a Web version of these products. The Web has spawned a whole new marketplace of sales between parties that have never met and never will. eBay has popularized the phenomena with its P2P auctions. In third quarter, eBay 36.2 million auctions, nearly four times the number in third quarter 1998 (9.2 million). In fact, eBay’s registered user base of 7.7 million is approximately equal to the entire online banking user base across all U.S. financial institutions.

Truly Virtual* Retail Banking Products

Source: Online Banking Report, 11/99

*companies don’t have to be a bank to offer these “banking” services