Strands makes a dent in PFM for large banks – ING is newest client

Strands makes a dent in PFM for large banks – ING is newest client
moneyStrands is an online PFM tool that is available to consumers online. While moneyStrands offers a slick, easy-to-use site, it is but one of many players battling in the crowded PFM space. Its largest differentiator is that it boasts BBVA as a client (BBVA also invested US$24 million in the firm in December 2007). This large bank client is a great jumping off point for the firm to market its offering to other banks looking for a PFM tool. This has apparently payed dividends as on June 30th, Strands announced that it has signed up ING in the Netherlands. The offering is currently in private beta at ING. This is clearly a major win for the firm. My first experience with Strands’ moneyStrands product was at the Finovate Startup conference in late April (see blog entry). Strands has also been profiled in our recently published report, Financial Technology Startups: Giving Banks a Run for Their Money.



Financial Technology Startups: Giving Banks a Run for Their Money

Financial Technology Startups: Giving Banks a Run for Their Money
At the end of April I had the opportunity to attend Finovate Startup in San Francisco. I already blogged about my experience the day after returning. I also decided to writeup a report on financial technology startups – that report will be coming out next week. I decided to produce the report because much of the competition (to banks) and innovation in the financial services sector is coming from non-banks. The report singles out the innovative startups that Celent believes will have an impact on the banking space and/or the consumer market (many of these startups bypass the bank channel and market their products directly to consumers). Celent has selected the following companies to profile in this report: I am curious to hear your comments on these firms as well as your thoughts on innovation in the banking industry. Please feel free to post your comments and interact!

Next Generation Online Banking Solutions

Next Generation Online Banking Solutions
I have been receiving many inquiries from banks about what to do with their aging online banking platforms. They recognize the need to upgrade but question what their provider is suggesting or simply would like to know more about where the market is headed. I have spent a lot of time researching the market and I have a pretty strong opinion regarding the types of features/functions that banks need to offer. Usability and customer experience are paramount. Some of the key areas of discussion lately have been:
  • Vendor solutions. Should I stick with my current vendor or switch to a new provider? Who has the best solution out there? This is not a simple question to answer, and one that requires plenty of investigation. Celent has recently evaluated the vendors of retail online banking solutions (see the following report). Banks have been approaching us for custom evaluations where we plug in their specific requirements. I enjoy these projects as they always produce different results and I get to meet a lot of interesting and knowledgeable people.
  • Web 2.0 Rich Internet Applications. Banks are trying to sift through the hype. They want to build Rich Internet Applications (RIA) but are having a hard time defining the business case. It’s a slow-moving process, but banks are recognizing the shift and the need to remain competitive. Non-banks are leading the Web 2.0 charge and banks are realizing that they are playing catch-up when it comes to customer experience.
  • PFM. I have blogged about this extensively. Banks know they need to jump on the PFM bandwagon. Should they build a solution, buy pieces, outsource the entire thing? They also want to know how to integrate PFM properly into online banking. Lots of questions here.
  • Social Media. Twitter is the talk of the town. I am receiving a ton of inquiries about how banks can leverage Twitter and other forms of social media. Banks also want to know how to integrate this into online banking and customer support.
While retail online banking has been the subject of most inquiries, small business online banking has proven to be a popular topic as well. Most banks tend to lump their small business customers onto retail solutions and ignore their unique requirements. The last thing a bank wants to do is let a small business customer fall through the cracks. They require customized features, some of which will need to be scaled down from cash management solutions (e.g. ACH, wire transfers, entitlements). The same can be said for high net worth customers who may require sophisticated capabilities. In any case, I have been conducting a lot of online banking research lately and I am enjoying the fresh perspective that certain banks are thinking about or even starting to take. If you would like to discuss any of these please comment or feel free to send me a note (email / Twitter).

The Risks of PFM Revealed

The Risks of PFM Revealed
It was an interesting and dangerous week in the PFM space. I have been talking about the security risks and data privacy issues of PFM for some time and unfortunately my predictions have come true. This is what happened:
  • Rudder experienced what I would consider to be a serious data breach. Certain Rudder users were able to see the account information of other users. Twitter and the blogosphere were ablaze yesterday with details of the breach. A good summary can be found on the TechCrunch blog. This is a serious blow to Rudder and the entire consumer direct PFM space. This is an inexcusable gaffe and one that will have folks questioning whether they should be providing their account info to these sites.
  • Mint.com may begin to sell “anonymous” consumer data (This Bloomberg article sums it up). This will raise the eyebrows of many users and I believe it is a privacy violation. Banks have all kinds of “anonymous” data on their consumers but they can’t just turn around and start selling it (they would likely get shot down by regulators).
These 2 events further reinforce my belief that PFM needs to be taken care of by a bank. Startups may have cool, next generation products, but they can’t necessarily be relied upon to protect your information and privacy. Don’t get me wrong, many banks have experienced data breaches, but they answer to a higher authority and are in a better position to help customers deal with the consequences.

PFM is an Integral Component of Online Banking – Digital Insight and Metavante are on The Right Track

PFM is an Integral Component of Online Banking – Digital Insight and Metavante are on The Right Track
Interesting happenings in the PFM space yesterday. Digital Insight announced an agreement with Metavante that would enable Metavante to offer Digital Insight’s FinanceWorks to its online banking customers. I’m a big believer in integrating PFM with online banking so it is nice to see the traditional online banking solution vendors take the next step. Digital Insight has been selling FinanceWorks like hotcakes – More than 160 banks and credit unions currently offer or are in the process of launching the solution. There are a couple of reasons why the Digital Insight/Metavante deal is significant:
  • Credibility and Proven track record. Digital Insight and Metavante have been in the online banking space for eons. They have experience with online banking solutions and have acknowledged the important role played by PFM.
  • Integration Experience. There are a few consumer-direct PFM players (e.g. Wesabe, Gezeeo) that have announced that they will market their product to financial institutions (see the following blog entry). While they have very viable and competitive offerings they don’t have experience integrating with online banking solutions. This will however change as these vendors continue to sign up additional financial institutions. They will give the traditional OLB players a run for their money.
Additional OLB players will come out with next generation PFM solutions – it is only a matter of time. Digital Insight (and now Metavante) have a good head start.

Finovate Roundup

Finovate Roundup
I had the opportunity to attend Finovate Startup in San Francisco earlier this week. It was a great event with a slew of fintech companies showcasing their wares to the captive audience. Each company was given 7 minutes to live demo their product – not an easy task. I’m very much a hands-on person so I appreciated this format. The demos were great and I got a pretty good feel for each firm’s product. The audience was a mix of vendors, press, analysts, financial institutions and VCs. I was surprised and disappointed to see how few banks were in attendance. Only 17% of the attendees were from financial institutions, and 40% of the FI attendees were from a single institution. Banks need to do more with regards to innovation and this event is a perfect place to learn more, and formulate thoughts and ideas. It’s also a great opportunity to look for vendor solutions that will improve feature/function, customer experience and overall competitiveness. While many of the startups offer their solutions directly to consumers on the web, there are a good number of firms that would be quite happy to sell their product to a bank. Some takeaways and trends from the show: PFM is where it’s at. I was amazed at the number of PFM solutions that were showcased at Finovate. Vendors include, moneyStrands, Wesabe, Mint, Jwaala, and greensherpa. I am a big proponent of PFM (see the following blog entries ) and was happy to see the emphasis. However, the market cannot sustain this many vendors and some will have trouble staying alive. PFM is expanding beyond budgeting and tracking. A number of vendors (Mint, greensherpa, Rudder, and Simplifi) demonstrated solutions that provide a picture of a consumer’s financial health/viability and financial planning. Grades/rankings are provided and customers can see where they need help and can plan for the future. BillShrink demonstrated an impressive solution that can help consumers save money on their wireless bills, gaz, and credit cards. Lending related solutions are gaining popularity. Tight fisted banks are driving consumers to a variety of places and P2P lending companies are capitalizing on this. Vendors here include, Prosper (now reopened), Lending Club, People Capital, and Pertuity Direct. Other vendors showed off lending and credit related offerings. These include Know Before You Apply, Credit Karma, Home-Account, ZimpleMoney, and SmartHippo. Payments offerings. A number of companies had payments solutions – SmartPay, HomeATM, Moneta , and Tempo Payments. Mobile Solutions. iPhone apps were the talk of the town (some live, some in development). Mobank demonstrated a neat e-commerce iPhone app. Not enough emphasis on security. Only 2 security vendors were part of the mix. Aradiom with a soft token for mobile phones and mobile banking, and Silver Tail Systems with their forensics solution. I was worried about the security of some of the solutions that I saw at Finovate. One vendor, Tempo Payments actually showed a form that contained a full SSN – not something you ever want to request or display online! The audience was given the opportunity to vote for best of show. BillShrink, Prosper, Silver Tail Systems and Simplifi were selected (in no particular order). Look for an upcoming Celent report authored by yours truly that examines the fintech space and what it means for banks.

Banks need to jump onto the PFM bandwagon

Banks need to jump onto the PFM bandwagon
Wesabe announced today that they will start to sell their PFM offering (dubbed Springboard) to banks and credit unions. Wesabe is not the first vendor to start selling directly to banks. Earlier this year, Geezeo made a similar announcement. These are win-win moves for both the banks and the software companies: – Bank PFM tools cannot compete with the rich solutions offered by non-bank providers. They need to update their offerings in order to remain competitive and keep clients attracted to their sites. For more info see my post on PFM Meets Social Networking. – The non-bank PFM providers have been struggling to make money. Their products are offered free of charge to consumers and their online business models are questionable. Direct sales to banks will provide a much needed revenue stream. Expect to see more of this trend as we move forward. It will be interesting to see how this software will affect PFM usage growth at the banks.

springboard

PFM Meets Social Networking?

PFM Meets Social Networking?
There was an interesting article this morning in American Banker called, “E-Banking, Meet Social Networking.” After reading the article I came up with 2 conclusions: – Banks need to improve their personal financial management offerings (PFM). The article talks about how Geezeo is offering a white label version of its PFM software to banks. While many banks have PFM tools that they make available to their customers, they pale in comparison to those offered by non-banks in this space (e.g. Mint.com, Wesabe, Geezeo). I would like to see a few banks come up with more competitive offerings (either on their own, or using a 3rd party). Customers really value these tools and they are being demanded, particularly in tough economic times when folks carefully track their spending. – Social networking can be an interesting component of PFM but is not an absolute requirement. This is a nice to have feature, but not one that will keep customers coming back, particularly in the short term. Basic community features would be nice, or at least some spending stats from the overall user base. However, I see customers gravitating more towards the functional component of PFM as opposed to the social networking aspect. In fact, some banks may be scared off if they have to deploy PFM and social networking features in one swift motion. Banks will want to have the option of choosing the features they want to turn on or off.