NetBanker 2.0

Bill payment reminder service

Launched this month, Whatbills <whatbills.com> is a simple $1.95/mo Web-based service for tracking your bills and sending yourself email reminders to pay. Although the functionality is limited, it's the kind of service banks should be offering. We found out about the service through its Google advertisement on the phrase "quicken online" (see screenshot right).

The interface is similar to Billeo (FMW Feb. 14), but with far fewer functions. Users can do three things:

1. Enter bill name, category, due date and amount
2. Send themselves email reminders to pay
3. Mark bills as paid

The entire program today is shown on the screenshot below:

Business model
At a cost of $1.95/mo, which is about what you'd pay each year for Intuit's Quicken Basic, the company doesn't seem to have a compelling selling proposition. It would make more sense to offer a limited free version, perhaps earning a few pennies per month per user by displaying advertising on the user interface. Then upgrade users to a premium plan with more features.

But neither of those business models will yield much more than low-six figures per year. A more likely scenario for the San Diego-based company is a sale to Microsoft, Google, or a major financial institution for a few hundred thousand, a price that would be less expensive for a large company than developing the application internally.

Update: A similar Web-based service, BudgetTracker <budgettracker.com> founded in 2003, has a free version that uses Google AdSense revenue to keep it running. For $19.99/yr users can upgrade to an ad-free version that also provides unlimited data storage and several additional features such as bank-data import. See the price plans here.

--JB

Top U.S. financial brands

Last week (July 17), Advertising Age <adage.com> published its annual list of U.S. "megabrands" as defined by total measured advertising expenditures in 2005 (see Note 1, click on link at bottom). The top six, and eight of the top 10 were phone or car brands.

1. Verizon >>> $1.7 billion
2. Cingular >>> $1.3 billion
3. Sprint >>> $1.0 billion
4. Ford >>> $980 million
5. Chevrolet >>> $880 million
6. Nissan >>> $810 million
7. Dell >>> $780 million
8. Toyota >>> $770 million
9. McDonald's >>> $740 million
10. Honda >>> $640 million

Financial megabrands
The biggest financial brands were American Express and Citi, tied at number 14 with $590 million in 2005 advertising. Seventeen other financial services brands made the top 200, including what has to be one of the biggest surprises in the top-200 list, LowerMyBills.com which spent an estimated $130 million in advertising last year, more than Time Warner, The Gap, or Johnson & Johnson.

  14.  American Express >>> $590 million
  14.  Citi >>> $590 million
  31.  Visa >>> $360 million
  35.  Capital One >>> $350 million
  36.  MasterCard >>> $340 million
  40.  State Farm >>> $320 million
  48.  Allstate >>> $290 million
  56.  Progressive >>> $250 million
  66.  TD Ameritrade >>> $220 million
  72.  Chase >>> $210 million
  72.  Bank of America >>> $210 million
  99.  Wachovia >>> $170 million
  99.  Washington Mutual >>> $170 million
113.  Fidelity >>> $150 million
122.  E*Trade >>> $140 million
134.  LowerMyBills.com >>> $130 million
146.  Schwab >>> $120 million
159.  Ameriquest >>> $110 million
177.  LendingTree >>> $100 million
----------------------------------------
Total >>> $4,820

Industry spending
These 19 financial services megabrands spent $4.8 billion in 2005 (see Note 2, click on link at bottom). The financial services sector was the fourth largest, trailing automotive, retail, and telecom. In all, financial services account for about 10% of $49 billion in total measured advertising expenditures across 200 so-called "megabrands."

-- JB

Zions launches SecurEntry powered by PassMark

Zions Bank <zionsbank.com> is one of the early entrants in the parade of banks and credit unions rolling out multi-factor authentication this year. The Utah-based bank is using the PassMark/RSA <passmarksecurity.com> system pioneered by Bank of America last year (FMW May 26, 2005).

Although there are compliance and security reasons enhancing security, the biggest benefit is marketing and PR. Just today, highly influential Wall Street Journal columnist Walt Mossberg urged readers to ignore financial institution emails saying, "...never, ever consider any email from a financial institution as legitimate." Ouch.

SecurEntry positioning
While we like the SecurEntry name, its page-dominating position on the Zions homepage (see above) is a bit over the top. Granted, they are in education mode as they race to enroll every customer within the next two months. But there's a reason why bank branches in high-crime areas use Plexiglas enclosures instead of steel bars; you don't want to make your customers afraid. The best security measures are subtle and discourage criminals without overly impacting the 99.9% of your customers who would never try to make off with the contents of the cash drawer.

It would work better to place the SecurEntry logo near the log-in area in the upper-right. That way, customers concerned about security could click-through to learn more, and customers that weren't already paranoid could go about their banking business without feeling new insecurities.

How it works
SecurEntry is a multi-factor authentication scheme identical to that used by 20 million customers of Bank of America, Stanford Credit Union, and others (see FMW April 12). The new system, launched July 11, is optional for the first two months and becomes mandatory on Sept. 8. The bank estimates it will take five minutes to enable. Zions posted a Flash and HTML demo explaining the system, a one-page Quick Reference Guide (PDF), seven-page illustrated tutorial (PDF), and 11-question FAQ. 

Off-topic: brief homepage critique
Zions' new homepage design is hard to judge. Taken individually, the modern graphics and succinct copy are excellent. However, the overall effect is way too busy, with too many elements screaming for the user's attention. The bank needs to better prioritize what they want to communicate on the homepage. The main points can be emphasized with strong graphical treatment while less-important areas are reachable through more subtle navigation, such as sub-menus.

--JB

 

Zillow opens "financing" area; lands $25 million

Seattle-based Zillow (see FMW Feb. 8) announced a $25 million second-round investment led by Boston's PAR Capital Management. The home-value and real estate-listing service, founded by Expedia's Rich Barton, received 2.1 million unique visitors in June according to comScore.

With a total of $57 million raised, the 118-person company can create interesting new products from its database of 67 million homes. The latest twist: residential real estate "heat maps" that show home values, measured in sales price per square feet, across 18 metro areas (click on the inset to see Seattle's heat map, with red being the higher prices).

Zillow also launched a "financing" section last month, complete with its own tab on the homepage (see screenshot below). It's clearly a first effort with a cluttered design. An unattractive LoanWeb banner dominates the page with Google ads running along the right side and LendingTree and Bankrate.com providing interactive tools along the bottom.

Financial institution opportunities
Financial institutions can use Zillow and its competitors (RedFin, HouseValues, HomeGain, PropertyShark, RealEstate.com, Trulia) in several ways:

1. Advertising medium: With millions of potential home buyers using the sites, it's an ideal place to market mortgage and other bank products, especially with a "new mover" package (see FMW April 5).
2. Prospecting tool: Branch loan officers could use the service to map potential untapped home equity in their neighborhood. Although this information is already available in other prospecting databases, the ease of use and mapping capabilities of the Web-based services could help loan officers hone their pitch.
3. Consumer education: Although Zillow is well known among the early adopter crowd, it's not exactly a household name. Introducing your customers to Web-based home-value services would make an interesting addition to your consumer education area or monthly newsletter.

Event calendar

The latest conferences for online bankers and financial marketers.

Integrating gift cards into online banking

Gift cards are hot, accounting for nearly 5% of holiday spending last year. How can banks leverage this interest?

There are two broad categories to consider:

1. Prepaid MasterCard/Visa
2. Single-merchant gift cards

Most discussions in the industry are centered around prepaid MasterCard/Visas, but we think there is a significant opportunity in the second category: merchant cards. Here are ways for financial institutions to jump onto the gift-card bandwagon:

Easy (requires little investment, primarily customer education):

• Purchase education: Provide consumer education on the pros and cons of merchant gift-card purchases and urge customers to charge the cards to your credit or debit cards. Emphasize built-in protections such as fraud guarantees, tracking, and so on.
• Purchase incentives: If your systems allow it, add an incentive such as a 1% rebate, sweepstakes entry, or purchase protection.
• Directory: Publish a list of stores that are selling gift cards and/or create an online directory where cards can be purchased online.

Harder (requires programming, employee training, and more)

• Integrate gift-card account-access into online banking: Using account-aggregation technology, such as that offered by Yodlee, CashEdge and others, link to the merchant's gift-card account-management area such as <starbucks.com/card>. The integrated view would provide a secure and easy way for customers to manage their gift card accounts.
• Offer automated reloading via your debit/credit card: When gift-card account balances get low, offer to automatically reload from your credit/debit card. Reloading could be manual or automated, e.g., "Add $25 to my Starbucks card whenever it dips below $5."
• Send low-balance alerts when gift-card accounts dip below a set amount.
• Resell merchant cards via shopping cart such as The Card Cafe <cardcafe.com> (see screenshot below)

Hardest (requires customer training, sales, and website programming)

• Issue gift cards on behalf of merchants
• Sponsor your own gift card network with a stored-value card that can be used at multiple sources. For example, the Northampton Chamber of Commerce <northamptonchamber.com> markets a gift card that can be used at 50 local merchants (see inset). The card, which can be purchased, reloaded, and tracked online is powered by Swipe It Technology <swipeit.com> which offers turnkey gift and loyalty packages beginning at $299, plus a $12 monthly fee and $0.23 transaction charge. Other vendors include eCardSystems <ecardsystems.com>, Valutec <valutecardsolutions.com> and Value Gift Card <valuegiftcard.com>.

The business case
There is a surprisingly good business case for integrating gift cards into your online banking service with not one but three potential revenue streams:

1. Interchange from loading/reloading: Provided customers load the card via debit/credit, you can earn 1.5%+ on the load, for a $50 card, that's $0.75 per load
2. NSF/OD income: Every debit card purchase increases the chance of an NSF/OD item; assuming one of every 300 cards loaded results in an NSF/OD fee, the profit per load is $0.10 ($30/300).
3. Merchant commissions: Selling cards at your website could earn $5 or more per card sold.

The program also brings in the usual intangibles: new customer accounts, positive PR, branding benefits, retention and so on.

--JB

Good landing by WAMU

Washington Mutual, one of the more creative offline promoters, is beginning to apply its talent to online promotions. We're still not particularly fond of the "trapped bankers" creative (see FMW April 28), but we like the bank's new "more than free checking" campaign.

We first ran across the promotion July 7 in a skyscraper-animated banner (175 x 500 pixel) on the right side of Rotten Tomatoes <rottentomatoes.com>, the popular film review aggregator (see inset).

The banner was good, but what we really liked was the landing page (see below). The design was clean and fresh (not so hard to do), and the copy was original and user-friendly, with just the right dose of humor (not so easy to do).

Our only criticism is the crucial final step. Users clicking the "Get Started" button are delivered to a much different and more bank-like screen to begin the application. The relatively dull look (see below) is a real letdown after the originality of the landing page. It's so different, it may cause users to stop and rethink their decision to apply.   

The bank would likely convert more prospects if they continued the landing page theme through the first page of the application. Overall, we'll score the effort an A-.

--JB

PayPal Mobile in print this fall

Conde Nast's Lucky magazine will use PayPal Mobile technology to allow users to buy products from 18 advertisers in its September issue (see inset). Using PayPal's Text2Buy technology, readers will be able to purchase products from magazine advertisers by simply sending a text message to the number in the ad, then confirming the purchase when PayPal automatically calls back a few seconds later (see FMW July 17 for more on how it works).

This is believed to be the first major offline promotion of PayPal's new service. According to The New York Times, the following advertisers have signed on: Avon, Bulova, Dooney & Bourke, Estee Lauder, Ford, Le Tigre, Liz Claiborne, L'Oréal, Perry Ellis, Sephora, Target, and Unilever.

Readers will also be able to order online via a special website <livebuyit.com> that was not operational at press time.

Banking applications
While spur-of-the-moment buying is not a major part of financial services, Text to Buy could be implemented in financial advertising as a simple way to order information such as a loan application, mutual fund prospectus, or a new account kit. Advertisers would list a code in their print ad, billboard, or other offline promotional device (see UNICEF example in the inset; buyers simply text "water" to the 5-digit number to make a $10 donation). This would allow users to request info by simply entering 10 characters into their cellphones or mobile device. The information packet would ship to the "buyer's" PayPal address.

An even bigger application, especially around the holidays, would be ordering prepaid MasterCard/Visa/American Express gift cards. Different codes could be set up for different amounts. For example, text "card25" for a $25 gift card, "card50" for a $50 card and so on. A handling charge could cover the 3% processing fees due to PayPal.

Finally, financial institutions could use Text to Buy for non-financial items such as:

• Donations to community causes
• Entry fees for a community event such as 5k run
• Signups for seminars
• Schwag, e.g., t-shirts, hats and so on

PayPal mobile sets high standard for ease of use

Most people interested in electronic payments have probably read reviews of PayPal's mobile payment system launched in March. If you haven't yet had a chance to use it, by all means head over to PayPal Mobile and activate your phone.

The service covers two mobile payment services:

1. Person-to-person payments: PayPal's email-payments service is extended to phones, mobile or land-line, allowing users to send money to anyone with a phone number using text messaging or by following the prompts on PayPal's toll-free number (800-4PayPal).
2. Text to buy: To buy things at participating merchants, users send via text message a code to the merchant's text-message number; for example, listed on the PayPal site today is a special offer to purchase a DVD Of X-Men 2 from by texting "X2FF" (full-frame) or "X2WS" (widescreen) to "63336," which is the Text to Buy code for FoxStore.com.

Sign-up process
The sign-up process is absolutely painless (click on screenshots below for a closer look). Assuming you already have a PayPal account, just enter your phone number and then a few seconds later answer the verification call on that number. After that, you can send money to any other phone by sending a text message from your phone, or by calling PayPal's toll-free access number and following the simple prompts to make a payment.

Step 1: Activate     Step 2: Confirm      Step 3: Use it
          

Launch sweeps
The company ran a sweepstakes during the first month to encourage activation with instant prizes valued up to $1,000 (see screenshot left). The sweepstakes has ended, but not before we bagged a fresh $5 credit to our account. All entrants are also in the running for a new BMW.

Security
Although it will take some convincing before PayPal Mobile hits the mainstream, it's far more secure than using a credit card. Whether you text money to someone, or to pay for goods and services, PayPal first confirms the purchase by calling your designated phone number for confirmation with a self-selected PIN number. At that time, you are also able to make changes, such as altering the default funding source, which is always bank transfer (see inset for PayPal's how-to-use instructions).

Analysis
In the United States, payment by phone is likely to be a small subset of the "online payments" market. It provides a good solution for situations where a computer is not available (purchasing a new DVD from a magazine ad or paying your friend for the concert ticket she just gave you).

However, in other parts of the world where mobile phone usage is far higher than computer usage, it could become an important payments vehicle.

Most people interested in electronic payments have probably read reviews of PayPal's mobile payment system launched in March. If you haven't yet had a chance to use it, by all means head over to PayPal Mobile and activate your phone.

The service covers two mobile payment services:

1. Person-to-person payments: PayPal's email-payments service is extended to phones, mobile or land-line, allowing users to send money to anyone with a phone number using text messaging or by following the prompts on PayPal's toll-free number (800-4PayPal).
2. Text to buy: To buy things at participating merchants, users send via text message a code to the merchant's text-message number; for example, listed on the PayPal site today is a special offer to purchase a DVD Of X-Men 2 from by texting "X2FF" (full-frame) or "X2WS" (widescreen) to "63336," which is the Text to Buy code for FoxStore.com.

Sign-up process
The sign-up process is absolutely painless (click on screenshots below for a closer look). Assuming you already have a PayPal account, just enter your phone number and then a few seconds later answer the verification call on that number. After that, you can send money to any other phone by sending a text message from your phone, or by calling PayPal's toll-free access number and following the simple prompts to make a payment.

Step 1: Activate     Step 2: Confirm      Step 3: Use it
          

Launch sweeps
The company ran a sweepstakes during the first month to encourage activation with instant prizes valued up to $1,000 (see screenshot left). The sweepstakes has ended, but not before we bagged a fresh $5 credit to our account. All entrants are also in the running for a new BMW.

Security
Although it will take some convincing before PayPal Mobile hits the mainstream, it's far more secure than using a credit card. Whether you text money to someone, or to pay for goods and services, PayPal first confirms the purchase by calling your designated phone number for confirmation with a self-selected PIN number. At that time, you are also able to make changes, such as altering the default funding source, which is always bank transfer (see inset for PayPal's how-to-use instructions).

Analysis
In the United States, payment by phone is likely to be a small subset of the "online payments" market. It provides a good solution for situations where a computer is not available (purchasing a new DVD from a magazine ad or paying your friend for the concert ticket she just gave you).

However, in other parts of the world where mobile phone usage is far higher than computer usage, it could become an important payments vehicle.

Fee income opportunities from SMS alerts

While most banks in the world charge fees for at least some aspect of online banking, the service has been almost entirely fee free in the United States, at least ever since Bank of America rolled out free bill payment in 2002.

At first glance, it seems like a great deal for consumers; however, the lack of direct revenue has hampered investment in the channel and deprived U.S. customers from the more sophisticated services common throughout the world, such as SMS alerts, multi-factor log-in controls, and so on.

We're always on the lookout for fee-based opportunities (see Online Banking Report 122/123 for a laundry list of online fee opportunities), and we are encouraged by eBay's latest innovation, SMS auction alerts with a fee of $0.25 per auction. This is the first time eBay has attempted to charge fees to bidders. The site has offered free email alerts since the beginning.   

Here's how SMS alerts work (see screenshot below):

1. Select "Get SMS alert" (see red circle in screenshot at above, click to enlarge).
2. Select mobile phone provider from drop-down list and enter mobile phone number; currently Cingular, Verizon, Nextel, Alltel, Sprint, and TCRcom participate
3. Check "Watched item ending alert" or "Outbid alert"
4. Click "Continue" which initiates a confirmation message to the user's mobile phone
5. Send a text-message reply from the mobile back to eBay to agree to the charges

SMS-alert users pay $0.25 for each auction entitling them to up to 10 alerts. Each 10 thereafter cost another $0.25. It would be unusual for the number of alerts to exceed 10. After receiving an alert, users can submit a new bid via text message by responding to the text message with their new bid amount. Bidding can be protected with an optional PIN.

Instant messaging alerts work in a similar manner (click on screenshot for closeup):

1. Select "Get IM alert" 
2. Select IM provider; eBay supports the big three: Yahoo, AOL, MSN
3. Check "Watched item-ending alert" or "Outbid alert"

There are no fees for IM alerts. After receiving an IM alert, users can submit a new bid via the provided link.

In addition to SMS-alert links in the main auction listings, successful bidders are also prompted to set up an alert on the bidder's confirmation screen (see below).

What it means for financial institutions
There is no reason why banks cannot charge for triggered alerts. Unlike account access, alerts are a value-added service with no similar "free counterpart" in the offline world. You don't see telecom giants giving away any of their specialized services such as caller-id, custom ringing, call forwarding and so on. Banks should work on developing premium service bundles. For inspiration, take a look at your local phone provider's website (see Qwest screenshot right).

Resources:

• Online Banking Report #109, "Pricing Online Banking Services"
• Online Banking Report #122/123, "2006/2007 Planning Guide"