NetBanker 2.0

Bank of America is first major U.S. bank to integrate personal finance into online banking

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).

Bank of America advertises "Your Own Bank" in NY Times

Today's New York Times (p. A8, national edition) has a half-page, red-and-blue ad for Bank of America dominated by the headline:

If you have a computer, you have a bank.

The visual is a generic laptop with a generic browser displaying Bank of America's homepage. Text copy and sub-heads emphasized that 20 million are now using BofA online banking.

The ad-copy emphasized three benefits:

• Instant and free funds-transfer to anyone with a BofA account
• My Portfolio, the bank's account aggregation service
• Security features

Call to action: visit www.bankofamerica.com/yourownbank (see screenshot below).

Screenshot: Bank of America's landing page
(click to enlarge)

Analysis
There are several interesting things about this ad.

1. No offer. The bank, which recently tested the richest new account bonus we'd ever seen costing it as much as $300 per new checking account, offers NOTHING. And this is an ad on black Friday, where stores typically offer monster loss-leaders to lure customers into their stores early on the biggest shopping day of the year.
2. Account aggregation featured: I can't recall the last time a major bank featured account aggregation as one of the three biggest benefits of banking online. Could this mean that BofA is going to begin emphasizing the feature more in its national advertising? If so, it could reinvigorate the service.
3. Customization deja vu : The "yourownbank" landing page is reminiscent of the bank's late-90s website-customization engine called Build Your Own Bank (see 1999 screenshot below). Given the landing page URL, we thought BofA might be pitching customization again, but it's really just a play off the ad's headline, that your computer is now your bank.

Taken together, it's an interesting effort, although it looks more like corporate branding rather than an effort that will generate enough accounts to justify the five-figure tab to the NY Times.

Screenshot: BofA's Build Your Own Bank from 1999
(click to enlarge)

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

Yodlee's new MoneyCenter goes live

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 (FMW 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

Financial mashups

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 (FMW, 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 FMW, 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