NetBanker 2.0

Online Banking Report awards five "Best of the Web" winners in 2006

Our sister publication, Online Banking Report, is constantly on the prowl for innovations in online finance. When it finds a new one, it awards the new development an "OBR Best of the Web." During its 12-year history, the newsletter has handed out about 80 such awards (click here for the pre-2006 list). The main criteria for winning is "raising the bar" in online consumer banking, credit/debit cards, payments or lending (see note).

The 2006 winners in chronological order were:

• Prosper (March) for its eBay-like take on
  person-to-person lending (coverage here)
• billQ (August) for its Web 2.0 bill payment
  reminder service (coverage here)
• USAA (November) for the first in-home, remote deposit-capture service (coverage here)
• Wells Fargo (December) for fully embracing
  blogging with the launch of four blogs in 2006
  (coverage here); also, a belated award to Verity Credit Union for being the first to blog in
  December 2004 (coverage here)
• Bank of America (December) for its Yodlee-powered, full-featured online personal
  finance service, MyPortfolio (coverage here)

It was a good year innovation-wise, and we look forward to continued growth in 2007. One prediction: multiple winners in the mobile finance arena. For more information on the top developments of 2006 along with the latest 10-year forecast, see Online Banking Report #137.

Note: Usually, the first company to implement a significant new feature wins the award. And generally there is only one award for each new feature. For instance, Signet Bank was named best of the Web in 1997 when it launched the first triggered-email alert. Then Charter One won the award in 2002 when it took the triggered-alert feature to a whole new level, integrating voice, fax, and email options into a full suite of alerts. Online Banking Report founder and managing editor Jim Bruene makes the final decision. The only way to win the award is by being innovative. There is no nomination process, no deadline, nor any way to influence the decision. 

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).

billQ uses account-specific RSS feeds for bill payment notices

For the past few months, I've been more or less obsessed with RSS feeds (see our latest full report on the subject here). All of a sudden every information-delivery problem seems solvable with a feed.

And there is enormous potential for feeds in everyday banking which primarily involves simple information queries: What's my balance? Did my check clear? Was my mortgage paid? 

The first account-specific financial feed
I've been on the lookout for the first financial institution with account-specific feeds. That search continues, but a non-bank has been using feeds for bill-payment-status updates: previous OBR Best of the Web winner billQ <mybillq.com> (see previous coverage here).

The company has an "RSS Feed" option on its list of automated bill-payment-tracking mechanisms which also include an iCalendar subscription, an Apple OS X widget, or a toolbar applet (see screenshot below for billQ subscription options).

When using the RSS feed option, bills automatically appear in the user's newsreader software. Below is an example using the Newsgator Web-based reader:

billQ MAC widget released

Our most recent OBR Best of the Web winner (FMW Sep 1), Seen Creative's billQ, has achieved another industry first, a bill payment-tracking widget for Apple Mac users (here's where you can download it from Apple's site).

The widget allows Mac users to drop a small billQ screen right onto their desktop (see FMW 2 May 2005). It allows users to see what bills are due and mark them as paid without ever leaving their desktop.

The widget can also be downloaded at billQ's website <mybillq.com>.

billQ named Best of the Web by Online Banking Report

In the latest from Online Banking Report, "Personal Finance Features for Online Banking," we've awarded an OBR Best of the Web 2006 to a new Web-based bill management service. It's the third winner of the year,* and 53rd since the first recipient in 1997 (here's the list).

And the winner is, drum roll please, billQ <mybillq.com> a new Web 2.0-inspired bill manager from Seen Creative Group <weareseencreative.com>, a relatively new website-design firm based in Rochester, NY. The company was chosen for raising the bar in three areas:

• User-interface design (click on screenshot below for closeup; see more screenshots by clicking the continuation link at the bottom of this article)
• "Add this bill" browser-toolbar button
• Publishing bills through RSS and iCalendar feeds

Read the entire review, along with a look at a dozen other online personal finance applications, in this month's Online Banking Report (#131/132).

--JB

*Previous 2006 winners include E*Trade Bank for its Mileage Maximizer airline card mile aggregator (FMW 7 Dec 2005) and Prosper for its person-to-person lending platform (FMW Feb. 5 and others).

P2P lending rates a NYT article

While person-to-person (P2P) lending will never create the buzz or user base of eBay's PayPal or Google's GBuy, it passed a milestone yesterday with a favorable article in The New York Times. The short article looked at UK-based Zopa <zopa.com>, a recent OBR Best of the Web winner (FMW Dec. 1) and a similar service being hatched in Silicon Valley, Prosper <prosper.com> (formerly CircleOne).

Prosper, like many Internet startups before it, bears watching not only because of its relatively minuscule user base–currently, just 12 transactions are pending–but also because of its VC backers, Benchmark Capital, Accel Partners, Benchmark Capital, Fidelity Ventures, and Omidyar Network, along with its famous founder Chris Larsen, who launched E-Loan nearly a decade ago. The company has raised $20 million according to its website. Click on the screenshot, right, for a closeup of its homepage.

We'll look at both companies in more detail in the next Online Banking Report (Number 127), due out at the end of the month.

--JB

Online poaching: E*Trade's Mileage Maximizer

Credit card companies have been poaching revolving balances from each other for years primarily through direct mail. It helped boost the share of early movers, such as Capital One. But once the tactic was widely copied, it dragged margins down for all.

The same technique has been used online with dedicated balance-transfer microsites posted by Bank of America and others beginning in 2003. The online balance transfer is better than paper because it can be interactive, prompting the user to make additional transfers, or to correct errors in the information input. However, it still requires the user to make a trip to the website to make the transfer.

Enter E*Trade's new Mileage Maximizer program, launched with a page-dominating color ad in Tuesday's Wall Street Journal. With the Mileage Maximizer, the bank encourages users to make purchases on their existing non-E*Trade rewards card, then have the balances AUTOMATICALLY swept to an E*Trade 8.9% APR line of credit each month. The bank's website is used to initiate and maintain the transfer process. But like recurring bill payments, once the sweep is established, it will occur each month with no interaction by the user.

E*Trade may well be the most innovative online financial services company. Here are some of the industry firsts they've logged over the years:

• 2001: MyLoanTeam from E*Trade Mortgage (OBR 73)
• 2003: Real-time funds transfers (OBR 96/97)
• 2005: 7-year online transacation archives (OBR 118)
• 2005 (March): First U.S. bank offering security tokens for online access (FMW 2 March 2005)
• 2005 (December): First virtual rewards card, Mileage Maximizer

--JB

Editor's Note: Mileage Mazimizer was awarded an "OBR Best of the Web" in our report on online lending published Jan. 31, 2006 (OBR 126).

Citibank fights fraud with personalized emails

It's fitting that the financial company most targeted in phishing attacks, Citibank, would be the first to introduce a new email format that goes a long way towards helping users identify legitimate email messages.

The personalized emails (click on inset to enlarge) include not only the name of the recipient, but also the last 4 digits of the user's ATM card. While simple personalization with the customer name would help many users identify legitimate emails, it's far from fool-proof.

First, there's the relatively common practice of including first name and/or last names in email addresses. Also, some phishers are using direct marketing tactics and first running email addresses through various databases to append actual names and other info to the email record in order to develop a personalized pitch (see ZD-Net article).

Citibank's new email format was announced to customers through a short message on the top of the online banking screen in early May. It is also now mentioned in the bank's main FAQ page.

Analysis
This is a great first step in winning back the confidence of users. Eventually email standards will evolve so that the email client will be able to readily identify legitimate emails, but that could be years in the future.

If you are considering a similar approach, you might want to let users choose the name and identifying information that appears in the personalization box. In February, we reported on a UK security initiative that took that approach.

For more information:

• Previous FMW article on eBay's personalized email strategy
• Security & Privacy from Online Banking Report (#93/94)

-- JB

Editor's Note: Citibank received an OBR Best of the Web award for this and other security features in Online Banking Report #119, "Marketing Security."

Bank of America unveils multi-factor security for consumer accounts

Bank of America wins the race to be the first with a viable plan to secure consumer online banking accounts. In an announcement today, it becomes the first major U.S. bank to endorse multi-factor authentication for consumers at login.*

The system, already in use at Stanford Federal Credit Union, is called SiteKey. The clever approach from Bill Harris's PassMark Security provides several layers of security to defeat phishing and keylogging attacks. The company calls it two-way two-factor authentication because not only does the end-user authenticate themselves to the bank, the bank authenticates itself to the user to defeat phishing schemes.

Here's how it works (click on inset below for BofA page):

1. User provides username
2. BofA verifies that the login request is coming from the user's previously registered computer; if NOT, user must successfully answer a challenge question based on previously registered shared secrets
3. After passing steps 1 and 2, the user is shown their previously selected image, so they know they are logging into the true BofA server
4. User enters their password

The service launches in mid-June in Tennessee with full roll-out by the end of the year.

Analysis
Even though it's long overdue, we applaud Bank of America for moving the industry forward. While the program won't be available system-wide until year-end, we're giving it an Online Banking Report "Best of the Web" now because it's the biggest development in U.S. online banking for several years.

The BofA/Passmark system is ingenious for several reasons:

• Unless a user logs in from a new computer, there is little extra work involved; just a two-step login with username, followed by the password
• Requires no hardware or out-of-channel coordination by the end-user; shouldn't cause a major increase in customer service expense
• Defeats phishing by displaying a personal image prior to asking for password
• Defeats keylogging with the rotating challenge question

If you are at one of the other 15,000 financial institutions in the United States, the clock is now ticking. As your customers find out they are not among the 13+ million consumers (BofA's current online base) receiving extra protection, they will be demanding the same from you. And if you thought BofA was aggressive in its free bill pay promotion, wait until you see the marketing blitz on this one. Extra authentication simply MUST BE in your 2006 plans.

-- JB

*For several years, ING Direct has asked for a third bit of info at login, but the necessary info is relatively easy to obtain (for example, zip code). Also, earlier this year, E*Trade launched security tokens for its high-rollers. But BofA is the first with a broad, secure, and non-hardware-based approach.

Bill payment from the toolbar

Just when you thought the banks were gaining an upper hand in the electronic bill payment battle, up pops a newcomer with a fresh approach. Take a moment to check out Billeo. An odd name, but so is iPod, and it seems to be working pretty well.

We haven't used it yet, so these comments are preliminary, but "on paper" this company and its approach appear to be winners. (One caveat: the business model is unknown, and the privacy policy is a bit ambiguous when it comes to the issue of adware. We'll keep you posted on what we find out.)

Billeo is a free toolbar-resident application that plays "virtual assistant," enabling more convenient and controlled direct bill payment at vendor sites. The toolbar also serves as an e-wallet simplifying online point-of-sale transactions.

Analysis
The toolbar contains several unique features, one of which is extremely impressive, the ability to save screen captures of transaction receipts. The application also includes payment reminders, a payment register, and a personal "bill payment" email address for users.

There are several familiar names associated with the startup. Nancy Langer, a former exec at Metavante, is the president. The advisory board includes Eric Dunn, formerly with Intuit, Shankar Srinivasan co-founder of Cyberbills, and Scott Loftesness of Glenbrook Partners.

We'll dissect the new service in Part 2 of our upcoming Electronic Payments Report in Online Banking Report.

--JB

Editor's Note: Billeo was named "OBR Best of the Web" in the second part of its series on E-Payments (OBR 119) published in June 2005.