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).

Yodlee announces bill-pay switch kit

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.

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

Online banking's "second wave"

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. (FMW 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

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