Everyone's Doing It

FinanceWorks from Intuit/Digital Insight

I recently had the opportunity to look at a demo of Intuit's new software called FinanceWorks. In true social-media-aware fashion, the nice folks at Intuit were listening close to the Twitter feeds for any mention of their product. So sure enough, when I mentioned FinanceWorks (FW), they began following my feed and invited me to take a test drive.

First, a little background. In February of 2007 Intuit closed on the acquisition of Digital Insight (DI) - a deal worth approximately $1.3 billion. DI is a third-party provider of online banking software. By "third-party" what I mean is that they are not a core processing provider to financial institutions. Core processing can be defined loosely as the accounting software banks and credit unions use to actually track each and every account and each and every transaction within those accounts. Most people don't realize this, but unless you bank with a very large bank or credit union, your data isn't likely to be stored at the bank itself. Rather, the data is stored within the data center of one a core processing company such as Fiserv, Metavante, Jack Henry, etc. In most cases, banks under a billion or so in assets will outsource their core processing to one of these companies. In some cases, banks or credit unions will purchase the software from these same companies and run it in-house while much larger banks will actually write their own software.

In order to fully appreciate the complexity of online banking and where all these various players fit into the puzzle, it is helpful to understand all the different pieces. The unfortunate bit in this whole story is that it is fabulously, unnecessarily complex. In-fact, it's really not complex at all. Everything hinges on the core. The core is where all the data resides. What complicates things is that the core providers really don't want anyone else interacting with their data. Before I get up on my soapbox, let's just say that DI did the dirty work of connecting with these core processors and that banks and credit unions now have a third-party choice for online banking and bill-pay.

One thing that online banking and bill-pay all have in common is that they are simply transaction processing systems. Some work well. Most are abysmally poor examples of user interface design. DI's happens to work pretty well. One other thing they have in common is that they don't offer the kinds of analytical and planning tools you might find in software or online tools like Quicken, Money, Mint, Wesabe or Thrive. The downside to all of these tools is that they don't allow users to see their data in real-time. They each can connect to your bank on demand and download a batch file of the latest account data, but it's just not the same as real-time.

In-steps FinanceWorks. Intuit took DI's knowledge of core connectivity and bank/CU relationships and built a tool that takes features from Quicken and puts them at the bank alongside the online banking system. FinanceWorks is sold to banks and credit unions who then provide the service to end-users. From what I've heard most banks and credit unions are providing the service to account holders at no cost.

 

As you can see in Scenario 1, most PFM tools require users to download and import a batch file containing recent transactions. Most software has this process fairly automated. What FinanceWorks does that none of the other tools do is provide users with a real-time connection to their account data.

 

So, what does FinanceWorks do? FinanceWorks seems to be a subset of features from Quicken. It allows users to set and manage budgets, categorize spending and keep track of bills by setting due dates and notifications. FinanceWorks does not provide bill-pay and does not interact with your banks bill-pay in any way. You can set a reminder in FW to pay a bill but you then must leave the system and log into your banks online bill-pay system to pay the bill.

I liked a feature called RealBalance. RealBalance allows you to adjust a slider back and forward in time to show what your balance is (or would be) based on bills and deposits it knows are coming up. I also liked the fact that you could add accounts from other institutions. This “account consolidation” feature is common and exists within all the third-party PFM tools such as Mint and Wesabe. 

While the features within FinanceWorks were nice, there wasn’t anything earth shattering or new. Overall I thought it was a good application. The biggest benefit so far lies within their business model – not within the features. Understand that FinanceWorks is sold to banks and credit unions – not to end-users. However, banks and credit unions will have a significant leg up on their competitors by offering a PFM tool that’s “Powered by Quicken”.  As far as end-users go, if you already own MS Money or Quicken, you probably won’t find much of a reason to start using FinanceWorks. Convenience and real-time data are the two big draws. The desktop versions of both Money and Quicken have a much richer feature set.

Pros

• Real-time connectivity to core processor
• Solid personal financial management tool
• Can be branded for your financial institution
• “Powered by Quicken” had brand recognition that will help financial institutions market this service to end-users
• RealBalance feature shows accurate balance given upcoming deposits and expenses

Cons

• Features still have a ways to go compared to desktop personal financial management tools
• Not integrated with bill-pay
• Still a “view only” application – you can’t perform any transactions such as paying bills or making transfers

Banks and credit unions might view tools such as Mint and Wesabe as competitors. FinanceWorks gives banks a tool they can provide to their end-users that would give users the features they want in a tool branded by the bank. Do I think FinanceWorks has addressed all customer needs? No. There's a long way to go, but they do provide a solid solution for financial institutions to get into the game of supplying a personal financial management tool to their end users under their own brand. The fact that banks even see a clear need for this is a positive step in the right direction towards taking a consultative approach to banking rather than being simply a transaction processor.

You Still Can't Cross a Chasm in Two Small Steps

This is a guest post by author David Svet at spurspectives.com.

I love this quote, or at least this half of it by David Lloyd George. The entire quote is, “Don’t be afraid to take a big step. You can’t cross a chasm in two small steps.” No one knows this better than Wile E. Coyote. I think it has a lot to say about the current state of the social media marketing frontier. This reminds me of the early days of the Internet when there was radical change happening at a maddening pace. Social media seems to be in the same boat today and the fallout is beginning.

I’m talking about Geoffrey Moore’s book, Crossing the Chasm, and the wonderful little graph he co-opted to explain the adoption of technology products and services by the public. It divides the market into five groups along a time line that shows when people adopt a certain technology. The most interesting part of the curve is the chasm between stages two and three. This is where most technologies fail to develop into a full product with a fully supportive company behind them and they die, unlike Wile E. Coyote.

The plethora of social media products and services currently available is mind boggling, to say the least. They won’t all make it. They can’t. The market isn’t big enough. Yesterday’s announcement that one of the larger services, Pownce, a competitor to Twitter, is shuttering its site and merging with SixApart highlights one of the first social innovations to make it to the chasm, and fall in. There will be more. The questions that remain are who will they be and what do you do about it?

If I could answer the first question, I wouldn’t be writing this blog post. I’d be deciding if I wanted to have lunch with Warren Buffett, again. Suffice it to say that things will change, companies come and go, life goes on, so hedge your bets. That answers the second question. Hedge your bets. Here’s what I mean:

• Don’t freeze. Staying out of social media is a mistake as big as when your uncle Gilbert said the Internet is a fad.
• Don’t try to use ALL of the available social media outlets and tools. Have you seen what’s available? You’ll end up divorced and spend the rest of your life in therapy.
• Do look carefully at your target market. Who are they? How old are they? How do they communicate with one another?
• Do match your selection of social media channels to the needs and habits of your target market. Note that “channels” is plural. You need a multi-channel approach.
• Do watch what is happening with the adoption of your selections and the maturation of the companies that developed them. Be prepared for change.
• Do have a plan should one of your channel selections become no longer viable.

So, don’t stay out of social media altogether and don’t try everything all at once. Rather, put together a plan with a well-rounded selection of social media services at various stages of maturity that match your target market’s needs and interaction habits. A multi-channel approach hedges your bet that one might fail/merge/transform/get expensive/etc. It also enables you to interact with your community at multiple touch points. Furthermore it allows you to interact with people using both pull and push marketing tactics. Then you can listen, record, respond, suggest, and have a real relationship with your constituency.

It also helps to realize that loads of products and services are born and continue to exist for their entire product life in the first two segments of Moore’s hill. I think this is particularly true for non-consumer products or specialty products — products where the market is niche and limited to not include the possibility of mass adoption. So if you match your mix to your target base, monitor the results, and keep an eye on the horizon, you will end up watching the Coyote leap off the cliff instead of following him. Meep-meep.

The Twitter From My Front Porch

This is a guest post by author David Svet at spurspectives.com

There’s a small coastal village on Lake Erie in Vermillion, Ohio that is the best explanation I can find to answer the question: Why does social media matter? This takes a pretty big leap, so please indulge me for a few paragraphs.

This beautiful little village was built at the last turn of the century as a summer gathering place for a church community. The houses are cottages, all white clapboard and shake, with ornate front porches. They are built very close to one another with a strip of flowerbed for a front yard bordered by narrow sidewalks and streets that might let two Model T’s pass without scraping fenders. In a word it’s cozy.

Life in the village is quiet and slow — a throwback in time. People sit on their front porches along tree lined streets. Children and parents casually walk to the beach, playground, general store, or church. People greet passers by from their porch. Some stop by for a chat, others simply wave and comment on the beautiful weather.

My grandparents lived in nearby Cleveland. They had small clapboard and shake houses with nice front porches too. Their houses were newer and weren’t as close to one another. They had front yards, albeit modest ones, and detached garages. The streets were wide enough for normal traffic and on-street parking. When I was little I remember sitting on the porches and talking to neighbors as they passed by, but not when I got older.

My house is bigger than both of my grandparents houses combined. It is skinned in cedar shake but that was done as a retro touch. It has a two-car attached garage that serves as our front door — we enter and leave the house in a car. We don’t have sidewalks. Yards average an acre or more in our neighborhood. We wave to the neighbors and they wave back. It’s a sterile existence. So, my wife and I did something a little crazy. We built a porch — a great big wrap around front porch with seating, lighting, tables, and flowers. Now we see our neighbors. They stop by the porch. We talk. We laugh. Sometimes we just wave and comment on the weather.

That’s when I figured out why social media is so hot Social media gives everyone the capability to interact in the way we used to do on the front porch. Social media is a virtual front porch.

Think about it. Why did we stop hanging out on Grandma’s front porch? Because of central air conditioning. It sealed up the house and made it more comfortable than the porch. We sat inside and watched TV. Pretty soon houses weren’t built with porches and garages became attached to the house. Yards got bigger and houses got farther apart. Suburban sprawl, AC, TV, and McMansions killed spontaneous social interaction. As neighborhoods changed so did our sense of community.

So what is the result? New urbanism and social media. We are building physical and virtual communities that are a throwback to the village on the shore of Lake Erie. Why? Because it is innate human nature to want to interact with other people on a social level. We crave it. There is a market for it because demand drives markets.

New urbanism is easy to understand as an answer to the desire for a sense of community. But social media and virtual communities seem to be a real stretch, don’t they? Not really. Look at Twitter — the machine gun prattle of 140 character conversations between virtual strangers. On the surface it seems nuts, or annoying at best. To understand it, record a conversation in the office the next time a group gathers to look at a silly YouTube video. Then transcribe the conversation and attribute comments to the people who spoke them. It looks just like a Twitter conversation — there’s a link to a video followed by snickers, OMG, LOL, and individual sentences of friends bantering about the video, then it stops and everyone goes back to work. This is the same kind of social interaction that used to take place among friends on front porches. That’s why social media works. It gives us a place to connect to people and banter about the things that interest us. So, stop by my porch and say hi: http://www.twitter.com/spurdave

Trust and Security in Social Media Banking Tools

Is Security Really The Barrier to Adoption?

An Israeli company called WorkLight conducted an interesting survey of 1000 Facebook users, ages 18-34, asking questions related to banking using Web 2.0 applications. In response to the question, "If another bank offered Web 2.0 gadgets for personal banking, would you consider switching banks?", 27% said yes an 73% said no. Of the 27%, 12% said "highly likely" and 15% said "yes." In addition, 48% of all respondents said they would use Web 2.0 tools if offered by their current bank. 

If I had to make an educated guess about the survey respondents, I would guess that nearly half, if not more, would be hard pressed to tell you what a "Web 2.0 application" is. I also would suspect that nearly all would be unable to define what a Web 2.0 banking application would do. In fact, the question is very ambiguous. A better question would be, "Would you consider using a secure banking application within a social media network such as Facebook, iGoogle or MySpace?" 

A lot of the focus in the mobile and social media community around banking applications is on security - as in - security is the barrier to user adoption. I doubt these findings are accurate and here's why. The issue isn't security per-se: it's trust and comfort. I think nearly anyone would tell you that they trust their bank. Most would make the assumption (right or wrong) that if their bank is offering an application, the bank must have done their due diligence, the application must be secure and the bank would surely stand behind and guarantee the security of the application.

The adoption rates for any new trend in banking is always slow. In the past, people were hesitant to use the drive-ups. Then there were ATMs. Now online banking, mobile banking and new banking tools and "gadgets" within social networking sites. There are people that still don't use ATMs. There are even more folks that don't use online banking. For non-users, trust isn't usually the issue. It's a comfort level - the breaking of a habit. If you talk to these "non-users" they'll say things like, "I like going into the branch and talking to the tellers", "I'm horrible with computers", or "I hate machines."

Early adopters are technology folks and will show an interest in the security of these applications. Eventually, it's not security that's the issue. Security will be assumed. Trust becomes the factor. Does the application come from a trusted source? Right now there are literally a massive number of "tools" in the social media space with hundreds more rolling out almost weekly. With the high volume of "noise" out there, the source of the application is very important. Fiserv, a trusted name in the banking industry, rolled out a Facebook banking application that hasn't  seen strong adoption. Why? Because 1000 out of 1000 of those folks surveyed have no clue who Fiserv is. Is the app secure? Sure it it, but the source isn't trusted. Once banks and credit unions settle on an application and do a good job of educating their customers on the banking tools available to them, users will welcome them whether in the mobile channel or the social medial channel.

Fidelity Secure Gadget

Fidelity Labs just released the beta version of an iGoogle gadget that allows account holders to check account balances and receive alerts from their iGoogle page. Fidelity Labs claims to have developed the application themselves, but it looks a lot like a banking widget built by WorkLight of Israel. According to their website®, enables organizations to do business securely using consumer Web 2.0 technologies"

One user commented, "I for one hate www.fidelity.com, so I am quite happy they have this to save me their web experience.

Again from the WorkLight website: "WorkLight for Retail Banks allows retail banks to securely deliver to customers personalized account information balances and transaction updates via familiar web 2.0 tools such as RSS, widgets/gadgets, personalized home pages, and instant messaging. Using these convenient means to deliver highly relevant, personalized information directly to users’ desktops, WorkLight relieves customers of the need to log in to and navigate through complex portals and thus substantially enhances the customer experience. This strengthens customer ties reduces customer attrition, and provides secure conduits for up-selling additional products and services, all without requiring changes to the bank's applications or requiring customers to install client software."

Editors note: the liberal use of the term "Web 2.0" in this article, while against my instincts, is purely based on WorkLight's use of the term to describe their products. There is no such thing as "Web 2.0" and use of this term is generally frowned upon by industry insiders. Terms such as Social Media and Social Tools are used by most to describe the tools used in the social web movement. "Web 2.0" however, is still commonly used by the press and media to describe a general movement towards social interaction on the web. It is not a specific product, networking protocol, tool or piece of software.

Financial Institutions: How to Compete Online

I've been spending a lot of time working on dissecting and reconnecting the pieces that make the suite of online and mobile banking services we have all become accustomed to using. I've been getting a lot of feedback from progressive financial institutions around the country as well as end-users about the need for something new. There is strong consensus about the idea that online applications are becoming the dominant customer-facing retail channel for financial institutions and that the same old transaction based systems aren't cutting it anymore.People want more.

For banks in particular I recommend taking a more consultative approach to serving customers as opposed to the purely transactional approach most currently take. Many banks say they want to help their customers, but are you walking the walk? Many just give it lip service. Where you really see progress are in financial institutions run by progressive thinking management who truly walk the walk. Unless the entire organization sees a new approach from the top down, it will be the same-old, same-old.

Transaction processing is the absolute lowest common denominator. If you don't already have spectacularly beautiful online interfaces with superior usability, mobile optimization and a demo of each on your website, you're behind competitively.

If I could relay only one piece of advice to bankers it would this: make the selection of your online banking applications an entirely separate process from the selection of core processing. Consider this question: would you let your contractor design your next branch? (and for the sake of this argument, assume that your builder has no architects or interior folks on staff - and trust me - from what I've seen, your core has no one qualified to design web apps on staff). Believe it or not, there are people who now shop banks and credit unions strictly based on the quality of your online applications. Consider that when your core processor is "throwing in" the online banking applications when you're busy evaluating their core platform. Get your marketing people involved and know that you don't have to use their application.

Expired, Tired & Wired for Financials

In the tradition of Wired Magazine I have compiled a list of expired, tired and wired things related (mostly) to technology within financial institutions. Many of these were submitted to me by Twitter followers.

Expired	Tired	Wired
Social Media?	Social Media Strategy	Social Media Participation
Helpline	Online	On Twitter
Open Source Desktops	Open Source Server	Open Source Core
Building Vaults	Building Branches	Building Online Communities
English or Spanish?	Phone or Email?	Mobile Push or Mobile Pull?
Tellers Cross Selling	Plasma’s Cross Selling	Customers Cross Selling
Checking Fees	Overdraft Fees	Mobile Transaction Fees
Analyzing Core Platforms	Analyzing Loan Platforms	Analyzing Social Media Platforms
Reacting	Listening	Participating
Hating Credit Unions	Legislation Against Credit Unions	Learning from Credit Unions
Teller Serve	Self Serve	Community Serve
Cardswipe ID in Lobby	Biometric ID in Lobby	No Lobby
Transactions	Statements	Value Propositions

2008 Forward Motion Hare Scramble

Well, we made it in one piece! The hare scramble race yesterday was held in Carbondale, KS - about 15 minutes South of Topeka. The race was well organized and we were really appreciative of how helpful all the folks were. We brought 4 bikes - 2 to sell and 2 to ride. I decided to ride Tom's Honda XR200. I've ridden this bike a lot this past year and even though it's a few years old, it has good power and a solid feel. The down side is that it's a kickstart. My bike has electric start but I decided that the power was an advantage and I knew that this bike has always been ultra-reliable - starting on the first kick every time. Little did I know, I would be kickstarting the bike maybe 100+ times over the course of the race. I was getting worn out not from riding but from kicking the starter over and over! The bike simply wouldn't idle. Fortunately a spectator along the track had a small phillips and helped me adjust the idle speed. After that it was really off to the races - literally.

There were about 140 riders which made the start very exciting. They started everyone in flights each staggered about a minute apart. Let me tell you, the sound of 140 motocross bikes revving their engines at the starting area was absolutely incredible! We were very glad to see and hear that we weren't the only newbies in the group. In-fact, there were dozens of us. Not new to riding, but new to hare scrambles. Several lessons were learned. Neither my friend Tom or I had never ridden at this location which was a big disadvantage. When you don't know what's over that hill, you don't know whether to scream over it and get air born or whether to be cautious to the top in anticipation of a cliff face, hairpin turn or another rider just over the lip. Having said that, riding the entire course for practice before the race started would have been impractical. The course was 7 miles long and took about 45 minutes to ride. The pros finished a lap in 20 minutes, but hey, that's why they're pros! Which reminds me: the guys in the lead (the ones who were lapping us) are studs. We're both avid riders, but seriously, these guys are amazing. We decided on the way home that a riding school may be money well spent.

Here is a link to photos from the race. We're in there somewhere (I haven't had a chance to look at them all). *Correction - the photos on the Forward Motion website are from the race in July of this year. As of today they don't have photos posted from yesterday's race. However, the course is identical and you can take a look to see what it was like.

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Funny and pointed video that has a lot to say about the benefits of a sound social media strategy.