Banking Review

The wrap from Finovate 2009 – where were the bankers?

It’s sometimes said that New York has its back to the water. Manhattan may be an island, but you can wander the streets and avenues of the city for days without ever seeing a glimpse of the water that surrounds it.

Which is a shame, because it turns out the islands surrounding Manhattan are home to a thriving and now protected community of water birds. Quite an achievement given they live alongside a city populated by more than 8 million people.

Like the dive bombing, often imposing and somewhat predatory cormorants of Swinburne Island, a gaggle of innovators, venture capitalists, journalists and bloggers descended on Manhattan last week for the third annual Finovate conference.

The Finovate concept is unique in financial services events – organisers Jim Breune and Eric Mattson personally select the 32 companies that are given seven minutes to demo their wares, resulting in a hectic, but ultimately very efficient, 8 hours designed to help attendees “See the future of finance first”.

Sadly, like the New York locals and thousands of visitors that give only a passing glance to the waterways and islands of the city, only a handful of bankers took the time to attend Finovate to get an understanding of the companies they may be disrupted by, or could work with to bring new services to market in the future. Vendors, venture capitalists and bloggers made up the majority of the 400+ strong audience.

Of the Australian banks, only ANZ bothered to send a representative – something not lost on head of innovation Peter Dalton who was quite happy to blend into the crowd and soak up the learnings without competition.

The first expense to get cut in any downturn is often travel and conferences, but, as innovation writer Jeffrey Phillips (inspired by the Harvard Business Review) argues, cutting ourselves off from interaction with people in other markets and industries does little to foster innovation.

For those of you who missed Finovate, some excellent summaries are available including this from Techcrunch blogger Larry Chiang, and this from Visible Banking director Christophe Langlois who did a fantastic job conducting video interviews with the Finovate elite.

On the back of the sale of Mint.com to Intuit for US$170 million, Finovate saw renewed interest in personal financial management (I’ll be publishing my interview with founder Aaron Patzer in the upcoming issue of Online Banking Review).

However it is the broader theme of personalisation that seemed to be the driving force behind many of the companies seeking to hit on the next big thing in financial services. iGoogle-type dashboards, drag and drop functionality, and the ability for consumers to micro-manage their own data were common features on display at Finovate.

Anyone managing online banking platforms should take a look at the interfaces being continually developed by Backbase, Intuit, Mint.com, Simplifi, Strands, and Yodlee.

And if I were a venture capitalist, these are the top 5 companies I’d be investing in:

Bling Nation (www.blingnation.com – US$13.2 million raised, 28 employees)

Bling Nation enables consumers to use any mobile phone to pay for purchases at the point of sale. That’s right ANY mobile phone. How? By using special stickers containing RFID chips that can be attached to the phone to enable contactless payments.

Tap & go payment trials conducted by Bling Nation have seen 70 per cent of merchants in the trials accept the payments & 20 per cent payment option penetration

Contactless mobile payment trials in Australia have been limited to single bank/telco and card scheme tie ups which reduce the benefit to merchants. Bling Nation is helping to make mobile payments more universal. Of course the usual hurdles remain in the deployment of contactless readers and merchant acceptance.

Kasasa (www.kasasa.com – US$21.9 million in revenue, 164 employees)

Kasasa provides an aggregated marketing service for community financial institutions, helping them to compete on a national scale, but with localised marketing plans.

Parent company BankVue provides a platform of products, including an online savings offering that incorporates charity donations and rewards to promote customer loyalty.

By combining their marketing dollars the institutions that use Kasasa are investing in building their brands to a level where they can compete more effectively with the major US banks.

Mutual institutions in Australia have been trying to set up a similar collaborative marketing campaign for years, without success. Kasasa is a commercial model the industry could lean from.

Silver Tail (www.silvertailsystems.com – $US2.1 million raised)

Silver Tail provides online fraud detection capable of detecting the growing threat of man-in-the-middle attacks on online banking. The group’s Mitigation service manages the threat in real-time by detecting possible malware attacks and stopping funds transfers when fraud is suspected.

Fraud detection advances are the future for online banking fraud management as more institutions implement two-factor authentication and fraudsters become more adept at advanced attacks that bypass such point solutions.

SmartyPig (www.smartypig.com – 15 employees, more than US$250 million in deposits)

SmartyPig’s claim to fame is that it has managed to attract more than $250m in US deposits since launch, with zero advertising, and very little marketing.

SmartyPig allows customers to open goal-based savings accounts and invite family and friends to help them reach their goals using Facebook, MySpace, Blogger, and now Twitter.

SmartyPig has partnered with ANZ in the US and after recently hiring a new CEO is now on the lookout for other partner banks around the world as it seeks to expand through Asia and Europe.

The group is well-placed to capitalise on the growing trend towards saving emerging as a result of the GFC, and has achieved the envious position of being “a financial organisation that does no evil”.

Strands (www.moneystrands.com – US$55 million raised, 100+ employees)

Strands offers personal financial management solutions for financial institutions, and has successfully deployed its white label solution with Spanish bank BBVA. BBVA also happens to be an investor in Strands, proof that at least one bank believes personal financial management will become a viable business.

Strands is also behind the personal financial management pilot currently being run by ING in the Netherlands.

Strands continues to invest in its platform which works with mobile devices, and recently announced a deal with savings.com in the US to work out which coupon deals/offers are best to serve customers based on their transaction activity.

Well done to Jim and Eric for putting together a top-rate event, and to all of the companies presenting at Finovate. A special mention to Bob, Jon and Tiffany from SmartyPig; Aaron and Martha from Mint; John from Kasasa; and Murali from Billeo, for taking the time to personally share your vision with “the blogger from down under”. I hope to see you again at Finovate in 2010.