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Glenbrook's Take on Finovate 1.0

Glenbrook's Bryan Derman filed the following report tonight from today's Finovate 1.0 Conference in New York City.

I had the pleasure of attending today’s Finovate 2007 conference in New York, the inaugural edition of what we hope will be a long stream of such gatherings to highlight new offerings from many of the most forward-thinking companies in financial services. Jim Bruene and the team from Online Banking Report made an impressive debut in their first foray into the conference business.

The show was as innovative in its format as it was in its content. Forgoing the usual regimen of keynote speeches and moderated panels, the organizers gave each of the 20 presenting companies seven minutes to demonstrate their latest wares for the audience (200 people in the main room, with an overflow crowd watching on TV nearby).

Presentations by groups of 10 companies were followed by ample time in an exhibit hall for additional demos and extensive Q&A. Hardly a PowerPoint slide was used all day long, and I don’t think anyone was left disappointed.

I won’t try to review all the presentations, as the OBR team seems to be capturing the key details of each demo on their blog (www.netbanker.com), but I did distill a few themes that were prevalent across several of the presentations.

  1. PFM Goes 2.0. A number of presenters appeared to be competing for the mantle of “Quicken for the rest of us”. Web-based versions of personal financial management (PFM) applications were on display from upstarts like Geezeo, Jwaala, and Mint as well as stalwarts like Yodlee and Digital Insight (Intuit). These services are usually offered through online banking applications and promise greater ease of use and more accurate spending categorization than the traditional PFM software packages. Many also employ algorithms to help the user identify opportunities to save money by avoiding fees, reducing interest charges, or other means. The technology advances in this space are impressive, and we have often criticized banks for ceding the PFM market to software companies, but I continue to wonder how large is the segment of consumers that really wants to understand its money this well.

  2. More Online Services for Banks. In addition to PFM functionality, several vendors brought forward new services for banks. Metavante demonstrated its expedited payment functionality, while CheckFree showed its enhanced user interface and deep integration with recently-acquired Corillian, and Online Resources displayed its Virtual Collection Agent to automate collections. Andera offers automated assistance with online accounting opening and Identity Theft 911 allows banks and other institutions to offer high quality, one-to-one ID theft resolution services to their customers.

  3. Power to the People. By contrast, a group of presenters brought forward consumer-facing applications, some of which could be viewed as threatening to banks. Prosper demonstrated enhanced tools to help its lenders make better risk assessments, while Lending Club showed the peer-to-peer lending solution that it debuted earlier this year on Facebook. Mortgagebot has leveraged its relationship with 700+ mortgage lenders to create Mortgage Marvel, a mortgage product and price search engine for consumers. Finally, Billeo, while also working with banks, demonstrated its toolbar which allows consumers to manage biller direct sites and payment instruments without sharing data beyond their own hard drives.

  4. Go Mobile or Go Home. Much of the afternoon session was given over to what one participant called a session of “mobile banking speed dating”. Five leading mobile banking/mobile payments companies (Firethorn, Monitise, ClairMail, MShift, and mFoundry) presented their solutions consecutively, leaving a trail of SMS, mobile web, and native applications in their wakes. It’s too early to try to pick the winners here, but there does seem to be a growing sense of inevitability about the deployment of mobile functionality by banks across the world. Functionality beyond traditional online banking transactions are emerging (geo-location services, bank-sponsored ads), but I would like to see some greater level discussion of the consumer segments to be targeted and the elements of the bank business case for investment (beyond competitive necessity).

All in all, a day well-spent. It’s great to see in one room the high level of innovation ongoing in the financial services and payment space and again we thank the Online Banking Report for bringing it to us in such an efficient and engaging format. I can’t wait for Finovate 2008!

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Bryan, thanks for the great recap of the day. The themes you grouped the DEMOs under are spot on. Thank you for attending and bringing your energy to the conference.

I've been following the mobile banking and payments space for some time now and after the Finovate conference I am concerned about a couple aspects of what is happening in the U.S. marketplace. In particular, the AT&T/Firethorn offering seems to be opening up the door for the Patriot Act police to come crashing through. If I understand their model correctly, they would like the consumer to rely on a Carrier and/or a startup to manage their id and sign on credentials. While this single sign on approach may seem convenient to a consumer, having followed the evolution of Yodlee-like offerings, I can tell you there are a number of hurdles here that could cause this market unnecessary pain:
1) Single Sign On offerings both online and mobile always seem great in theory, but when the customer is asked to trust someone other than their bank or brokerage with their credentials (especially a non-financial services provider) everything screeches to a halt
2) In this mobile version of single sign on it appears AT&T/Firethorn want to own not only your bank info, but also your credit card data for mobile payments...that seems safe :)
3) By ATT/Firethorn owning the key to unlock this door, aren't they in fact on the hook for the transaction is something goes awry re: the Patriot Act?

This latter issue seems to be the biggest one that no one is talking about...perception alone would seem to dictate that AT&T/Firethorn want to be seen as the "parent" to the transaction and that any violation of the Patriot Act would then in deed be on their watch. Am I missing something? Why would I want AT&T to run my accounts when I've been working with BofA for 17 years and never had an issue? Why are banks fighting this more? Would seem they have the most to win & loose here...

Andrew

Hey, thank you for the extensive report!

Your post makes me even more to be keen to attend the conference this year. We would love to, but we are just starting our operation:) and are a bit short:) Me and my team run a personal finance/expense tracking project in lithuania and we created Wallet Haven ( www.wallethaven.com ) website and Money Watch ( http://www.getjar.com/products/15566/MoneyWatch ) mobile application. Our applications let you track your spendings and provide you with automatic finance intelligence reports.

Most probably, we'll be there the next year.

Best regards,
Maksim

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