New Ventures in Financial Services

Focus on Payments and Mobile

Archive for the ‘online financial Services’ Category

Monitise – Loss widens

leave a comment »

16 Feb 2010

MONI.L Global strategic alliances with Visa and over 1.75MM registered consumers in over 200 banks could not pull it out of a pre-tax loss of £6.67MM. Think of Monitise as a “Mobile ATM” kind of service.. much less dealing with payments and more about checking balances. MONI’s fee structure is a monthly  subscription (by the bank by customer/transaction) with a monthly minimum. My guess is that they are growing users.. but also suffering from bank’s efforts to delete “inactive” users.

Given Visa’s June 2009 $13MM investment, my bet is that Monitise will pull through with a new service and continue its growth as it evolves into new products.

Written by tomnoyes

February 16, 2010 at 8:50 pm

Citi Launches Bundle “Mini”

with one comment

15 Feb 2010


Previous Post:

In the Press: NetBanker, and American Banker

As a banker I can’t help but ask “how is Citi going to monitize this”? So you can read the rest knowing I’m an “old school” skeptic. Sure it offers some cute tools, but others in the market already do this for free (see www. It does have a cool iPhone App called Vice Tracker (iTunes link) … perhaps Citi will start a “gaming business”.

But seriously… Citi’s growth opportunities are in international retail, I can’t imagine Vikrum trying to defend this US only investment.  Let me take a shot at writing Vikrum’s analyst response

Vikrum: Citi has always been known as a technology leader for the last 100 years, we are focused in delivering value to consumers and helping people better budget their spending is crucial in these challenging times.

Analyst: So why isn’t this under Citi’s Brand?

Vikrum: … well the business heads don’t want to pay for it but we will certainly recommend Citi products to any consumer that uses this free service

Analyst: Did you know that Mint already provides this service free to consumers? How do you compete w/ Free?

Vikrum: Mint will not recommend Citi Products, bundle will…

Analyst:.. err Ok.. yeah customers will love that

Analyst: I hear that Bundles next version will be able to aggreagate your spending details across multiple FSIs, who will bear the risk of maintaining all of this confidential consumer information

Vikrum: Bundle is a seperate company…

Analyst: Got it

Looks like the beta doesn’t have the budgeting tools ready yet. Also curious that the beta does not work with either firefox or google chrome.. wonder if this was a condition for Microsoft’s investment.. 🙂

Written by tomnoyes

February 16, 2010 at 4:59 pm

Safecorp Financial

leave a comment »

Americas Next Direct Bank?

2 February 2010

Perhaps it is a sign of aging that I see events unfold in “waves”. The wave phenomena is probably my brains feeble attempt to connect new information to prior personal experiences… reinforcing some neural networks and restructuring others. Along side this gray matter re-wiring are events that ARE actually connected as ideas are discussed and lessons learned among leaders and investors leveraging new market insight to build new products and businesses.

This week’s “Wave” was related to direct banking. The country direct bank leaders I had a Citi were just fantastic, each one a local crucible of business and technology innovation. I viewed the principal challenge for Citi as finding a way to learn our lessons once (as opposed to 47 times). While I had international, Steve Kietz grew Citi’s US Direct Bank to be the fastest growing bank in the history of US ($6B in deposits in first 8 months).  Internationally UK, Australia, Singapore, Japan, Columbia, India (NRI) and HK stood out as excellent examples.  Our key lesson is that there are opportunities for a “direct bank” model globally and established banks have challenges attacking it because of margins (Innovator’s Dilemma).

This week I learned of the latest DirectBank “Black” initiative by Bill Harris and Rob  Foregger: Safecorp.  From Rob’s Linkedin:

Co-Founder, Chief Strategy Officer at SafeCorp Financial. Envisioning the future of financial services and building it today. SafeCorp Financial is building America’s next-generation electronic finance company, focused on reshaping the retail financial services industry for the 21st century. SafeCorp Financial will offer a full suite of customer-centric retail banking, payments and investment services for the mass affluent market. SafeCorp Financial will operate as a branchless financial services organization, efficiently servicing customers in all 50 states.

Given Rob’s background at Fidelity and Bill’s background from (pre paypal) I would make the following assumptions on their business model:

  • Focus on Affluent, Fed chartered FSI
  • Aggressive push for Customer Acquisition with Direct Deposit (Salary Domiciliation)
  • Yodlee Aggregation and advance financial tools (think of this as quicken lite) for both planning and investing. Bill has excellent relationship with Yodlee.
  • Open Payments architecture for pay anyone.. a key feature missing with most major banks. Perhaps a bill pay driven by Yodlee’s bill direct (driving card transaction fees).
  • Highly competitive rate driving product play. Example interest checking bearing 1.5% and no fee.
  • Investment Products (perhaps later in cycle),  through partnerships
  • Integrated rewards for balances, and use of debit card with tiering in investment products

Thoughts appreciated

See Previous post on Citi’s challenges in Direct Banking

Fidelity Bank…

Written by tomnoyes

February 2, 2010 at 4:52 pm

Bundle – Citi/Microsoft Venture

with 3 comments

Citi Rolls out Mint Competitor: Bundle

15 December 2009

First article on Bundle came out last week from Windows in Financial Services (above).  See my previous post here

“Americans know they are not saving enough for retirement. They know sometimes they buy things they cannot afford. They realize that as salaries go up, so does personal spending. And they know they are not alone. But these aren’t easy problems to fix. The popular personal finance magazines are all written for people already heading into retirement. The banks and investment companies all have products to sell”

The innovation guys at Citi are friends of mine. This team sat just 4 doors down the hall and I would love for them to be successful.  I like these guys… objective of this blog is to give feedback to this team (brutal honesty) and perspective to competitors. For those of you that don’t know Citi lets review some data on their US business and recent announcements in retail banking:

1)      Citi is largely a card bank in the US with only 12M retail banking accounts, and almost 100M cards in circulation (see 2009 10-Q for more info)

2)      Citigroup Will Pare Back To Six Major Metro Areas

“The bank has 1,001 U.S. branches, compared with more than 5,000 apiece at Bank of America Corp., J.P. Morgan Chase & Co. and Wells”..“Citi is trying to sell its roughly 120 branches in Texas and reconsidering whether it makes sense to maintain a big presence in Boston and Philadelphia”

3)      Citi’s internet and innovation teams have no (very limited) retail banking experience

4)      Citi’s Retial CEO Teri Dial is on her way out the door .

5)      Citi is largely an “affluent bank”. Although they rank 9th in branches, they are a solid 4th in deposits (see FDIC tables here ). Their average account balances are 3-5 times that of most competitors (2006 comscore data below)

6) Citi’s internal business heads don’t know what to do with this innovation team that has money to invest and  limited “connection” (read accountability) to the lines of business. This one may get me in trouble … so I need to expand here a little. Creating an innovation team presents a structural challenge for the CEO in any company. If they are too tightly tied to the LOBs, then nothing will happen. If they are too loosely coupled then their innovation will not be consumed. The issue with Citi is not the innovation team, but the structure of the constraints and incentives.


As I stated previously, a central challenge will be moving customers away from their bank to engage in activities such as budgeting and paying bills… and then transacting. In the US, MSFT, and INTU had trouble getting customers engaged separate from their Banks.   Mint has over 400,000 customers and VERY high customer satisfaction, yet this does not translate into revenue (below $5M).  This dynamic is why Microsoft has exited financial planning software (MS Money) and has very limited use of its own financial budgeting tools on MSN Money.

INTU certainly overpaid for Mint, at over $400+/per non transacting customer. Mint’s customer base was  “spenders” vs “savers” (hence the need for budgeting)..  they may need retirement planning, but Mint did not prove ability to get a customer into any product (even a cheaper card). Why would Citi want into this business? Investment hypothesis must fit into one of the following “buckets”:

A)    Customer feeder to core products, or

B)     Revenue generating service(s) for existing customers (think marketing, or card based payment)

C)    Revenue generating service(s) for new customers (think advisory), or

D)    Innovation team needs to invest money with a big name partner in the hope that something will work out

My guess is A and D. There are several organizational, brand issues and customer support issues with Citi’s approach. Why would Citi want to encourage existing customers to do budgeting external to Citi’s brand? Fortunately for banks, customer data shows that consumers prefer to go to their bank directly to perform financial services. This “Trust Pattern” is something banks should want to reinforce and was a key reason why banks invested in online infrastructure. WFC exemplifies the alternate approach within its online banking services, with integrated budgeting tools, which is a great service and provides solid customer retention.

With regard to aggregation and budgeting, they are great tools to build closer relationships to consumers. As a consumer, why would you want to go to bundle when the only products it recommends are those of Citi? Lets assume the Bundle signs up all of the major banks to also offer their “retirement services” products. This form of competition aligns with Citi’s new retail distribution strategy (reduced branches), but DOES NOT align with any of it’s product pricing competencies. Are Citi’s products capable of competing on price? How does this align with Citi’s current Affluent customer base and product mix? Citi has a tremendous brand, and in 2006/2007 Citi’s brand proved it was capable of competing online with a price driven product in Citi Direct growing $8B in deposits in 6months. However what Citi’s management team (at the time) also learned was that “most” of this growth in liabilities came from existing customers (read cannibalization). Outside of brokerage, few online channels have proven an ability to acquire (or cross sell) affluent customers.  So is Bundle a mass market acquisition play? What products will they offer and at what price point?

In the UK, customers select their bank savings account through leading comparison sites like In the US, mass market retail customers select their bank based upon the proximity to their house. The business premise with, Intuit and its competitors is that customers will start with budgeting, and then move to select financial products (no retention play as these are not necessarily Citi Customers) or transact. The UK online bank Egg was successful in online acquisition because is first started with the most competitive product, establishing trust, and then moved to deliver the best services to surround it.

Globally, the only success model for aggregation and comparison that I am aware of is, which my team at Citi acquired May 2007 for just over $1B.  If you sit down with Paul Gratton, Egg’s first CEO he will tell you that their success was driven by a complete focus on delivering value to the customer, both in product and online services. In other words, aggregation was part of a larger product value proposition. It is the coupling of product and service value that creates challenges for large companies to replicate, particularly with respect to cannibalization of existing products. For Bankers.. this is why the Egg model is so difficult to replicate (or acquire), it takes alignment of a value proposition across product, services and channels. A challenge which is even greater for an innovation team, hence Citi’s attempt to decouple the “idea” from the “business”.

If Microsoft had challenges running financial planning as a business, you can be certain that Citi will too.  Bundle’s seperate brand may not insulate it from the trends impacting its parent as Citi’s consumer brand has “lost luster” with furor over bank bail outs, bonuses and credit card rates.

As a side note, Egg’s troubles began when it lost its focus on customer and prioritized product based upon  meeting short term investor demands. The relative simplicity of the liabilities business gave way to more complex (and higher margin) asset products. As Egg developed a portfolio of card and PILs (to improve interest income) it started to resemble a card business much more than a retail bank (approx $14B in Deposits). The customers that “saved” with Egg were much different than the customers that borrowed.  Poor credit risk management and underwriting led to substantial write downs, under performance with Prudential PLC and eventual sale to Citi in May 2007. For Citi,  neither of the Egg customer segments fit well within Citi’s affluent focus, the acquisition was driven by Chuck who wanted to show “internet distribution” progress to the BOD.

Written by tomnoyes

December 15, 2009 at 1:39 pm