16 March 2010

SXSW Series #6 - Banking, Banking, Banking and Technology

The Banking 2.0 panel was so good, I thought I'd pull all the thoughts together into a post. This is more a list of trends and themes, but it's well worth a read. Banking, gambling and porn are going to be the dominant industries on the Internet (you laugh - but it's true). And banking probably has the most to win and the some of the easier short term solutions to implement...

At the Banking 2.0 panel. Opening remark -- Banks = innovation gone wrong. #sxswSA

Power panel at Banking 2.0. CEOs of Mint, SmartyPig, Credit Karma and Lending Club. Serious traffic. Serious money in web finance.

New Banking: LendingClub.com = 1 billion dollars in demand. Smartypig = $350 mil in deposits. Mint.com = 2.5 mil users.

Let's just pause here for a minute. 1 billion dollars in demand for LendingClub.com? That's a lot of demand for what seems to be a largely US based service.  $350 dollars in deposit for SmartyPig, the social savings portal. These aren't just startups, ideas, companies running on piles of venture capital, yet to invent a business model. That's real money and real demand.

Most common Mint.com comment/tweet in social sphere: Can't believe I've blown my alcohol budget this early in the month.

These kinds of comments just illustrate the gap that intermediary services like Mint.com are managing to close. That between the institution that provides your financial tools and how those financial tools are used in everyday life. For banks to succeed, in my opinion, they're going to have to work hard at changing that culture. I don't see my bank as being able to help me understand, interpret and measure my spending. Perhaps I should?

RT @jeckman: Best #SXSW comment so far #banking20 panel, re: startups having more fans than big banks - "sure, but fewer customers"

This was a hilarious comment coming from the audience, just tempering the enthusiasm for all these fancy Web 2.0 services. Mint may have 6 million users. But exactly how many customers do they have? Make no mistake, banks hold all the cards at the moment. They have the customers, the actual income generating customers. Now all it needs is a bit of inspiration and perspiration to really own and leverage the relationship.

Mint.com doesn't buy 'keywords' to advertise. They create value through educational videos & let them spread virally. #sxswSA #banking20

Most innovative thing to come out of US banks in past 5 years? Save Your Change. 'The bar is low' - panel says.

And that's how these intermediary services view financial institutions. It's as aggressive as you can get - you guys are failing to provide relevance, value and cutting edge tools. You guys have set the bar low. We're here to cash in on that gap. Mint.com recently exited for over $400 million if I'm not mistaken.

- - -

Does they have a point? 

I mentioned them in the last post - but they're worth repeating. Where are things going? Keep an eye... This industry is hotting up:
  • Social saving - the idea of using social tools to manage, encourage and share your spending habits with friends and family. It's like having a financial motivation coach, on hand.
  • Goal based finances - not just saving, but budgeting and spending as well. There's a definitely move from the intermediary service to make money sexy again. 
  • Stock picking communities - customer communities are the new leverage point. Customers need advice, and they need it from trusted, FAIS accredited people. But they also need reassurance, they need to talk to people who've been through it before, and no-one fits that bill better than there fellow humans. In South Africa, these guys are disappearing off to Just Money, MoneyWeb etc. Do we want them to stay there?
  • Lending Clubs - popular in the states due to the inability of American Banks to lend during the crisis. Humans will always find the path of least resistance, won't they?
  • Open anonymous aggregation of data for benchmarking. People like to benchmark. They like to know they're better than everyone else, or at least on par. It's a comfort thing. We're already starting to services that find patterns in transactional data and display those patters back to consumers. The average person spends x on clothing, x on alcohol. The average homeloan in your area is x. The average time it takes a person to pay back their vehicle finance is x. That's exciting stuff.

Interestiing, no?