Bank 2.0 author and mobile banking evangelist Brett King is determined to shake up the industry. His start-up, Movenbank, claims it will be the worlds first cardless bank when it opens its virtual doors later this year. Robin Arnfield asks whether the world is really ready
Founded by Australian banking consultant Brett King in 2010, Movenbank aims to ride the growing popularity of smartphones and social media sites such as Facebook among young US consumers. Moven reflects the fact that mobile communications is central to Movenbank.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Movenbanks motto is no paper, no plastic (cards), no hidden fees. Customers will interact with Movenbank through online and mobile channels, with point-of-sale payments being made solely via Near Field Communications (NFC) enabled smartphones. You need a smartphone to be a Movenbank customer as you have to download apps, says King. Your smartphone can either be a true NFC phone, or it can have an NFC sticker attached to it.
King, who is Movenbanks CEO and chairman, is author of the book Bank 2.0, How Customer Behavior and Technology Will Change the Future of Financial Services.
Through Movenbank, we want to change the way that people are connected with their money and to help them understand their finances better, says King. Were not looking to take on Citibank or Bank of America, but we think we will be a game changer.
Scott Bales, former senior vice president of partner solutions at Fundamo, the mobile payments firm acquired by Visa in 2011, joined Movenbank in November 2011 as chief mobile officer. Bales is responsible for implementing Movenbanks mobile technology platform.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
CRED
Since October 2011, Movenbank has been running an alpha pilot with 5,000 customers to try out CRED, the credit scoring system which the company developed in-house. Its banking and payments platform is not live yet.
When consumers sign up for Movenbank, they provide the bank with access to their public Facebook profile. If someone wants to be a Movenbank customer but doesnt have a social media presence, were not interested in acquiring them as a client, says King. We are very focused on acquiring customers via social media.
CRED is based on a combination of conventional systems such as FICO, analysis of account applicants social media data, and a financial personality test that applicants take. CRED is the primary way in which customers relate to Movenbank, says King. The platform analyses their historic financial behaviour prior to joining Movenbank, which we obtain from credit reference agencies, as well as their activities once they become Movenbank clients. It also looks at their social media profile, including the number of their Facebook friends. We create a score based on all of this to measure the customers financial health and their value to Movenbank.
Movenbank rewards people with a large number of Facebook friends whom they can introduce to the bank, with a better CRED score. We will trade extra potential customer contacts from Facebook for lower fees and greater access to credit, says King. But customers financial behaviour will still be the primary measure for getting credit. Also, if a customer, whom we reward for bringing us new contacts, turns out to be making risky credit decisions, we can manage our exposure to them via CRED.
Customers maintain their Movenbank profile through CRED. This means they never have to complete a Movenbank product application form once they are on CRED, says King.
US consumers who are underbanked are a potential market for Movenbank, says King, although the bank is not targeting the unbanked. There are around 40-50 million people in the US who are underbanked, he says.
Another potential market for Movenbank is US consumers whom Aite Group senior analyst Ron Shevlin refers to as the debanked. These are people, typically members of Gen Y and Gen X, who have turned their backs on conventional bank accounts because of their high fees and are opting for general-purpose reloadable (GPR) prepaid cards because of their attractive pricing. According to a survey by Aite Group, 40% of debanked consumers own smartphones, which makes them likely targets for mobile financial service offerings.
Launch
Commercial launch of Movenbanks transactional bank accounts and payment services is scheduled for October 2012. We had originally planned to launch our banking and payments services in July 2012, says King. The delay was caused by the fact that our original transaction processor TxVia was acquired by Google. We now use FIS for transaction processing.
Movenbank does not have a US banking charter, and instead relies on a partnership with Bancorp Bank. We use Bancorps banking charter, says King. Were talking to a couple of other banks about becoming our partners. The advantage of having multiple bank partners is that we can act as product aggregators, offering accounts with different banks to our customers. This will ensure our customers get the best deals on pricing.
Customers register and log onto Movenbank either via Facebook or Twitter. Social media log-on will remain the way that customers will get online to Movenbank, says King. We plan to introduce two-factor authentication via smartphones. For example, we will send a security message via SMS to customers smartphones when they carry out an online banking transaction.
King says that Movenbank has developed technology to identify whether there is a real personality behind an applicants Facebook presence, rather than a counterfeit, synthesised personality. We make this judgement based on their Facebook activity, he says. For our KYC checks, we also require details such as valid social security numbers.
Personal financial management
Personal financial management (PFM), an application which helps consumers to understand and manage their finances, is at the heart of Movenbank. PFM puts your expenses into different category buckets, so you can see via graphs and charts where your money is going, says Aite Group senior analyst David Albertazzi.
Traditional banks dont give their customers advice about how to manage their money, says King. But we will give our customers feedback every day on how they spend and save. This will enable them to decide if they need to change their financial behaviour.
Movenbank has embedded PFM technology from US-based technology firm Geezeo inside its online banking user interface. This contrasts with the approach taken by the incumbent banks which offer PFM applications, says Albertazzi.
Currently, some banks that offer PFM require the customer to register for their PFM service, or they put their PFM application on a separate (website) tab, Albertazzi says. The drawback is that users may not notice the PFM tab. These banks are challenged to integrate their PFM offerings with their online banking, because they are very siloed in their approach.
Most of Geezeos clients are traditional banks and credit unions, says Shawn Ward, CEO and co-founder of Geezeo. Movenbank is Geezeos first client that has natively embedded our PFM system in its user interface. Its entire online banking system is based on PFM. There is no separate tab within Movenbank that leads to our PFM application. The big thing with PFM is that users shouldnt have to consciously decide to click on the PFM tab, and that PFM is part of their whole online or mobile banking experience.
Geezeo provides account aggregation and data normalisation services for Movenbank customers. Fiservs subsidiary CashEdge is our partner for account aggregation, says Ward. Geezeo will obtain data direct from Bancorp about Movenbank customers accounts for display on the Movenbank site. But, if a Movenbank customer wants to view their accounts at third-party banks that arent Movenbank partners, then CashEdge will do the data aggregation.
Customers who choose to view their various third-party accounts via Movenbank will benefit from higher CRED scores, says Ward. They will also have a clearer picture of their overall financial health, he notes.
Data normalisation involves Geezeo taking raw transaction information such as the name of a merchant and adding extra data such as purchase classification. For example, on a credit card statement, a Starbucks transaction may come up as SBUX store 44, Ward says. We will correct this to Starbucks and categorize it as a dining or entertainment transaction on the statement.
By classifying transaction information, Movenbank is able to help its customers with their spending decisions, says King. When someone uses their smartphone to make an NFC purchase at Starbucks, we will tell them how much they have spent at Starbucks this month, he says. For example, if theyve spent $400 at Starbucks so far in July, they might decide to cut back on their spending there. Well also remind customers about upcoming bills such as their rent, and suggest that if they make a certain purchase, they wont be able to pay the rent this month.
Hybrid accounts
King says that Movenbank plans to offer hybrid accounts. We dont use terms such as credit card or chequeing account, he says. Initially, our accounts may start off working like a prepaid debit card and later they will offer overdrafts, provided that customers CRED scores qualify them for credit.
Movenbank will use the existing card networks for its NFC payments functionality, King says. We will start off with MasterCard because it is more advanced in mobile wallet APIs (application programming interfaces) and SDK (software development kits) than Visa. However, we are also looking at Visa, although we currently have no plans for American Express.
King says that Movenbank has had a number of approaches from potential partners to set up similar operations outside the US, mostly in Australia and the UK. We are seriously considering setting up foreign operations, but first we have to get our US business launched, he says.
NFC technology
This is now the time for NFC payments in the US, says King.
According to a survey carried out by ACI Worldwide for the Aite Group report The Global Rise of Smartphonatics: Driving Mobile Payment and Banking Adoption in the United States, EMEA, and Asia-Pacific, 41% of US smartphone users want to replace their plastic cards with mobile devices.
In summer 2012, Isis, the NFC joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, is due to launch in Austin, Texas and Salt Lake City, Utah. The first issuers committed to including their card credentials in the Isis mobile wallet are Amex, Chase, Barclaycard and Capital One.
In May 2012, MasterCard said it will launch the PayPass mobile wallet in the US in the fourth quarter of 2012. The PayPass wallet will be open-platform and will allow users to store non-MasterCard payment cards, says Michael Weitzman, group head of the US market for MasterCard.
MasterCard is also a participant in the Google Wallet initiative, which launched in 2011, along with Citi, Sprint and Google.
New York, Boston and San Francisco all have the biggest NFC penetration in the US, says King. These cities also have contactless-enabled ATMs. Movenbank customers will be able to withdraw cash using their NFC phones from contactless-enabled ATMs. Were also looking at various ways for customers to withdraw cash from ATMs that dont have a contactless capability. One possibility would be that Movenbank customers would receive a text message containing a one-time ATM PIN on their smartphone.
(Bank)Simple
Movenbank faces competition from rival US start-up Simple (www.simple.com), formerly known as BankSimple, which accepted its first customers in November 2011. As at July 2012, Simple was still opening accounts on a limited basis.
Portland, Oregon-based Simple uses Bancorp as its banking partner, but, unlike Movenbank, it offers a plastic card the Simple Visa debit card. Simple says its approach is to avoid charging fees to its customers and instead to make its money from interest margins and debit card interchange. There are no debit card fees, account maintenance charges or overdraft fees, although Simple does charge for international ATM transactions and foreign wire transfers. Simples customers can withdraw cash at the 40,000 surcharge-free ATMs owned by US ATM network Allpoint.
While Simple embeds PFM tools such as budgeting and savings in its user interface, the bank doesnt provide a facility for its customers to aggregate their accounts with third-party banks (ie those who are not Simple partners) on its website.
The management team behind Simple includes Alex Payne, formerly application program interface (API) leader at Twitter. Traditional banks and credit unions lack the technological sophistication of Simple and Movenbank, says Ward. What Simple and Movenbank are doing is to improve the user interface and make it easier for customers to use their PFM services, says Albertazzi.
Like Movenbank, Simple requires its customers to use a smartphone, which will serve as a transaction authorisation device as well as a way to access their Simple accounts.
On its website, Simple says that customers can deposit cheques into their Simple accounts by scanning them into their smartphones camera. Simple may offer desktop PC scanning of cheques at some point, it notes.
