Exclusive Online Only ContentStartups’ Online Tools Give Financial Firms Stiff Competition
July 6, 2009
Technology startups are providing stiff competition to banks in providing useful financial tools to consumers, according to a new report from Boston-based research firm Celent, “Financial Technology Startups: Giving Banks a Run for their Money.”
For example, in personal financial management, an area where banks do not offer robust tools, a startup called moneyStrands takes the experience to the next level, automatically pulling together bank, credit card and investment information from multiple sources, said the report’s author, Jacob Jegher.
Such a service could displace the online service of a bank, credit card company or stock brokerage as a consumer’s window into his or her personal finances.
The lesson for financial services firms, said Jegher in a phone interview, is that “it is all about the stickiness of relationships. What can a financial institution do to improve relationships with customers, lessen attrition, and build up trust? If you can provide a differentiator that is useful to the customer, you have built a tie that binds.”
The report, released July 2, examines and analyzes 12 financial technology startups that Celent finds promising.
In security, they include Aradiom and Silver Tail Systems; in lending and credit, they include Credit Karma and Lending Club; in personal financial management, Jwaala, moneyStrands and Wesabe; in payments and transactions, MoBank; and in miscellaneous financial services, BillShrink, Expensify, IOUSOS by GlobeFunder, and Simplifi.
Jegher, a senior analyst at Celent, said that to select the profiled startups, he sat through 36 live demonstrations by financial technology firms attending an April conference sponsored by Celent. The firms selected all focused on an area relevant to consumers or business where improvement is required, said Jegher.
“The market is too competitive to allow financial institutions to rest on their innovation laurels,” Jegher concludes in his report. “Much of the competition and innovation is coming from non-banks that are active in the financial services sector. These companies have discovered opportunities where banks have been slow to react, or where they believe consumer interest is strong.”
