Wednesday, July 16, 2008

Banking as a Platform 2

Last week in Banking as a Platform, I discussed how banks might use the platform concept (for example as discussed by Tom Steinthal in a post called Some Thoughts on Platforms in Financial Services) to support radical improvements in customer experience and service.

Tom has now replied. In a post called Platforms - Are They Coming, he mentions a banking product called PNC Virtual Wallet. [PNC Bank Takes on Mint & Quicken with PNC Virtual Wallet, NetBanker, July 14th 2008]

The NetBanker article mentions several companies offering financial management platforms that apparently sit on top of (and aggregate) online services from regular banks. These financial management platforms include Geezeo, Jwaala, Mint, Wesabe. I haven't studied these in detail, but from a quick review of the material on their respective websites they look fairly similar, and a lot more like real platforms (according to the criteria stated in Tom's earlier post) than PNC Virtual Wallet. Although PNC deserves some praise for innovating at all, I can't see anything very radical in the PNC innovation.

Among the comments to the NetBanker article, I note contributions from Aaron Patzer (CEO of Mint) and Andrew Taylor (CTO of Jwaala). This is not the first time these two have clashed in public: in September, Andrew put a post onto the Jwaala blog called Hi I'm Mint. Ugg., which prompted a robust reply from Aaron.

Behind the rivalry between Mint and Jwaala is a fundamentally important difference in platform strategy. Mint appears to be selling to customers - "use our platform to get a better service over and above your existing bank accounts and other financial service providers". Whereas Jwaala appears to be selling to banks - "use our platform to provide better services to your customers". (Back in 2005, I noted a similar dilemma for software billing specialist LaCayla - whether to market its services upwards or downwards. There are some complex questions of platform strategy here, as I indicated in my post on two-sided markets. There are also questions of trust.)

I really hope that innovations like these are successful, but there is a lot of work to do. Big banks like PNC may offer a watered-down and "safe" version of the innovation, but they might possibly have mixed feelings about the outcome. Meanwhile we can expect a lot of exciting stuff to be produced by small energetic companies with disputatious senior management; but it will be interesting to see how far they get with or without the active collaboration of any of the big banks.


Andrew from Jwaala said...

Funny you used the word platform.

At it's core, Jwaala MoneyTracker is a set of enhancements to online banking for things like personal finance management, document management, dashboarding, etc. The solution is sold to banks and credit unions, enabling them to have their own "Mint+".

BUT, we also have a model where we will make the entire source code stack for our products available to our customers. These customers can then start to use MoneyTracker as a PLATFORM to build their own enhancements, like new widgets for the dashboard!

-- Andrew Taylor

CTO Jwaala

Richard Veryard said...

Interesting. You clearly regard the banks and credit unions as your customers. What I haven't seen evidence of yet is that banks and credit unions are taking the next logical step, creating a genuine platform (rather than just enhanced products and services) for THEIR customers.