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Crain's New York Business

Reinvented by Technology: Financial Services




By Judith Messina

The biggest hit at last month’s Finovate conference here was Manhattan-based BillGuard, which uses crowdsourcing to solve a big consumer headache: unauthorized credit card charges.

It’s one of several companies in New York that are using technology to transform the way financial services are delivered and solve problems that traditional institutions have yet to successfully address. Pervading it all is mobile access: the ability to pay a bill, make a purchase, check balances or transactions, even cash a check via a smartphone.

“Mobile will be the way you bank,” predicted Jim Bruene, the author of the NetBanker blog and an organizer of Finovate, a twice-yearly conference on innovative financial technologies. “Online will be secondary.”

Some upstarts are vying with big banks for ownership of the customer relationship. BankSimple, a mobile middleman launched in Brooklyn, combines checking, savings and debit card services under a single bank card accessible via smartphone. Transactions take place behind the scenes at partner banks, but BankSimple is the brand facing the consumer. On the money management side, Betterment offers savings and investing services, both online and through an iPhone app.

Others are addressing areas neglected by bigger players.

SecondMarket operates an online platform for trading illiquid securities, displacing bigger intermediaries that had been the main, though inefficient, market-makers for such assets. The 5-year-old company expects to broker $600 million in private company stock alone this year. OnDeck Capital lends to the credit-starved small business sector, using technology to track a company’s cash flow, while Plastyc is going after teenagers, students and the “unbanked” with a prepaid debit card linked to a savings account and accessible via a smartphone.

In innovative uses of crowdsourcing, CB Insights’ Mosaic service scans social media, blogs and other sites to evaluate the health of private companies, while BillGuard combs the Web for complaints about credit card transactions, analyzes its subscribers’ accounts for similar transactions and alerts customers to potential problems.

“It’s brilliant—the kind of thing that makes you say, ‘Why didn’t you do that 10 years ago?’ ” Mr. Bruene said.

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This article originally published October 17th, 2011 on Crain's New York Business


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