Movenbank -- a financial services startup that's championing a new business model for Digital Age banking -- is getting closer to launch. The company, now in invitation-only beta, plans to offer its CRED proprietary scoring product publicly within a few weeks.
Next month, it plans to release its mobile banking application. In October, it plans to open for business with a full suite of offerings, including basic spending, savings, and credit services.
To understand Movenbank, you have to redefine your notion of financial services. It is not a bank, a telecom, or a card company. Rather, it's an online and mobile-only company whose motto is "no paper, no plastic, no hidden fees." It will control the front end of the customer relationship and will store deposits with banks, including Bancorp Bank in Delaware.
What really sets it apart is its decision to base loan and savings rates on far more than its customers' financial health. Brett King, founder of Movenbank and author of the bank-blasting book Bank 2.0
, has developed the CRED scoring product, which incorporates data from social media into its credit and other pricing decisions. It also incorporates credit risk scores from FICO
), but it also tracks a range of other data to determine how customers manage their money and their credibility among friends and business associates.
As Sherri Cruz explained in a post this year, if you are an influential tweeter, or you have a large network of Facebook friends or LinkedIn contacts, you could get a higher interest rate on your savings or a lower rate on a car loan.
"Just the fact that all this information from sources like social media is out there changes the whole game," Alex Sion, president of the New York upstart, told me. "Companies like us think about the data first and look for ways to capitalize on it."
Sion called CRED a progressive body of social and behavioral data. And because it is based on real-time data, it's more accurate than the "lagging indicator" of a standard credit score.
CRED uses an in-house algorithm that incorporates both predictive and sentiment analysis to evaluate a person's standing on Facebook, Twitter, and other social networks. It uses that data to make decisions about the person's track record in paying bills and engaging in other financial activity, as well as to gauge that person's ability to influence other people to sign up for a Movenbank account.
Movenbank employs behavioral psychologists, who work with its data analysts to evaluate customers. The focus is on influence and behavior -- for example, whether a customer's Twitter following is increasing or decreasing, and how influential a customer is within a group of friends.
The company is collecting and using information on members' Facebook "Info" screens that are marked as public, including first and last name, current location, and profile picture, to customize its dashboard and help identify "financial personalities." It's also looking at users' lists of friends (with the consent of both parties) to identify which ones are also Movenbank customers and sharing financial personality information.
Along with the social component, Movenbank will track transactions and ask customers questions on how they save and spend on a daily basis. It will use all this information to build customer profiles that it will use for credit decisions and pricing, as well as to help customers manage risky financial behavior. To make the process fun, Movenbank plans to encourage behaviors with elements of gamification -- badges, rewards, and incentives.
Customers will get not only access to their CRED scores, but also the ability to monitor and improve them -- as easily, in some cases, as recommending Movenbank to online friends or sending someone money through Movenbank. As a CRED score improves, the customer can get better rates and fee structures. For instance, a customer who introduced 10 people to the company may get a 5 percent savings rate, instead of 1 percent, or a better rate on a loan. Movenbank says banks typically spend $200 to $350 to acquire a new customer.
Two months ago, Bank Technology News named King to the No. 1 spot on its list of Top 10 innovators of 2011. King "stands out from the rest," the publication said in a story on the list:
He's one of the few who is not a banker, but on the contrary a bank critic. He doesn't have an actual product or working service yet. But the disrupter company he plans to open this summer, Movenbank, will be closely watched by all in the industry.
What do you think? Are you ready to link your banking to your social media standing? Is this a one-of-a-kind offering or a sign of things to come?