CIC Startup Micronotes Emerges From Stealth to Help Yodlee Appify Online Banking

The online banking space is taking a cue from Apple’s iTunes App Store.

No, you won’t be seeing Sudoku puzzles or restaurant recommendation tools on your online banking interface, but you will be seeing plug-ins designed to enhance your online personal finance management experience. The marketplace for these apps, unveiled yesterday, is the Yodlee FinApp Store, and one of the first companies hawking its wares in the store will be Micronotes, a startup working out of the Cambridge Innovation Center.

Redwood City, CA-based Yodlee, a maker of online platforms for personal finance management founded in 1999, launched the FinApp Store as part of its newest software release, Yodlee 10. “We’re enabling new innovation to come to online banking at a much more rapid pace,” says Yodlee chief product officer Peter Hazlehurst. Apps available via the store include an automated tax filing tool from H&R Block, a savings app called BillShrink, and Micronotes‘ KulaMula FinApp, which aims to market deals to consumers as they work on their finances online.

“Our mission is to radically change the way marketing is done today,” says Micronotes senior vice president of field operations Christian Klacko, through targeted marketing and engaging the consumer in a conversation.

Micronotes makes the consumer data found in online banking profiles available to companies, who then engage the customers they think make the best fit for their products—based on details like transaction history—through surveys in the KulaMula app. Consumers using Yodlee’s finance management platform, either directly or through their financial institution, can choose whether or not to bring the KulaMula application into their interface. Those who opt in will see a dashboard of several different brands looking to market to the customers with specific coupons and offers. Each survey lists what product it centers around, for example the word “toys” would appear under the Sears logo on the dashboard if it’s marketing a toy coupon to consumers. Users answer a few questions from the brand, and at the end receive an e-mail offer, like $10 off of a $30 toy purchase. The questions typically center around consumers’ shopping habits regarding that particular product. For a demo of a survey, go here.

It sounds like there’s a lot at stake when it comes to security of the customer’s information, but Micronotes says that’s one of the many benefits of working with Yodlee. “Because we are working with Yodlee, which has all the security requirements and platform in place, we are 100 percent compliant,” Klacko says.

See, Yodlee is already connected to more than 25 million users, through its destination interface, Yodlee MoneyCenter, and through other financial institutions, which account for the majority of its use. Yodlee powers the personal finance management section of online banking sites for a number of firms such as American Express, Bank of America, and CitiBank, all wrapped under each individual bank’s brand. (For example, the “My Portfolio” section of Bank of America’s site is actually powered and hosted by Yodlee.)

With the new app store, “we allow developers to come in on their own and get their content distributed on our channel,” Klacko says. “Developers can get access in a place where consumers already have a vested interest.”

Opening up the app platform to a number of developers—much in the way that Apple and Google do—also spares individual financial institutions from having to develop applications beyond their specialty. For example, retail banks won’t have to worry about developing a retirement savings or investment portfolio app, but can instead plug one in from an institution more expert in that space, Klacko says.

The FinApp store will first be rolled out at the destination Yodlee site starting this year, and financial institution customers will start to integrate the marketplace into their own sites starting early next year, the company says. Hazlehurst says Yodlee is following much the same pricing model as used by Apple’s App Store and Google’s Android Market, typically with the developer getting 70 percent of the revenue, and the other 30 percent going to Yodlee and the financial institution using the platform. App costs to the consumers are at the discretion of the developer, but Hazlehurst says that most likely will follow the mobile app model of a one-time payment.

Micronotes has a slightly different model for its KulaMula app. It will charge the brands a fixed amount for each survey that consumers complete. A quarter of that will go to the consumer that he can cash in as a check payment, another chunk will go to Yodlee or the banking site hosting the survey, and Micronotes will take another cut. The company is still working out the exact breakdown. It is also considering adding an auction model like Google has, where marketers can bid to get their content in front of desirable consumers.

Micronotes, which formed in 2008, has brought on half a dozen retailer partners to market through its app. The startup’s big focus has been on getting the app on financial institutions’ sites, but now that the Yodlee FinApp Store is being rolled out, Micronotes is working on its push to marketing customers. The startup has raised about $2.5 million in funding, with $1.6 million from institutions, including Harbor Light Capital Partners.

So what happens if consumers don’t end up using the offer e-mailed to them as a result of the survey? It won’t count against them—right away that is. Over time, Micronotes’ platform will build a rating for the consumer, and offers that go unredeemed will detract from a consumer’s rating and make him look less attractive to marketers who have to pay for each completed survey, Klacko says.

In some ways, it sounds like a lot of work for individual customers—they have to opt in for the app, decide which brands they want to hear from, and decide which surveys they want to take. But in a way, that’s exactly how Micronotes is trying to change the marketing game. “It’s the social contract of marketing we want to change,” Klacko says. “We want marketers to say, ‘I’m aware of your time, I only want to engage with you if you want to engage with me.'”

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