MoneyAisle Lets Banks Bid, In Real Time, for Your Business

The Web is lousy with financial sites that promise to help you find good rates on loans, mortgages, savings accounts, credit cards, you name it. But a new site called MoneyAisle says that it has the potential to do even better than existing competitors because of its innovative technology and a financial model that doesn't depend on advertising.

MoneyAisle's technology allows financial institutions to sell their products--the aforementioned loans, mortgages, and such--using an auction model that mediates between what customers want and what the institutions are willing to pay in order to meet their own business needs. Created by online auction technology company NeoSaej, MoneyAisle makes money by charging a fee for actual transactions; the site accepts no ads.

Here's how it works: Say I have $10,000 that I want to invest in a certificate of deposit for one year. I provide this information to MoneyAisle's auction system. Meanwhile, participating banks--NeoSaej says that more than 100 had signed up as of last week, prior to its launch today--give the system information on the amount of money they wish to raise and a bidding algorithm that might specify different interest-rate ceilings depending on the immediacy of their need for cash.

Based on the bank input, MoneyAisle's software generates bids for my $10,000 and then runs the top bid through the software again to see if any other bank's algorithm allows for a better offer. At the end of the process (which NeoSaej says shouldn't take more than a few minutes, and which I can initiate any time of day or night), I receive the top offer, which I can accept or decline; if I take it, I proceed to make arrangements with the winning bank, which pays MoneyAisle a fee.

Mukesh Chatter, NeoSaej's chief executive, says this approach attracts small and midsize institutions that, while FDIC insured, cannot afford the big advertising budgets and expensive technology that larger banks have used effectively to attract more and more customers online. As a result of their smaller presence, they're hurting for customers, Chatter says.

MoneyAisle potentially lets these smaller institutions compete against larger ones by offering higher rates of return (or cheaper interest on loans and credit cards), which they can afford because they aren't taking a big hit for marketing (and because they're paying only for actual deals, as opposed to click-throughs on ads). Consumers, meanwhile, benefit from having access to more banks, as well as to an auction system that should yield the best rate an institution is willing to pay for their business.

At launch, MoneyAisle will offer CDs and high-yield savings accounts; within two months, it plans to support loans. I'm looking forward to trying it out.