Make Banks Compete for Your Deposits

Auction sites are among the Web's greatest wonders. Want to know something's value? For tangible goods, there's no better barometer of current worth than eBay. Now a new site called MoneyAisle promises similar benefits to people looking for the best interest rates for their long- or short-term savings.

Sure, you can run a search on Bankrate.com, or check out mortgage offers on LendingTree.com. But MoneyAisle's creators at the online auction technology company NeoSaej say that the site's innovative technology and ad-independent business model help consumers find the best rates on money-market savings accounts or certificates of deposit, while also helping banks find depositors more cost-effectively.

Here's how it works: Say I'm looking to invest $10,000 in a one-year CD. I provide this information, along with my state of residence, to MoneyAisle in a simple Web form. Immediately, the site tells me how many of its partner banks want to bid (83 in my test-drive auction), based on input from the banks' end of the auction engine. Banks create their own bidding algorithms; a bank may be willing to pay a higher rate on a particular day or even time of day if it needs cash to meet obligations.

Bidding proceeds in rounds; banks drop out as the highest bid exceeds the cap their bidding algorithms allow. The site shows how many banks are still bidding in each round until all but one drops out. In my example, after about 15 rounds of bidding (which took under a minute), the top offer was a 4 percent annual percentage yield--significantly more than the 3.85 percent high I found on BankRate when I checked a few moments later.

You don't have to accept a winning bid; but if you do, you should be able to set up your account electronically, NeoSaej CEO Mukesh Chatter says. Banks pay MoneyAisle only when they book loans. (The site expects to add mortgages, credit cards and other financial products eventually.) Chatter says that this approach attracts small and midsize institutions that, despite being FDIC insured, are hurting for depositors because they can't afford the expensive technology larger banks have used effectively to attract customers online.

And because banks pay only for transactions, Chatter explains, they can offer higher interest rates than they could if they had to factor in the cost of click-through ads that produced no business.

Trial Auction, No Registration

You don't have to register to run a test auction. In mine, I found that MoneyAisle didn't always produce the highest rate for money market savings accounts, but the CD rates were generally good.

Edward Woods of the financial consulting firm Celent says that MoneyAisle will appeal to an investor who "wants to minimize their research effort."

MoneyAisle, he adds, "screens out some of the noise" that people face when doing finance research--for example, seeing a good rate and then finding that they can't get it because their deposit is too small. Banks that bid for your business on MoneyAisle already know your particulars.

LendingTree's ad campaign says that when banks compete, you win. MoneyAisle lets you watch them duke it out.

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