Website lets banks bid for customers

In a twist on the Internet tools that help consumers find the cheapest airfares or the hottest deals on a flat-screen television, a new website called MoneyAisle.com turns banks into bidders as they compete in real time to offer customers the best rates on financial products.

"In the context of today's economy, especially with rising energy prices, consumers overspent, credit card delinquencies going up, and on and on and on, we have a company who basically - I look at them as the eBay of financial services," said Bob Egan, chief analyst of the financial research firm TowerGroup.

MoneyAisle, which debuts today, turns customers looking to open a bank account into auctioneers. They will be able to use their computers to specify how much money they are looking to invest - either in a high-yield savings account or in a certificate of deposit.

Then, they can sit back and watch the rounds of bidding as the potential transaction is offered to more than 100 small and mid-size banks that have specified through a computer program how high they are willing to bid. Their rates may vary from to day to day.

After each round of automated rate bidding, the software returns to the remaining bidders with the best offer to see if they will match or undercut it. Eventually, a winner is chosen. If the customer chooses to set up the account, the bank pays a referral fee to MoneyAisle.

The idea for MoneyAisle, the first offering from neoSaej Corp., of Burlington, was born in the retail electronics aisle.

Chief executive Mukesh Chatter was researching television sets for his home and found a price spread of $2,000 on one model at different retailers. He began to notice such wild variations in pricing everywhere, whether he was shopping for electronics equipment or looking for the best place to invest money.

Chatter thought about flipping the relationship: Instead of spending hours online researching different products, companies could compete for his business.

NeoSaej developed algorithms that would simplify the competitive process by creating an automatic online bazaar where companies bid for customers. It plans to expand beyond savings accounts and CDs to offer lending products later this year.

NeoSaej has 48 employees and is backed by various investors, including Stata Venture Partners. Ray Stata, a cofounder of Analog Devices Inc., is chairman of the company.

Other financial comparison websites, such as LendingTree.com or Bankrate.com, aggregate rates and offers from banks. They "allow people to go to one spot and make the decision convenient to them, but it's not necessarily creating a venue where banks are competing for your business against each other," Egan said.

Still, he said, one of the company's big challenges could be recruiting enough customers seeking bank accounts to sustain the business.

Chatter said the product also benefits banks. The firm is focused on recruiting small and mid-size banks because they do not have the marketing budgets to compete with dominant national banks.

Paul Germano, senior vice president of Beverly National Bank, with eight full-service branches in Essex County, said his bank signed up for MoneyAisle because it can be naturally integrated with the bank's efforts to use online tools to increase business.

"We have traditionally generated our deposits and loans in a [geographic] footprint, and about a year ago we began doing something through the Internet to offer accounts online, to help us generate additional customer activity and deposits," Germano said. "We believe that more and more customers will want to have that convenience of opening accounts online."

The complications of finding the best product - and value - are familiar to any consumer, and the idea of banks competing to offer a better deal seems to have obvious benefits. But for neoSaej, the trick may be creating the kind of competition it envisions.

"Their challenge is really going to be establishing an ecosystem of banks participating that become meaningful competition," Egan said. "They have 100 banks today, but there are 18,000 financial institutions in America."

Carolyn Y. Johnson can be reached at cjohnson@globe.com.