"We were told to trust these institutions, and we did," says Mitch Tuchman. "We trusted Madoff. We trusted AIG. And now we've lost most of our life savings." Tuchman, though, is not an angry victim of some Ponzi scheme or shady subprime lender. To the contrary, the former hedge-fund manager is trying to be part of the solution, starting a company whose goal is to upend the trillion-dollar mutual-fund market by offering cheap, no-nonsense investment advice. Tuchman's MarketRiders is part of a movement of Web-based financial startups creating services that embrace transparency (even in their largely fee-based pricing) and improve the customer experience. These are the same traits that changed everything from music to auto sales, and given the financial industry's woes, it, too, looks ripe for this type of reinvention. Here's our list of the eight most promising "green shoots."
1. Debit with dividends
TEMPO PAYMENTS 
Debit cards have left cash and credit in the dust for in-store payments, hitting a record-high 37% last year (cash is used 29% of the time; credit, 22%; checks and gift cards make up the remainder). And yet, "debit's last significant development was PIN technology," says Mike Grossman, CEO of Tempo Payments, which has decoupled debit cards from the banks that traditionally provide them. Tempo's cards, branded by MasterCard, can be linked to any checking account. They're also tied to a specific retailer or nonprofit (much like an affinity credit card) so customers can use them to earn rewards or help a cause, such as the Breast Cancer Fund or Greenpeace U.S.A. "This is very disruptive," says Bruce Cundiff, a consumer-payments analyst at Javelin, a financial-services research firm. "The banks will lose out on all that revenue from consumers' use of bank-issued debit cards."
2. Big brand, little banks
In 1994, banks with less than $10 billion in assets held 70% of U.S. deposits. Today, that number has dropped to 31%, mainly, says Gabriel Krajicek of BancVue, because "community institutions lack name recognition, and consumers think they can't deliver big innovations, such as Bank of America's Keep the Change program." Krajicek rolls up a set of incentives -- rewards-driven checking accounts, up to 6% APY interest rate, ATM-fee reimbursements -- for these banks to offer customers who actively use debit cards, e-statements, and online accounts. (Such practices drastically reduce overhead costs, enabling the banks to shell out.) Then he gives the banks an opportunity to join his Intel-inside-style marketing plan, advertising their BancVue services under the brand name Kasasa. "Many customers may still rather bank with Wells Fargo or Bank of America, simply because they're less likely to fail," warns Jacob Jegher at Celent, a financial-services research firm. That said, if BancVue's 620 clients formed just one bank, it would have approximately 4,200 branches, America's fourth-largest network.
3. Allocation, allocation, allocation
During his years managing a $1 billion hedge fund, Mitch Tuchman uncovered two truths: Steady returns come from smart asset allocation, not stock picking, and inevitably, managers will "siphon your money" with fees. Tuchman's lessons underpin MarketRiders, which recommends to customers a variety of low-cost exchange-traded funds (ETFs) for $9.95 a month. The service then tells you when and how to rebalance your portfolio. During MarketRiders' 15-month beta period, Tuchman estimates that the site's 2,000 testers would have saved $3.25 million -- or 1.3% of their $250 million in declared investments (the difference between a standard 1.5% mutual-fund fee and MarketRiders' average 0.2% ETF charge) -- by switching exclusively to this service. With hedge-fund manager brio, Tuchman boasts, "We could do to investment what Craigslist did to classified ads."
4. Banking on the unbanked
At 2008's Clinton Global Initiative annual meeting, brothers Roy and Bertrand Sosa pledged to provide financial services to 5 million of the world's unbanked masses. How? By tailoring services to local markets and making the programs more accessible. In Mexico, they offer prepaid debit cards to workers; in Romania, they enable thousands of cell-phone users to send money via text. Through two of their startups, Mpower Labs and Mpower Ventures, the brothers are funneling roughly $100 million toward their goal. "Any company that's good at getting people to interact with banks," says Avi Karnani, a former Citigroup analyst and cofounder of Thrive, a popular financial-services Web site, "that's a good thing."
5. Build a bull market
With the IPO market on the fritz -- just 20 companies have gone public this year in the United States -- buzzed-about private ventures are locked out from cashing out. Barry Silbert, who brokered the sale of nearly $50 million in Facebook shares last year to private investors, started SecondMarket to help later-stage, fast-growing companies set up their own stock exchanges, where they govern everything from disclosure rules to pricing to market hours. Although there are concerns about liquidity and just how much companies can control the buyers (there are roughly 3,500 in SecondMarket's database), Silbert is undeterred. "Our clients need to practice for the big leagues," he says of their eventual appearance on Nasdaq or the NYSE, "and we're spring training."
6. Rank and file
Hey, Apple employees: Your 401(k) sucks. So say Mike and Ryan Alfred, who have worked with the likes of Lockheed Martin and American Airlines to develop BrightScope, a free site that ranks retirement plans on everything from provider fees to participation rates to match contributions. (Apple scores a troublesome 63 out of 100 points; Microsoft: 79.) "Employers need leverage to demand lower fees from 401(k) providers," explains Mike Alfred, who charges companies to dive into detailed plan data. "But we're also helping employees who want to comparison-shop before accepting a job." The service presently has info on 4,000 retirement plans -- a fraction of the 710,000 available -- but hopes to amass at least 30,000 by the end of the year.
7. Power tools
If you're a bank, it pays to ply customers with Web apps: Almost 70% of online-banking users would recommend their provider to a friend or relative, according to July 2009 data from Fiserv, a financial tech firm. Yet today's most attractive tools -- Mint's expense reports, Thrive's savings calculator -- come from Web 2.0 startups, not financial institutions. Andrew Taylor, a former IBM software engineer, founded Jwaala to sell social-media tools to behind-the-times banks. "We're basically an arms dealer," he says, rattling off his best ammo: updates via text, a Google-style expenses search, and an online safety-deposit box (to store key docs such as tax returns). "Some banks might be scared to do a deal because Jwaala is so small," says Javelin's online banking analyst Mark Schwanhausser. Taylor's retort? "We have deals with 30 financial institutions, and Jwaala has been profitable since early 2008."
8. Wait not, want not
Paging accounts payable: U.S. companies annually exchange $18 trillion worth of invoices, but the average business sweats it out for seven weeks before getting paid. The Receivables Exchange turns this waiting game into an online auction. It enables businesses with at least $1.5 million in annual revenue to sell their invoices to institutional investors for between 97 and 99 cents on the dollar. "We're like eBay," says CEO Justin Brownhill, "except we're auctioning IOUs." Sellers see cash, on average, in one day. Since its November 2008 launch, every deal has gone through without incident, earning buyers a nice return in just a few weeks. "They're all about accessing working capital," says Celent's Jegher. "Companies will be interested."