Personal financial management tools are seen as nice to have – but not a need – for mobile banking. One vendor says the opposite is true: It sees financial management tools as the onramp to mobile banking.
T8 Webware LLC, based in Cedar Falls, Iowa, began life in 2008 offering Web hosting and website building services to banks. Last month it launched Grip, its pay-as-you-go mobile PFM service for smaller banks and credit unions that also lets customers do basic transactions.
T8 charges banks 99 cents per user per month, but banks pay only if the customer uses the app during the month. Otherwise it doesn't cost a dime.
"The per-use fee model is very appealing, because there is no upfront development cost to the bank," says Adam Montgomery, director of marketing for the Coastal Bank, in Savannah, Ga.
Coastal will begin offering T8's services in December. The bank has $450 million in assets.
T8, which plans to leverage its base of 240 financial institutions for which it already does Web hosting, has signed more than a dozen of these banks to its service so far.
Grip presents users with a consolidated view of their finances, including a dashboard of available cash and credit, across all aggregated accounts. It also mines aggregated transaction data for possible bank cross-sell opportunities.
"It gives us the same technology, if not better, than the large national and regional banks and it gives the customer who is looking to switch banks no reason that they should not look at Coastal Bank," says Montgomery.
Wade Arnold, T8's chief executive, has been tracking mobile traffic to its bank customers' websites. About two years ago, 2% of the traffic came from mobile devices. Now it's closer to 40%. Arnold says his team designed a search engine that crawled the websites of the 14,000 financial institutions with assets of $50 billion or less and found that the majority did not have links out to either the Android or Apple app stores.
"We saw this massive underserved market," Arnold says.
While not every bank knows what its conversion rate to mobile banking will be, T8's pricing model gets around the business problem many have had around "build it and they will come" by eliminating the cost hurdle of building.
Mobile banking providers tend to offer products and services with fixed contracts that are far more costly, and for more users, than banks currently have. That is why T8's pricing and business model is "ingenious," Kevin Travis, a partner for Novantas LLC, says.
"Increasingly, banks get rated on their websites, and not having PFM capability could be a big problem," Travis says.
T8's model lets banks say they have the capability, but they don't have to pay for it unless they use it, Travis says.
Coastal Bank already offers a mobile banking site, but not an app. It would have been beyond the means of the bank to develop its own app, Montgomery says. Coastal Bank offers Intuit Inc.'s FinanceWorks online.
Similarly, AimBank, of Lubbock, Texas, which has $275 million in assets, signed a letter of intent with T8 and plans to roll out the service to its customers by the end of the year.
"PFM is no longer a back-burner product for our customers," says Jeremy Ferrell, executive vice president and chief operating officer for the bank. Ferrell says AimBank had neither the budget nor the technical expertise to create its own app.
In addition to letting customers move money between accounts for the bank offering the service, Grip uses geolocation services that allow consumers to map transactions to where they occurred. It also lets them locate ATMs.
"What T8 is pushing, and what they are saying, is that the view into mobile banking is not about transactions, it is about 'my money,' " says Stessa Cohen, research director of banking industry advisory services at Gartner Inc.
Still, T8 competes against other white-label providers such as Geezeo Inc. and Lodo Software Inc., Cohen says, and that may prove to be a big challenge as these companies tackle the mobile market.
It's also a problem that Grip does not let consumers do all their transactions from the application, other experts say.
"You still need to go out the [bank] website to transact," says Brad Strothkamp, a vice president and principal analyst for Forrester Research.
More robust transactional abilities are coming in later versions, says Arnold.
"At this point banks need to have enough users to do the cost justification analysis [for mobile banking]," Arnold says.
The functionality is rich enough for now, says Ferrell, but customers will "expect transaction capabilities in the future."
