Quicken is launching a new money management product for small business owners that will compete with banks and pull in bank account data from aggregators.
The product is being released as an upgrade tier for the company's personal finance app,
"Quicken Classic has had a business tier for many, many, many years," said Tara Pugh, lead product manager for Quicken Business & Personal. "What we're doing with Quicken Simplifi… is we're finally adding that business piece to it."
The new product, named Quicken Business & Personal, is designed to meet the needs of self-employed and small business owners by bringing their business and personal finances together in one mobile interface.
"We're really trying to make this whole process simple," Pugh said, "so that you, as the business owner, are investing your time in the things that matter, which is your business, your clients, and growing that business, not managing your accounting system."
Traditionally, managing business and personal accounts requires toggling between, and sometimes paying for, multiple programs. "When you're newer in business, the reality is that the income that you earn from your business is your personal income," Pugh said. "Seeing money separated into personal only and business only, for a lot of people, it doesn't really tell the complete story." The Quicken Business & Personal product features options for a user to toggle between separate and combined dashboards for their personal and business accounts on the app as needed.
Since Quicken is hosting all of a user's sensitive financial data in one place, Quicken uses 256-bit encryption for both its newest product and its core app, Quicken Simplifi. "We follow all of the industry security around banking as well," Pugh said. "We work closely with the three aggregators that we use, and they are obviously compliant with the banking requirements of aggregating their service."
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Quicken's product joins a collection of fintech companies, such as Sage, Freshbooks and Xero, offering financial services to small businesses. The banks that many of these small businesses use to facilitate their transactions do not yet have the same kind of in-house offerings for cash flow management for their customers, according to Alenka Grealish, principal analyst in Celent's financial services practice.
Third-party fintech software providers like Quicken are currently ahead of banks in the workflow sector, Grealish said in an interview, because "they are already helping small businesses with workflows, whether it's managing accounts payable, accounts receivable, and of course the net cash flow. I've been advising banks to pay a lot more attention to workflows and offer cash-flow tools, and importantly cash-flow forecasts. Very often the small business fails not because they don't have a good value proposition business model, it's because they had a cash shortfall that surprised them… so forecasting is a really important element."
The Quicken Simplifi app currently includes a
For banks, aggregating a user's financial data the way Quicken is doing offers them an opportunity to, through customer consent, gain more access to additional information they wouldn't otherwise have.
"Business bankers are eager to know whether or not a new client has cash parked at another financial institution (FI) or is an active user of another FI's credit card," Grealish wrote in a
Data aggregation between banks and third-party financial software providers is becoming common practice in the industry, whether for personal or business accounts.
"Banks have been having one-way sync and two-way sync for personal and business for a while," Grealish said. "They're much more interested in providing it to businesses, because they're hoping businesses will pull more data onto their platform and allow them to have better visibility into their cash flow."
Higher cash-flow visibility would also give banks the opportunity to do cash-flow-based underwriting for small businesses that might otherwise not qualify in a traditional credit underwriting method. "They have great incentive to do it for businesses," Grealish said. "Getting permission to use it for underwriting, whether it's simply a small business loan, credit card or credit line or term loan, they'd love to have more data, because more data means more visibility and greater ability to assess risk holistically."
Quicken's new app feature should give it an advantage over banks in marketing to more entrepreneurial consumers, Grealish said.
"Individuals that already use some personal financial management software are pretty diligent," she said. "It's methodical to have to do that to begin with, and that's some fraction of the population. So if they're running a business, the corollary would be they probably are already using business software. If they're starting a new business then that would be, 'Oh, I'm starting a business, and I'm a current customer. Wouldn't it be great to just know the interface already; I'll just choose Quicken by default.'"
With Quicken adding their Business & Personal feature to their already existing app Simplifi, the company is initially targeting the product to an existing consumer base of individuals who manage their personal finances through Quicken.
"The sweet spot is somebody who's already diligent and comfortable using software for their personal financial management, so of course they're going to use software for their business financial management," Grealish said.
Next steps for the new Quicken product will include integration with other apps small business owners use so they can consolidate existing data by migrating it over.
"Right now it would be a manual process," Pugh said. "I want to keep building more features, more solutions, a lot more integrations like that. That'll be something that I'm going to be looking at over the next year, two years: what are the things that we can do to make this product better for our users? We'll be talking to them... if that's what they need, then that's what we'll do."
