Quest for Consumer Why Intuit is buying Mint for $170MM
For those of you that have never used Mint let me give you an overview (for more info see first link below). It is a free service used by 400k-600k users for personal finance. The core of its service is aggregation, where you register your financial (and non financial) accounts by providing your online credentials. Mint then logs in to your account and pulls your balance and transactional information into its online site (service provider is Yodlee). Mint leverages this information to provide services, such as:
- Spending comparison (geographic and income ranges)
- Alerts (against budget, transactions, balances, …etc)
- Recommendations (ie marketing, saving, investing and budgeting)
- Trending, ..etc
Mint.com will become part of Intuit’s Consumer Group, which includes both Quicken and TurboTax products. Intuit’s business case for acquisition rests on 3 tenants:
- Grow consumer portal.. with Mint as the new base. The revenue equation here rests on expanded marketing of Financial services into combined Intuit.com/ Mint.com customer base.
- Mint customers can be sold into TurboTax
- New value added services such as: Card based bill payment (revenue from interchange), mobile, advisory, …
How should Banks respond?
There are 2 central issues for banks to consider: Customer data and customer relationship. Having your customers manage their finances outside of your financial institution is a lost opportunity to add value to your existing relationship. Banks need to decide what services and tools their customers WANT through customer engagement and advocacy. Mint’s demographic seems to indicate that there is a minimal business case for bank investment here. Banks may want to consider “good enough” services for budgeting such as what Wells Fargo provides online (https://www.wellsfargo.com/wfonline/spending).
If consumer surveys point to need for a comprehensive view and portfolio management the vendors such as Yodlee and Cashedge offer these services to banks today. Of specific focus should be small business and wealth. Banks should carefully track trends in these segment as needs are greater (as is customer profitability).
Banks have substantial control over Mint/Intuit success by controlling access to data. Many leading financial institutions have altered there hands off approach to allowing 3rd parties ad-hoc access to customer account information. Banks should require formal agreements with Intuit over data access, and shift costs to Intuit for managing the activities associated with allowing this access. During my time as head of Online and Payment services with Wachovia, over 40% of all ‘Internet’ help desk calls were related to Quicken/Money and a further 30% were related to aggregation. Banks should strategically manage access to their data from a cost, privacy and consumer perspective.
$170MM is 5.5x invested capital of $31MM, and $408/Mint user. Revenue has not been disclosed, but it is assumed that Mint.com is operating at a loss.
2009 has seen other activity in this space, with Apax Partners $571MM acquisition of BankRate (NAS: RATE). Also look for new financial portals coming out in partnership with Microsoft within the next few months.
Great Article.. had a good laugh.
Every time I go to France I marvel at the pace of life, whether in Paris, Lyon, Nice, or traveling in Bordeaux. 32 hour work weeks, minimum of 30 days of paid leave…late to bed, late to rise.. time spent eating 135 minutes PER DAY. How can you spend 2 hours EATING every day!? It’s no wonder that the French see American’s as always in a hurry… to talk, to eat, to walk, to work… Its also not surprising to see so few French emigres: as few want to leave, and fewer would want to hire…
But what are we in a hurry for? Seems like we spend 44% of our free time watching the tube… Sure would be great if we (Americans) could find something useful to do with our free time (community, social, educational).. then perhaps we could realize a quality of life advantage.
Thought for the day… is all time spent in bed by the French considered sleeping? Maybe we should have something to envy…
The payment space is hot. With FIS’s recent $2.94B acquisition of Metavante will create a company w/ combined revenue of over $5B. Good move by FIS. According to the deal summary, drivers were:
•Enhances growth prospects
•Generates substantial synergies
•Drives margin expansion
•Increases financial flexibility
•Accretive to cash earnings
•Creates significant shareholder value
Expect $260MM expense save in combined entity. FIS will be a key channel to deliver service to banks outside the top 20. External vendors should be ramping up there alliance plans w/ FIS.
Rob Foregger is now Chairman and CEO of Fidelity Investment’s new internet bank. Reporting initially to Sanjiv Mirchandani under Steve Akin’s personal investment group Rob will be building on the cash management platform. Ned and Abigail are keeping the lid on this one.
Fidelity’s plan is to create a Direct Bank based upon an investment led model… Similar to e*Trade and their stock plan services. Abigail is leading the corporate side plan services… and is looking for something new to sell. In addition to 401k, stock plan services, … why not offer banking?
Note that Rob’s background is in mortgage. The lending side is quite attractive for Fidelity… it obviously needs to get the liabilities side of the balance sheet going before jumping in with the asset products. It looks like the bank is FDS National out of Mason Ohio.
Order No.: 2000-27
Date: March 10,2000
FDS National Bank, Mason, Ohio (the Bank), has applied to the Office of Thrift
Supervision (the OTS), pursuant to 12 U.S.C. $ 1464 and 12 C.F.R. 0 552.2-6 for permission to convert from a national bank to a federal stock savings bank, FDS Bank (the New FSB). Federated Department Stores, Inc., New York, New York (the Acquirer) and FDS Thrift HoldingCompany, Inc., Cincinnati, Ohio (collectively, the Applicants) seek approval under 12 U.S.C. !j1467a(e) and 12 C.F.R. $ 574.3 to acquire the New FSB. In addition, FMR Corp. and Fidelity Management & Research Company, Boston, Massachusetts, and Abigail P. Johnson and Edward C. Johnson, III, have filed, pursuant to 12 C.F.R. 5 574.4(e), a rebuttal of control submission that includes a rebuttal of control agreement for approval to acquire up to 25% of the stock of the Acquirer.
I was in Orlando 2 years ago at what use to be retail banking seminal event: BAI. It wasn’t what it use to be… One speaker stood far above the crowd, it was Michael Porter the preeminent strategist from Harvard. For those not familiar with Porter, his books include “Competitive Strategy” the reference book which defines the subject. I was fortunate to hear him speak at the large forum, and at the round table following. His words have stuck with me for 2 years: ‘The time that you (bankers) spend trying to figure out how to make your products sticky, and increase your switching costs, is that much more time a competitor is going to develop a model that delivers value to your customers’.
Banks don’t spend enough time thinking about how to deliver value. Let me give another example of a “value” bank that probably has one of the better reputations in the US: ING Direct. I was with Arkadi Kullman (CEO ING Direct) in Oct 2004, he said his “model” wasn’t for everyone (customers or competitors). From a customer perspective according to Arkadi ‘if you want a relationship then go somewhere else, ING’s goal is to deliver value with minimal interaction’. Following this comment he continued ‘if you (customer) call me more the 3 times a year, I will cancel your account’. This is obviously not a customer centered message. Even banks known for delivering value are more focused internally (low cost in ING’s example) then on the customer. I believe that most successful large banks actually started with a strong customer focus; after all how can any company be successful without making customers happy?
Perhaps customer expectations of financial service providers has gotten so low that the industry needs a face lift. As the former CEO of Egg said to me (Egg has the highest customer satisfaction in the UK) “we are the best of the rats.. customers hate banks”. Most customers in the US choose their primary bank based upon its proximity to their home.
Is there another way? What are the keys to a successful financial services relationship? Lets explore this over the next few days.
I was struck by a very good “top ten” list today in fast company. How do we improve customer satisfaction?
1.Eliminate the customer obstacle course. If you asked customers they’d say that the obstacle course for figuring out who to talk to and how and when to get service is over-complicated, conflicting and just plain out of whack
2.Stop customer hot potato. He who speaks to the customer first should “own” the customer. There’s nothing worse that sends a signal of disrespect faster than an impatient person on the other end of the line trying to pass a customer off to “someone who can better help you with your problem.” Yeah, right.
3.Give customers a choice. Do not bind your customer into the fake choice of letting them “opt out” of something. Let them know up front that they can decide to get emails, offers or whatever from you and give them the choice.
4.De-silo your website. Websites are often the cobbled together parts created separately by each company division. The terminology is different from area to area, as are the menu structures and logic for getting around the site. What’s accessible online is frequently inconsistent, as is the contact information provided.
5.Consolidate phone numbers. Even in this advanced age of telephony companies still have a labyrinth of numbers customers need to navigate to talk to someone. Get people together to skinny-down this list and then let customers know about it.
6.FIX (really) the top ten issues bugging customers. It’s likely you’ve been surveying your customers for years and know what’s broken. Do something about those issues! Then tell your customers!
7.Help the front line to LISTEN. Let your front line be human, give them the skills for listening and understanding and help the frontline deliver to the customer based on their needs.
8.Deliver what you promise. There is a growing case of corporate memory loss that annoys and aggravates customers every day as they have to strong-arm their way through the corporate maze just to get basic things accomplished. They’re exhausted from the wrestling match, they’re annoyed and they’re telling everyone they know. And, oh, by the way, when they get the chance they’re walking.
9.When you make a mistake – right the wrong. If you’ve got egg on your face, for whatever the reason, admit it. Then right the wrong. There’s nothing more grossly frustrating to customers than a company who does something wrong then is either clueless about what they did or won’t admit that they faltered.
10.Work to believe. Very little shreds of respect remain, if any, after you’ve put customers through the third degree many experience when they encounter a glitch in products and services and actually need to return a product, put in a claim or use the warranty service. As tempting as it is to debate customers to uphold a policy to the letter of the law, suspend the cynicism and work to believe your customers.
US lawmakers: Wal-Mart threatens US payment system
March 10 Reuters
In a highly critical letter to the acting chairman of the Federal Deposit Insurance Corp., obtained by Reuters, a group of more than 30 Congress members asked the bank regulator to reject Wal-Mart’s application to open a bank in Utah.
“Wal-Mart’s plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation’s payments system,” the lawmakers wrote.
“Given Wal-Mart’s massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system.”
The congressmen said the losses to the FDIC, which insures deposits at banks and thrift institutions, could be staggering if Wal-Mart begins to have financial troubles that bleed into its bank’s business.
“Consider the consequences if Enron or WorldCom had owned a bank,” the group said.
Good political spin, but wouldn’t it be better if top banks could articulate the threat a little more clearly? I had Denis Bouchard, WalMart’s Director of Payment Services up to Charlotte a few months ago. Needless to say, there is opportunity for improvement in relationships between “Banks” and WalMart. An example (WalMart POP Success): WalMart had a very successful pilot with POP (Point of Purchase Check electronification) but it’s continued rollout is hampered by new proposed fees (NREF) by NACHA that would greatly impact the cost effectiveness of POP.
Unfortunately most banks don’t know how to collaborate as single entities or as an industry. The real danger for banks here is public relations. Customer’s trust WalMart much more then do their banks, and see congressional involvement not as a mechanism to “protect” customers or the financial system, but as a control play. The retail lock box business is in jeapordy, and other retailers are closely watching WalMart’s moves here. During Denis’ visit, he said that Banks need to work actively to drive down the cost (to WalMart) of the payment system to 0 (ZERO). Strategies designed to “protect” and insulate existing (ex. ACH) payment systems will drive WalMart to other channels. From WalMart’s perspective, Banks’ profitability in retail payments will no longer be borne by retailers.
GE Consumer Finance has shown the ability to partner in consumer credit. There is ripe opportunity for someone to partner in payments… but is there anyone innovative enough to act?