The problem when it comes to innovation for regional banks and credit unions isn’t lack of interest. Quite the contrary, according to Ondot Systems CEO and President Vaduvur Bharghavan (known as VB) who told Karen Webster in a recent conversation, regional banks are highly interested.
“They are salivating to create something like an Apple Card. And when you explain to them how much of that is possible for them — their main question is usually ‘how do we get started,’” he told Webster.
Because getting started for players of this size is often the stumbling block — mostly because regional banks and credit unions often don’t have the internal infrastructure in place to really push for cutting-edge or innovative add-ons to their offerings, or at least not quickly. In the hardware-rooted past, VB told Webster, product rollouts could be measured in years end to end. In a software-ruled world, those cycles contract into months and weeks.
Which is why Ondot is rolling out — to the 4,000 or so banks and credit unions it works with — the capability to access a suite of cloud-based services and functionalities for the cards they issue to consumers. Those tools today include things like instant digital issuance, mobile onboarding, transaction enrichment, spend insights, recurring payments and other digital card tools.
And while Ondot isn’t quite offering instant speed to market, it is offering the ability to be up and running with those capabilities in a matter of eight weeks, instead of eight months.
“Functionality is what we have been talking about over these many months — and the challenge we address here is an operational technical challenge,” he said. “If you don’t have the infrastructure to support this on the premises, how do we supply that for you?”
But beyond the tactical challenge it solves, the goal for Ondot “is to open the playing [field] for those smaller banks and let them use innovative tools to build entirely new solutions and get them to market at a reasonable speed,” he said.
Building Scalable Cloud-Based Solutions
Ondot didn’t start out looking to offer up a cloud-based cache of solutions for small- and medium-sized banks wanting to offer cutting-edge card technology. In its early days, VB told Webster, the firm started with the much more narrow goal of helping control all the pop-up alerts customers received.
But, he noted, the opportunity to “bring inert plastic to digital life” became an increasingly frequent topic of discussion among the many payments processing firms they worked with. Those payments players, and the financial services institutions behind them, see disruptive innovation coming from the likes of the Apple Card and want to be able to meet and compete with it, but don’t have a way to do it. Apple can invest nearly infinite funds in building its product from a green field, but a credit union with a few decades worth of pre-existing infrastructure cannot.
To build solutions for that, and more importantly, to be able to provide it at scale, VB said it was clear Ondot needed to be able to provide for three things. The first, he said, was being able to tap into the card-processing rails, something the firm’s pre-existing relationship with dozens of processors already guaranteed.
Second is for the FI to have a card and app experience that reflects its brand, something that Ondot and mobile banking providers allow through custom branded white label app experiences.
Third, Ondot needed to be able to present its cloud-based offering as a pure value added — the banks aren't asked to unplug anything or add on anything new; this is a suite of capabilities now possible through a processing relationship they already have.
Overcoming the Hurdles
Ondot’s cloud offering gives credit unions the ability to overcome the issues associated with the shared digital infrastructure environment that exists today.
“It’s not easy to create a custom solution when institutions share infrastructure,” VB said.
And being able to anticipate and then deliver those digital, personalized experiences, he said, is how credit unions can create relevance and utility for the payment tools they have — or would like — to offer. And, as credit unions and regional banks can connect their cards to those more useful functions, VB noted, they stand a greater chance of not just being a card in a consumer’s wallet.
It can be the card that the consumer keeps at the top — because it is the most consistently relevant for use.