When the parent of Rocket Mortgage announced late last month it was spending roughly $1.3 billion in cash to purchase the personal finance site Truebill and its 2.5 million users, it was touted as a way to accelerate Rockets’ vision to “help clients in complex moments” while also giving it control of a rapidly growing player in the financial empowerment space.
Mission accomplished, most market observers said at the time, including Cota Capital partner and Truebill stakeholder Ben Malka, who told PYMNTS’ Karen Webster that deal with the Detroit-based mortgage company was super important and landscape shifting.
“So when you think about Rocket Mortgage, it’s actually a broad line mortgage lender that has episodic relationships with their customers,” Malka said. “People buy a house once every seven years, and maybe look for a mortgage maybe one and a half times every seven years,” he added, noting that Rocket doesn’t stay in front of these customers as they go between house purchase decisions.
“So I think what they’re looking for, and craving, is a way to have a value-added and aligned way of interacting with their customers and potential customers through those periods of time, when there’s not a mortgage transaction involved,” Malka said, noting the desire to go beyond the transactional nature of interactions of things like buying a home or auto, to an ongoing, steady consultative relationship.
What Truebill will enable, he said, is a customer alignment that is constant, as in daily, weekly, or monthly interactions that provide a value set that is important to Rocket — and other players in the category.
“I think where it’s landscape shifting is that Rocket is not alone in having these episodic relationships and PFM (personal financial management) has always been a category which hasn’t quite hit the mark.”
An Open Banking Success Story
As much as the PFM business is hard, and clients often don’t want to do — and don’t like — the ongoing budgetary analysis and belt-tightening it typically requires, Malka agreed that this deal is also a reflection of both the growth and potential that exists in the burgeoning open banking sector. Startups like Truebill are held up as success stories and a precursor to future expansion into other categories like underwriting or buy now, pay later.
“We think customer centric data ownership is the future. I don’t think it’s even controversial at this point anymore so we think now it’s a question of what do you do with it?” Malka said. “Is it data extraction and consolidation and insights? Is it maybe payment verification? There’s all kinds of other ways that this open banking story is going to evolve.”
Look Out, Traditional Banks
To be sure, the encroachment of FinTechs and the advance of open banking are not new ideas, but they are growing and bringing new challenges to legacy lenders.
As far as what the role of traditional banks might look like in the next few years, Malka said that depends.
“We think that the traditional bank has a lot to offer its customer base. We don’t view them in any way, as a relic,” he said, pointing to the important role they still play in the universe of financial relationships.
“[Traditional banks] still occupy one of the most trusted positions,” he said, noting the range of experience they provide to their customers that is starting to become more immersive, targeted and value-added. Companies like Truebill are showing what the banks need to do to build those relationships with their customer base.
As for those that don’t, he said, they’ll face a different fate.
In short, Malka said, “some banks will find ways to withstand the pressure and make the relationships work, and others won’t They’ll have a harder time.”