Fixing The Digital Banking Problem With Social Commerce

Within the growing realm of digital banking, many regional banks struggle to compete with the caliber of consumer products offered by their larger counterparts. To overcome that roadblock, Richard Steggall, CEO of Urban FT, says the right solution is about more than just the financial relationship between banks and their customers. It’s also about social commerce – creating an experience that’s highly relevant to a user’s daily life. MPD CEO Karen Webster recently spoke with Steggall to find out how Urban FT’s platform seamlessly meshes both non-financial and financial capabilities together, and how they plan to drive consumer dependence on mobile banking apps for much more than just transacting.

KW: We’re here to talk about Urban FT. Before we get into what you do, let’s start with the basics. What problem do you solve, and for whom?

RS: We solve the digital banking problem for regional and community banks here in the U.S. We provide a full suite of products that allow them to not only compete what the big banks are doing, but also leapfrog what the big banks are doing.

KW: Give us some specifics. What do you mean by solving the digital banking problem?

RS: So our solution provides not only mobile banking apps and Internet banking solutions, but it also brings together the best of grade payment solutions. It brings together social commerce, and puts it in an experience that’s highly relevant to a consumer’s daily lifestyle. It’s become more than just a financial relationship between the user and their bank – it’s both financial and non-financial. It’s about how a user spends and manages their money, rather than just simply how a user saves and receives their money.

KW: The social commerce aspect of your platform is interesting. You talk about the goal of getting consumers to think more broadly about mobile and digital banking than just a place to check on transacting. But consumers are hardwired to do things in silo. Social commerce is perhaps something they think about on a social network, and transactional activity and monitoring that is something they think about doing on a mobile banking platform. How successful have you been in meshing those two things together, and getting consumers to actually do it? 

RS: First, we founded this business out of a consumer-based business. We originally started with the focus of providing an alternative banking solution to the student demographic. In the student demographic, there’s a heavy concentration of early adopters that are really setting the trend for what everyone from youngest of generations to the baby boomers are doing. That in itself, that experience, was worth a lot to us in terms of market research. The activity that we saw from around 25,000 users demonstrated a very compelling need to bring together the financial and non-financial aspects of a day-to-day lifestyle. The most obvious place for that to be supported was through the banking relationship. It allows the bank to own the digital relationship with a user when it comes to not just savings but also spending their money.

It’s not so much changing a person’s hardwired view, telling them they have to go to Groupon to get a daily deal, or to Yelp to determine where they want to go to, to OpenTable to make a booking, and to Venmo to split the payment. We’re actually bringing all of that together in a very seamless experience, one that’s empowered by their local banks. It’s something that naturally comes to a user, rather than having to change their behavior. It’s almost like when the digital camera came out, or email – it just makes sense.

KW: So what is the user experience for someone who is a customer of a bank that’s taken advantage of the Urban FT digital banking platform? Help us understand what the user does with the app that’s now available to them. 

RS: We finally launched our platform in December of last year, and we are now onboarding the first of the banks that signed up. In total, during the course of last year, we managed to get 289 banks committed to our platform. So in the course of 9 months, we’ll be onboarding all of those banks. We’re completing right now the first 5 integrations.

Our platform is so modular in its formation, and it allows very simplistic onboarding and ongoing management of a particular bank’s platform. But then what we need to do through the process with the bank and customer service education, through customer education, we need to be coming up with the FAQs and looking at the regulatory side. All in all, it takes approximately 60-90 days to get a bank live from the moment we have completed all of the necessary commercial requirements with them.

KW: So once that happens, and I am a consumer that now has this capability available to me, is it that I pop open my app, and all of the things that I’m used to doing in separate applications like what you just described are available to me in this one app?

RS: It is, however, if we take a step back for a moment, that consumer will have been notified through various means of communication. They will be notified that as of this date, they will have all of these additional benefits and services available to them – it will be a gradual education process during an approximately 60-day period. It will say, as of this date, users can download the new mobile app, and as of this date, the new Internet banking portal will be up, and as of this date, users will be able to do the following things via phone banking.

So if you look at the mobile app, when the next app update comes through, users will get the new app, as opposed to having to go into an app store to download it. We’re trying to provide a seamless experience for the user, one that doesn’t require conversion, and one that provides the most optimal solution for banks and for ourselves in terms of onboarding banks. So when the user downloads the app, they’ll still have all of the functionalities they expected, they’ll still be able to navigate their way through, but it will allow them a huge amount of additional information.

If you think about some of the social networks that people are using, a Gen Y user will use certain tools in Facebook that a baby boomer may not use. It will be exactly the same with these banking apps we’re supporting – anything you could imagine within reason is available, and it then becomes something that relates to multiple generations. That is something that’s highly attractive to the banks.

KW: Step one is obviously to provide regional banks that don’t have mobile, digital banking capabilities with those table stakes. In the world of banking, people’s expectations are to be able to monitor transactions and do their banking and bill payment online and via mobile app. Have you thought about how you’re going to layer the additional capability into the app? What is your thinking with respect to the next set of capabilities that you think will hook the consumer into becoming more dependent on the mobile banking app for the other kinds of activities you described? 

RS: All of the activities that I described are activities that are supported by the app today. Our platform has been developed in a way that allows us to integrate either our own additional modules, or third-party modules. For example, some banks want or have existing relationships with companies like Cardlytics or Yodlee – we’re already integrated with many of those providers or platforms. We offer a 30-day integration process with third-party platforms, so if any bank requests a certain provider or platform, they can do that. What we don’t want to be doing is losing market share, requiring them to only use our products. We’re really saying that the biggest strength we bring to them is a platform that allows ongoing agility, provides an exceptional user experience and allows us all to stay ahead of the game.

In terms of additional modules that we’re looking to bring on, by the middle of the year, we will have a module that banks can add for HCE, allowing any users on our platform to make contactless payments using the MasterCard credentials. To coincide with that, we’ll be offering a digital wallet so that banks can own that wallet rather than third-party providers.

KW: How will you get merchants to accept these digital wallets that regional banks are going to offer? Will each of these digital wallets be branded for that particular bank? That seems like a lot to ask a merchant to support. 

RS: Firstly, it is branded for the individual bank. Secondly, the digital wallet, initially, is about bringing together a user’s existing payment methods. One of the things that our platform already does is allow users to aggregate, for example, a Chase or Bank of America and AmEx account. So if the regional bank has got the digital app in place, through the analytics portal built into the platform, they’re able to see if a user, for example, has approximately 72 percent of his monthly payments business going through his AmEx cards. The bank can then setup automatic product buckets so that customers can receive an offer for a 0 percent balance transfer, or something like that to win their business.

Tying back into the fact that we’ve already got users through a linking third-party account, or we will be allowing them through that digital wallet to also transact in-store and online using the same digital wallet. Again, it goes to show that the regional bank now gets to own the digital relationship. We all know that the bulk of inquiries through mobile apps and phone banking are bill inquiries. Have I been paid yet? How much money do I have? So if a user is looking at their AmEx or Bank of America account, and you’ve got a more intuitive local bank app, then they’re more likely to go to that because they’re seeing a more holistic financial position.

KW: I still think that’s a big rock to push up the hill for a regional bank to get a merchant to accept a proprietary wallet given everything that’s already on their plate.

RS: I think one of the issues, though, is that all banks, not just regional banks, are in a state of disarray over what their position should be on digital wallets. I don’t believe it would be fair to say they’re comfortable with third-party wallets coming in. Regional banks, in particular, are not just looking at how they can provide an exceptional consumer experience but how they can get their consumers engaging with the business customers in the region they support.

Within our platform, in the commerce section, we have a section called “Bank For Your Buck.” That’s where local merchants who bank with that institution can advertise deals like they could with Groupon or LivingSocial. Those deals show up to members of the community. It’s actually finding a way for banks to become the center point again in their communities – they’re bringing together local merchants and consumers to a local economy.

In time, we’ll find that banks do want to own that digital wallet experience. Over time, the bigger players like Home Depot and others will be quite happy to make certain credentials available so these individual wallets can transact within their stores or be embedded in third-party wallets.

One of the good things for these regional banks is that, if we at Urban FT are doing deals with larger department stores, that doesn’t just mean it becomes available to local banks in Iowa or in Wisconsin. It becomes available to every single bank on our platform. The uphill battle you mentioned will naturally evolve, and we need to first get consumers using digital wallets for their financial needs and then use it for loyalty and other aspects.

KW: I agree that the banks want to control the relationships, but I think merchants will do what they think the critical mass of consumers want them to do. Unless they’re convinced they’ll lose business or not get business as a result of not accepting a particular digital wallet, they just won’t do it. But I take the point that consumers need to get their head around using a mobile banking app for more than just transactions. That sounds like something your platform is helping the banks get consumers to do.

RS: Yes, absolutely.

KW: So who competes with you in this area? Are there others that offer this platform as a service capability for digital banking?

RS: I don’t want to sound arrogant by saying we don’t have any direct competitors, we do. But they’re competitors with certain aspects of what we do. We certainly don’t have any competitors that provide the entire suite of solutions we offer.

So if we look at on a strictly banking POV, there are companies like Monitise and FIS that have products that compete at some level. Then when we look at the social aspects, you could say Cardlytics or Money Desktop and Yodlee are competitors – but as I said earlier, we’re actually integrating with a number of those parties.

If I look at Yodlee in particular, when I spoke to some of their senior executives recently, they said winning the contract with a bank is only half the challenge. Getting the bank to then provide that service in a way that actually engages the user is the other half of the challenge. So Yodlee sees this as a great way for banks to more regularly consume their APIs. Yodlee and Urban FT are now working together on certain partnership opportunities because it’s a win-win. They’ve got a channel to market, and we’re trying to expand aggressively, and we give them a method for an accessory that drives API calls. So some of these companies we tend to look at as competitors are actually very useful to us.

Likewise, our root to market is not to go and knock on thousands of bank and credit union doors. It’s to go to the payment processors, explain how this drives transaction velocity and creates longer-term relationships with clients and potentially wins new clients, and how it doesn’t in any way erode their margin. If anything, it’s increasing their margin. So by showing them the compelling proposition, we’re then able to go through their client list and start cross-marketing this.

We’ve been able to do this now with two processors here. The first was a smaller regional player – TransCard – and the second one is FIS. We’ve completed our integration with both of those processors, and we’re now moving forward to looking at ways to expand on that.

Through that distribution model and expertise we’ve brought on board, we expect to grow fairly quickly.

KW: It is interesting. Payments is one of those crazy ecosystems where competitors often collaborate in certain dimensions of the business – it’s pervasive.

So you mentioned Urban FT grew out of your consumer-facing business and you had 25,000 or so users that helped you refine the platform capabilities that you now take to market. What is the thing that surprised you the most about the consumers and their relationship or lack thereof with banking? How did that really help to inform what you’re doing today?

RS: I think the first thing we learned from that experience was that they weren’t shy to tell you what they wanted, or in fact what they didn’t like. I keep saying to all of my investors and everyone we speak to, if we were a big company, we’d have spent millions getting that research. What we did learn though was that people were frustrated by the boundaries that are in place with banking. It was more about how they could spend their money, and where they could go for a cheap meal, how they could pay for that and split the cost. Or it was the case of getting money from A to B in a way they couldn’t currently do it.

We live in a very social world, and if a consumer has a particular good experience, we want to push it out. It all comes back to something a consumer purchases. Every experience comes back to a payment – we’re paying for most experiences.

So in May of 2013, we ultimately determined we were going to pivot in the way we now have. We realized we hadn’t done what we wanted to do yet, so we decided to sit down and work out where to take it and make it a future-proof proposition.

Richard Steggall
CEO & Co-Founder

Prior to co-founding Urban FT, Richard was the CEO of Waspit Group Inc, a banking alternative for students in both North America and the United Kingdom. Before entering the FinTech sector, he spent 17 years in multiple sectors of the IT&T industry ranging from streaming and digital media through to B2B IP based telecommunications. His prior roles included COO of U.K.-based Burlington Rye Plc, and Head of Corporate Strategy for NASDAQ listed and U.S.-based Kit Digital Inc. (formerly Roo Media Inc.). During his time in the IT&T industry, he was responsible for the growth strategies of a number of private and public companies in North America, the United Kingdom and Asia – particularly strategies focused on acquisitive and capital growth. He also led a number of IPOs (including via reverse merger) in North America, The United Kingdom, and Asia. Richard is a successful and results driven entrepreneur with a passion for accelerating and capitalizing on emerging opportunities.

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