No one gets excited about paying bills.
Which, according to SVP of Consumer Channels and General Manager Richard Kang at Handle Financial, is why when it comes to financial services, bill pay doesn’t get a lot of love from innovators.
“I feel there is little known about this category, because it is not the sexiest thing in financial services. There are lots of new FinTech providers that are doing interesting things that really appeal to a niche number of people,” Kang said.
Niche ideas are good, he explained, but when Handle Financial was developing the Prism app, the company wanted to target a wide swath of the population. Because everyone pays bills — or at least everyone has bills that need paying.
According to Kang, people are still paying bills the same way they were nearly 20 years ago at the dawn of the digital era. Sure, the paper checks are mostly gone, but experience-wise, the log-in and payout experience hasn’t shifted much.
“Everyone is paying their bills the way they did 20 years ago, and there hasn’t been a lot of innovation around making this complicated, fragmented, longtailed problem easier. We think industries like bank bill pay and financial management is ripe for disruption, and we want to solve the problem for a big, wide group of people,” he explained.
How It Works
The problem with paying bills via bank account, Kang noted, is that there’s often a delay. Same-day, real-time payments are not always possible. A customer may want to pay an electric bill on time, but their bank, instead of making a digital payment, will actually draft a paper check and mail it. That often means it’s incumbent on the customer to remember to schedule a payment a few days in advance and to be flexible about when that payment actually hits.
This situation is out of step with how consumers, particularly millennial consumers, are used to delivery of services of all kinds, Kang said. If they can figure out how to make a direct digital payment to their creditor without cracking a checkbook, it comes as irritatingly friction-filled surprise to discover that their bank often can’t. Moreover, he noted, for consumers who are managing their funds down to the penny, a bill payment floating but not reflected in their checking account can often be the recipe for a disastrous explosion.
“Younger generations … are moving away from bank bill pay [and] going to the biller website. We think the reason they are doing that is because they can pay it immediately and deliver [money] immediately without scheduling or waiting a long time to see the funds move — at worst it might be a day,” Kang said — which solves the immediacy problem, but creates two new ones to take its place.
The first is that, depending on how many accounts a customer has, the bill payer can spend too much time logging into and out of websites, which is tedious.
More problematic from a financial management point of view, however, is that consumers can’t see their bills as a unified whole, which makes it harder to construct a complete financial plan.
Prism wants to fix that conundrum, he said, by offering a “best of both worlds” type of solution.
Users only have to onboard once, where they enter their username and password for their billers sites. As of today, Prism has 11,000 such billers on its platform, according to Kang. The company is working to add more every day, “down to the tiniest niche utility players in the U.S.”
Once data has been entered, the platform pulls all of a customer’s billing information into a single dashboard that can send alerts and keep track of things like due dates.
“Once they want to pay,” Kang said, “it’s a matter of simply clicking send, and the payment moves instantly to the biller as if they had paid on their site, and the dashboard updates the user’s entire billing picture.”
Who It Helps
Though the platform was designed for customers who have bills to pay, Kang told PYMNTS, as of today, it mostly appeals to millennials, and is particularly strong with female customers.
Paying bills falls on the spectrum of life activities somewhere between eating veggies and going to the gym — things most people know they should do, but really, really don’t feel like doing most days. Financial responsibility for consumers usually requires persuasion if one is hoping for adoption.
But among those who have contributed to the million-plus downloads Prism has netted — and among its hundreds of thousands of active users it claims monthly — Kang said the company didn’t have any persuading to do. Many of its users have come to them looking for a solution.
“What we find is that many customers come looking for us after they have made a mistake or two. When you read our reviews, you see a lot of people saying we saved their credit. We see people who got hit with lots of late fees because life got busy on them,” he said.
Customers also seek them out after a large life event, Kang explained — usually shortly after having a “Oh my god, I need to grow up right now and get myself organized” moment.
Organization is often an issue for consumers, particularly younger ones, he said, when it comes to making payments as opposed to actual funding.
“Consumers often have the money for their bills— that’s not the main problem we see. But life happens to people, and it’s amazing how fast it can get expensive when a few things get away from a consumer,” Kang said.
Bill payments assistance is a service many consumers need, and finding creative ways to keep consumers on top of their finances is a good investment for everyone in financial services, Kang noted; but it’s not terribly exciting. And it’s not particularly easy either: Personal finance app Mint recently exited the bill pay market because the service cost more than it brought in.
But Prism is persevering, because it’s a service consumers need now and will always need going forward. It’s incumbent on digital innovators to find a better way to bring it to them.
“One thing that is really rewarding for us is that we see people saying ‘life-changing’ often in their reviews. It’s maybe hard to imagine that a little FinTech app could be something that changes someone’s life, but if you are out of control of your finances and can get back in control of them, that really is life-changing,” he said.