Intuit Inc., a longtime frenemy of banks, may end up raising the bar for mobile financial services with its latest acquisition.
The owner of Quicken, QuickBooks and Mint is buying yet another fintech darling: the mobile bill payment provider Check. The $360 million deal would give Intuit a goldmine of financial data, mobile-centric bill payment capabilities, a team of technologists aspiring to create the go-to financial app for mobile devices and a business that profits off certain consumer transactions.
Banks, which do not charge for bill pay, often believe it improves customer retention but have had a hard time getting more customers to use it in recent years. They will want to keep a close eye on the Check deal, because Intuit is acquiring strength in an area where many banks are weak: intuitive bill payments for the fast-growing mobile channel.
Check, designed to be used for day-to-day finances, is perceived as a modern and elegant way to pay bills digitally that could make other Intuit services more useful — including those geared to small businesses. Over the longer term, Check's technology, with Intuit's marketing budget behind it, could shape consumers' expectations of bill pay through financial institutions and inspire entrepreneurs to cook up similar software to disintermediate banks.
"Check is a slick, appealing option," says Mark Schwanhausser, director of omnichannel financial services for Javelin Strategy & Research. "Banks and credit unions lose whenever Intuit and others weaken the feeling that [financial institutions] are the trusted place consumers turn for advice, recommendations, and a sense of control when monitoring and managing their money."
Formerly known as Pageonce, Check counts 10 million registered users and has received $49 million in total investment in its seven years of existence.
The acquisition would give Intuit another source of financial data it can crunch to cross-sell consumers third-party products like credit cards or something it offers, like tax preparation services. Some view this advantage as the more direct danger to banks.
"I think in the overregulated world of banks, Intuit is thinking [it] can offer more and more bank-like functionality without being a bank," says Shawn Ward, chief executive officer and co-founder of Geezeo, a personal financial management provider.
The deal for Check, according to Ward, resembles Intuit's acquisition of Mint in that it wants to own the engagement platform. In so doing, it can profit from referral fees and pitch users its own products.
"The digital landscape is a bigger threat than when a traditional bank competed with one down the street," says Ward.
Jim Bruene, founder of Finovate Group, views the deal as one that could make Mint and Quickbooks more profitable, without any need to cannibalize the banking business in the near term.
To understand why Intuit would pour millions of dollars into a mobile bill payment provider — more than double what Intuit paid in 2009 for Mint, which now claims 14 million registered users — keep this in mind: 37% of all bill payments will be made through the mobile channel by 2018, according to AlixPartners.
"Mobile is a key driver of bill pay opportunities," says Guy Goldstein, Check's chief executive.
Check has a jumpstart on the category.
The firm, founded in 2007 in Palo Alto, Calif., by Goldstein, a former Israeli fighter pilot, has always had its roots in mobile. The app's use case, however, evolved over the years: What started off as an app for storing passwords for online shopping turned into a digital service exclusively for bill payment. All along, Check has been vocal about purposely not cluttering its app with more traditional PFM features that Quicken and Mint include, such as pie charts. Instead, it ended up taking a single-minded path: pay bills — something Goldstein says consumers find value in and a category that is linked to $20 billion in revenue in the U.S. Billers like New Jersey Natural Gas promote the Check paperless payment to their customers.
To date, Check processes $2 million in payments daily — most of which are automated clearing housing transactions.
After users link in their bank accounts, they can schedule bill payments, view a file cabinet of their bills and receive due-date reminder alerts. While banks typically do not charge for bill pay, Check makes money on advertising partners and some kinds of payments. Consumers can pay with credit or debit cards for a fee (and expedite payments for an additional fee) or pay through their bank accounts for free.
Intuit said the acquisition will accelerate its ability to offer bill pay to small businesses and consumers. Check will become a unit of Intuit's so-called consumer ecosystem group, while Goldstein will join Intuit as a vice president.
It is unclear whether Check will remain a separate service or be incorporated into Intuit's other consumer lines. It also remains to be seen if Check, which built its own aggregation technology, will migrate to Intuit's software that works to do the same thing.
The acquisition is the latest example of how mobile — like any new channel — has given rise to new competitors that rethink the financial experience.
"I think offerings like Check are — more than anything — a glimpse into the future of mobile PFM and digital banking more broadly," says Peter Wannemacher, a senior analyst with Forrester Research. "Banks should be inspired by some of the features and ideas from Check, rather than fearful of an Intuit armed with Check."
Some financial institutions have been working hard to modernize their mobile bill pay experiences. BBVA Compass, U.S. Bank and City Bank Texas have all made available a feature that Check has not: letting customers photograph their bills with their phone's camera to pay them, for example. The idea is to reduce data entry.
Still, Check offers an experience many banks have yet to introduce: multiple payment options and the ability to use mobile before signing up online. Security-minded financial institutions require customers to sign up for online banking before they can log in to mobile services, which could turn off a segment of customers who want mobile-only experiences.
That leaves the door open for young companies like Check.
"The driver around bill pay isn't payments," says Jacob Jegher, senior analyst with Celent. "It's value-added services."
Check, says Jegher, provides banks with two important consumer lessons: One, there's a demand for mobile bill pay; and two, consumers are likely to take to having several payment options available from the same portal.
The deal also highlights a shortcoming of PFM: budgeting tools — typically in read-only mode — may need to mature to include transaction capabilities like bill pay. Mint, which comes without payment capabilities, could become more useful should Intuit decide to incorporate Check's technology into the budgeting software.