MOUNTAIN VIEW, Calif. - Intuit's acquisition of Digital Insight is an arrow aimed at the heart of how small businesses manage their financial operations through the Internet-and how credit unions will serve them.
The buy out deal for approximately $1.35 billion announced late last week promises to bring startling changes to credit union services aimed at the small business market in the first quarter of 2007. With many credit unions complaining that their core processors don't provide a robust business services component, the industry is interested to see how this acquisition unfolds.
So promised Paul Rosenfold, director of product management and marketing for Intuit in an interview with The Credit Union Journal. "Online banking is growing like a weed, but it's not solving the problems faced by small business owners today," said Rosenfold.
Intuit, maker of QuickBooks(r), Quicken(r) and TurboTax(r) software has been working with Digital Insight, a leading provider of online banking services to more than 1,700 financial institutions (almost half of which are credit unions) for nine months, he said.
"There are 26 million small businesses in the country today, and 22 million of those are what we call small and simple," said Rosenfold. "By that I mean that they do it all themselves. Now, Intuit has always had good penetration in that category, but small market share in that space overall. A few years ago, when we did some research on what the future might bring, we saw the opportunity in the small business market and wanted to be more relevant," said Rosenfold.
Which brought them to online banking and the delivery of financial management software through that channel. And that prodded Intuit to reach out to Digital Insight, and talks began about "conceiving a new product line to fill that niche," said Rosenfold.
The working relationship was a good fit, he said, and the work products created will be geared to expand the capabilities of small business operations from accounts balances, payment queries and bill pay to complete cash management and planning of all aspects of small business operations. "Online banking does a few things very well, but only from a financial institution's site, and small businesses may have as many as five or six accounts to do several tasks, so there are too many hoops to jump through."
It's the solution of those currently separate, yet related abilities that Rosenfold said, "we're champing at the bit to announce."
That's the wide-open space we intend to fill, allowed Rosenfold, noting that Intuit is a conservative company in that it deals with solving real world problems. "Small businesses today go out of business because they run out of money, right? So they need to know, on a daily basis, 'how much did I spend, where did I spend it, how will it affect my taxes, how much taxes will I owe, what's my cash flow?' and a lot of other questions that aren't answered."
Intuit products collectively can provide the answers, he said. "We've started to thoughtfully solve users' most important tasks that aren't being met and we've started with a clean slate." At Intuit, they believe that online banking is still in its infancy.
He allowed that "this is an enormous acquisition, and we feel incredibly confident in Digital Insight's technical capabilities and especially their relationship to their clients. "We know we've chosen the right company to work with on a long-term basis. Stay tuned, the best is yet to come."
At press time, The Credit Union Journal asked Randy Karnes, CEO of CU*Answers for a reaction to Digital Insight's acquisition: "It's getting harder and harder to be a third-party provider in home banking today, so it's a positive signal that more resources are being placed on proactive Internet delivery. Credit unions should sit up and take notice."
