Yes, his company does derive 60% of its revenue from the workmanlike business of processing online bill payments for community banks and credit unions - but no, Matthew Lawlor still has not lost the entrepreneurial twinkle in his eye.
Last week Mr. Lawlor, the chairman and chief executive officer of Online Resources Corp., swung by American Banker's offices to talk about three "innovations," as he described them, that his company has been working on. Two of them - a customer relationship management platform and a souped-up account aggregation service - are already available and in use by some of the company's 560 financial institution customers. A third - a system that would let consumers use PIN debit cards to buy things on the Internet - is still a gleam of future excitement to Mr. Lawlor.
The bread and butter of his McLean Va., company is providing online banking and bill-pay services to banks that want to outsource the whole operation, including customer service. While CheckFree Corp. dominates the online bill-pay market, processing about 463 million transactions a year, and the Metavante Corp. subsidiary of Marshall & Ilsley Corp. claims second place with about 150 million transactions, Online Resources comes in a respectable third, with 100 million.
When Online Resources went public in 1999, its top priority was to take the databases of customer information it maintains for each bank that uses it as an outsourcer and refashion them for mining for marketing purposes. The result was what the company describes as an "integrated consumer marketing program" that relies on customer relationship management software and that has telemarketers actively calling customers to cross-sell products or encourage them to use online banking and bill pay.
"We made a more than $10 million investment in that CRM program, which is huge for a little company," Mr. Lawlor said.
The system continuously prowls customer usage patterns. If someone has not been using online banking, he or she will get an e-mail reminder to use it, followed by a phone call if the system detects continued dormancy. The same thing goes for online bill payment.
"We have gotten zero pushback from consumers" about the sales calls or e-mail reminders," Mr. Lawlor said. "It's the way it's being done. We don't call five times; we call you once, and say, 'Hi. Is there a problem with your password?' Nine times out of 10, that's the problem."
Mr. Lawlor said the system has boosted the penetration of online banking at his company's customer institutions. Before 2000, when the system was introduced, the average Online Resources client had about 3% of its customers using online banking; today the figure is more like 15%.
More recently, Online Resources has been getting its banks hooked up to Money HQ, a robust online banking and account aggregation service that was pilot tested over the summer. The vendor started introducing it commercially through its client banks in the fall and will continue to do so through early next year.
The premise is that many account aggregation services have not been popular because they let people see their information in one place but do not let them manipulate it. "To call … [aggregation] a bomb would be an overstatement," Mr. Lawlor said. "I think it was mispositioned. I think it's the ketchup rather than the hamburger - it enhances what's already there."
Therefore, Money HQ not only presents data from a variety of accounts at different financial institutions but lets customers move money among those accounts. Cashedge Inc. is a partner in the product.
Today, there is a time lag when funds are moved from one account to another, but "where we're going here is ultimately real-time A to A," Mr. Lawlor predicted.
More than 90% of Online Resources' customers already charge in the neighborhood of $5 per month for online bill pay, and the vendor suggests they charge an additional $5 a month for Money HQ, because it is a premium service. Mr. Lawlor acknowledged some skepticism that people would pay so much, but the service "does a lot, so it's cool," he said.
Third on his list of innovations is something called CertnFunds, which would use the same electronic funds transfer networks that normally process PIN-based debit card transactions at the point of sale to process PIN-based debit transactions on the Internet. Such transactions cannot be processed today.
The technology exists, Mr. Lawlor said, but since banks do not make a lot of money from PIN debit transactions, there is not a lot of incentive for them to build out such a system. He predicts that will change in a "post-Wal-Mart" environment, with the EFT networks raising interchange and the pricing of PIN and signature debit reaching more of a parity. "The gateway is built; the challenge is to find a market," Mr. Lawlor said.
On the page of his road show presentation headed "Tradition of innovation in remote delivery of financial services," CertnFunds is the last item, listed for next year. But three to five years would be more realistic, Mr. Lawlor said.
Other items on the list are the introduction of a screen phone for banking transactions (1991), a patent for real-time ATM-based processing (1993), and becoming an application service provider for Internet banking (1995).
Until recently, Online Resources had to stick fairly closely to its knitting. This year it lost its two largest customers when they were bought by other banks and converted to the parent companies' e-banking systems. New contracts with other institutions have helped the company make up the slack, Mr. Lawlor said. The company has been profitable. In October it reported net income of $364,000 for the third quarter, up from $93,000 a year earlier.
To Mr. Lawlor, the fun part of the business is coming up with the next innovation and bringing it to market. Indeed, though it is comfortable to run a healthy company, the enthusiasm Mr. Lawlor is feeling does not seem tied to the balance sheet.
"We're now allowed to dream again," he said.
