Intuit Inc., providing the first in-depth look at its plans for entering the payments market, is hoping to attract small businesses and consumers with a combination of personal financial management tools and online banking capabilities.
The Mountain View, Calif., company is expected to announce today that it has developed its first products resulting from last month's acquisition of Digital Insight Corp. — a pair of online applications that make available online the detailed cash-flow tracking capabilities Intuit has long offered through off-the-shelf software. One of the applications is designed for small businesses, and the other is designed for consumers.
Observers said the combination would make Digital Insight's consumer product comparable to online banking products available from rivals such as Corillian Corp. However, observers also said that small businesses — especially very small ones that are rarely targeted directly for such products — likely would find the capabilities appealing and would be willing to pay for them.
Many small businesses "are not being well served by bank offerings today," said Paul Rosenfeld, the general manager of Digital Insight's small-business division.
Besides basic banking and payment features, the small-business product also will include tax management, payroll, and bookkeeping capabilities, all of which are aimed squarely at the needs of business owners, he said. "There's a broader set of financial management needs, and online banking only solves a sliver of them."
Intuit will introduce the consumer product in June, as the next version of Digital Insight's consumer online banking product. The small-business version will be introduced in the fall, along with an upgrade of the consumer product. Both will be named FinanceWorks.
Intuit has long been known for its off-the-shelf financial software, Quicken for consumers and QuickBooks bookkeeping software for small businesses. The new products will merge many of the features from those applications with Digital Insight's online banking technology.
Both FinanceWorks products are built around a cash-flow calendar that lets users see how much money they have at any time, or to predict how much they will have in the future, in part by looking at anticipated deposits such as paychecks and invoices that are due.
The products also have a feature Intuit is calling RealBalance, which calculates account balances after pending payments and deposits clear. Mr. Rosenfeld said this feature could provide banks with an opportunity to cross-sell a line of credit, or overdraft protection, when they know a customer's account might slip into the red, "right there at what we call the point of need."
The small-business version will include software to create invoices and manage payroll, including managing tax withholdings and printing tax forms. It will allow users to accept electronic payments and reconcile their books with payments that are received by mail.
There are also features designed to help users who have both a personal and small-business account with a bank, he said. For example, both products create a spending chart so users can monitor monthly expenses; users can assign the same merchant to spending categories for both business and personal expenses.
Though the Digital Insight deal closed last month, Mr. Rosenfeld said the two companies began collaborating on these products nine months ago.
Patricia Hines, a senior analyst with the wholesale banking practice at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said FinanceWorks "will serve the smaller businesses well."
Offering complex functions such as payroll management through online banking systems would make it easier for banks to justify their fees for these services, she said; such services can be a harder sell when the business offering looks much like the consumer offering.
"Adding invoicing, payroll, and merchant accounting will provide the banks with the ability to charge fees because businesses will see that as an additional value," she said.
Online payroll management is especially compelling, because many small businesses either use desktop software, like QuickBooks, or outsource the work to a provider better suited to businesses with more employees, Ms. Hines said. "Integrating payroll has always been something that's been really tricky for online banking vendors, so this will be one of the first true integrations, particularly on the payroll side."
George Tubin, a senior analyst at TowerGroup, said that Yodlee Inc. and Corillian also provide consumer online banking software that features spending charts comparable to those found in personal financial management software, and that Intuit's consumer product puts them "on par with what some of the others are providing."
However, he said that banks may be able to implement Intuit's software more easily than these competitors, because Intuit is hosting it. "The banks can more readily flip a switch."
Jeanne Capachin, a vice president at Financial Insights Inc., a Framingham, Mass., research unit of International Data Group Inc., said the small-business version of FinanceWorks would appeal to the smallest businesses — those with owners who manage their expenses out of a personal banking account — and could help banks attract more of those customers' deposits.
The visibility that the Intuit tools could offer users "should encourage more consolidation of balances with that one institution," she said.
The combination of Intuit's financial management tools and Digital Insight's online banking "makes a lot of sense for banks," Ms. Capachin said. "They seem to be delivering what a lot of banks talk about wanting to have."
