FIRM: CashEdge
CEO: Sanjeev Dheer
PRODUCT: Popmoney, a services that enables banks to offer person to person payments
POTENTIAL: Firm research found that 81 percent of Web consumers would use P2P if their bank offered it
What do you get when you combine social networking, the expanding usage and understanding of smart cellphone devices and the public's growing online banking habits? Perfect timing for CashEdge, Inc.
"The unleashing of the power of peer-to-peer interaction laid the foundation for the recognition that payments could follow the same model," says Sanjeev Dheer, CEO at New York City-based money movement services provider CashEdge. So this past winter CashEdge launched Popmoney, a secure service that gives banks the ability to offer person-to-person payments to their customers. Using Popmoney, bank customers can send an electronic payment using a recipient's e-mail address or mobile phone number.
With smartphones demonstrating the ability to transfer information back and forth with simple fist-bump applications, customers began asking for similar capabilities from their banks. The consumers who are beginning to drive technology are the instant messaging generation, says Catherine Palmieri, global head of product and marketing at CashEdge, "and for this generation technology isn't seen as a barrier between people; it's an enabler."
Analysts say that P2P transfers can help banks acquire and retain customers. "There is a new willingness by banks to work cooperatively in this area," says Aaron McPherson, an industry analyst and practice director with Framingham, MA-based IDC Financial Insights. CashEdge's technology gives banks an inexpensive way to offer P2P services, McPherson explains, and is attractive to banks because it is "a way to make online banking stickier" so that banking customers don't look to outside providers for additional services. It also gives financial institutions some insights into customers' payment behavior and the opportunity to market targeted services that match customer habits.
Is the public clamoring for this? CashEdge undertook a nationwide survey of online banking users last year and learned that 81 percent of the online banking customers they studied said they would use a P2P service at least once a month if their bank offered it.
Banks have seen the customer eagerness for P2P payment services and jumped at the opportunity to offer them: more than 165 banks will offer Popmoney by this summer.
Early adopters include First National Bank of Omaha (FNBO). "Through our customer feedback surveys we knew this service was something our customers wanted," says Teresa Sloboth, marketing manager for FNBO Direct, a subsidiary of FNBO. By educating customers about what they can now do with their new account powers, FNBO is seeing growth in monthly P2P usage and a shift in how some customers are conducting their banking.
"I think it is about taking some of those traditional offline behaviors and moving them to the online channel," Sloboth says.
Offering P2P capabilities benefits banks in several ways, says Beth Robertson, Director of Payments Research at Pleasanton, CA-based Javelin Strategy & Research. "Banks can generate some revenue from this type of service," Robertson says, "and it offers diversification in the ways customers interact electronically. Any service that drives stickiness and usage of online banking benefits the financial institution."
CashEdge CEO Dheer says services like P2P can fundamentally redefine customers' relationships with their banks, because increasing the number of customer transactions also increases the quality and frequency of their bank interactions."
