JPMorgan Chase & Co.’s mobile check-deposit service stood out to the financial services industry as one of the few to make it to market without technology from Mitek Systems Inc. But now even Chase counts itself among Mitek’s growing list of customers.
The new partnership announced Feb. 14 is a coup for a company that analysts say already has the mobile remote-deposit capture market cornered through dozens of licensing relationships with vendors that work directly with banks.
The contract will increase Mitek’s revenue, but “more important … is the message,” says George Sutton, a senior analyst who follows Mitek for Craig-Hallum Capital Group LLC in Minneapolis. Chase has generated buzz for mobile check-depositing applications with a service it developed internally, he notes.
The deal underscores the difficulties banks face in developing the technology in-house, Sutton says. “Anytime someone has tried to create this on their own, they quickly find that the image quality is not where it needs to be, and that’s where Mitek’s technology is vastly superior,” he says.
Chase announced its multiyear agreement with Mitek to develop smartphone applications using the vendor’s technology. Mitek’s mobile-imaging technology will replace its own technology, James DeBello, Mitek’s president and chief executive, said in a Feb. 15 interview.
DeBello would not say how much revenue the contract with Chase will generate, but he called the impact “significant” for Mitek, which reported Monday that revenue for its fiscal first quarter ended Dec. 31 rose 21% from a year earlier, to $1.4 million.
“We look at this as a long-term arrangement,” DeBello said. Mitek’s work with the banking company would go beyond mobile check deposit, he said.
Chase would not offer an executive for an interview, but a spokesperson said by e-mail the bank plans to “leverage both proprietary and Mitek technologies for our products and services.”
Chase first made its QuickDeposit service available to customers in July through an update to its app for Apple Inc.’s iPhone. In November it rolled out the service to customers who use Google Inc. Android smartphones.
Chase has marketed the service heavily on TV, which analysts and other vendors say has generated interest from other banks.
Though Mitek is working directly with Chase, DeBello said its main strategy will be partnering with other resellers to get its product out to banks. “We really depend on the success of our channel partners and that is our strategy and that has not changed,” he said.
Last year Mitek added several major vendors, including three–Fiserv Inc., Fidelity National Information Services Inc. and Jack Henry & Associates Inc.–that collectively work with hundreds of financial institutions.
“Chase wanted to have a direct relationship … to take advantage fully of all the recognition technology that Mitek has to offer,” DeBello said.
In the future, the company’s growing roster of vendor partners could make Mitek appealing as an acquisition target, Sutton says.
“One of the things they’re doing well with their limited balance sheet is using partners to really expand their go-to-market strategy,” Sutton says. “Obviously if I’m a major bank vendor, … Mitek has to be very attractive as an option.”
Mitek has not been approached about being acquired, DeBello said. “The truth is that every company large or small faces that opportunity to be bought or sold, and we’re no different,” he said. “So at some point that may be of interest. Right now we’re focused on the operation of the company.”
Mitek ended its fiscal first quarter with $2.1 million in cash and cash equivalents, up 64% from a year earlier.
The company reported that its net loss grew to $800,727 from $222,946 a year earlier, partly because it converted its long-term debt into equity and stock-based compensation expenses.
Mitek last year announced it was marketing a version of its service for bill payment, which would enable consumers to take a picture of a bill with their smartphone (
A large financial institution is testing the service and expects to make it available this year, DeBello said during a Feb. 14 earnings conference call. He would not name the company.
