Expense Manager Services

Getting a handle on Unmanaged Spend through Expense Manager Services

personal finance

Credit Cards

Using Spotify and Netflix payments to build your credit score? Grow Credit has a service for that.

Can subscriptions and everyday payments be used to help build or rebuild a credit score? The Los Angeles-based Grow Credit thinks so.

The service, which launched earlier this month, is one of the slew of new ideas coming from businesses that are angling to help build up credit scores for folks who can’t (or won’t) get a credit card, or who are rebuilding their credit.

The company is the latest evolution of a credit-based approach to financial services from the LA-based serial entrepreneur, Joe Bayen.

Bayen’s last startup was Lenny, a credit monitoring and lending service that was aimed at helping people better manage their payments to avoid damaging their credit scores.

Bayen scrapped the Lenny business model after realizing that he’d have a hard time finding a debt financing partner. So Bayen resolved to be more of a sourcing partner for new customers rather than developing a credit and lending business himself.

Hatch Bank, the new business arm for Firstrust Bank, is acting as the lender of record for Grow Credit’s secured Mastercard credit business.

Bayen has always been focused on helping the under-banked make better decisions, and in-between Grow Credit and Lenny there was still another business model that Bayen wanted to try.

It would have been a platform called LennyBike, which would have been a subscription service for customers to get access to a bicycle for $30 a month, and those payments would then count toward building credit.

However, it’s a much simpler proposition to get people to use their existing subscription services as a credit-building device than trying to get folks to pay for something new… thus, Grow Credit was born. (It also didn’t help that Bird raised $300 million and Lime another $250 million around the time that Lenny Bike was trying to get to market.)

The company uses a virtual Mastercard that allows for consumers to pay for online subscriptions only. “We have been able to transform a healthy, positive habit, which is making subscription payments, and we have turned that into a credit-building opportunity,” says Bayen.

It’s a pretty elegant way to solve a problem that’s a real barrier to entry for a large number of financial services. Credit scores can impact mortgages, the ability to receive small business loans and a host of other services that are ways to boost economic opportunity.

The company has even brought on board experienced executives like Nick Roberts, the former chief marketing officer of Acorns, to help get their messaging out.

There are two main competitors to a service like Grow Credit in the market for providing opportunities to build up a credit score, Roberts says. One is forced savings programs, the other is using fixed-limit credit cards with massive fees. A host of new services that would use reporting utility, rental, mobile phone payments and other monthly expenditures toward credit scoring have yet to gain traction.

Grow Credit offers 0% APR financing for its service, but has two tiers. A free tier for an unlimited $25 revolving credit line and a subscription service that charges $4.99 for a 12-month service offering periodic credit limit increases of up to $300. Both the free and subscription versions offer free FICO scores and automatic subscription detection.

The company makes money by giving subscription services the chance to upsell customers using the credit lines. ClassPass has already signed on as a partner, according to Bayen.

“This is establishing a small dollar loan and a line of credit,” says Roberts. “People on debit cards and stored value cards that are out there… they’re  using debit cards so the money is immediately debited from their account. What we’re doing is paying the bill and establishing the line of credit and getting paid back at the end of the month.”

The idea of using more data sources and alternative data to how credit bureaus determine credit scores is one that’s already resonating with a few Democratic contenders for the presidential nomination.

Senator Kamala Harris has called for amending the Fair Credit Reporting Act to require credit agencies to include rent payments, cellphone bills and things like utility payments in their credit score calculations.

Roughly 26 million people are invisible to credit ratings and another 19 million have files that are unscorable, according to the Consumer Financial Protection Bureau . These are people who lack enough bank or credit-union accounts to have a credit score — and they’re a group that’s more likely to include African American and Latinx consumers.

Roughly 15% of African American and Latinx consumers are unable to receive a credit rating, according to data from the Consumer Financial Protection Bureau, as cited by MarketWatch.

“Expanding the calculation of credit scores to include payments made on rent, phone bills, and other utilities will increase access to credit for those with a limited or ‘invisible’ credit history or poor credit scores,” according to the Harris website.

Read more: https://techcrunch.com/2019/07/23/using-spotify-and-netflix-payments-to-build-your-credit-score-grow-credit-has-a-service-for-that/

Credit Cards

Tallys Jason Brown on fintechs first debt roboadvisor and an automated financial future

Yesterday, Tally, the startup looking to automate consumers financial lives, announced it had raised a $50 million Series C round led by Andreessen Horowitz and with participation from Valley heavy hitters Kleiner Perkins, Shasta Ventures, Cowboy Ventures and Sway Ventures.

On the back of the announcement, TechCrunch’s fintech contributor Gregg Schoenberg sat down with Tally’s founder and CEO Jason Brown to discuss the round, Tally’s growth strategy and the company’s vision for an automated financial future.

Gregg Schoenberg: I never like to congratulate people when they raise a big load of capital, because if anything, the pressure is on even more. But just to level set real quickly, are there any numbers you can share that Andreessen Horowitz and the other investors saw that underscored your traction?

Jason Brown: So I agree with you. Internally, the metaphor I use is that it’s kind of like going on a long road trip where you’re stopping in the gas station to get more fuel so you can make it to your destination. You should really celebrate when you’re delivering value to customers.

Schoenberg: In terms of total credit card debt you’re managing, you were at $250mm towards the end of last year.

Brown: Yes. Now, we’re getting close to $400mm.

Schoenberg: And the savings vehicle – it’s new and totally free?

Brown: Yes, it’s completely free and just to recap, it takes 35-45 seconds to set-up, it automates the process of setting money aside every week and it gives you points. It’s still in beta, but we’re getting close to the end of beta, and have over 30,000 people on the waitlist.

AI is a non-technical term, right? I like to use the word automation because it means things are being done for you.

Schoenberg: With respect to the fundraise you just announced, the big takeaway I got was your aspiration to automate people’s entire financial lives. That’s big talk.

Brown: That is big talk.

Schoenberg: You obviously knew what you were doing when you decided to frame it that way. Where do you go from here? Obviously, credit card payments and the savings vehicle are good, but there are many other financial services out there that you’ll need to tackle.

Brown: Well one of the key portions of the investment thesis for Andreessen Horowitz is actually what’s under the hood. So we actually took three years to build the underlying infrastructure to automate the pay off my cards job. And there are two fundamental layers to the tech.

There’s the “decide what’s best for me,” which addresses the complexity of ingesting data across your entire financial life, and being able to validate that it’s accurate and consistent, and then having algorithms that can make sense of it and figure out what’s best for you. The next layer is actually doing what’s best for you, which involves being able to move money around and lend money.

Read more: https://techcrunch.com/2019/06/19/tallys-jason-brown-on-fintechs-first-debt-roboadvisor-and-an-automated-financial-future/

banks

Honeydue is a money management app for couples

Honeydue is a mobile app that aims to reduce money-related arguments between couples by offering tools to share information on respective account balances and spending.

The app also lets couples stay on top of money matters in other ways, such as being able to comment on individual transactions and manage bill reminders together so they can, in the words of co-founder Eugene Park, be on the same page about money.

My co-founder, Thien Tran, and I are pretty passionate about personal finance and helping others develop better financial habits and literacy, Park tells TechCrunch, explaining how the idea for the app came about.

When we started this project both [of us] were living with our partners and arguing, from time to time, with our partners about money. And it sort of hit us with all of these basic tools that are out, there if couples like us cant get on the same page with money then these tools really dont matter.

The target user is typically in the Millennial age-range with Park noting there are some 32M Millennials now living with a partner. We believe all of them should be co-managing their money together and certainly co-developing their financial literacy habits together, he says.

The founders surveyed 600 couples to help spec out the apps feature set, and the research threw up a few surprises such as how much demand there was for a bill reminder facility. Sixty per cent of users who sign up to use the app now create at least one bill reminder during the onboarding process, according to Park.

We were shocked, he says of this appetite for bill reminders. We thought, maybe its because we live in this Bay Area bubble where everythings being auto-paid, but why do people want bill reminders?

[W]e took a deep dive into it and I think the narrative thats emerging is 75 per cent of Americans generally are living paycheck to paycheck. And are having to make a very difficult decision of which bill to pay. And for that reason thats why theyre not autopaying it.

The top four banks in this country are charging $6.4BN in bank fees whether theyre late fees or overdraft fees and so I have to imagine, I dont any data to prove this, that that money is coming from some of the most vulnerable parts of our culture, he continues.

And so these folks, theyre very sensitive to two things: one is the actual timing of when to pay their bills. And two, their account balances so that they dont go under certain minimums that result in monthly fees.

The team also found the most used existing application for couples to manage their finances together is spreadsheets hence spying an opportunity to build something better.

If financial literacy is bad in this country, spreadsheet literacy is almost as bad, says Park. 18 per cent of couples that we surveyed are using spreadsheets. And it was 3x over any other app or service. And so were setting out to build a better alternative to these spreadsheets that couples are co-managing.

If nothing else were automatically updating your balances and activity, whereas a spreadsheet cant do that, he adds.

A key friction point the app aims to address is to enable users to choose how much information they share.

One of the hesitation points that we saw in a lot of the couples was that they didnt necessary want to argue about the little things, he explains. Did you take Uber vs Lyft, The number one argument we read in a study was over frivolous purchases. So a lot of couples said that they want to goal set and plan but they dont necessarily want to argue about did they make frivolous purchases. So one of the features we allow you to is we allow you to track your account balances but choose what you want to share.

So you can choose which accounts you want to share, you can choose whether you just want to share the balance only. Or whether you also want to share activity and transactions as well.

We looked at existing tools like Mint.com and others, and they are generally not collaborative in nature, he adds. One of the friction points for a lot of couples is choosing what they want to share with each other. Choosing how much of their finances that they want to delegate vs collaborate on.

The Honeydue app soft launched on iOS in late January and Android in March. They have around 20,000 registered users at this point. The app is currently US-only.

We skew female, I believe its 60 per cent. Which makes us relatively unique relative to other personal finance apps, he adds.

 

Whats interesting is from a generational perspective and a behavioral perspective were seeing that Millennials are more likely to co-manage their finances together as opposed to my parents generation, my generation (X).

So we did a survey of 600 couples and 75% reported that they co-manage some to all of their finances together so that is generally our target market: People that are committed to sharing financial responsibility as well as financial literacy with each other.

Users are typically using the app to connect and share their bank account balances which is what the team considers our core use-case and our core pitch/value proposition although, interestingly, couples still choose not to share information on a portion of their accounts.

Whats interesting is that approximately 60 per cent of accounts are shared at some level but 40 per cent are not, notes Park. And so couples that are signing up for our app are exercising that privacy and autonomy.

Another interesting use-case thats emerged for the app is a feature called whats that charge? which lets users query each other about individual transactions.

What we were noticing is that a lot of couples, before we built this app, they were looking at their bank statements and whenever they saw a transaction that they didnt recognize they would screenshot it in a mobile app and then they would MMS it to their partners and ask do you recognize this charge? And that loop was regular, was repeatedly regularly and we just thought that was so silly, so we made it easier for partners to identify these transactions and share them or ask their partner whats that charge?

So we added a comment section under each transaction as well as an emoticon button. So you can flag transactions, you can express shock to a transaction with your partner or thumbs up support. Were seeing a good number of couples that are using that on a regular basis, so thats another common use-case.

Another feature thats proving popular aims to help couples who are trying to budget together by allowing them to see their spending autonomically categorized.

Bill splitting (or sharing in the apps language) is also supported, although Park says this turned out to be less popular than the founders thought it would be, with only around 5 per cent os users making use of it.

Theres no native payment facility within the app itself either if couples need to settle an IOY between each other Honeydue links out to PayPal or Venmo to do the actual moving of money.

Once youre getting into the business of helping people move money then we expose ourselves to another level of scrutiny, adds Park.

Currently, the app supports integrating with around 9,000 of the biggest banks in the US, via its data provider which he describes as pretty broad coverage of the most popular banks.

Like other personal finance tools we go through one of three major financial data providers. Generally the way it works is when you enter your credentials, its validated with the bank and they provide us with a token and we store that token and with that token we cant do anything other than look up your balance and your transactions. and keep them up to date.

In terms of business model, the app is free to use which does of course bring up the question of how they intend to monetize the visibility theyre gaining into users bank accounts and spending habits.

And while Park couches the privacy policy and terms of service as pretty restrictive saying, in generally were not allowed to sell your data to anyone, similar to Mint.com and Credit Karma the eventual plan is to offer our users offers, so they will be using income and transaction/spending data to support custom marketing of other financial services, down the line, taking a cut of any services sales as their commission.

Essentially we want to help guide our users to better financial products and services that we think will save them money, and we will use your data to help tailor some of these offers to you, without compromising your identity to third parties, he says, adding: Its not at the top of our roadmap but in some point in order to keep it free well start testing that.

The Y Combinator backed startup is graduating in the accelerators summer 2017 cohort, and will be looking to raise seed funding shortly after demo day.

Read more: https://techcrunch.com/2017/08/07/honeydue-is-a-money-management-app-for-couples/