Sramana Mitra: People who are paying their loans online is one type of usage. Do you have a sense of how many of these are using a consolidation app to manage their debt?
Matthew Cooper: To our knowledge, we are not familiar outside of the ones that Mint built. It’s a very small number. The only other application in this space was Prism. It was more generally focused on bills payment. That’s part of why we see a huge potential for changing where Americans interact with their loan.
Sramana Mitra: Out of this 100 million consumers, are we talking 100,000? A million perhaps?
Matthew Cooper: I would say it’s a million. The overall industry is quite early. If you go back 30 years, people would sit down and write checks. This is in the American context. That was the old version of it. It was all happening in one place, but it was happening from your kitchen table.
The next step was online banking. When online banking came in, they created online bill pay. A large portion of Americans ended up using online bill pay. That was the consolidated experience. You go to Bank of America only and then you start making payments out of Bank of America instead of going to each of these billers.
Technology hasn’t changed much in the last 15 years. The billers have developed really good interfaces that are mobile friendly and also provide a lot of control where you can go to each of those sites and make a payment. The opportunity we see is consumers have gone from consolidating everything to doing all these individual payments. That is an indication of how strongly consumers want to have control.
A big part of our drive is, can we create a central environment where consumers are willing to centralize their payments again in a completely online environment. In that evolution, it is quite early.
Sramana Mitra: There are a couple of companies that are on my radar that are also working on this segment that you’re talking about. They are lenders – Earnin and PayActiv. You must be familiar with these companies?
Matthew Cooper: I’m familiar with their businesses, but I don’t know them in detail. Currently, we don’t partner with the super short-term loan payment, but we do have discussions with them. It’s more informal.
Sramana Mitra: I’m going to switch my line of questioning and go to the last segment. Lift yourself to the 30,000 foot level and look at the FinTech landscape in general. What are some open problems that you would encourage new entrepreneurs to solve?
Nadim Homsany: Some of the problems that we’ve seen in the last couple of years are in the RegTech space. Starting a business in the United States particularly in the FinTech space has a very long gestation period relative to other industries. I’m not saying this is a bad thing.
Because of the way the environment is, getting a product to market takes a certain amount of size, scale, and expertise that meets the regulatory requirements. Several FinTechs have started that transition. Those would be in areas like KYC.
Hummingbird would be one. They’re doing cross-border anti-money laundering. There’s another one where they’re able to do KYC as well as fraud detection. You have companies that have aggregated access to several different data sources for smaller FinTech that don’t have the size to be able to enroll or purchase all the different services.
Some of the credit bureaus have an API where you can connect to and where you can get a positive identification on the consumer. We’ve seen some really neat growth in that area. If I’m an entrepreneur doing this again, I might consider going into that area.