Max My Interest: Friend or Foe


Max My Interest, or Max for short, offers a cash management app that enables individuals and businesses to earn additional interest on their checking and savings accounts. The advantage for consumers? Max does automatically what most people are too busy (or lazy) to do for themselves, which is to shop around for the best rate.

Customers do not have to change banks to use Max. They simply link the app to their current bank and create savings accounts at other institutions through the setup process. From there, Max automatically transfers funds as market rates change, always ensuring that the cash in their accounts is earning the maximum yield. Max charges 0.02 percent per quarter on the cash being optimized, for a total of 0.08 percent per year

In theory, this sounds great. Max allows users to save smartly and earn a higher rate of interest on cash deposits with minimal effort. Max works directly with the largest institutions, including the likes of Bank of America, Wells Fargo and Citigroup, and uses an algorithm that transfers money between banks automatically. Since Max only utilizes other banks’ savings accounts, customer funds are FDIC insured despite the fact that Max itself is not a bank.

According to the website, the average customer earns 0.70 percent to 0.90 percent more with Max than they do at traditional brick-and-mortar banks, which can be significant–particularly for high net worth clients, who Max estimates keep nearly a quarter of their portfolio in cash. In addition to individual accounts, Max offers services to wealth management professionals, and to businesses.

Signing up isn’t exactly as easy as 1-2-3. A new user must create multiple savings accounts, one for each bank it wants to be able to transfer funds to, which is time consuming—although once that has been done, everything happens automatically thereafter. We are also leery of products that require the user to give a third party access to their existing bank account because that increases their security risk.

This is a tough call. Although Max could be considered a potential friend for big banks or banks with high savings account rates, what it comes down to is this: Do they really want aggressive rate shoppers who are always chasing the highest possible yield, which is what Max will bring them. And if you do happen to be a bank that pays out a higher rate, don’t you still want a relationship with the consumer that includes more than just their deposits? If so, partnering with Max may not be the best way to maximize your interest.

Digit: Friend or Foe


In the world of fintech, Ethan Bloch, CEO of the personal savings website Digit, has the three of the four important keys to success. He has the experience of creating a successful company, Flowtown, and selling it to a scale player, Intuit. He has brand name investors: General Catalyst and Google, among others, and they have given him enough capital to have a decent runway to grow the company. And he has what many fintech start ups do not—real live customers. In the last few months Digit has been adding 20 million dollars a month into Digit accounts. It is easy to see why everyone is eager to invest. What he does not appear to have 100 percent nailed down at this moment is a business model for his automated algorithm-based savings fintech.

The Good:
Bloch made a bet that he could make savings painless and almost fun. The market is full of planning tools that are hard to use or do nothing to help a consumer actually save. Digit is the opposite. A customer signs up, gives Digit their login and password to their bank checking account and the firm’s algorithm watches the account and identifies the cash flow of the account. It times withdrawals that the customer won’t miss, and then places the excess money in their Digit account.

This may sound like a traditional micro saving program such as “Keep the Change,” but there are several features that differentiate Digit’s platform from that model. For starters, it’s all centered on text communications. Also, consumers don’t have to set a specific amount to set aside to save, and that they can access their savings or withdraw at any time. Digit savings accounts are FDIC insured up to $250,000. The best part: It’s absolutely free, and it intends to stay that way. This is certainly a convenient and helpful feature for consumers as the amounts deposited into these accounts can be significant for high earners, and it can help create crucial rainy day funds that all consumers will appreciate later.

The Bad:
The immediate worry is that Digit’s app is a consumer data security risk. Digit says that account data is anonymized, encrypted and secure. This is probably not the place to try to settle the bank/fintech divide on data access and protection, but it is certainly a major concern.

The large number of deposits starting to build in Digit accounts are not rewarding consumers with interest. There is a very modest rewards program, 5 cents on every $100 saved–but it is certainly a long way away from compounding interest. Imagine a bank offering what amounts to a .0005 interest rate.

Digit is currently able to make money by earning interest on its deposits. While this may be an attractive vehicle for millennials’ convenience-and-mobility needs, it is not an investment account. For banks, it’s taking consumers money away from traditional institutions. Anytime one of your customers is depositing money, it should be with your bank—not a third party account.

Our Verdict:
Foe. Bloch says Digit will remain independent. Some big scale player will potentially want to buy the the firm, and if that happens all banks may need this kind of automated savings feature. The problem for banks is that Digit is draining deposits from banks and creating avid fans. If it expands into wealth management or other financial services, Digit could become a real competitor to a bank’s core business.

Some Banks Offer Digital Appointment Booking, But It’s Rare

mobile-appointment-3-18-16.pngIf a customer wants a haircut, chances are that individual can go online and schedule an appointment at a local salon. But if the same person wanted to schedule online a convenient time to sit down with a banker to discuss a loan, that customer likely can’t do the same. A bank’s website should be a strong prospecting tool for banks, but despite the drive to digital, many banks don’t offer a way to go online to schedule an appointment. Shouldn’t banks offer an easy way to direct the customer from the web to the branch?

Few banks offer digital appointment booking, according to the research firm Celent. According to a Celent survey conducted in October 2014, just 36 percent of North American financial institutions above $50 billion in assets offer online appointment booking to their customers. For institutions below $50 billion, online booking is even rarer, at less than 5 percent.

Bank of America was an early adopter of online appointment booking, starting with its mortgage lenders in 2008. The bank has since expanded to allow customers to book appointments within its mobile app as well, and customers can arrange appointments for a score of products, including checking and savings accounts, credit cards, investments, financial planning, small business banking and various loans. Prospective customers just choose a product area, select an in-person or phone meeting, and type in their zip code to find a nearby branch. From there, the client can select a date and time. “We do 21,000 appointment requests a week now through either smartphone or the website,” Bank of America’s head of digital banking, Michelle Moore, told the Associated Press in February 2016.

Users of digital appointment scheduling in the U.S. include Wells Fargo & Co., Regions Financial Corp. and PNC Financial Services, and small community banks such as Santa Barbara, California-based Montecito Bank & Trust, with in $1.2 billion in assets, and $577 million asset Paducah Bank & Trust Co., based in Paducah, Kentucky.

“You’ve got to figure out how to be smarter in engaging customers, and digital appointment booking is one way to do it,” says Celent Senior Analyst Bob Meara. “Make it easy to click to call, or have an online chat with somebody or to make an appointment in a branch.” Celent reports that Bank of America’s digital appointment features were developed in-house, but vendor solutions are available that can easily tie into a bank’s current infrastructure.

“We’re in this on-demand economy,” says Gary Ambrosino, president and CEO of TimeTrade, based in Tewksbury, Massachusetts. Clients that use TimeTrade’s online appointment scheduling technology include retail banks, healthcare companies, universities and retailers.

Prompting a potential customer to make an appointment online makes that person more likely to follow through with bringing their business to the bank. A customer may be looking for a loan late at night, and want more information. “It makes sense to have a link” for scheduling a time to come in to see a banker, says Meredith Deen, president of Alpharetta, Georgia-based FMSI, a branch performance technology provider serving the banking industry.

Bank marketing teams also gain valuable data—even if that customer skips the appointment. “They just handed you their name, their phone number, [and] their email,” along with information on the products and services that the customer is interested in, says Glenn Shoosmith, CEO of BookingBug, an online booking platform based in London, with offices in the United States. “That’s the marketer’s dream set of information, and you’re getting that for free.”

Scheduling appointments online means that bankers can meet at a time that’s convenient for the customer. By doing so, branches can better schedule their day, reducing traffic at peak times and instead creating a steady flow, so ideally even walk-in customers will have a better experience. Banks can also make better, more profitable use of specialized employees that float between branches, who can now potentially see more customers within a day, says Deen. And bankers can better prepare for their day, by knowing exactly why the customer is coming in, and the product that customer is interested in.

Adoption among Montecito Bank & Trust’s customers has been slow, according to Megan Orloff, director of marketing. However, she expects that to change when the bank improves its website. To ensure the success of such appointment platforms, bank marketing teams could advertise their availability to customers, and ensure that it’s easy to find and use on the bank’s website or app. The financial institutions that offer digital appointment booking now remain in rare company—which means newcomers easily will stand out in a competitive marketplace.

Unlocking Smartphone Secrets

mobile-apps-9-4-15.pngSoon, your bank may know more about you than you could imagine. Bank Director recently spoke with Stephen Burke, chief operating officer for Context360, a startup firm in San Mateo, California. Context360 uses a smartphone’s sensors to track user location and behavior, including what other apps the person is using on the phone and when. There are a variety of potential fraud and marketing applications for the technology. San Francisco-based Wells Fargo & Co. earlier this year awarded the company seed money to develop its platform for potential banking uses.

Tell me what Context360 does.
We started out three years ago focused on game developers trying to solve the problem called retention and engagement. Unlike the web, where web sites know where you came from and where you went [by] using cookies and various devices, apps are very much siloed. You don’t know where [users] came from when they open your app or where they go when they close your app. What if we could provide insights into what users do outside your app?

How does it work?
All smartphones have sensors. Once it’s installed and the user has accepted the permissions, it runs in the background. It collects changes in the phone’s state, like the phone moving, or logging in. If you open your mail app, that gets registered. Our license terms explicitly require our customers to get informed consent from the end users. I want to be very clear. We don’t have your contact lists, email content and we are not looking at SMS [text message] content. We just know that someone is spending two hours per day texting, but we don’t know the content of those texts.

I understand that Wells Fargo is interested in this as a way to prevent fraud, by knowing the customer’s location through the sensor in their smartphone and comparing that to where the credit card is being used, for example.
If you use the United app in the last few hours, that is a good indication that you might be traveling soon. We don’t know if it’s you. We know it’s your phone. If you have opted in to be directly recognized, if you are traveling a lot, you may opt to link your bank user profile with your smartphone profile.

So the bank app would know that I was doing something in an airline app, or that I had downloaded a boarding pass, so they don’t have to block my credit card when I travel to that city?
Yup. Or you could check into the Four Seasons hotel in London and because your phone is logged into the wifi there, we know it’s you. At the end of the day, your phone is you. It is the single most ubiquitous personal device ever. Similarly, if you travel back and your credit card continues to be used in London but your phone is in Tennessee, that’s a signal those charges should be blocked. We are in the middle of three weeks of testing for another use case, which is lead generation or cross selling. The example here is you suddenly have an interest in real estate apps such as Trulia or Zillow, and that’s a sign you might be in the market for a house. If I’m Wells Fargo, I have a new loan rate and I have 6,000 people in Tennessee who have been looking for real estate, so why don’t I send them a message right now that they should come in and talk to a loan officer now?

As a user, do you know what I’m searching for on the web?
No. We see the broad category, such as she just downloaded an app. But we don’t see what you’re searching for on the web.

But Wells Fargo is not actually using this with customers yet?
It is only being done with Wells Fargo employees in a trial. We’ve raised about $1 million to date including the seed funding from Wells Fargo. We have several other clients using our software and about 7 million active users on our platform right now, ranging from real estate apps, retail, to voice over IP and banking. We have about six game developers in the U.S. using it. We are in discussions with a large bank in the U.K. to do something similar to what we’re doing with Wells Fargo.