15 million reasons why engagement matters
Congratulations to Tally on its recent funding round:
San Francisco-based Tally Technologies raised $15 million in Series A venture funding to launch an app that promises to help people maintain good credit while avoiding fees, charges and other credit card affiliated pains.
We will be watching Tally with interest as it gains traction. Again, another FinTech company is disintermediating the traditional bank/customer relationship. For the life of us, we cannot understand why banks are allowing this to happen.
Disruption anyone?
We have talked a lot about the opportunities for FinTech where banks continue to see their customer as a revenue generation widget as opposed to a partner. In Tally’s case, they are simply honing in and calling out the pain around credit card transactions.
We have done some analysis previously on the credit card industry (and it’s revenue generation) and were stunned by some of the numbers:
Average spend per annum: $10,680 (link)
Users carrying debt in their credit cards: 39.0% (link)
Average Credit Card Debt: $7,327 (link)
To give you an idea of what this means for a bank, if they charge 14.9% on the credit card debt, they will earn more than $1,000 per annum in interest.
When you start dealing with the numbers banks deal with, for every million customers, this represents $1 billion in interest revenue. And if they are only paying 2–3% to borrow the money, the profits are insane. Let’s not forget this is before all the nefarious fees and charges that are applied.
No wonder they are a target for disruption.
Banking Engagement
We talk about banking engagement. It means changing the paradigm from customers as a profit centre to an ongoing partnership based relationship.
Here are the things that Tally is offering:
- reduced balance interest rates
- reduction in fees and charges
- more information and management tools around credit card spend
To us, these are all basic offerings that a bank should be extending to their customers. Yes, they might reduce the current golden goose of credit card revenue, but that is going the way of the dodo. The likes of Tally and others will ensure that.
What is worse, if it is up to the likes of Tally to deliver those services, banks will no longer have the primary relationship with their customers. In a world where new business is frightfully expensive to acquire, surely limiting churn should be a high priority.
And the data proves that out:
- Engaged customers bring 37% more annual revenue to their primary financial institution (link)
- For banks, having fully engaged customers translates to a serious financial boost. (They are) more likely to remain customers of the bank; their attrition rate is 50% lower than actively disengaged customers (link)
At Onefill, we believe bank’s will realise engagement is their future. We provide solutions that change the paradigm for banking customer engagement.
While we wish Tally every success, we’re working on helping our banking partners make Tally’s growth that much harder.
