Moven, one of the original challenger banks, now relies more on enterprise platform applications than direct-to-consumer downloads. CEO Marek Forysiak says challenger banks must operate more like traditional banks if they expect to satisfy investors. He also explains what legacy banks and credit unions need to do to remain competitive.
By Bill Streeter, Editor at The Financial Brand
When most people think of Moven, they likely think of Brett King. The high-profile financial futurist, author and speaker (including at The Financial Brand Forum 2020) founded the Moven mobile banking and savings app in 2011. King is now Executive Chairman and remains very active in the venture.
But Moven’s CEO since December 2017 has been Marek Forysiak, a 30-year banking and financial services veteran. Forysiak was an early investor in Moven and was advising the company for several years prior to becoming CEO.
Less visible than the much-traveled King, Forysiak nevertheless has a unique perspective into the evolution of both the fintech and banking industries. He’s worked on both sides. He has led Moven away from its initial focus, as a standalone mobile-only challenger bank. Now Moven concentrates on being an enterprise partner with large financial institutions around the world.
A U.S. native, Forysiak speaks fluent Polish and Russian. After working many years at Chemical Bank and Chase, he shifted overseas where, as he says, he “built mass retail financial businesses in economies transitioning in the post Soviet Union world.”
Moven still operates the original direct-to-consumer banking app in the U.S. in partnership with CBW Bank. The core of Moven, both direct and within the enterprise partnerships, is financial wellness. Algorithm-driven savings tools and real-time monitoring provide personalized spending insights and prompts that help consumers live smarter financially.
Substantiating this focus, Movencorp (parent of Moven and Moven Enterprise) received what it describes as the “first-ever” financial wellness patent, in the fall 2019.
The Financial Brand interviewed Forysiak about the future of Moven, of challenger banks in general, and of traditional banks and credit unions, as well as what the bottom-line is for financial wellness as a banking service.
Can you give an update on Moven’s current numbers and growth expectations?
Forysiak: We’re live with seven financial institutions worldwide. About an equal number are in various stages of implementation. The global enterprise expansion began in 2016 with TD Bank in Canada and now also includes Westpac in New Zealand, Indonesia’s BCA and Yandex in Russia. We serve well over three million active users through these relationships. “Active” means they are engaging with Moven components inside the mobile applications of the financial institutions, and the number fluctuates. Overall, however, the number of users should grow exponentially, given that we’re only operational in Canada today with TD Bank and will be expanding into TD Bank’s U.S. customer base soon. BCA alone has 40 million retail customers and we’ve just come online with them.
Is the direct-to-consumer model still viable for Moven?
Forysiak: We have around 200,000 direct-to-consumer users in the U.S., which amounts to less than 10% of our total user count.
The way the company is structured, however, our U.S. direct-to-consumer business is a critical component for proving concepts and substantiating engagement. After doing so, we can deliver the best to our enterprise clients. Everything in our product development roadmap we first build and test in our direct-to-consumer lab. We don’t need millions and millions of users in the U.S. — just a substantial and representative base.
Nobody questions the importance of financial wellness to consumers. But what’s the business case?
Forysiak: There are three main components.
1. Reduced attrition through personalization. As an ex-banker I look at attrition first and foremost. In the U.S. the major regional banks are paying anywhere from $600 to $1,100 to acquire a customer. So one of the best ways to improve your bottom line would be to reduce attrition. I equate wellness-related features, such as spending insights and savings prompts, with personalization. And personalization builds longer-term sustainable relationships that can directly impact, and reduce, attrition.
TD Bank incorporates Moven wellness components in its TD MySpend application. MySpend’s attrition rate is one-fifth that of non-MySpend users. That clearly shows there is a commercial benefit for the institution from financial wellness.
2. Increased savings deposits. Financial wellness encourages consumers to control spending and controlled spending allows them to save more. That benefits the consumer, but also the financial institution as banks and credit unions continue to struggle with low deposit levels. In addition, customers who save more also tend to stay with an institution longer.
With TD Bank, again, MySpend customers on average annually save 5.5% to 6% more than non MySpend customers. Those savings dollars are not coming from earning more money. They are specifically coming from real-time engagement through spending insights and controlled spending.
3. Opportunity for contextual credit. Even while saving and controlling spending, customers still need credit. By understanding customer spending behaviors, banks and credit unions can identify when they need credit and be predictive about it as opposed to a consumer finding themselves in a position where they didn’t deliberately think about how to how to finance X,Y or Z. Moven offers contextual credit through several of our enterprise banks.
In addition, financial wellness allows an institution to surface other offerings including investment programs and insurance.
What do you think about some kind of licensing or charter arrangement for fintechs in the U.S.?
Forysiak: As you know, a federal court came out against the OCC’s attempt to issue a fintech charter. When that charter was first proposed, we began an analysis of it. When it was almost immediately challenged, however, [by state banking regulators] we decided to wait.
To me, the concept is logical. Compared with what some other countries are doing, it’s a narrow charter. It doesn’t allow you to hold deposits. If it is made available it would let the market prove that organizations like Moven and others can operate within this space, and then build upon it.
The good thing is that the sponsorship model has really evolved from 2011 when we launched our business basically built on a reloadable prepaid card platform. Today, institutions like Moven, Chime and other challengers can use many different sponsor models from debit to savings to credit.
What about going for a full-service national charter like Varo?
Forysiak: Varo [a U.S.-based mobile-only challenger bank] is now three years into the process of getting a charter from the OCC and they still don’t have FDIC approval to make their programs available. Even if they get it, we’re not going to follow suit. Are we going to wait another three to four years as Varo did?
So how does Moven penetrate the U.S. market?
Forysiak: I would love to be able to walk down the street here in New York City and license my platform to five other institutions that I know need it. But when we licensed Moven to TD Bank, we gave them some exclusivity on our platform in North America. However, we’ve got an incredible amount of runway with TD in both Canada and the U.S., so we’re really excited about the partnership. And in addition, Latin America is an incredibly vibrant market for us.
How do you see the future for challenger banks overall?
Forysiak: First, the fact that there are more and more players suggests that there is a market there and real opportunities. That said, at some point challenger banks are going to have to show their investors how they create value if they want to remain viable. Acquiring customers by giving away services that are more efficient than those provided by traditional banks is excellent for bringing people in. But you need to be able to substantiate how you monetize that. The long-term viability of challenger banks will be based on their ability to build primary, long-term customer relationships that create value. If they can’t demonstrate that, they will have a difficult time.
Ultimately, if you’re a challenger bank anywhere, you’re going to have to understand how the banks make money and then operate like that. On the retail side that means borrowing from consumers and then lending to the consumer and the margins associated with that. Just saying, “Well, we only want to do this or that” doesn’t necessarily translate into creating value longer term for challengers.
On the other side, how do you size up the situation for traditional financial institutions?
Forysiak: Implementing technologies to modernize the way that they do business is an issue for many. Banks for the last decade have benefited from interest rates close to zero, which didn’t require them to really invest in making the organization more efficient. But now top-line banking revenues are not projected to grow more than 1% to 1.5% per year for the next three to five years. So if you want 10% to 15% earnings growth, that’s going to have to come from investing in technologies to dramatically improve operating efficiencies. The good news is, there is a lot of opportunity there.