Every financial institution wants to be like Apple, or more specifically Apple Card — “Created by Apple, Not a Bank,” — as its slogan brushes off the role of Goldman Sachs.
Helping FIs from big banks to credit unions to offer Apple-like virtual cars is Ondot Systems, a digital platform for debit and credit cards which has launched a white-label app that offers the speed, control and transaction record for virtual and plastic cards.
Ondot wants to bring Apple Card convenience to banks and credit unions on iPhone and Android. (Photo ... [+]
“Ondot’s Card App enables any issuer to brand and deliver an Apple Card-like experience for its existing credit and debit card portfolios, including instant card signup, wallet provisioning, spending insights and easy self-service,” said the company in its announcement.
Consumer expectations for digital spending were outstripping banks’ ability to provide solutions, said Vaduvur Bharghavan, CEO of Ondot Systems. They wanted to get the card instantly, be able to use it immediately, understand their transactions and monitor the card. From the FI perspective, the payments provided an insight into customer spending and the opportunity to interact in real-time, such as increasing credit limits at Christmas, or understanding when a user has traveled abroad even if she didn’t tell the bank beforehand.
Apple can do this because its users have signed up for iTunes and provided payment
information. Ondot works with banks and processors, like First Data, so it has access to the popular payment rails and can provide immediate onboarding for virtual cards.
Apple Card advertising works for him, Bharghavan said. “Our message to banks is ‘You like Apple Card? We can provide it now because we are integrated to your payment rails and system in real-time and can meet or exceed Apple card.”
In a new report, Aité Group’s Thad Peterson calls digital payments a “Must Have” for smaller financial institutions.
“Beyond developing a digital payment capability, a holistic view of customers and their behavior is essential. Many FIs have siloed solutions that minimize their ability to see an entire customer relationship. Beyond adding new digital payment capabilities, FIs need to be able to have an integrated view of their offerings.” His report provides work sheets for FIs to evaluate their position and opportunities, and see how they rank in digital services.
Apple, Google Pay and Venmo are the latest tech firms to move into banking services, Bharghavan said, and they threaten to move consumers from banks to mobile providers.
“We think there is a significant transformative change with big tech coming in. Banks know they want to do something like this, they just don't know how. It’s critical to empower the 10,000 plus financial players and allows FIs to own the tech and compete. Our card is available both virtually and in physical form and we enable all the engagement through a digital channel.”
Transactions appear with detail, including maps of where they took place, rather than inscrutable codes, along with a record of spend over time and changes in spending — information to help the cardholder. If a cardholder runs up against limits on a debit card, she can apply for immediate overdraft, or on a credit card, for an installment loan. The card does away with the need to register travel plans. The cardholder can simply set a rule that the card can only be used where she is, so when she walks off a plane in Mexico her phone says “Welcome to Mexico, would you like to use your card while you are here?”
The app lets a user deny a transaction, cancel a card and replace it immediately with another if it is compromised. It can also use location to propose offers from nearby stores and restaurants.
Ondot does not have access to that cardholder information, Bharghavan said. That is held by the customer’s bank, and customers already trust banks with their financial information.
“We just happen to the tech player; the bank owns the data, we don’t. The challenge for banks is providing a meaningful digital experience.”
Ondot makes it possible for the banks to compete on digital. New fintechs and neo banks are delivering that value and incumbent banks have to catch up.
“We provide a digital card services platform that lives on top of existing legacy infrastructure, so a typical mid-tier bank does not have to invest millions to deliver these capabilities. We got into real-time upstream of pretty much every processor so we can talk to cardholders. We are plugged into the infrastructure, our front end created an orchestration layer so we have integrated to bank infrastructure — you can do KYC, AML, get third-party offers or credit wellness,. We want to provide a holistic solution to small banks and capabilities for premium strategies.”
It is providing banks the ability to offer a smarter card to its clients. “That stupid card in your wallet could be smart and provide your bank with a point of engagement in your daily life.”
The Independent Community Bankers of America’s payment subsidiary, ICBA Bancard, has been exploring Ondot’s solution. About 2,400 community banks work with ICBA Bancard to issue 6 million debit cards and 1.3 million credit cards, said Tina Giorgio, ICBA Bancard’s president and CEO.
“Ondot provides the card controls for the program, like location and being able to turn your card on and off. I began working with Ondot earlier this year and we launched a new card app which is a digital wallet. It tracks the user’s purchase history.
‘We are starting our pilot soon,” she added. “This is a great example of how community banks can partner with a fintech company to deliver best of breed, state of the art solutions to the market.”
Justin Olson, VP of Information Technology at Utah Community Credit Union, said “Building these innovations in-house would require massive resources and budgets, but with Ondot, we can launch this in just weeks.”
Ondot is already pre-integrated into the credit unions Visa processing rails and with its Fiserv DNA core banking platform, said Olson, addressing a point that Aité’s Peterson made:
“The ‘build or buy’ question is usually the first to be addressed in a product development scenario; however, developing and integrating a digital platform from scratch for most FIs is cost prohibitive. While getting digital products in the hands of customers might be the call to action, it’s imperative that all digital services are integrated on the back end to avoid the problems created by a siloed infrastructure. The ability to quickly access customer data and analyze trends at the enterprise, portfolio, and account levels will pay dividends in the long run.”
Utah Community Credit Union has been active with Ondot since April and is working on various card controls, such as digital replacement of a lost or stolen card. Before, the cardholder had to call or come in and wait for a plastic card to arrive.
“We want to avoid requiring someone to reach into their wallet for another card, and we don’t want them to wait a couple of days for a card.” The implementation went smoothly, but there was a lot of work on both sides, he added.
