BBVA Compass recently announced the integration of BBVA Compass Financial Tools into its latest Mobile Banking App release. The tools are made available in coordination with MX, the leader in actionable financial data, based in Lehi, Utah.
I recently had the pleasure of speaking with MX’s Chief Customer Officer Nate Gardner to hear more about MX, its origins and why they believe that partnering with financial institutions can help improve the world.
Q: Nate, so nice to speak with you. Let’s get started with you telling me a little about yourself.
A: I’m the chief customer officer at MX and operate as our primary steward of delivering and creating success for our clients, partners and end users. At the core of that success is our mission, which is to “empower the world to be financially strong” by helping our financial institution clients achieve continued success by being very meaningful and powerful financial partners to their customers. At MX, we believe that advocacy for the end user of our tools, and operating a successful bank, go hand-in-hand and are not at odds with one another.
Q: Tell me about the origins of MX. What need did you see in the market that brought MX about?
A: The origin of MX was really one of saying “Look, a lot of these tools that end users are accessing outside of banks are the tools and resources that are providing a service and value to the end user. What we recognized was that in order for us to be able to achieve MX’s goal, which is to have an impact on the world’s financial success, we should work with banks, instead of trying to disintermediate them, because their roots are so deep in our global financial systems. We asked ourselves how we could be a really strong partner to financial institutions so that we could help them orient themselves even more toward a path of advocacy – and generate greater and better business outcomes as a result. We saw an opportunity to strengthen the bank/customer relationship and have it be founded in transparency – so that customers’ financial lives were being optimized through their own financial data. In this, the financial institution becomes even more central as the de facto financial guide in counseling its customer on how to make better financial decisions.
Q: How long has MX been in existence? When was it founded?
A: MX was founded in March 2010 as MoneyDesktop. We officially became MX in September 2014.
Q: In that period of time, have you seen other competitors come on the scene and if you have, what makes MX different?
A: Initially there were more competitors when we entered the market than there are today. We entered the marketplace primarily as a personal financial manager (PFM) software solution. Today, that’s just a facet of the platform we provide to our clients and the end user. But at that point in time, serving just PFM tools, there were a number of providers doing that. We were probably the fourth or fifth entrant in the space, so we were really late competitively. As for what the PFM tools were accomplishing, we came into a marketplace where there were a lot of companies attempting to solve this same problem, and our approach is really what differentiated us and allowed us to become the dominant provider.
At the core of that growth is that we realized early on that success around guiding a customer was found in the quality of the data that was serving insights to the end user. This is why we decided to be a partner to financial institutions rather than a disruptor. We understood that with the right data and more complete financial picture, financial institutions could serve customers much better because of how they were originally founded to be an advisor to clients when it comes to their finances. In some cases, culture has shifted away from that, but as a partner to financial institutions, we are driving to change that. We realized quickly that how that data was structured, and how clean it is was going to be, were really important parts of how that financial institution’s guiding insight was served up. We wanted to provide a little reflection of, “This is how you’re spending, this is what your life looks like from a financial perspective.” What most of the PFMs were providing at the time was just an end aggregation solution that didn’t really do anything to the data to optimize the way it was visualized or consumed by the end user. The work required by the end user to get those insights was still there, which resulted in, as you can imagine, low utilization, because who wants to take the time to recategorize all the transactions?
So that was where we started. From there, we realized the power of being able to provide a more insightful and more personalized user experience. For a long time, we’ve been saying that PFM is dead. What we’re saying now is that the replacement of PFM is proof that the financial institutions want to act as a steward in providing guidance and advice based on data in every channel the user is engaging. So, for example, when we see somebody heading to a disaster situation financially, we can provide guidance on optimizing which bank product a customer is using, replace a bad actor’s credit card with one of a lower interest rate, recommend ways for the user to increase their savings with a product better suited for them, and nudge them towards building a base amount to start building wealth or being prepared for retirement, or just a rainy day. Our role in this is to provide FIs clean data so that they can take leaps and bounds towards better personalized advice and guidance to the end user.
Q: What does that look like in practice? Is it Bubble Budgets?
A: I think Bubble Budgets is a piece of that. Individuals are going to behave and operate in different ways in terms of trying to get perspective on their finances. You have a segment of users that will engage in the tool with introspection, but then you’re going to have a segment that says, “I don’t really have time to be nerdy, I just need a quick view of how things look.” Bubble Budgets serve both those segments. The biggest segment says “Man, for the first time, Bubble Budgets is giving me perspective of where my money is going on a monthly basis without having to really drill down and study. I have an immediate view of where my largest area of expense is and it’s easy to realize that’s something I have to pay attention to.” So, I would say the Bubble Budgets do serve one segment of the broader set of people.
Gardner: ...what I see BBVA Compass doing differently than many other financial institutions is actually saying we must use data to act as that steward to optimize our customers’ financial success.
Q: Is BBVA Compass doing anything with the tools that is unique?
A: There are financial institutions that, from a maturity standpoint in their culture, are deploying solutions as a check the box approach. There can be a culture around tech and innovation sometimes that says, “Look, the pack is doing X, and we need to check the box on X.” That mindset is one of the things we’re really trying to shift so that financial institutions are a true advocate for customers. That’s where we see BBVA Compass being very thoughtful and proactive. BBVA Compass is asking, “How do we actually use the data to be much more of a guide?” It’s saying, “What are the personas of our customers and how does the data help us understand how we can truly act in their best interest in what we offer and provide advice to them, both in terms of content, recommendations and product offerings?” That’s a process, of course, but what I see BBVA Compass doing differently than many other financial institutions is actually saying we must use data to act as that steward to optimize our customers’ financial success.
Q: How does this work practically? Does MX receive the data via an API?
A: We are advocates of data belonging to the user. We also believe the best way for FIs to help their customers as an advocate is by allowing the greatest transparency of that data. To be the best steward of an end user means taking security very seriously. MX has created very secure APIs that allow data to be securely cleansed and categorized, so the financial institution can provide insights and advice that is clearer and more personalized.
Q: As organizations look to leverage data more effectively to benefit consumers, what do you think is most important for them to keep in mind?
A: In most industries in the US the consumer has very broad freedom to select from a wide variety of providers to serve their needs, and it is fairly easy for a new competitor to enter the space and open up shop. For decades banks have enjoyed a walled garden where only those who are willing to engage in the regulatory burden – and it’s heavy – have had the luxury of serving consumers and businesses in a true fiduciary role. The restrictive regulation, slow innovation and lack of competition has made change very difficult and slow. We believe the pendulum is swinging and you see a couple key things occurring in the space. Over the last two decades we’ve seen the emergence and rapid growth of fintech tackling an ever-expanding set of services that historically belong to the bank. Although we see these fintech’s still currently relying on banks, we expect this space to grow even more with greater sophistication – in how it serves customers with amazing customer experiences. This will obviously ratchet up the expectations of users and therefore the expectations placed on financial institutions. We also expect big techs like Google, Amazon and Apple to expand more and more into these services, which will make the landscape even more competitive while offering even greater freedom to end users.
Gardner: Those financial institutions that are best at using data to shape their organizations’ operations – to be true advocates to the end user – will be the ones that have the biggest impact on powering the financial success of end users...
Those financial institutions that are best at using data to shape their organizations’ operations – to be true advocates to the end user – will be the ones that have the biggest impact on powering the financial success of end users and be the ones left standing. We want to be tight strategic partners with those who have this vision and believe that there is deep, deep value for the banks and the world in doing so.