FusionWire, June 2016.
Meet Moven, the non-disruptive challenger bank
Is it actually necessary for challenger banks to re-invent the wheel? No, says Alex Sion, co-founder of Moven. We went to New York to learn how Moven is making waves in the US as a next generation bank that doesn’t actually hold money.
What if, instead of building an app-focused bank, you built a great banking app that could be used by anyone, regardless of where their accounts are?
That’s what Moven has done. Alex Sion, co-founder and Managing Director, is the first to admit that Moven is technically more of a customer experience startup than a bank – but even so, the Moven experience is an impressive imitation of a bank. After linking up their existing accounts, US customers use the Moven app to manage all their money, and even spend it with a Moven-branded bank card. “Moven is structured as a programme manager that sits on top of a bank,” says Sion. “Basically, we orchestrate the banking experience.”
I’ve met the Moven co-founder in New York, in a non-descript Midtown office building across the street from Madison Square Garden. Inside, the office very much looks the part of a startup, down to Sion’s company hoodie with “Spend, Save & Live” written across the chest. 47 people work for Moven right now, says Sion, who co-founded the company alongside Brett King in 2012.
“We always had a vision that the future of banking was going to be an app. But that’s different from saying that banks need apps,” says Sion. To explain what he means by this, Sion points out how banking apps are different from other apps because you need to have the product before the app is any good to you. You wouldn’t download the HSBC banking app unless you already bank with them – what would be the point? This, the Moven founders thought, needed to change:
“If banking is to become an app, the app needs to have a value proposition just like every other app.” He lists them off: “This is the app that helps me find restaurants. This is the app that helps me buy clothes. This is the app that helps me play music. So we thought, the value proposition of banking in the future is: this is the app that helps me build better spending habits. This is the app that guides me to save, and helps me to buy the stuff I want in smart ways.”
The commerce link
This is the reason why Moven is more about the experience of banking, rather than the nuts and bolts of holding money. The fact that customers don’t have to leave their old banks to join Moven means the company is less of a disruptor to the established financial providers. But this also means Moven has sidestepped what’s arguably a fundamental tenant of banking. To date, Moven has raised over $24 million in funding, most recently in a $12 million round led by Route 66 Ventures in October. Does Sion think the fact that Moven doesn’t hold the money could become a drawback as the company grows?
Sion admits this issue is something they think about, especially now that the fintech startup landscape is maturing. Four years ago, any kind of new bank was a bold move, but that’s a long time ago in the startup world: “People are pursuing the same ideas now, but in more aggressive ways.” But Sion is quick to add that the fundamental idea behind Moven is sound: “[When we launched,] we believed the important part was the experience layer – banking itself would remain largely the same.”
If you ask people what banking is, says Sion, they’ll say it’s a place that holds money securely, moves it about, and gives yield and credit. “We believed banking products weren’t going to transform that much. What was dramatically going to change, was how people experience money. … What you needed to do, was build an experience layer that would tightly connect to the infrastructure of money. That would be the redefinition of banking. You don’t require a charter to do that.”
This is an interesting approach to the task of building a challenger bank: the idea that you don’t need to build from scratch, as the new banking experience can sit on top of the existing system. It also negotiates a fundamental problem faced by challenger banks: that people are notoriously reluctant (or too lazy) to move current accounts. “The challenge with fintech, and neobanking in general, is that it’s hard to underestimate centuries of history when it comes to the sensitive of money. Habits aren’t going to change overnight. But what is changing rapidly, is behaviors toward commerce,” says Sion. “For us, that had nothing to do with banking.”
The fact that people are experiencing commerce in new ways, via the likes of Amazon and eBay on mobile phones, means we’re expecting the same levels of ease from banking, says Sion – but banks haven’t stepped up to fill that gap: “To me, that gap is the threat and the opportunity that we can solve. There’s the massive behavioral shift that’s central to how consumers engage with their money.”
A visual approach
So what does this solution look like? Sion opens the Moven app on his phone, and swipes around while explaining how it works. The app is surprisingly simple-looking, using visuals to monitor spending (green means on budget, red means having gone over), and to motivate to reach savings goals (tap three times to “break the glass” and access the cash). “We simplified it as wants versus needs. Wants are discretionary items. Needs are non-discretionary. It’s colour-coded.” Sion taps into the restaurant category. “Here’s my dining out: I’m $404 above typical. If I want to see why, I can see that was because of Mother’s Day. I could dive in deep.”
The app also lets Sion see what he’s spent on his American Express card, as Moven becomes a hub for everything to do with spending money. But the home screen on the app isn’t your usual current and savings account balances, because Moven doesn’t focus on accounts – it focuses on behaviour: “This is organised around a vision: this is the app that helps me build better spending habits, and guides me to save and buy something I want.”
The lifestyle element of Moven starts from the moment Sion enters the app: he doesn’t actually have to log in. “I’ve enabled it to recognise the ID on my phone. We did that because there are very few lifestyle apps on your phone that require you to log in every time.” Banks take a black and white approach, says Sion: either you’re logged in and can access everything, or you’re outside and can see nothing. With Moven, you can look at basic information without a password, only requiring one when it comes to doing things like transferring funds.
Moven has started moving beyond the US, currently operating in New Zealand in partnership with Westpac, and in Canada in collaboration with TD Bank. Moven in Canada operates as TD My Spend, a companion app to TD Bank’s regular app. “It’s like Facebook and Facebook Messenger: they are separate apps, but they’re completely integrated.” Yes, they’re considering the UK, says Sion: “Commerce and its behaviors do not discriminate by geography. We have very ambitious plans to drive growth. … We’re poised, in this calendar year, to break a million people using the Moven experience.”
Over the coming year, Moven’s plans are to continue to expand its partnerships with banks: “We’ve got a healthy pipeline of opportunities to do that, and to expand by geography.” On the consumer side, it’s all about broadening the product line: “We started out with a basic focus on what consumers would consider spending, and we now monitor savings habits too. Further out – I don’t like to use the word credit, because credit is just spending. Spending money I don’t have, basically! But we’re going to continue down the expansion pipeline, to the point where we’re full-service. You’ll soon be able to get every experience from us that you currently get from a full-service retail banking operation.”