Wade Arnold, CEO of Banno, Presents Grip

Wade Arnold, CEO of Banno (formerly known as T8 Webware) presented the new and improved Grip mobile app at Finovate last week, and afterward stopped by Bank Innovation‘s offices in Manhattan.

Wade discussed his path to working in the financial sector as well as what differentiates Grip from the many other personal financial management offerings on the market. One key point is that while many PFMs look backward and provide solid histories for users, Banno’s aim with Grip is to help consumers make informed purchases by alerting them to the state of their finances before a purchase is made. To that end, Grip keeps tabs on where customers have spent money and in what amounts so that when they return to that merchant, they have their information ready to help make a decision. Presenting a coupon on the back of your receipt, or the digital equivalent, is too little, too late, Wade said.

The data to help us before we plunk down our hard-earned money is present in many forms. For example, our smartphone knows where we are — say, in the parking lot of Walmart — and software such as Grip knows we spent $200 at Walmart last month. Additionally, social-networking software may know how we plan to pass the coming weekend. All these data points could come together to form a powerful picture of what we might like to buy. This can be helpful or frightening depending on your point of view. Wade thinks it’s helpful — but he also told us that after learning more about how Facebook manages its mountains of data, he shut down his page.

Customers are looking for more information from their banks than ever before, and they’re looking to do this using their mobile devices. If banks can help customers spend money more wisely, that would be a huge value-add to a simple checking account. But as Wade and many others at Finovate described, the cores operating at most financial institutions simply can’t keep up with the rapid advances in mobile software development. Put another way, it’s relatively cheap and simple to build a mobile app, but cores take time and money. Smartphones and software such as Grip present a compelling and rich picture of customers to the core — but the core, by and large, doesn’t know what to do with that data. This deficiency has led to a lot of tech companies entering the financial space, hoping to fill the gap. The buzzword at Finovate Fall 2012 was disruption, a concept borrowed from Clayton Christensen’s seminal work, “The Innovator’s Dilemma.”

The challenge for banks in the face of these emerging technologies is to harness them intelligently enough to provide “integration of PFM at the point of sale in real time,” says George Colwell of Loki Consulting. This is precisely what Banno’s Grip software aims to do. However, Wade described two key problems with Grip, stemming from its lack of integration with the core. First, customers may have to enter different passwords to access different parts of their accounts, because of the piecemeal way cores have been assembled. Login issues are tremendously inconvenient to customers, especially when time is of the essence, as at a checkout counter. Second, transactions are not registered by the customer’s account in real time by most core software, so going from store to store and purchase to purchase, customers will not be presented with a precise picture of the state of their finances. (Batch processing? So 1970.) These are large shortfalls in customer integration, and the race is on to find solutions that address ever-rising customer expectations.

Wade described a further problem that occurs because of the dissonance between mobile and core offerings. A customer becomes used to logging into his account using his username and password. He encounters a problem and calls customer support. The representative asks for his account number, which is how he is most easily identified by the core, but he doesn’t know it. Instead, he knows his mobile banking username. But the core, and therefore the representative, doesn’t know this username and therefore can’t connect him with his account. The core may not even have a field for a customer’s email address. So this customer is adrift between two systems and consequently, as the meme says, is gonna to have a bad time.

Wade and analysts like George Colwell agree: Banks, particularly the smaller banks that are Grip’s target customers, need CRM — customer relationship management, the software routinely used by sales forces to keep track of customers — in order to store more valuable customer information. Banks that provide this will have a big head start over the competition in helping customers manage their budgets and use their money more wisely. They’ll also provide a superior customer experience. The larger banks, by and large, have CRM, but are they using it effectively? This is one of the many innovations we’ll continue to monitor here at Bank Innovation.

Watch Wade demonstrate the Grip app below.