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Cale Johnston from Fintech Firm ClickSwitch Reveals that Banking Challengers are Now Interested Only in Handling Direct Deposits

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ClickSwitch, a U.S. fintech that claims it simplifies and automates the switch of direct deposits and recurring payments for financial institutions’ new and existing account holders, recently acquired $2 million through its Series B investment round led by USAA subsidiary. The investment round brings ClickSwitch’s total funding to more than $21 million.

ClickSwitch describes itself as an automated account holding acquisition technology provider for financial institutions and fintechs. The company aims to simplify the process of bringing new depositors onboard by quickly, safely, and efficiently switching their deposits and recurring payments from their old accounts to new ones.

Cale Johnston from ClickSwitch claims that banking challengers are only interested in handling direct deposits now. He reveals that banks have become more aggressive when it comes to onboarding new customers.

As reported by Tearsheet, ClickSwitch has been helping customers of challenger and traditional banks with switching over their direct deposits to their new accounts.

As banking challengers continue to focus on acquiring more customers, they’ve also started to provide better services to their existing clients (so that they can continue to earn their business). Digital banks and other financial service providers are now being judged or evaluated on whether these new account openings can actually turn into new clients. Financial institutions are also being assessed on whether their new customers can rely on them to provide comprehensive banking services.

ClickSwitch aims to assist large challenger banks and incumbents with converting new account openings into loyal customers. The Fintech firm’s proprietary technology has been designed to help new customers with seamlessly switching over their direct deposits and bill pay to their new banking service provider.

The ongoing competition between digital banking solution providers has started to mature. The Fintech and banking industry is not only focusing on acquiring new customers. They also want to onboard and provide quality services to consumers that have already signed up.  Banking challengers are making substantial investments into getting a new customer to consider their new digital accounts as their primary bank accounts.

Cale Johnston, founder and CEO of ClickSwitch, says that customers are able to easily open new checking accounts. He adds that banks are sort of forced with this “dilemma” as to how they can identify a primary bank account holder.

One way to check how engaged a customer might be with a service provider is to see if they’ve got their direct deposit set up. ClickSwitch aims to assist challenger banks and incumbents with figuring out which of their customers are primary bank account holders and are not just maintaining inactive checking accounts.

ClickSwitch’s platform and services can integrate with banks in order to interact with customers directly after they’ve signed up for a new account. ClickSwitch’s management explains that the company uses data aggregation to show new account holders they’ve got a direct deposit of their paychecks setup.

The Fintech company claims that it has a fast approval process, after which customers are ready to move their direct deposit to the new account via integrations with payroll processors.

ClickSwitch claims that it’s currently working with more than 500 financial institutions, which includes some of the largest banking challengers.

In statements shared with Tearsheet, Johnston noted:

“It’s not just about direct deposit — it’s about the downstream effect, as well. Creating the ROI metrics for our financial institutions has been critical in getting us in the front door of our 500 clients and signing 10 to 15 new net financial institutions a month right now.”

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Financial Services Professionals Say Lending Sector to Take A Year or Longer to Recover to Pre-COVID Levels: Survey

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The COVID-19 pandemic has accelerated the shift to digital with financial services, according to a recent report from TransUnion (NYSE:TRU), a financial services data platform and credit report provider.

The report notes that the Coronavirus outbreak sent “shockwaves” through the financial services sector and has “challenged the way lenders have historically operated.” TransUnion also mentioned that as more commerce begins to move to all-digital platforms, “empowered” consumers will have even more power or control in today’s global, technology-driven economy.

The company’s report pointed out that 40% of consumers are now using all-digital channels more frequently than before the pandemic began. The increase in the use of digital services is taking place at a time when 60% of consumers say that “the majority of their financial transactions are conducted via mobile applications.”

The report also revealed that one in three consumers are “engaging with their preferred financial institution multiple times a week via digital channels and roughly two in three are utilizing such platforms a minimum of once a week.”

Liz Pagel, SVP of consumer lending at TransUnion (and moderator of the Future of Lending roundtable discussion recently held by the company), stated:

“The pandemic has acted as a catalyst for lenders to adopt new technologies and stay competitive in this changing environment. A strong digital presence is now all but required to meet the evolving needs of consumers. Financial institutions that prioritize digital innovation to optimize their consumer interactions are likely to see the most upside over the long-term.”

Although the lending sector is going through a period of recovery following COVID, organizations are beginning to make plans for the future, the TransUnion team confirmed.

Around half of a group of 20 financial services professionals recently stated (during a Summit organized by TransUnion) that the lending sector could take at least a year or longer to “return to pre-COVID levels.” Despite these challenges, the financial services executives said their companies would be making additional investments in improving their digital capabilities because of changes in the business environment due to COVID.

Pagel added:

“Consumers are now accustomed to receiving highly customized retail offers through online channels. As a result, they now have higher expectations for their interactions with lenders. Lenders who integrate into the purchase moment, or who provide customized, relevant credit offers are seeing outsized growth.”

She also mentioned:

“As retail and financial services interactions continue their accelerated shift to online channels, lenders will need to continue to invest in seamless engagement, underwriting and servicing experiences – companies who can make every consumer touch point customized and smooth will win in the future.”

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Indonesian Fintech Investor, BRI Ventures’ CIO Says Company will Use $250 Million Fund to Create “Real Value,” Not Just High Valuations

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Indonesia is one of Southeast Asia’s largest markets for digital platforms and services. The country offers an attractive business environment and opportunities for investors who are interested in projects that aim to take advantage of fast-growing economies.

BRI Ventures, the investment division of Indonesia’s oldest bank, BRI, has a $250 million fund that it plans to allocate toward the development of initiatives that can create real value for the nation’s residents.

In statements shared with KrAsia, William Gozali, CIO at BRI Ventures, noted that his company believes in “real value” creation and they aim to become “strong value-add investors” for their portfolio companies.

BRI Ventures is a Jakarta based venture capital and private equity firm that’s supported by Bank Rakyat Indonesia. BRI Ventures is established as an independent business entity with its own funding processes.

Gozali noted that the VC company focuses on businesses that are generating consistent revenue and also those initiatives that can continue to grow their operations. He explained that for BRI Ventures, revenue means “validation.” He also mentioned that when people or organizations truly value your products and services and when they value your brand or company, then that’s when they’re willing to part with their hard-earned money. This is a sign of “real value creation,” Gozali said.

He also clarified that there can be times when valuation merely reflects the “perception of value, the future.” However, validation-revenue means “the real value created now,“ Gozali noted.

He told KrAsia that BRI Ventures is mainly focused on Fintech, education, agriculture, retail, transportation, and healthcare related businesses. The VC firm has made strategic investments in digital wallet provider LinkAja, SME-focused Fintech firm PayFazz, and peer to peer lending platforms Investree and Modalku.

Nicko Widjaja, CEO at PT BRI Ventura Investama (BRI Ventures), a subsidiary of BRI, had stated (in late June 2020):

“In today’s digital tech business ecosystem, the landscape has shifted from growth at all cost, to sustainable growth. The name unicorn has been adapted from Silicon Valley, which might no longer sit well with today’s ecosystem. Indonesia needs Sembrani, a symbol for Indonesian start-ups.” 

In May 2020, BRI Ventures (along with other firms) invested in Fintech firm Nium. The company said it would use the funds to support its product development efforts.

BRI Ventures had also launched Dana Ventura Sembrani Nusatara (Nusantara Venture Capital) in Jakarta on June 24, 2020.

The company will offer convenient access to venture capital for digital technology and Fintech firms, including SMEs.  Dana Ventura aims to accelerate the growth of local start-ups by offering digital technology-enabled products in offline and online environments.

Dana Ventura will mainly be funding seed-stage and Series A ventures.

Widjaja had noted (earlier this year):

“The philosophy behind BRI Ventures investment is ‘value over valuation’ in which our focus is seeking businesses with strong fundamentals. The funding will be channeled to start-ups that already produce products, have income from their operations and have a clear business strategy toward profit.”

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