The Bankwatch

Tracking the consumer evolution of financial services

Billeo represent an example of dis-aggregated financial services

Billeo announce some enhancements to their service this morning. They are up to over 6,000 billers, and have additional tools available including a toolbar. Press release here:

SANTA CLARA, California – July 16, 2007 – Billeo, Inc. (, today announced that the company has launched a series of solutions which give consumers unprecedented control and flexibility in online bill payment. Billeo lets you pay virtually any bill online, using any payment method desired, including credit cards and debit cards. If paying by credit card, the average Billeo user can reap over 5,000 additional points per year as part of their increased card activity, allowing them to redeem points faster and at higher levels. The Billeo directory is featured by VISA, JP Morgan Chase, Wachovia, Bank of America, Wells Fargo and Target.

What intrigues me about this service, is that they are well funded, receiving an additional $4M VC funding in 2006. They are the Visa bill payment engine.

I am always looking for dots to connect, and disaggregated financial services is a connection theme I see more clearly now. Recently Jason pointed out the disruptive influence of the CapitalOne debit card, and lights went on. Here are examples we can see today:

  1. disaggregated debit card (Ex CapitalOne)
  2. disaggregated bill payment (Ex Billeo)
  3. disaggregated loans (Ex Prosper, Zopa, VirginFinance/CircleLending)
  4. Advice (Ex Wesabe)
  5. Consumer power (Ex Wesabe)
  6. disaggregated payments/ money transfers (Ex Paypal)
  7. brand advocacy (Ex FaceBook)

Even I am rational enough to note that there are always players on the edge of any industry, attempting to carve off lucrative components in a long tailish kind of way. However what is intriguing about this list, is that they have all been driven by internet, and could not have existed before internet. You could argue 1. (debit card) could have been done before, but the counter is that it took PayPal, and many smaller operations levering EFT/ ACH/ BACS (Canada, US, UK) to begin using services offered by Banks, and over internet, to gain access to the payment networks.

Relevance to Bankwatch:

I remain increasingly convinced we are in a state of disruption, that will provide Banks’ real difficulty, unless they adopt different approaches and strategies. The difficulty they will face is that of survival on a narrower group of services, that are expected to continue the same revenue growth they have historically experienced. There are two grand solutions:

  1. support disaggregation as a conscious strategy, and eliminate internal costs. An example of that is Wachovia Visa, running Billeo as bill payment, and not building their own. Key here is to combine with elimination of existing and costly duplicative processes.
  2. grow revenue by being so attractive with such a complete offer that customers who prefer simplicity and security in size stick with you. This would be supported by a conscious takeover strategy to achieve scale, and BofA, Wells, and Barclays are probably examples.

There is a third alternative of course, and thats to remain small, be efficient, and believe you can survive the onslaught, through customer loyalty. I am increasingly curious about mid sized banks, and Credit Unions in this particular space.

One a more local level, I am even more curious how Canadian Banks, all five of the big ones, with hundreds of smaller banks, Credit Unions, Mutual Fund and Investment companies, can expect to thrive, when they are all fighting over the same 10M household base.

Fascinating times, and thanks to Billeo for setting me off on this tangent!

Written by Colin Henderson

July 16, 2007 at 07:30

Posted in Banking Strategy

%d bloggers like this: