Fast service has become a staple of American life. We’re accustomed to fast in-and-out foods, prescriptions, car washes, and, of course, fast cash access via ATMs. So why not fast in and out check deposit? That’s the thinking behind the unveiling of “Ingo – the Good Funds Network,” the new name for Ingo Money’s (formerly Chexar Networks), 12-year-old network that uses mobile remote deposit capture (RDC) to deposit checks and load funds to prepaid cards.
“Ingo, as in put your money in and go, using your mobile,” Drew Edwards, the CEO of Ingo Money Inc., said in announcing the name change at the Underbanked Financial Services Forum last week. The Forum is a yearly event presented by the Center for Financial Services Innovation (CFSI) and the American Banker newspaper.
Cachet and Ingo Money have been partners for several years. We helped pilot the network, and last week we announced that Cachet has been named the preferred mobile deposit technology provider for Ingo. This is exciting news, not just because it’s a validation of our world-class mobile RDC solution, but because Ingo helps financial institutions reach markets that are often ignored by banks. Now Ingo is available as an integrated solution for Cachet’s growing base of bank clients.
The FDIC has calculated that nearly a quarter of U.S. households either have no contact with banks (and are thus unbanked) or they have bank accounts but also frequent check cashers and other nonbank providers of financial services (these are the underbanked). CFSI reported this spring that the underbanked market consists of 68 million Americans who spend an estimated $78 billion a year on financial products and services.
General purpose reloadable prepaid cards are popular among the underbanked, and are typically marketed as alternatives to bank accounts. But the potential of these cards hasn’t been fully realized. One big reason is that consumers without bank accounts still receive checks (like most of us still do) and there has been no convenient or cost-effective way to cash checks and apply the funds to prepaid cards. Or at least that was the situation before Ingo. Working with Visa and several banks, Ingo leverages Cachet’s mobile RDC solution, along with sophisticated risk analytics and 21st Century network to bring cheaper, better, faster services to check-cashing consumers who for any number of reasons tend to shun banks.
Contrary to common perception not all unbanked and underbanked consumers are low income, or for that matter, unprofitable for banks to serve. Many are “alternatively” banked: they have chosen for any number of reasons, not to open accounts at banks or credit unions.
Often, the decision to do business with banks and credit unions is based on generational and technology preferences. According to the consulting firm Aite Group, 45% of the estimated 80 million Americans who make up what is known as Gen Y (commonly referred to as “millenials”) have opted out of traditional bank accounts. Meanwhile, a recent Federal Reserve study revealed that the unbanked and underbanked are more likely to have mobile phones than are the rest of us (91% compared to about 87% of the general population). Then there is this from a 2012 survey of millenials by the company Think Finance: 51% had used prepaid cards in the prior 12 months, regardless of income level. Millenials are also more frequent customers of other alternative financial services providers; Think Finance said it found that about a third of those surveyed had used check cashing services in the prior 12 months.
Now with Ingo – the Good Funds Network, millennials and other consumers who prefer to use prepaid cards instead of bank checking accounts can quickly and affordably convert the checks they receive to irreversible good funds applied to those cards.
Consumers using Visa-branded prepaid cards issued through RushCard, AccountNow, Banking Up (formerly Plastyc) and FSV Payment Systems programs are all eligible to enroll prepaid cards with Ingo. (Ingo said it is also in talks with additional issuers and networks.) Once enrolled with Ingo, customers can immediately begin making check deposits to the cards using their mobile devices. Cardholders can choose to obtain immediate “good funds” on any mobile check deposit, for a small fee, or wait for a few days and pay nothing to have the full check amount applied to their prepaid cards.
Ingo is poised for growth and rapid growth we believe, because it addresses a critical pain point for consumers and financial services providers, alike: the need for a fast, reliable and cost-effective alternative to traditional checking account relationships. Financial institutions that are serious about growing deposits and remaining relevant in a shifting market should seize the opportunity Ingo offers to reach previously underserved markets. The ones that don’t may find themselves on the wrong side of a paradigm shift in banking.