Method Financial: Blurring the Lines Between Bill Pay, Debt Management and Marketing
By John San Filippo
In 2019, two of the eventual co-founders of Method Financial started a company called GradJoy and launched an eponymous mobile app. The purpose of the GradJoy app was to help people manage student loan debt by giving borrowers a consolidated view of all their student loans and allowing them to make payments to any of those loans through the app.
“It was supposed to be the Credit Karma of student loans,” Method Financial Co-Founder and COO Mit Shah told Finopotamus. The company was on a solid trajectory and was continuing to refine its technology. Then COVID-19 happened.
“When the pandemic hit, student loans went on a pause, and GradJoy was out of business,” added Shah. This led the team to look at other applications for the technology GradJoy had created. This ultimately led to the creation of Method Financial. The company’s debt management platform can be deployed in a variety of use cases.
A Bill Pay Alternative
In the traditional bill pay environment, members set up each payee in a mostly manual process. However, because the Method Financial platform presents members with a complete view of their debts, members can configure multiple accounts from multiple creditors during the Method Financial setup process without having to rekey any information.
“We can offer members a unique bill pay experience,” said Shah. “(During setup) they can connect all their liabilities. And while doing so, we will be running a whole host of technologies on the member’s behalf – authentication, KYC (know your customer). We run a soft credit check, which will not impact the member’s credit score. And then, with member consent, we pull the full wallet. Now the member can see their Capital One credit card, their Wells-Fargo card, their auto loan at Ally, their student loan at Nelnet, and their mortgage with Caliber Homes. They can connect any of these for bill pay going forward.”
Debt Consolidation and Balance Transfers
According to Shah, Method Financial is seeing more interest in its product from credit union lending departments because of the company’s ability to automate debt consolidation and balance transfer transactions. He said this is in stark contrast to the manual processes many credit unions employ today.
“There's generally a loan processor or somebody in the backend validating which accounts the member wants to transfer money to,” explained Shah. “They’re collecting that information either via pen and paper, via some form, or getting the consumer to input it. That person validates what the accurate amounts are, and then disburses checks to those locations.”
He added that he has seen some credit unions that disburse loan proceeds in a single check to the member and trust them to distribute the funds accordingly. “Come pick it up from the credit union here, and then deposit into your account. We've just given you this lump-sum; you can do whatever you want from here on,” he said. “At that point, they still haven't completed the full balance transfer process.”
With the Method Financial system in place, the process is fully automated. “During a debt consolidation or balance transfer process, as soon as the member gets a new credit card or debt consolidation loan, it's the next screen we show,” noted Shah. “The member has their outstanding liabilities right there. We recommend they pay these off, but it's up to the member. They pay those off and get real-time confirmation that the payments went through.”
Because the Method Financial system can access so much valuable member financial data, it can also be leveraged as an effective tool for credit union marketing departments.
“We have a whole host of marketing capabilities,” said Shah. “One is helping credit unions provide the right lending offers lending offers. They have most competitive rates out there, but sometimes they either lack the marketing reach or the ability to identify the right opportunities. When a member comes in for a loan, we are able to help them give the credit union a more real-time view on that member’s portfolio.” This in turn enables the credit union to make more personalized offers.
Shah noted that, through Method Financial’s partnership with Clutch, “we've increased loan origination volume by $300 million for about 10 credit unions over a span of four months.” He added that about half the members who apply for a new loan end up with a second new product because of the targeting provided by the Method system.
Shah said that to achieve the maximum benefit from the Method Financial system, it needs integration touchpoints in a credit union core processing platform, its lending platform and its lead generation platform.
Asked by Finopotamus to further explain the need for lead generation integration, Shah said, “There are plenty of marketing programs out there in place that involve setting up lead generation engines using products directly from credit bureaus or augmenting internal data with other alternative types of data sets. Where we come into play is, if a consumer is permissioned and opted in to receive more offers from a marketing standpoint, we are able to provide the data that helps the credit union find that right point in time in a consumer's journey when to - target them.”
Asked which marketing platforms the product has been integrated to, Shah mentioned Salesforce. Regarding lending platforms, he mentioned MeridianLink and Origence. Finally, on the topic of core processors, Shah said Method Financial has been integrated to some – but not all – core processing platforms from Fiserv, FIS and Jack Henry.
He indicated a willingness to integrate to new platforms in all three categories.