October 15, 2008
CashEdge's Rise Mirrors Online-banking Revolution
By: Martin Desmarais
NEW YORK - Banking woes is big news nowadays, but for Sanjeev Dheer and CashEdge Inc., banking is nothing but big business.
New York-based CashEdge, which Dheer co-founded in 1999, is a provider of online financial software applications for banks, credit unions and wealth management firms. CashEdge products include online account opening, funding, funds transfer and data consolidation services. Getting into the online banking game as it was just kicking off CashEdge has thrived helping banks provide their customers with an increasing number of online products. According to the company, as the demand for online banking grows banks have turned to online services as a way to attract customers, increase revenue and reduce costs.
Dheer uses the term “online money movement” to categorize the continual shift of banking customer transaction from traditional brick-and-mortar banking branches to online bank sites. Today, estimates are that more than 36 million U.S. households are banking online instead of visiting ATMs or local bank branches. CashEdge has continually banked its business on the evolution of these online banking demands from simple online banking services, such as bill pay and account services, to more advanced processes such as account-to-account transfers.
CashEdge has scored an impressive portfolio of customers for its online banking services. The company has 600 customers, more than half of the top 10 banks, close to half of the top 25 banks, 23 of the top 100 banks and 20 of the top 100 credit unions. Customers include: Bank of America, Citibank, HSBC Bank USA and Royal Bank of Canada. CashEdge processed more than 1.75 million new accounts and nearly $40 billion in online funds transfers in 2007.
According to Manish Vrishaketu, CashEdge’s director of product marketing and strategy, Dheer has driven the company, and the online banking industry, from its “infancy” to what it is today. Many of the innovations, he said, derive from additional services the banks are asking for or new services that CashEdge anticipates will be in demand.
“We introduce a concept and work with cutting-edge banks to do it,” he said. “Once it gets beyond the early adapters it will go mainstream.”
The company’s most recent innovation is called Intelligent Money Movement, which provides consumers and small businesses “simple, seamless access to conduct electronic money movement through online and mobile banking applications.” The products glitter comes as a result of its ability to provide a single point of access through a financial institution’s online banking portal or mobile applications for consumer and small business transfers, including new account funding, me-to-me transfers, third-party transfers, employee and vendor payments and invoicing and customer payments. The third-party transfer service has drawn particular interest because it allows customers to make fund transfers directly from a customer’s account to third party (such as friends and family) accounts held at other financial institutions.
“The company’s flexible money movement [software] platform, including its common risk management architecture, unleashes the potential for financial institutions to rapidly introduce new transfer modules with ease, by simply switching on a new configuration setting,” Dheer said in a statement about Intelligent Money Movement’s launch. “We expect to launch multiple new transfer modules to our financial institution clients over the next two years.”
CashEdge sells directly to large financial institutions and partners with resellers to target smaller banks and credit unions. Many partners have integrated the company’s products into their financial services. Such products include: CheckFree, Albridge Solutions, Corillian, Digital Insight, eMoney Advisor and Online Resources.
According to Vrishaketu, there is a very interesting dynamic in the banking market with the combination of big banks and small banks. He said they both act differently in terms of what they are looking for from CashEdge.
“The top-10 banks are more than just clients, they are partners,” he said. “It is a collaborative effort … they give input on products.”
“That has been one of the keys working with them - providing what they want,” he added.
Smaller banks, Vrishaketu explained, don’t want to get left behind regarding online banking technology, but they cannot afford to spend the money upfront to implement the software necessary for such services. He said CashEdge’s software-as-a-service business model has been crucial to inking small banks and credit unions as customers.
“You pay only when your consumers adapt the technology - when they make the transaction,” he said.
Vrishaketu believes the online banking industry, overall, will continue to evolve and CashEdge expects to continue to be right there with it.
“We expect a lot of change … there is still a lot of adoption and growth to come,” he said. “The option of online banking has finely reached a stage where it has reached a critical mass.”
“There is a lot of room for growth and our feeling, on the money movement side, is it is only the tip of the iceberg,” he said.
CashEdge has 350 employees in its New York headquarters, Silicon Valley, as well as in offices in Chennai and Gurgaon. Revenue has grown at a rate of 1000 percent over the past four years, earning the company recognition as one of the United State’s 500 fastest growing private companies by Inc. magazine for two straight years in 2006 and 2007. CashEdge was also been recognized by Deloitte Technology Fast 500 and Fast 500 in 2007.
Co-founder Dheer is a financial industry veteran and was a partner at McKinsey & Co. before starting CashEdge. He has also worked as a systems analyst and IT consultant at the United Nations Development Program. He has a master’s degree in business administration from Stanford University and a master’s degree in history from the University of Delhi’s St. Stephen’s College.
CashEdge launched its India operations two years ago. Vrishaketu headed up the launch as general manager and saw the business grow to 150 employees. As a market, CashEdge is looking at India as in its infant stages and hopes to get a foothold early.
“It is still very, very early days for the Indian market,” Vrishaketu said. “We all know that India is a very promising market. … It is still early days, but the signs are all positive.”
Vrishaketu expects to see some real movement in the Indian market in the next 12-18 months and said CashEdge will wait to see how it progress before moving forward.