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January 13, 2021 | 0 min read
Banking data analytics vendor MX raises $300 million
By Penny Crosman
January 13, 2021
“Where the future is taking us is users saying, I don't just want you to make my finances simple, I want you to protect me and I want you to be able to put them on autopilot,” says Ryan Caldwell, CEO of MX.
Read the full story here in American Banker (paywall required) or see below.
MX, a banking data analytics company in Lehi, Utah, has raised $300 million in a new round of funding, quadrupling its valuation to $1.9 billion.
The Series C round, which closed on Wednesday, was led by TPG Growth. Other investors included Regions Financial, Canapi Ventures, CapitalG, Geodesic Capital, Greycroft, Pelion Venture Partners, Point72 and Digital Garage Group.
MX personalizes real-time offers and advice for customers of more than 2,000 banks and credit unions. The startup in the so-called Silicon Slopes region has grown quickly because it addresses financial institutions' rapidly growing need for accurate, timely and cleaned-up data that helps them solve customers' problems.
MX's number of end users has doubled to 200 million since its last funding round, which was 18 months ago, according to CEO Ryan Caldwell. He said its workforce has doubled to 550 employees, and its data-aggregation clients and monthly transactions volume have tripled, in that same time period.
MX aggregates, enhances and categorizes data with the goal of helping banks and credit unions improve customer experiences. For instance, it can replace a string of numbers and letters with a merchant's actual name to more clearly identify individual transactions.
BBVA USA in Birmingham, Ala., has worked with MX for several years in mobile and online banking. In 2018, the $102 billion-asset company launched personal financial management features powered by MX. Among other things, MX categorizes BBVA customers’ transaction data to help them understand where their money is going.
“From the beginning, MX has understood BBVA’s vision for the future of banking, knowing that digital is the key to a better customer experience and that customer financial health is at its best when predicated on experiences that leverage data to help customers manage their financial lives,” said Pepe Olalla, BBVA USA head of strategy and global business.
The $144 billion-asset Regions, which is an MX client as well as an investor, plans to roll out new customer experiences based on MX’s technology later this year.
“While we are not ready to announce complete details yet, we can share that it will be another innovation on the Regions mobile app,” said Andy Hernandez, chief digital officer of Regions, which is also based in Birmingham. “And it will be centered on providing greater details and clarity on transactions so customers can pull up the app and instantly learn more about where their money is going.”
According to Caldwell, banks are realizing that they can’t stay competitive without becoming data-driven and using data to improve customer service interactions.
For instance, a bank might have MX help it track the recurring payments a customer will have in a given month and subtract them from the customer’s paycheck total to help the customer avoid overdrawing.
“Where the future is taking us is users saying, I don't just want you to make my finances simple, I want you to protect me and I want you to be able to put them on autopilot, though I still want to have control and be able to cancel at any time,” Caldwell said.
But it's hard for banks to pull this data out of their own core systems and stitch together a 360-degree view of the customer — the auto loan over here, the Delta Miles on a card over there — then enhance it, cleanse it, enhance it and classify it, Caldwell said. The classification part is especially tricky, he said.
“I mean really understand the nature of the transaction, not just changing a bunch of numbers and letters to the name Verizon,” Caldwell said. “It’s also letting me know that that was an automated payment to Verizon that comes out almost every month on the third, give or take one and a half days, and it’s usually around $110.”
With that kind of data, companies can predict customers’ cash flows and balances. That can help them offer products at the right time.
Bank of America, U.S. Bancorp, Huntington Bancshares, Regions and others have been trying to provide personalized, just-in-time advice for years. They have proceeded cautiously because the consequences of making a mistake and inadvertently giving bad advice can be dire. But Caldwell said this attitude has shifted in recent years, because banks are starting to lose customers when they don’t provide this type of critical information.
“They're seeing loans go to competitors,” Caldwell said. “They're seeing fintechs provide phenomenal experiences. And they're watching massive growth rates for neobanks. They're now thinking about this as survival: If we don't get good at understanding this data right now, we are going to lose our most profitable customers. And we don't have to lose that many of them for us to go from the black into the red quickly. That realization is changing how engaged they are.”