Here’s a Facebook App That’s Basically a Bank
Online banking is used by those who have checking and saving accounts, but what about the millions of teens who rely on prepaid cards for all of their transactions?
Seattle-based Bobber Interactive believes it has come up with a solution: A Facebook application that allows prepaid users to track their spending, make savings goals and ultimately earn cash rewards.
While a number of Facebook applications exist to collect debts from friends, pool money for shared bills or track household expenses, this may be the first application that allows people to actually manage real money, like a bank.
The application, called Goal Card, is being unveiled this week at the Finovate event in New York, where the company is providing a demonstration and announcing that it has raised $1.4 million in a round of capital.
As you might expect, the Goal Card application is nothing like your mother’s bank. Instead of black-and-white spreadsheets, the GoalCard apps uses animated pictures, videogames to increase loyalty, and even viral mechanisms, like posting to a friend’s Facebook page.
The concept for the company, led by CEO Eric Eastman and COO Scott Dodson, started to gel last year, and won the “Best in Show” award at the Finovate event in the spring.
Today, the five-person team works out of luxurious headquarters in downtown Seattle. The space is hundreds of thousands of square feet too big, but it’s a bargain, and there’s always parking available in the garage. It’s also appropriate because it’s on Wall Street. Eastman jokes that while a lot of people have lost their trust for financial institutions on Wall Street, “hopefully they’ll trust this one.”
The company’s investors include Peak6 Investments and Dove Capital.
The application allows prepaid cardholders to do a number of regular banking activities such as check balances and track recent purchases. But it also allows users to set goals, like saving up for a new mountain bike or designer purse. Every day, users will see a progress bar detailing how close they are to making that purchase.
Users will also be able to play games, like a version of Bejeweled in which users line up credits and debits or answer questions such as “Who would you rather loan $50 to?” using their Facebook friends.
The games encourage engagement and enable users to earn cash rewards, Dodson explains. Users will also be able to receive up to five percent cash back once they meet their goal and purchase the item they’ve been saving up for.
Bobber makes money by sending referrals to e-commerce sites, which can pay up to 15 percent, depending on the item. But the majority of its revenues are expected to be made from interchange rates, which merchants pay the card’s processors each time a purchase is made. Those rates have remained high for prepaid cards — around 1.25 percent — despite recent legislation that lowered rates for other transactions.
So far, Bobber has only integrated with Amazon, but it expects to add more retailers soon.
Additionally, it expects to lower the cost of acquiring customers compared to other banks and card issuers, which spend big dollars on circulars and flashy ads. Instead, it believes current customers will spread the word about the site through Facebook’s viral channels.