One product category (or the lack of it) has impeded financial advisers’ longtime ambition of becoming all-purpose fiduciaries for their clients: Bank accounts. Especially ones that pay generous interest.
But Galileo Processing, a manager of prepaid card programs, says it has developed the equalizer for these wannabe bank challengers: a white-label digital banking product developed exclusively for financial advisers.
Galileo a respected Fintech player who has been innovating for many years, brings to market a new innovation in the wealth management space. Interestingly this is not an area one would expect a prepaid program manager to pursue new product offerings, which shows the ingenuity of fintech firms to evolve in seeking new methods or products for the financial service sector.
The product, Money Plus, is meant to give financial advisers the opportunity to offer a traditional checking and savings account with interest rates tied to the Effective Federal Funds Rate, as part of a broader wealth management program. “One product category (or the lack of it) has impeded financial advisers’ longtime ambition of becoming all-purpose fiduciaries for their clients: Bank accounts. Especially ones that pay generous interest.
But Galileo Processing, a manager of prepaid card programs, says it has developed the equalizer for these wannabe bank challengers: a white-label digital banking product developed exclusively for financial advisers. The product, Money Plus, is meant to give financial advisers the opportunity to offer a traditional checking and savings account with interest rates tied to the Effective Federal Funds Rate, as part of a broader wealth management program.
This product offering will be particularly helpful to the financial advisors that are not a part of a large brokerage or wealth management firm. It will help to create an equal playing field among the independent or small firms and the large firms. From a consumers perspective independent advisors now offer like products to large firms allowing the consumer to select their financial advisor for their knowledge rather than choosing a firm based on their product offerings.
The Carson Group, a family of companies advising individual investors, is first in line to offer the digital banking service, starting in the third quarter. To that end, Wilkes said the interest rates are a critical feature for financial advisers to sell because often they are suggesting clients open such accounts with Ally Bank, Capital One or Synchrony, to name a few. The Money Plus Reserve Account, which is essentially a savings product, has an interest rate of 2%. The Money Plus checking account, which Galileo calls the Spending Account, features an interest rate of 1.24%.
Galileo Money Plus users will benefit from the same features as a traditional checking account, including a Mastercard-branded debit card, direct deposit, online bill pay, mobile check deposit, person-to-person transfers, automated clearinghouse transfers, and the ability to send a check, among other features.
Wilkes and the Carson Group insist the appeal of Money Plus is to give users a clear picture of their finances in one place, complete with traditional bank accounts. “It’s not easy to do unless what you’re converting to offers a comparable end-to-end experience to handle the minutiae of what your legacy bank does for you, especially for high-net-worth people because they don’t want to upset the apple cart that’s working,” said Lane Martin, a partner in the banking practice at the consulting firm Capco.
Galileo Money Plus users will benefit from the same features as a traditional checking account, including a Mastercard-branded debit card, direct deposit, online bill pay, mobile check deposit, person-to-person transfers, automated clearinghouse transfers, and the ability to send a check, among other features.
It seems Banking as a Service (BaaS) offered by traditional prepaid program managers might be a new trend for prepaid fintech firms.
Overview by Sue Brown, Director, Prepaid Advisory Service at Mercator Advisory Group
Read the quoted article from American Banker here
