Geezeo, a three-year-old Connecticut-based startup, has inked a deal to license its personal finance management software to the seventh largest credit union in the United States, a move experts say gives the company legitimacy within the industry, while also allowing it to double its staff in the coming months.
Chicago-based Alliant Credit Union, which has 250,000 members and over $6.7 billion in assets, agreed last week to purchase the licensing rights of Geezeo’s software.
Geezeo provides banks and credit unions personal finance management tools that can be integrated directly onto their Web sites, and goes beyond typical programs that limit customer interactions to checking account balances or making a transaction. Its software allows bank and credit union customers to aggregate bank accounts from multiple institutions, set and track budgets and spending goals, and includes a social network.
Alliant is the third credit union to sign a contract with Geezeo. Earlier this year, the company also inked deals with California-based Stanford Federal Credit Union, which has over 47,000 members and $1 billion in assets, as well as Virginia-based 1st Advantage Federal Credit Union, which has $500 million in assets and 60,000 members.
Financial terms of the deals were not disclosed.
“I think this deal will put Geezeo on the map, especially with credit unions,” said Jim Bruene, editor of Online Banking Report, a Washington-based publication that tracks the industry. “This deal really validates what they are doing, and gives them credibility as a company.”
Bruene said since its inception, online banking has been mostly used by financial institutions as a data dump, where they store transaction and account balance information for customers. But Bruene said the next step in the evolution of online banking will be for people to get analysis out of that information so they can use it to make informed financial decisions.
Bruene predicts that 10 percent to 25 percent of all households might use those tools in the next five to 10 years. Bruene said there are a couple dozen personal finance Web sites, but only a few generate revenues by licensing their software to banks and credit unions. Competitors include Wesabe.com and Intuit.
Peter Glyman, president and co-founder of Geezeo, said signing a deal with a large credit union like Alliant will give the company exposure to other large financial companies in the country.
Glyman said the deal will allow the company to double its staff from seven employees to about 14 in the coming months, adding new software developers and sales people.
Geezeo was based originally in Hartford at 750 Main St., but recently moved to Tolland for quality of life reasons, mainly less traffic and more parking, Glyman said. The move also puts the company closer to the University of Connecticut, where Geezeo can more easily recruit students.
Geezeo is backed by a $1.8 million investment from the TheStreet.com, the business Web site co-founded by investing guru and MSNBC star Jim Cramer. TheStreet.com had the opportunity to buy Geezeo outright for $12 million earlier this year, but failed to exercise that option, although it remains the single largest investor in the company.
When the buyout didn’t happen, Geezeo shifted its business model to focus on licensing its financial tools directly to banks and credit unions, Glyman said.
Originally he and co-founder Shawn Ward focused on their consumer-oriented Web site, Geezeo.com, which allowed customers to link all of their bank accounts to the site, use budgeting tools to track their spending, create expense reports and use a social network. Geezeo is no longer accepting new registrations to its Web site, Glyman said.
“The majority of Internet banking providers don’t have personal finance tools, so we think this is a good market to be in,” Glyman said.
Bruene said Geezeo’s business model shift was smart, because “the majority of people that want to do advanced financial tracking aren’t going to want to do it enough to go to a third party.”
“But if their bank or credit union offers the service, customers will be more likely to use it,” Bruene added.
