Article

MFoundry connects consumers to money and coffee

Drew Sievers, CEO of mFoundry, talks about how his company is helping companies like Starbucks offer mobile convenience.

February 21, 2011 by James Wester

Since its founding in 2004, mFoundry has been developing mobile payment and financial applications for financial institutions and retailers. And according to company CEO and co-founder Drew Sievers, "Things are good."

Considering the news mFoundry has been generating recently in the mobile payment space, things are good indeed: mFoundry is the company that helped Starbucks launch its popular Starbucks Card mobile application.

Rolled out in mid-January to all 6,800 of its locations, the Starbucks Card mobile payment application lets customers pay for their purchases at the point of sale with their smartphones. Praised by customers for its simplicity and convenience, the program has been a hit. In a recent post on the Starbucks blog, Chuck Davidson, the category manager for payment innovation for Starbucks, said the payment system recently processed more than a million transactions since going live.

Sievers said he is thrilled with the success of the Starbucks payment program. When asked if he is surprised at how quickly it has taken off, Sievers said he wasn’t.

“Starbucks doesn’t do anything by accident,” he said. It really comes down to convenience and the fact that paying with a phone is a faster payment method for consumers, he said.

And what about the supposed “hack” that allows a hacker to steal a customer’s barcode by taking a picture of it? “It’s ridiculous,” said Sievers. He scoffed at the idea that anyone would risk trying to take a picture of another person’s phone in order to get a relatively inexpensive item like those sold at Starbucks.

When asked if he believed the success of the Starbucks program would serve as a proof of concept for mobile payment programs in general, Sievers was less certain.

“For a mobile payment program to take off,” Sievers said, “there must be a perfect storm.”

For Starbucks, he said, “We solved a specific problem for Starbucks: Customers didn’t want to carry a card and didn’t know their balances.” For other retailers, he said, no one has given them a compelling reason yet to embrace mobile payments, though he did say there is opportunity on the loyalty side.

As to the future of mFoundry, Sievers said, “Some interesting opportunities are coming up.”

Along with the Starbucks program, mFoundry has been involved in bringing mobile banking solutions to local and regional banks through its partnership with First Data. Marketed as First Data’s Mobile Manager - mBanking solution, mFoundry’s product offers financial institutions of any size the ability to provide mobile banking to their customers through SMS, mobile web and downloadable applications.

About the partnership with First Data, Sievers recently said, “(It) has expanded (our) reach and made our award-winning mobile banking product accessible to an even larger base of customers.”

The relationship is paying off for mFoundry. Three banks in Texas announced earlier this month they will be implementing mFoundry’s mobile banking solution. Sievers said an additional 60 financial institutions have also signed on with mFoundry to begin implementing their mobile banking solutions soon.

According to Sievers, one of the reasons for the success of mFoundry’s banking solutions is cost: It is very expensive to build and maintain mobile banking programs. The expense could be prohibitive to financial institutions with fewer development resources. By offering a software-as-a-service solution, mFoundry helps its customers avoid high integration, development and maintenance costs.

Sievers also said that implementing a mobile bank program offers local and regional banks the ability to compete for customers with larger national banks that can develop their mobile programs in-house.

Additionally, allowing customers to manage their accounts using their phones isn’t just about convenience for customers. According to Sievers, mobile banking programs also lower costs.

“A huge number of calls (to banks) are about checking balances, and a huge number come from cell phones,” said Sievers. By implementing a mobile banking program, banks can avoid more expensive customer interactions such as customer calls to call centers, he said.