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July 16, 2018 FOCUS: Banking & Finance

Glastonbury fintech Payrailz readies fall launch of AI-driven personal banking technology

Image | Contributed A snapshot of Payrailz's digital tools.
Fran Duggan, CEO, Payrailz
By Matthew Broderick Special to the Hartford Business Journal

For most people, managing the payment of monthly bills is as enjoyable as a line at the DMV and, at times, as time-consuming.

But a new Glastonbury-based financial technology (fintech) company, Payrailz, is looking to change that through artificial intelligence-powered technologies that take the time and guesswork out of personal finance.

The company, part of the state's growing fintech sector, launched publicly last November and has attracted clients — and interest — from a national banking industry that is heavily investing in digital tools.

“The ability to pay your bills [online] through your bank has been around for a while,” said Payrailz CEO Fran Duggan, “but there has been [little] innovation in the [digital finance] space.” That is rapidly changing as banks and credit unions adapt to a consumer culture demanding digital tools and convenience. In fact, according to a 2017 CB Insights report, the top 10 largest U.S. banks have invested more than $4.1 billion in fintech startups since 2012.

For Duggan, fintech is not simply about creating a convenient online experience, it's about providing a real value-add for end-users.

“We want to use technology to help people pay their bills [through their bank] so they don't have to worry about it,” he said. “We are bringing artificial intelligence into the payment process and redefining what 'doing payments' is about.”

With Payrailz's platform, which will go live to customers through banks and credit union clients starting this fall, end-users will receive push notifications to a smartphone about upcoming bills and, with a text response, can authorize the bank to pay those bills, Duggan said.

“There's no more signing into your mobile banking account or getting bill pay alerts,” he said. “Our platform allows [a bank] to do that for you.”

By the end of the year Duggan expects, based on current client numbers, nearly 250,000 banking customers will be paying more than 1 million bills a month through Payrailz. To date, the company is working with two of the top 10 credit unions in the country as well as three of the top 20 banks, and recently announced its moving its headquarters — doubling the company's original footprint — in Glastonbury to accommodate growth. 

And it's not just payment innovation that Payrailz is bringing to the market. Last month, the company announced a partnership will Hopkinton, Mass.-based Billshark, a bill-reduction service that will be bundled with Payrailz services.

With Billshark, Duggan said, an end-user can be notified, for instance, when they pay more for their cell phone bill than people in the surrounding area and are given the option of having their bank's behind-the-scenes fintech vendor negotiate a lower rate for them.

“From the customer's perspective, they're saying not only is my bank or credit union making it easier for me to pay my bills [through Payrailz] but they're also lowering my bills,” Duggan said. “That's a great benefit to provide customers and why we're applying the data that banks are rich in and using it to drive value.”

Billshark co-founder Steve McKean said the goal is to make sure consumers don't overpay for services.

“We look forward to helping Payrailz deliver on their vision of reinventing the way the banking and financial services industry approaches the payment experience,” McKean said.

Targeting local, regional banks

As platform interfaces have become more advanced, fintechs have become better equipped to collaborate and expand joint capabilities.

“The ability to integrate [services] is much easier than it used to be, so [our company] doesn't need to buy another company to get its [services] on our platform,” Duggan said. “We can work out a partnership agreement and share the technology to provide a solution that is seamless.”

Those digital tools represent a big need for a banking sector that's seeing greater consolidation. In fact, implementing a transformative digital program was identified by banks as the second-highest need (85 percent) in a 2018 Ernst & Young survey, falling just shy (89 percent) of data security.

“If a bank is going to continue to win the younger generations who have no desire to go to a branch office, they have to differentiate themselves in an online and mobile world,” Duggan said.

For small local and regional banks — a targeted market for Payrailz — fintechs serve as an equalizer of sorts. Smaller banks know their customers and their data, Duggan contends, but lack the skills and resources of larger financial institutions to build a digital infrastructure to address an ever-expanding digital frontier. In fact, as Payrailz launches its AI bill pay technology this fall, it's already working on integrating it with smart watches and voice-activated digital assistants like Google Home, Duggan says.

While the company is poised for early growth, unlike many startups, Duggan, a 30-year banking and tech company veteran, says he and his investors, who are also all clients, are not looking to sell the company to a bigger fintech or financial institution.

“Our goal is to have a reputation [as a fintech company] that has helped all of our clients to differentiate themselves and make the [financial management] easier for their clients,” he said.

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