Now named 'Harvest,' the CEO of the robo-for-banks won't kiss or tell -- except about those 18 banks signing on in 18 months.

December 13, 2019 — 7:52 AM by Oisin Breen

Brooke's Note: If a spoof of The Graduate were to run in 2019 at an RIA conference, the knowing dad would whisper in the robo-advisor founder's ears: "banks." The retail robo-advisors have spent the last nine months rushing to realize their destiny as banks.  See: After Andy Rachleff explains Wealthfront's corrective to banking, Jon Stein told how Betterment is investing heavily in banking but mindful of 'frothiness' The B2B robos are also rushing to better serve banks, more of a doubling down in that instance. The funny thing is that these robo-founders really had no sinister plan to be banks in sheep's clothing. They were hoping to shepherd a lost flock of millennials to a better kind of investment firm. The millennials had other ideas. And so here we are with the name "Trizic" mothballed for a name that sounds more like a community bank.

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Drew Sievers now has $27 million more to put toward Trizic's evolution -- including rebranding with generic bank name. Harvest Savings & Wealth Technologies apparently has a better ring to harvest customers like Los Angeles bank-card robo, Acorns.

The CEO of the Larkspur, Calif., robo-advisor for banks attracted $12 million of venture backing and a $15 million line of credit (as of September) to spend in a pinch. That's on top of $10 million raised last year. See: Trizic CEO raises $10M, poaches ex-FolioDynamix COO and luxuriates in 'ocean' of FIS 14,000-bank insider advantage

"We have plenty of cash, but I have big ambitions for the business, and B2B software is an expensive lift. You need capital to effectively compete," he says.

The cash raise was spurred by banks signing on in droves under the old Trizic name.

In Mar. 2018, Trizic had just two banks on its books. Since then, Sievers’ firm has signed a banking deal monthly, bringing its banking clients to 20. It has an additional 30 non-bank customers, mostly a mix of RIAs and independent broker-dealers.

In September, Harvest launched Goalkeeper, a B2B tool that lets banks copy the approach of firms like Acorns. Their credit card customers can round up small charges and invest the extra pennies in ETF portfolios.  See: As Acorns grapples with monetizing 1.1 million micro-accounts, the laid-back LA robo-advisor brings Wealthfront’s former chief exec onto its board

Cross-sell opportunities

It is part of an ambitious effort to keep banks current with standalone robo-advisors -- notably micro-minded Acorns and STASH. See: NBCUniversal and Acorns join forces in $105-million mega-round in play to make two millennial quagmires into one big monetization play 

Acorns had about $1.1 billion of AUM as of its last ADV filing in February but a staggering 1.9 million accounts.

"At least 85% of the net interest margin goes to the [Acorns-style skimmer], even though the net outflow [for the bank] was zero," Sievers says. "[It’s] bonkers! [to give away all your profits to an outside vendor]"

Harvest also launched Signals, an overlay that flags internal money movement and messages bankers of the opportunity to cross-sell based on that cash in motion.

Without such algorithmic feelers they’re "blind" in the face of big-dumb movements of cash in and out of their own institutions, says Sievers.

Name game

The Trizic name was changed because no would could pronounce the verbal relic from the founder, or had a clue what it meant, Sievers explains. See: Peter Mallouk buys a stake in Trizic

Sievers adds that the $12 million of private equity did not require a big dilution in equity to existing stakeholders.

"There was [also] a large up-tick in value [but] don’t ask how much. I don’t kiss and tell," he says.

Where Harvest's strategy differs from other would-be robo-upstarts is that since Sievers took the reins in Apr. 2017, the firm has focused the lion's share of its attention on winning the business of traditional brick-and-mortar banks.

 

 

 

 

 


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