Garnet Capital Advisors Blog

Fintech startup Larky has been taking an innovative approach with its mobile applications, marketing them directly to banks so they can be used to provide consumers with discounts and offers from local stores.

Geolocation services
The fledgling company is using this strategy at a time when few banks have adopted geolocation services, which harness the customer's location - along with the organization's ability to reach this clientele directly - to provide specialized offers, according to American Banker. By supplying these perks, which must be used in concert with the bank's card to get the discount, banks can potentially enhance their wallet share.

While some lenders might use this technology to target those holding personal bank accounts and debit cards, community institutions could also leverage the mobile apps to strengthen their position as organizations that support local companies, American Banker reported.

Amid this opportunity, few banks have implemented geolocation services. Both Capital One and Wells Fargo are currently evaluating such services, with the former focusing on retail offers and the latter seeking to single consumers out when they enter branch locations. Many smaller organizations do not have the capacity to develop and test these technologies.

Chelsea State Bank partnership
One organization that has begun harnessing Larky's geolocation services is Michigan-based Chelsea State Bank. Last month, the lending institution announced a partnership with the fintech startup. John Mann, CEO and president, spoke to this new development in a statement.

"As the local community bank, we are excited about our new partnership with Larky and to introduce the Local Edge to our customers," he said. He emphasized that the financial institution's customers can save money with local vendors by using its new app, named The Local Edge.

Industry challenges
Mann, who met the fintech startup's founders at a trade show in June, said he likes Larky's approach, according to American Banker. The strategy has not been without its challenges, as certain local businesses were reluctant to sign up after being contacted by similar companies looking to solicit discounts.

While Larky originally targeted consumers, there are countless personal finance apps competing for the hearts, minds and wallets of this demographic. After consulting with think tank Filene Research Institute, the startup opted to target banks.

While financial institutions might harness these geolocation services as a boon to their clients in order to generate loan volume, banks can also use loan purchases to bolster volume, by buying portfolios of debt originated by other institutions but borrowed by individuals in their state or region.

When considering any loan purchase, banks should be sure to work with an experienced loan sale advisor to maximize the chances of achieving their investment objectives.