Chase Bank Takes On Mint and Swipely -- In Reverse
There have been a preponderance of Chase (JPM) television commercials this month touting Blueprint, a credit card service that lets you plan how to pay down debt. Blueprint looks awfully similar to Mint.com's (INTU) new purchase-planning tool, but done in reverse; the purchases are already made, and Chase's tool lets you manage (and perhaps increase) the load of debt.
Blueprint is interesting because it suggests that commercial banks, while not as agile, are indeed making plans to compete with Mint, Amazon (AMZN), Facebook and startups like Swipely and Blippy, all of whom are chasing some of the most valuable consumer data in history: what people want to buy, and when.
The service smacks of tech-savvy; even the promotional images (see right) evoke iPhone apps. The idea that individuals would want to slice and dice their own purchase records is a relatively new one, but ever since younger users drove Mint.com to prominence (and to acquisition), the data-driven consumer has become something of the norm.
A survey done in the UK by Yodlee, a large banking backend service, revealed that over half its respondents wanted granular online control of their accounts. It also said that only 35% of those respondents knew such a service actually existed.
Chase's Blueprint feature isn't new; it was rolled out last autumn. But it hasn't yet risen above the rest of the commercial banks' lame promotions, despite the fact that Blueprint is actually quite powerful. The service allows you to sort out your debt, choosing which items you pay off first, and how you want to attack your balance. Part of the fun is sorting your purchases by type, and telling the card to push the payment of that type of purchase (say, groceries) ahead of other, larger ones (say, a refrigerator).
All this is useful if you're a typical consumer. But for Chase, the implications of this data in aggregate are significant. Check out Chase's internal presentation on Blueprint, which you can download here. Here, the bank says that the purpose of Blueprint is that it "allows customers to better manage larger purchases," and "track their spending history by category."
This is crucial for Chase, because it allows the bank to better understand your financial situation. Before, they merely waited around, hoping you'd pay down your balance. Now they can see your payment plans months in advance, letting them know if it's time to tempt you with a higher-limit card, balance-transfer offer or some other promotion. (Mint.com essentially makes its money the same way, by finding offers that might appeal to someone with your financial profile.)
The system appears to be working, for better or worse. Chase has been fine-tuning the product in the last few weeks, increasing the low-end rate from 11.24% APR to 13.24%, even as credit card delinquencies industry-wide dropped last quarter. That could mean that Blueprint is working a little too well, allowing card-holders to take on more debt than they normally would, resulting in higher delinquencies for that specific card. Or it means that the product has become popular with a more delinquency-prone crowd. Either way, if Chase is raising rates on this card enough to shake up the entire industry's average APR, it clearly feels it needs to insure itself against something.
Until this point, there has been little evidence that granular controls on purchasing were anything but good for consumers. Presumably, the more financial planning the better. But planning may also be inspiring a false sense of control in cases where debt-management is the issue. While users tend to think of tools like Mint.com and online banking as interesting windows into their own behavior, the tools themselves may be having a reflexive effect on that behavior. Whether that's a good thing remains to be seen.
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