I built the core financial engineering stack at Tally and absolutely love our product! The stuff I worked on was cool (lots of highly non convex optimizations, cool statistical methods, all Scala stack, very FP-oriented, etc.) but mainly the experience we deliver to consumers is incredibly powerful. The biggest challenge was probably getting this very complex, very real-time concept to work on an antiquated financial system. We're proud to say we have. Sign up now! You won't regret it!
Also, PM if interested in anything on the "Careers" page. What do you all think?
yea it's a busy term. we just came out of stealth so it will take us a little to climb up the search rankings. (part of the tradeoffs you are making when picking a company name.)
Was there any particular reason this name stood out for you guys even if you knew it was a busy term?
I even searched directly for Tally Technologies and some other Tally Technology name pops up.
How expensive it is for a company that just came out of stealth to increase the search rankings vs changing the name to something less crowded?
It's just an interesting problem since it seems more and more companies are using the same terms (or maybe meaningful company names are drying up?, like that South Park episode), instead of creating new nonsense names.
Maybe nonsense names are not as attractive to potential customers of a financial company?
Maybe I'm missing something here, but this looks like a business with massive downside risk and very little upside.
It's bundling a bunch of bad debt (nobody who manages their money well is going to pay 20% interest if they have better options) and hoping that the aggregate is less risky. I have a feeling we've seen that sort of wishful thinking about debt before.
So what am I missing that makes Tally so good at managing the risk that people just run up huge debts on multiple cards and leave Tally holding the baby?
Yes, not seeing the business model here. They're basically issuing a credit card of their own.
Somehow, I suspect this will morph into a "consolidate your bills" scheme, or the low rate is only an introductory rate, or there will be big fees, or they try to sell you on a home equity loan, like LowerMyBills.com.
Good question on introductory rates and fees. Tally does NOT offer introductory or "teaser" rates. Your Tally APR is your Tally APR.
And Tally does NOT charge ANY fees of ANY kind. Here's a cut and paste from our FAQ: "There’s no annual fee, no origination fee, no prepayment fee, no balance transfer fee, no late fee, no overlimit fee, nada. Like you, we hate hidden fees."
Tally makes money by charging interest on the amount you borrow from us. We only make money if we can save you money. But that’s it.
we are planning to be pretty good about managing our risk :)
but more importantly credit card debt isn't "bad debt" at all. most folks think that. there is about $700B of credit card debt of which about half is held by large pensions funds etc. and none of that paper defaulted in the financial crises.
My understanding is that Credit Card ABS are kept at very good ratings via careful division and securitization of the credit card receivables into different tranches of risk and corresponding priority for repayments (specifically so that pension funds and investors of that ilk can invest).
The fact that none of those securities defaulted during the financial crisis, doesn't mean that none of the underlying credit card receivables were written off or otherwise defaulted on.
Seems that the parent comment's premise is essentially correct, you guys are going to be handling some portion of those credit card receivables and are betting that you can cherry pick or otherwise attract the safe/good/profitable portion.
edit
I realize that this comment probably comes across a fair bit more pessimistic than I intended. Actually, I think that this is a pretty decent bet. Pretty sure they're right about the existence of a class of cardholders who choose to carry a balance for convenience or short-term need rather than long-term circumstances or irresponsibility. Not sure what the TAM is on that, but definitely sounds like it's a hypothesis worth following up on.
Jason (Tally co-founder) here again. Its a common misconception that people who carry a balance are irresponsible. 78% of people who do carry a balance have good credit (Prime & Super Prime). We surveyed 581 of our friends on FB who all have good credit. Most of them have college or graduate degrees and work in tech. 45% carry a balance and 29% paid a late fee in the last year.
Bottom line: credit cards are the most profitable bank lending business (4x more profitable), so there is a lot of room to save people money and earn a profit as a company.
“Tally solves problems that customers have managing multiple credit cards, incurring charges or fees, and not knowing which one to pay first,” Flynn said. “Theirs is an elegant solution that can apply to a lot of people.”
“The investment community has gotten comfortable with non-bank entities originating loan assets,” Brown said.
Institutional investors were pulling back from buying marketplace lender debt even before the Lending Club nonsense. IMO only dumb money is going to be interested in loaning money at less than credit card rates to consumers who will use the funds to pay off their credit card debt. Maybe a year ago....
Tally appears to do no underwriting it simply offers you a lower rate than your current cards offer and allows you to pay all the bills at once? Or does Tally have a proprietary method to tell which borrowers are worthy of a lower rate, the story is not really clear on this point.
Currently Tally is limited to customers who get approved for a Tally Credit Line. The approval is based on typical criteria such as your FICO score, debt and income. As of April 2016, our minimum FICO score is 660.
you will need to qualify for and get the Tally Credit Line. Depending on
your credit history, your APR (which is the same as your interest rate) will
be between 7.9% - 19.9% per year. And similar to credit card APRs, it will
vary with the market based on the Prime Rate.
This looks like it could be helpful, but those rates are no better than your local CU offers.
As mentioned elsewhere, this seems like a hard business -- smart people use their credit cards as charge cards and pif every month. You probably aren't carrying a balance at 20% plus if you have the cash elsewhere. But good luck to them; the more competition banks have the better.
If a credit card company can make money from me by charging the merchants I use the card with, and the credit card company gets its money for free through bank deposits and the credit card company has decades and hundreds of millions already invested in its underwriting model, how can Tally sustainably charge me less than the credit card company?
You can probably build a $100m - $1B business that way. You're not going to be cap1 (though cap1 serves lots of customers prime banks won't touch, so they have their own niche).
Also, there may be lots of people who foolishly don't use CUs. If Tally can reach lots of them they'll do well for themselves.
Hey, great question. This is Jason (Tally co-founder). Credit card APRs are massively inflated. Here are two points to consider:
A. There is a 500% difference in the likelihood of someone paying back a loan with a 760 FICO score vs someone with a 660 FICO score, but only an 8% difference in APR.
B. "the credit card business continues to be the most profitable bank lending business, with returns more than four times higher than the average return on assets." - Richard Cordray, Director of the CFPB (December 2015)
The bottom line is that banks are significantly overcharging consumers AND have high fixed costs. Because of the technology Tally has built, our cost structure is an order of magnitude lower than banks. This means we can save customers money and be profitable as a business.
Do you guys fear that if big banks start to feel threatened, they will start lobbying to keep the field uneven to their favor?
Leaves me wondering how much inroad is possible to make going against such big (and dirty-playing) actors.
I mean, obviously if you get to that point you must be doing something right, and shaking the big entrenched businesses can sometimes (most of the times? always?) bring good things, so good luck!
Big banks are powerful and we don't take that risk lightly. However, regulators like the relatively new CFPB, are generally on the side of consumers. So as long as we always do right by consumers and don't lend irresponsibly, we have a very good chance of being on the right side of history. That said, we'll take any and all luck you can send our way
500% sounds like a deliberate play with numbers, if the default rates were 2% and 10% respectively, I could choose to call that a 500% difference, or more reasonably, an 8% difference.
Hey, this is Jason (Tally co-founder). Thanks for all the comments. Yes, you are correct, Tally underwrites. Here are some crazy stats.
A. For every 10 people who have a credit card, there are 16 late fees assessed every year. With Tally, you don't have to worry about missing payments.
B. 4 out of 10 households carry a balance ($15K average) for a total of $700B. 78% of those balances are held by people with good credit (Prime or Super Prime), yet their average retail APR is 18%. With Tally, you don't have to worry about being charged unfair APRs.
So I was probably in your target market last year but I'm struggling to understand how this product works. I work in tech but was laid off mid year and simultaneously incurred a bunch of debt. So I carried a balance of around $15k for most of the year (13% APR) until I could build savings up and get back on track. Thankfully I'm debt free now, but if I had had Tally, would it have paid off the balance and then I would have paid Tally a lower rate?
Jason here again. Tally is like a self driving car for your credit cards. Here's how it might have played out for you if you had had Tally before, during, and after carrying a balance.
1. Before you carried a balance ($0 Balance)
-Tally is free to use and pays all your cards for you every month. This means that instead of keeping track of multiple payments and due dates, you make just one payment to Tally. No more late fee anxiety. Easily manage all your cards in a single app.
2. During balance building (building up to your $15K balance)
-Since you lost your job, you no longer choose to pay 100% of what you spend every month. Instead, you just pay pay your Tally minimum and your Tally balance grows.
-Instead of paying 13% APR to your credit cards, your balance is held with Tally at a lower APR. I obviously don't know your credit score, so I can't say what your Tally APR would be, but for me my best credit card APR is 13.24% and my Tally APR is 8.90%. So assuming you qualify for the same Tally APR as I do, you'd save $500-$600 in interest.
3. During balance paydown (paying down your $15K balance)
-Since you now have a job, you start paying more than the Tally minimum.
-Tally continues to pay your cards on-time for you, and you just make one payment to Tally.
-Eventually you pay your Tally balance down to $0.
4. After balance paydown ($0 balance)
-Tally continues to pay and optimize your credit cards. Tally is free to use, protects you from late fees, and is the easiest way to manage all your cards.
Ah ok. Makes sense. I remember searching for a low interest loan because I knew I would be able to pay it back and thought 13% was ridiculous for such a credit worthy individual (credit score 760). Thanks for taking the time to answer, it is definitely a cool product!
1. How does Tally calculate how to much to pay for a bill? For example, sometimes I have will receive a statement weeks prior to the bill date where I only have to pay a small amount, but I'm actually carrying a larger by the time that the payment due date comes around.
I'd like to know the answer to this as well. Do you require login credentials from your users or what? I assume there's not some secret API for credit cards ...
You raise a really good question. Credit cards are confusing by design. Many people don't have the time to optimize how they pay their cards.
The Tally algorithm absorbs all this complexity and recommends whatever is in your best interest.
1. With the fact pattern you've provided, there are situations where Tally would only pay the Statement Balance (the smaller amount you mention) so that you can take advantage of your card's grace period.
But if you are not in grace with a card (meaning you haven't paid 100% of your Statement Balances for the previous 2 consecutive statement periods), Tally will suggest paying more/all of the Statement Balance to minimize your interest charges.
Bottom line: Tally is really smart and mathematically suggests whatever is in your best interest.
2. To see if Tally makes sense for you, its a soft pull and then a hard pull to actually open a Tally account.
Ironically, by doing a hard pull, you're hurting my credit slightly, which is against your stated mission.
Some of the appeal of the new FinTech startups are that they don't measure customers based off traditional models of risk eval (FICO, etc.) but that they are able to factor in both past and future based on many more data points. I'll keep monitoring Tally and hope in the future you can arrive to this same point.
BTW, I hope you look into marketing to credit card churners. I think they would love your product.
I suspect there would be much less market for the autopay feature here in the UK, where you can ask the bank to direct-debit the minimum amount every month to make sure you have no late fees.
I'm skeptical about the improved rates for debt consolidation, but if you're going to give people subsidised credit with investor's money I'm not going to complain.
Tally is more like a self driving car for your credit cards. It helps optimizes all your payments, balances, stops late fees, and helps you avoid obscure penalties.
Even if you never carry a balance, Tally is the easiest ways to manage your credit cards.
46 comments
[ 3.2 ms ] story [ 111 ms ] threadAlso, PM if interested in anything on the "Careers" page. What do you all think?
Cheers!
https://www.meettally.com/
https://www.meettally.com/careers
I even searched directly for Tally Technologies and some other Tally Technology name pops up.
How expensive it is for a company that just came out of stealth to increase the search rankings vs changing the name to something less crowded?
It's just an interesting problem since it seems more and more companies are using the same terms (or maybe meaningful company names are drying up?, like that South Park episode), instead of creating new nonsense names.
Maybe nonsense names are not as attractive to potential customers of a financial company?
Scrolling skips on andriod. I'm not even sure of the cause.
It's bundling a bunch of bad debt (nobody who manages their money well is going to pay 20% interest if they have better options) and hoping that the aggregate is less risky. I have a feeling we've seen that sort of wishful thinking about debt before.
So what am I missing that makes Tally so good at managing the risk that people just run up huge debts on multiple cards and leave Tally holding the baby?
Somehow, I suspect this will morph into a "consolidate your bills" scheme, or the low rate is only an introductory rate, or there will be big fees, or they try to sell you on a home equity loan, like LowerMyBills.com.
And Tally does NOT charge ANY fees of ANY kind. Here's a cut and paste from our FAQ: "There’s no annual fee, no origination fee, no prepayment fee, no balance transfer fee, no late fee, no overlimit fee, nada. Like you, we hate hidden fees."
Tally makes money by charging interest on the amount you borrow from us. We only make money if we can save you money. But that’s it.
The fact that none of those securities defaulted during the financial crisis, doesn't mean that none of the underlying credit card receivables were written off or otherwise defaulted on.
Seems that the parent comment's premise is essentially correct, you guys are going to be handling some portion of those credit card receivables and are betting that you can cherry pick or otherwise attract the safe/good/profitable portion.
edit I realize that this comment probably comes across a fair bit more pessimistic than I intended. Actually, I think that this is a pretty decent bet. Pretty sure they're right about the existence of a class of cardholders who choose to carry a balance for convenience or short-term need rather than long-term circumstances or irresponsibility. Not sure what the TAM is on that, but definitely sounds like it's a hypothesis worth following up on.
Bottom line: credit cards are the most profitable bank lending business (4x more profitable), so there is a lot of room to save people money and earn a profit as a company.
Remember those "responsible mortgage holders", homeowners with culturally "good" debt? The whole economy tanked because only 7% of them defaulted.
This business model is fine if Tally's leverage isn't too high.
from https://www.meettally.com/how
This looks like it could be helpful, but those rates are no better than your local CU offers.As mentioned elsewhere, this seems like a hard business -- smart people use their credit cards as charge cards and pif every month. You probably aren't carrying a balance at 20% plus if you have the cash elsewhere. But good luck to them; the more competition banks have the better.
Also, there may be lots of people who foolishly don't use CUs. If Tally can reach lots of them they'll do well for themselves.
A. There is a 500% difference in the likelihood of someone paying back a loan with a 760 FICO score vs someone with a 660 FICO score, but only an 8% difference in APR.
B. "the credit card business continues to be the most profitable bank lending business, with returns more than four times higher than the average return on assets." - Richard Cordray, Director of the CFPB (December 2015)
The bottom line is that banks are significantly overcharging consumers AND have high fixed costs. Because of the technology Tally has built, our cost structure is an order of magnitude lower than banks. This means we can save customers money and be profitable as a business.
Leaves me wondering how much inroad is possible to make going against such big (and dirty-playing) actors.
I mean, obviously if you get to that point you must be doing something right, and shaking the big entrenched businesses can sometimes (most of the times? always?) bring good things, so good luck!
lolol so many assumptions!
yeah they are overcharging. Credit card companies would be profitable lending at Fed Funds Rate + 2%
Instead they charge 14-22% no matter what. No matter what the macroeconomic environment is.
A. For every 10 people who have a credit card, there are 16 late fees assessed every year. With Tally, you don't have to worry about missing payments.
B. 4 out of 10 households carry a balance ($15K average) for a total of $700B. 78% of those balances are held by people with good credit (Prime or Super Prime), yet their average retail APR is 18%. With Tally, you don't have to worry about being charged unfair APRs.
I hope that helps!
1. Before you carried a balance ($0 Balance) -Tally is free to use and pays all your cards for you every month. This means that instead of keeping track of multiple payments and due dates, you make just one payment to Tally. No more late fee anxiety. Easily manage all your cards in a single app.
2. During balance building (building up to your $15K balance) -Since you lost your job, you no longer choose to pay 100% of what you spend every month. Instead, you just pay pay your Tally minimum and your Tally balance grows. -Instead of paying 13% APR to your credit cards, your balance is held with Tally at a lower APR. I obviously don't know your credit score, so I can't say what your Tally APR would be, but for me my best credit card APR is 13.24% and my Tally APR is 8.90%. So assuming you qualify for the same Tally APR as I do, you'd save $500-$600 in interest.
3. During balance paydown (paying down your $15K balance) -Since you now have a job, you start paying more than the Tally minimum. -Tally continues to pay your cards on-time for you, and you just make one payment to Tally. -Eventually you pay your Tally balance down to $0.
4. After balance paydown ($0 balance) -Tally continues to pay and optimize your credit cards. Tally is free to use, protects you from late fees, and is the easiest way to manage all your cards.
2. Do you do a hard pull of credit?
The Tally algorithm absorbs all this complexity and recommends whatever is in your best interest.
1. With the fact pattern you've provided, there are situations where Tally would only pay the Statement Balance (the smaller amount you mention) so that you can take advantage of your card's grace period.
But if you are not in grace with a card (meaning you haven't paid 100% of your Statement Balances for the previous 2 consecutive statement periods), Tally will suggest paying more/all of the Statement Balance to minimize your interest charges.
Bottom line: Tally is really smart and mathematically suggests whatever is in your best interest.
2. To see if Tally makes sense for you, its a soft pull and then a hard pull to actually open a Tally account.
-Jason (Tally co-founder).
Some of the appeal of the new FinTech startups are that they don't measure customers based off traditional models of risk eval (FICO, etc.) but that they are able to factor in both past and future based on many more data points. I'll keep monitoring Tally and hope in the future you can arrive to this same point.
BTW, I hope you look into marketing to credit card churners. I think they would love your product.
I'm skeptical about the improved rates for debt consolidation, but if you're going to give people subsidised credit with investor's money I'm not going to complain.
Even if you never carry a balance, Tally is the easiest ways to manage your credit cards.