Powered by a recent $17 million funding boost, Boom Financial is powering secure international banking for the ‘unbanked’

By Editor August 20, 2012

Boom Financial logoA Q&A with Boom Financial co-founder and CEO Bill Barhydt. The Palo Alto–based company was founded in 2008 and raised $17 million in new funding in mid-July led by Digicel Group.

SUB: Please describe Boom Financial, and the value proposition you offer to consumers.

Barhydt: Boom is a cross-border mobile banking service. Boom Financial is making it possible for anyone with a mobile phone to instantly share funds with any other mobile phone user in any country that Boom supports, all via a simple text message. Instead of sending money via traditional cash-based transfer services, which have high fees and require people to leave their children alone and travel for hours, facing robbery and attack, to pick up these funds, Boom is safe, inexpensive and convenient.

Sixty million people in the U.S. do not have bank accounts. Boom Financial is leveraging the proliferation of mobile phones to enable people who have never seen a credit card or had a bank account to have access to banking services via their mobile phones. Most Boom customers are still using older feature phones, so all services are provided to them via basic text message. A user loads money to their Boom account at various retail locations and convenience stores such as 7-Eleven or by cashing a check directly into a Boom account. Then, the user texts Boom the amount of money they want to share and the phone number of the recipient. Boom confirms the transaction and credits the funds to the recipient. The recipient gets a text message notifying them of the funds in their Boom account. If the recipient does not have a Boom account, one is automatically set up for them and a quick phone call walks them through how to use it. All account users also receive a Boom Card that can be used to withdraw funds from ATMs.

SUB: Who are your target users?

Barhydt: Boom services target the immigrant population in the U.S. and their extended families living in their home countries, providing an easier, safer and cheaper solution to store, manage and share cross-border funds. U.S. immigrants send over $100 billion to family and friends in their home countries every year. The same group also has an exceptionally high rate of mobile phone use—86 percent of Hispanic immigrants own a mobile phone. Put the two together and it’s only pragmatic to provide a secure, affordable and simple service to send money to family and friends via text message.

SUB: Who do you consider to be your competition?

Barhydt: Our biggest competitors are Western Union and MoneyGram.

SUB: What differentiates Boom Financial from the competition?

Barhydt: Unlike other mobile payment services, Boom users do not need to have a bank account or credit card. Many mobile payment services are only available in urban areas with point-of-sale (POS) systems, but Boom is also available to rural consumers. Boom users in urban areas can load money at a variety of retail locations. Boom users in rural areas, like small towns in Mexico where ATMs are unavailable, can purchase items from local store owners by transferring money from their Boom account to the store owner’s Boom account. In this way, the Boom service has viral capabilities.

SUB: When was the company founded and what were the first steps you took in establishing it?

Barhydt: Boom Financial was founded in 2008 to provide customers, who are often used to a feeling of helplessness due to high fees, fear of robbery and extreme inconvenience with a feeling of control over their finances. To accomplish this, I established strategic partnerships with key players in the mobile banking and mobile payments space. We partnered with CBW Bank to become a certified merchant bank, thereby allowing customers to store their money securely in a regulated bank branch. Boom also partnered with Shazam to build an infrastructure for consumers to wirelessly access their funds. We then established relationships with retailers like 7-Eleven and Diconsa to provide customers with centralized locations at which they can load cash to their accounts. We developed a system of short codes that allows users to share money through standard text messages without having a bank account or credit card. This also allows Boom to remain carrier agnostic as it grows its business and to keep the costs low for all participants.

SUB: What was the inspiration behind the idea for Boom Financial? Was there an ‘aha’ moment, or was the idea more gradual in developing?

Barhydt: During trips to Haiti and Mexico, my co-founders and I listened as women cried recounting stories of how they could not access money sent to them from the U.S., or were robbed picking up cash transfers. Sometimes they could not access the money because they could not leave their children to spend days traveling by bus or foot to pick up the money from a cash-based transfer center. Sometimes they could not access the money because it simply was not there when they went to pick it up. And sometimes when they managed to pick up the money, they would be attacked and robbed as they carried the cash home.

I believe people need to start thinking differently about money and payments. I created Boom Financial to solve these problems and to create a new category of mobile banking and payments for unbanked consumers.

SUB: What have the most significant obstacles been so far to building the company?

Barhydt: As with any company, bringing it from an idea to a fully-operational business is no small feat. It took years to build a carrier-agnostic financial network to support the Boom service and we partnered with several organizations including MasterCard, Cardtronics and the Mexican government to do so.

SUB: You just raised $17 million in new funding. Why was this a good time to raise this round, and how do you plan to use the new funds?

Barhydt: We now plan to deploy Boom nationally via retail partners in the U.S., and extend Boom throughout the Americas and the Caribbean as well as eventually into Asia and Africa. Our funding and partnership with Digicel will help make this vision a reality.

SUB: Do you plan to raise additional funds in the near future?

Barhydt: We are always looking to provide our users with better features, capabilities and an expanded reach of mobile-to-mobile banking worldwide. We will continue to pursue all strategies, including funding, to achieve this.

SUB: How does the company generate revenue or plan to generate revenue?

Barhydt: There is an annual charge of $25 for Boom members in the U.S. Boom membership outside of the U.S. will always be free for users receiving funds from the U.S. Boom also earns interchange revenue whenever customers spend funds off of their account using a Boom debit card.

SUB: You recently changed your name, from m-Via. What was behind this decision?

Barhydt: To our customers the service has always been known as Boom. We changed the name from m-Via to Boom Financial to better align the already known familiarity of the service with the company.

SUB: What are your goals for Boom Financial over the next year or so?

Barhydt: We are seeing a significant change in our core user base with many moving away from simple, feature phones and onto smartphones, in addition to prepaid Android phones via Boost and MetroPCS. As such, Boom plans to adapt our services to allow our users to take advantage of the touch-capable smartphone screens. We also plan to launch several, new ‘immigrant and unbanked’-focused mobile banking features this year that we expect will be breakthroughs for our user base. Finally, we’ll be opening retail locations where local immigrants can learn what it means to be unbanked, learn how the Boom accounts work, and load cash to their Boom accounts.

Boom Financial – www.useboom.com