Credit cards

Consumers are generally terrible at managing their finances. A big part of this issue is the misuse of credit. For those who have already dug themselves into a credit card debt black hole, the answer is likely to cut up their cards and get back to ground zero. But for the rest of the world, the answer should be to realize that credit cards are tools, but that to use them effectively, one needs to have the right tools in their toolbox, and to always choose the proper tool to match job.

Enter Glyph, a mobile wallet intelligence app that is launching an entirely redesigned Version 2.0 app (iOS only) to help consumers answer two basic questions: “Which cards should I have in my wallet?”; And, “Which card in my wallet should I use for each purchase?”

Glyph is based in Detroit, meaning that the mission of financial rehabilitation is near and dear to the hearts of its founders, Michael Vichich and Tyler Felous. Vichich and Felous, the company’s CEO and CTO respectively, are both former Accenture consultants who know a thing or two about financial optimization, not to mention credit card and airline traveler loyalty programs.

Combining these two contexts, Glyph was born in March 2012 to help consumers optimize their card usage from both a personal finance and rewards perspective. Its longer term vision could completely redefine the way consumers access credit.

The company recently joined the Yodlee incubator, giving it intimate access to the same backend banking data platform that powers the mobile apps of seven out of the top ten US financial institutions, as well as many of the Web-based financial literacy and management platforms such as Mint.

So enough context, how does Glyph work?

The first step is to optimize the cards in your wallet via the Glyph Web app. Users have the option of giving Glyph access to their personal banking data, allowing it to analyze their transaction history and current financial situation, and then make card and card usage recommendations based on this information. Those uncomfortable with granting this access can still get value from Glyph, which can make recommendations based on user life stage and preferences – such as post-college, young family, or executive, and reward-focused, interest rate-focused, or international accessibility-focused etc.

As part of the process, the company offers user reviews for various card types which it it describes as “Yelp for credit cards.” Glyph currently supports more than 300 different credit cards, representing well over 90 percent of all credit cards transactions today. The company receives an affiliate commission on new credit card activations originating within the app.

Once users have determined their “perfect three-card credit card portfolio,” Glyph can deliver real-time recommendations for which card to use for each transaction. The app can use GPS location data to determine where a consumer is shopping, or the user can manually input the name of a merchant, such as Whole Foods, Starwood Hotels, or Best Buy. The app then offers insight into how the use of each card for a given physical world or online transaction will affect the user’s rewards earned, her interest expense, and her credit score.

The average consumer missed out on $600 in potential rewards last year by having and using the wrong credit cards, the company says. What’s worse, many consumers don’t know how their credit score works. For example, the percent of credit utilization on both a per account and overall basis directly affects your credit score. With that in mind, if the credit limit on one card is 35 percent utilized while another is 10 percent, it may make more sense for credit score optimization to use the underutilized card, regardless of rewards impacts. Glyph considers all this and countless other scenarios in the background then makes real-time recommendations, with user-friendly explanations of each.

Improving one’s credit score can have a cascading effect on their personal financial universe, leading to lower mortgage and auto loan rates, more rewarding credit cards, and in some cases the difference between getting a new job or not. In addition to the above insights Glyph offers additional basic utility like managing all your credit card balances within a single app.

“We believe smartphones should help people make better financial decisions at the point of purchase,” says Glyph CEO Mike Vichich. The company describes its app as delivering consumers “peace of wallet” with every transaction.

Glyph faces significant competition in the space. Los Angeles startup Wallaby offers similar credit card optimization at the point of purchase, adding the twist of a single dynamic card that replaces all of a consumer’s multiple third-party cards. Similarly, Mint, ReadyForZero, and other platforms help consumers manage their personal financial universe, including optimizing credit utilization and repayment. Finally, enormous companies like Visa, Mastercard, Discover, Verizon, Google, and Apple are all investing heavily in mobile wallet innovation.

The other obvious challenge is that Glyph, as it’s currently designed, introduces additional friction into the purchase process. Consumers must take out their smartphone, open the app, and verify a merchant chosen by location or input one manually. Then, the consumer must decide what are their priorities at the moment – rewards, interest rate, due date, credit score, etc., etc., etc. – and filter the card-usage recommendations based on that criteria. Don’t get me wrong, the results are worth the effort and then some. The issue is that consumers are lazy, and often don’t put in the effort to access readily available information that could benefit them.

Eventually, as digital payment technologies like Pay with Square, PayPal Here, or plain vanilla NFC become more ubiquitous, there’s will be an opportunity to integrate Glyph or similar technology into digital wallet apps, significantly reducing this friction. This could lead to an acquisition of Glyph by one of the larger platforms in its category, or it could lead to a duplication (and immediate irrelevancy) of its product.

Glyph is backed by $500,000 in seed funding from local angel investors including the CEO of a regional bank and a professor at the University of Michigan. The company currently has eight employees based in Detroit and New York City.

The founders aren’t stopping at the current vision for Glyph, which is impressive in and of itself. Rather, they have a bigger vision which I find extremely compelling. Vichich and Felous describe a future where credit card companies bid in real-time for the business of each consumer at the point of purchase, much like online advertisers bid for ad real estate each time we load a website.

For example, if a consumer is buying a $2,000 HDTV, Discover Card could offer to discount their standard 6.0 percent APR to 5.0 percent for this single transaction should the consumer use their card. VISA could offer double the cash-back rewards, while Mastercard counters with triple the airline miles. What the company is describing is a real-time bidding (RTB) platform for the consumer finance business. This reality is still well off into the future, but the result could potentially be a far more dynamic and liquid consumer finance marketplace.

There remains a ton of room for innovation in the mobile banking and personal finance sectors. Glyph has delivered a compelling product that addresses the basic needs of consumers in today’s environment. As competition increases and technology improves, the company will need to execute is larger and far more ambitious vision to remain relevant.

Ultimately, I want to live in a world where products like Glyph exist and in which my life is made more efficient by the moment. “The digital wallet doesn’t add incremental value – other than a thinner pocket – unless it’s smarter as well,” says Glyph CEO Michael Vichich. “That’s what we’re trying to deliver with Glyph.”