Digitizing the Lockbox

Jay Tuli

Jay Tuli

Massachusetts bank ends the monthly landlord chore of collecting rents

By Ellen Ryan

It’s not often that doing something backward pays off so well.

Nearly all landlords with commercial accounts at Leader Bank, a $1 billion-asset community bank based in Arlington, Mass., were still depositing paper checks from their renters. A few landlords used a remote scanner or mobile phone, but still, the process was awkward. Landlords and Leader Bank’s leaders wanted a more efficient, less expensive process.

Late in 2013, Senior Vice President of Retail Banking Jay Tuli gathered the community bank’s software developer, operations analyst, customer-service expert and product manager. They envisioned a product that would let landlords collect rent online by ACH payments at a set date.

Rather than think about the how-tos, “we built out what the final product would look like first, like building a house,” Tuli explains. The final concept developed was a digital lockbox called ZRent.

Only after everyone agreed on the concept did the product go to marketing to create graphic slides, which took three months. Then came software development and coding for nine months, and beta testing for four more. Rollout was Feb. 1.

The selling point for tenants: a free service that automatically collected rent from any bank account with no stamp, no envelope and, in the case of housemates, no coordination or nagging. The selling point for landlords: predictability, no fuss, no deposit chore—and the ease of a dashboard to track all properties and payments. Landlords without a Leader Bank account pay for ZRent on a sliding scale.

Leader Bank’s lockbox and commercial customers, those with loans but no accounts, “find it hugely beneficial,” Tuli reports. The service has brought the bank 50 new accounts and $500,000 in deposits so far and made current customers more stickier, he says.

“We were surprised that you don’t need a ton of new people to have an impact,” says Tuli. Roughly 100 landlords and 300 tenants using ZRent have boosted business for the bank, and word of mouth is taking over. The bank is also white labeling the service for other community banks.

What Tuli thinks worked about the process—and his advice to other community banks in innovating—is encouraging creativity. “If you start thinking about the bureaucratic how-tos, that’ll kill your idea,” he says.

“Once you know what you have and what it can do to solve the customer’s problem, then go back and figure out the how. Otherwise you burn out the creativity.”

Ellen Ryan is a freelance writer in Maryland.