Neobank Better Financial aims to cushion financial shocks for gig employees
A new bank of challengers is leveraging embedded insurance and wage loans to help gig staff cope with unexpected financial shocks.
Better Financial, launched this month, is the latest digital platform aimed at meeting the needs of a very specific segment of the population – Gig workers who do not have employer-provided health insurance and who experience daily fluctuations in income.
The startup whose Checking account is supported by Blue Ridge Bank and Fintech entity, uses account holder’s current salary data and past salary history to draw emergency low-interest loans.
Better Financial hopes to target the six in ten Americans who have experienced some form of financial shock in their lives and are looking for a solution in case of future recurrence, said Saumik Tiwari, a co-founder of the startup who had the experience personal financial shock after a rugby injury in college.
The experience spurred Saumik and his brother and co-founder Kaushik, the CEO of Better Financial, to investigate such shocks and their impact on low-income Americans.
Other challenger banks offer their version of financial safety nets for customers running out of money – often in the form of an overdraft protection feature. However, Kaushik Tiwari said the startup is not targeting serial overdrafts with its product.
“Our goal is to bet on the average-income American who doesn’t overstay every week, who hasn’t built an emergency fund, and who wants the ability to rely on if something happens that he didn’t expect . “, Said Kaushik Tiwari.
Better Financial has group insurance with insurance company AIG, which underwrites the startup’s accident insurance product. As long as customers have a minimum deposit of $ 500 and are spending at least $ 250 on their debit card each month, they are part of group policy.
While the product is designed for both the average consumer and the gig or freelancer, Better Financial only has a consumer debit card. But a business debit card is in the works Kaushik Tiwari said.
“Right now, our consumer debit card doesn’t deserve that much exchange, so it helps us focus on the business use case,” said Kaushik Tiwari. “The broader umbrella we are targeting is banking, which combats financial shocks because financial shocks affect a wider variety of Americans than just gig workers [are] definitely a focus where we want to build a business debit card and focus on it as a segment. “
The majority of Better’s affiliated payrolls are gig platform accounts, he said. “If you do any type of service job that requires physical labor, or a retail job, you are more likely to be injured or have an accident. These are definitely areas where we see greater demand. “
The startup has 66 customers on the platform, with the goal of reaching 10,000 within a year. The company initiated a pre-seed round of Slow Ventures last summer.
“Our primary vision is to become essentially the costco of finance,” said Kaushik Tiwari. “We are collecting a membership fee to cover fraud and card issuing costs, as well as the monthly maintenance costs we have to pay to the bank, but our goal is to add more products.”
The platform has health insurance in the works – a product users can add for an additional monthly fee – and also explore discounted virtual primary care.
“We’re basically trying to make a light version of an insurance plan,” he said.