Helix enables banking as a service for fintechs
Helix by Q2 provides highly flexible banking as a service (BaaS) to fintech companies that have developed innovative services and then decided to offer a bespoke banking component as well.
Helix’s clients include clients such as Acorns, Betterment, Credit Karma, Empower, Gusto, and M1.
“Our focus is on how we help these companies create unique products inside of what they already do,” said Ahon Sarkar, CEO of Helix in Q2. “They’re solving different problems for different demographics, and we’re moving from one size fits all to differentiated products built around people.”
The products that Helix by Q2 can offer include the building blocks of banking – accounts, cards, payments, data and controls, administration tools and monetization solutions – to facilitate the integration of personalized financial experiences.
For example, Gusto realized that the #1 problem many employees faced was managing cash flow and the #2 problem was building up savings. So they worked with Helix and launched Gusto Wallet – a way for employees to withdraw from their next paycheck for free instead of having to pay exorbitant interest to payday lenders. Gusto also launched an emergency savings product to help its customers save, which many users have accomplished for the first time.
Betterment, a pioneering robo-advisor (or digital wealth advisor in their marketing parlance), helps users create and maintain portfolios through its automated investment platforms. When customers wanted a way to spend the money that was in their Betterment account and maximize the return on the money they weren’t going to spend, Betterment partnered with Helix to launch a checking account alongside automated scanning functionality.
The checking account and debit card are provided by nbkc bank, originally the National Bank of Kansas City, which is a member of the FDIC and both a local brick-and-mortar bank and a national online bank .
Helix debuted about 10 years ago as Smartypig, a goal-based savings product, Sarkar said, with a very light banking core. It was rebranded as Social Money and later acquired by Q2 which markets itself as a leading provider of digital transformation solutions for banking and lending.
“Then, we [at Helix] realized that this kernel was more interesting than the products we built on it. We started to focus on customization. Everyone [in banking] was this one size fits all and we realized through our fintech partnerships that if you can actually customize the product for each user and give them progression, you see greater retention.
They started with payments, then goal-based savings, investing, money management with Credit Karma, and wealth management with Betterment.
“Now we’ll see people in loans, insurance, markets and games – concentric circles of adoption,” Sarkar said. “People are ready to adopt brand new technology that they have never seen before if someone in an adjacent industry has had success with it and they can figure out how to apply it.”
Helix expects announcements from new customers in these areas soon.
Credit Karma used Helix to provide banking services to its users. The company, known for providing credit ratings and advice on credit products, was acquired by Intuit in late 2020.
Credit Karma had up to 14 years of an individual member’s credit history – the amount they borrowed, their credit score, missed payments, and the amount of credit they used.
“We only had one aspect of a member’s financial life – borrowing and paying,” said Poulomi Damany, senior vice president and general manager of assets and tax at Credit Karma. But with Intuit and TurboTax, it could access the other side of the ledger for a member who used the tax preparation service and granted Credit Karma permission to access income information.
Equipped with detailed credit information about its users, Credit Karma considered the idea of offering banking services. Three and a half years ago, it decided to test the market by offering a high-yield savings account to its members, using Helix and MVB Bank, Inc.
“People trust us with their credit data, will they also trust us with their money?”
The answer was yes they would, so about a year ago Credit Karma launched a checking account as well.
“Banks make money from fees,” Damany added. “The first thing we said was that we don’t want to charge any fees for these accounts. Our goal is to help members better manage their money,” she said. “We’ve partnered with TurboTax to make [tax] refunds available sooner. If you have a refund and are depositing into a Credit Karma Money account, we will make it available five days early. We have also made reimbursement advances. You can get part of your refund as soon as the IRS accepts it.
Debit cards don’t usually offer rewards, she added, and when they do, the rewards are very limited. “We have Instant Karma. Every time you use your debit card, you can get your entire purchase refunded. The behavior we encourage is that you spend the money you have and don’t go into debt.
“Credit Karma Money wants to be the best checking account for your credit score,” Damany explained. “Our bill payment features help members stay on top of their bills. Through this, we surface bills found in a member’s credit report, as these bills are most important to their score, and let them know when their bills are available and when they are due. We go one step further by identifying the best action a member can take to reduce their debt, including how much they need to pay, what loan they need to pay, and by what dates. Members who take action are likely to see their score increase.
Another innovation is a Credit Builder account, a locked savings account that looks like a line of credit. Members pay small amounts there and this is reported to the offices as a payment on a line of credit. “It’s a line of credit, for yourself,” she said. “Every time you save, we help you build credit, and in the end, you end up with $400 to $500 in emergency savings.”
As members improve their finances, they are rewarded with early payment – paychecks made available two days early and instant check cashing. New features are coming, she added.