In March, Credit Sesame debuted its banking offering, Sesame Cash. Since then, more than 200,000 customers have signed up, with thousands of new accounts per day, putting Credit Sesame among the fastest growing digital banking service providers in the U.S.
62 percent of Credit Sesame’s 15 million registered users have expressed interest in Sesame Cash for better cash and credit management. Cash was launched in collaboration with Canadian banking provider Stack. and now, Credit Sesame is announcing it has acquired Stack and will use the technology and team to expand for the first time internationally.
My guests today on the podcast are Adrian Nazari, CEO and founder of Credit Sesame, and Stack’s CEO Miro Pavletic, who will assume the new role of GM, Canadian and International Business for Credit Sesame.
Subscribe: Apple Podcasts I SoundCloud I Spotify I Google Podcasts
The following excerpts were edited for clarity.
The acquisition
Miro Pavletic: We’ve been working with Adrian and team over the past 18 months to launch Sesame Cash in the U.S. Since working together, we’ve been able to bring the teams together and bring this to fruition into an acquisition.
Adrian Nazari: Credit Sesame has been in business for about 10 years. Over the course of the last several years, we’ve emerged as a leader in helping consumers manage their credit. It’s been a great journey. 26 percent of Credit Sesame users improve their credit scores by at least 10 points in the first month with us. That creates a lot of excitement for consumers and we have a lot of loyal followers. We have more than 15 million registered users.
Armed with the knowledge of how credit works, we found how much cash a consumer has, and how and when they use that cash, has a profound impact on their credit and financial help. It was a natural next step for us to help guide consumers how to use their cash.
In 2019, we started exploring our options about building a banking product internally and working with partners. Fortunately, we found Stack in the second half of 2019. What we found in them was an incredible, talented team that built a great, innovative challenger banking product. Their approach and vision to financial wellness was a cultural fit for us. We started talking about how to bring the two teams together. Through collaboration with Stack, it made sense for us to acquire them and create a very compelling banking product. That was in progress for several months and now, we’re one team.
Sesame Cash ties credit to cash
Adrian Nazari: Sesame Cash is the first bank account to seamlessly integrate consumer cash and credit together in one place for free. We use AI and data science to help consumers do something they couldn’t do before. The reality is that in the current environment, most challenger banks took what traditional banks do and they made it free and accessible. That’s great — consumers are benefiting from it. But at the end of the day, the accounts don’t really work for people’s financial health.
By bringing cash and credit together, we’re actually getting our members’ cash to work for their credit and their credit to work for their cash. We’re already unlocking benefits that aren’t offered elsewhere.
SPONSORED
The numbers behind Sesame Cash
Adrian Nazari: We initially announced Sesame Cash back in March and we made it available to a limited number of our existing members. We had two months of pilot with those accounts and in the middle of May, we soft launched. In less than a month, we’ve exceeded over 200,000 digital bank accounts. The demand continues to surge — at this rate, we’re likely one of the fastest growing digital bank accounts.
We have almost 16 million registered users. 39 percent told us they were interested in a free banking account. When they found out about Sesame Cash, that interest went up to 62 percent. We think the opportunity ahead of us is significant.
Features
Adrian Nazari: We have three features already that are the result of bringing cash and credit together. Sesame Cash rewards users when they improve their credit by depositing cash in their bank account. When our members improve their credit scores in any given month by more than 10 points, we deposit $5 dollars in their bank account. Improve by 100 points and we deposit $100. We’re rewarding them for good credit behavior.
Our bank account users get $1 million of credit and identity protection.
We want our customers to be on top of their credit all the time. The third key feature is that Sesame Cash users can check their credit any time they want.
Roadmap
Adrian Nazari: We want to introduce smart bill pay. It’s an AI-driven bill pay that looks at your cash and cashflow, and based on credit obligations, makes recommendations for timely payments. Our consumers can pay less interest and improve their credit scores over time. We can do that because we have access to the credit side of our users’ balance sheets to know their obligations and terms to help them.
In addition, we will be rolling out a capability to help consumers build credit or improve their credit with their money in the bank — another example of how cash can work to improve credit.
Our users will have access to lower rate, better products that bring down their cost of borrowing and remove fees, freeing up cash. These combinations work together as a one-two punch to achieve financial wellness faster.
Going international
Adrian Nazari: The acquisition also marks an entry for Credit Sesame into the international market since Stack is primarily based in Canada. Our intention is to offer cash and credit in Canada as our first step to international expansion.
Miro Pavletic: We saw an opportunity when we were building Stack to extend out our platform and provide it as a white label service. We launched Stack about 18 months ago with real time digital rewards and offers and P2P transactions and an integrated social stream — a lot of brands reached out to us.
We started thinking that white labeling was a way to achieve our international aspirations. These brands have large customer bases. We get them on to our platform and BINs, eliminating our costs of customer acquisition because these customers are already acquired by these brands.
Because we’re built on global payment rails, we can launch this anywhere in the world. Our first expansion and partnership which turned into an acquisition, was with Credit Sesame in the U.S. Now, we’re running two programs across North America. We want to expand the proposition with our white label solution.
Expanding beyond financial services
Miro Pavletic: We’ve had a huge outreach. It’s not just traditional financial institutions. There are large lifestyle brands in travel, leisure, and experience that want to integrate financial services into their products. These brands have massive customer followings. There’s a huge opportunity to link financial services and digital rewards and loyalty.
Some of big brands have 10-20 million customers on their platforms. If they integrate financial services into their platforms, they can integrate loyalty and rewards to encourage customers to stay on the platforms for long periods of time. Not only that, but the brands get all the insight on their consumer spend, so they can extend and incent rewards and loyalties to their consumers to keep them in their ecosystems.
Interesting move – but cross-selling financial products (e.g. credit scoring and challenger banking) has been difficult to pull-off. Therefore, will be interested to watch this and see how they look to integrate their existing offerings.