One banks $40M to offer ‘all-in-one’ financial services to the middle class
August 18, 2021 at 11:00 AM EDT
One, a startup that aims to bring “all-in-one banking” to the middle class, announced today that it has raised $40 million in a Series B round of funding. Progressive Investment Company (the insurance giant’s investment arm) led the round, which included participation from Obvious Ventures, Foundation Capital, Core Innovation Capital and others. The financing brings […]
One, a startup that aims to bring “all-in-one banking” to the middle class, announced today that it has raised $40 million in a Series B round of funding.
Progressive Investment Company (the insurance giant’s investment arm) led the round, which included participation from Obvious Ventures, Foundation Capital, Core Innovation Capital and others. The financing brings One’s total raised since its 2019 inception to $66 million.
Since making its product generally available in September of 2020, Northern California-based One has grown to have “hundreds of thousands” of customers, according to CEO and co-founder Brian Hamilton, who previously co-founded PushPoint (which was acquired by Capital One).
“Stretched middle-income households and working families deal with financial stress on a daily basis and are largely unsupported by current offerings,” Hamilton said. “This can be viewed as a kind of a noisy market, and so this funding has been a good validation of the vision and kind of the products, in that we have been able to stand out in that market.”
Over the past 11 months, the startup has worked to enhance its core product offering, launching overdraft protection, an auto-save feature that rewards automatic savings contributions at 3.00% APY, cash flow-based credit lines and a credit builder product to help its customers build financial health. One claims that it has helped its users automatically save over $2 million collectively since its launch, a number that grows daily, according to Hamilton.
The company is also trying to change up how people share financial goals and responsibilities with individually configurable “Pockets” that it says can be “easily” shared with others and accessed via virtual and physical cards.
“What we’re doing really is to re-integrate and unify what is otherwise a pretty splintered financial life for middle income households and families that are attempting to manage finances on a daily, weekly and monthly basis,” Hamilton told TechCrunch.
Over the past few years, he said, there have been a number of different fintech and bank products that people use to run their life “and they’re all starting to converge.”
The company was founded on the premise that traditional banking exists “on a system of fractured accounts and billions of dollars in hidden fees that leave customers living paycheck to paycheck despite steady incomes.” One says it is built on a “proprietary” technology core that aims to deliver saving, spending, sharing, budgeting and borrowing in a single account.
“Everybody’s trying to do a piece of everything, but they all started doing one thing,” Hamilton said. “But it’s really hard to back into the others or to bolt them on afterwards if you didn’t begin with the end in mind, kind of on an integrated basis. So that is essentially what we set out to build with One, with the idea to reunify credit and debit and savings and reintegrate the sharing of money with other people so it didn’t have to be done on a one-off transactional basis through Venmo or PayPal or Zelle.”
One’s banking services are provided by Coastal Community Bank, Member FDIC. The startup emphasizes that it’s a financial technology company, and “not a bank.”
It plans to use the new funding toward “fueling” customer growth, hiring and expanding its product offerings.
Charles Moldow, Foundation Capital general partner and One investor, said that challenger banks such as Chime and Aspiration focus on a debit card offering to subprime customers who are looking for lower bank fees and access to paychecks sooner.
“These customers are generally treated poorly by banks and charged a lot of fees because they don’t generate much revenue for banks outside of interchange fees on debit purchases with little disposable income,” he said.
The real money made by banks, according to Moldow, is against mid-prime customers for both debit and lending.
“These customers are harder to acquire because banks hate to lose them due to their large lifetime values,” he said. “One differs from the challenger banks in the market in that they have created a superior mobile banking experience for the 80% of the market that is not super prime or subprime. They have both a debit and credit offering and a vastly better user experience.”
The fintech is able to offer a user experience that is “materially” different from standard large bank offerings in that their back end infrastructure is a “modern” core and One is able to handle core checking, lending, money transfer and savings all on the same back end.
This means One can fully integrate those experiences (the aforementioned integrated offering “Pockets”).
“This differs from traditional banks which have each of these systems on top of different tech stacks which prevents them from providing integrated offerings,” he said.
Also, by not having brick and mortar branches, the company is able to offer lower fees, more points and rewards and higher savings rates, Moldow added.