Having established itself as a goal-saving solution for millennials with its SmartyPig solution, Social Money is now gearing up for the next generation with its new partnership with educational lender, Sallie Mae.
Sallie Mae will use Social Money’s CorePro technology to build savings accounts for educational expenses such as tuition and books. The accounts are part of Sallie Mae’s Upromise program and will be rolled out this summer.
The partnership “validates a lot of trends” said Social Money co-founder Jon Gaskell in a telephone conversation after the deal was announced. First, it demonstrates the value of its new technology organizations can use to make goal-based savings accounts easy to set up, administer and, importantly, be cost-effective.
(Left to right): Social Money co-founders Scott McCormack, president, and Mike Ferrari demonstrated their GoalSetter solution at FinovateSpring 2012 in San Francisco.
Second, Social Money’s relationship with Sallie Mae shows banks there may be more value in their “low-balance” clientele than they think. “Sallie Mae would have to pay a lot of money to bank these accounts,” Gaskell said. “CorePro makes it easy to provide an account to customers and not affect the business model.”
Social Money co-founder and President Scott McCormack agreed. A banker by trade, McCormack spoke about the challenges of serving low-balance segments such as students and the underbanked. Often the only way to offset the costs is through higher fees, he said, which is not what low balance segments want or will pay for.
“CorePro eliminates that issue,” McCormack said. “We provide a core processing solution to the bank at a cost-effective entry point so (the bank) can provide a value-added user experience.”
“We help (banks) profitably bank customers they can’t reach,” said Gaskell. “Many of them don’t have the best feelings about banks, or about needing them. We provide a bridge to the next generation of bank customer.”
The Upromise program from Sallie Mae helps students and their families save money for education expenses via a rewards program that provides cash back for school when shopping with any one of Upromise’s more than 850 retail partners. Upromise also provides a MasterCard credit card with a cash-back-for-college plan, and a high-yielding savings account. Even though Upromise has been in operation for 13 years, Sallie Mae’s Charles Rocha, executive vice president, welcomes the new relationship with Social Money.
“We are consistently looking for new ways to enhance our customer experience and provide products and services to help our customers effectively save, plan, and responsibly pay for college,” Rocha said. “Social Money’s platform will provide a simple, straightforward, and consumer-friendly system for our new college savings account.”
Headquartered in Des Moines, Iowa, Social Money was founded in 2008 as SmartyPig, and rebranded as Social Money ahead of its appearance at FinvoateSpring 2012. CorePro was officially launched in 2013. The technology has been deployed by FIs like The Bancorp and Lincoln Savings Bank, as well as payment processors such as The Members Group. Qapital, another Finovate alum, has leveraged Social Money’s savings account and core processing power to build its own PFM app.