A fintech startup founded by a former Google boss which lets people pay off their debts via a single monthly payment direct from their salary is now planning to expand on its loans business with a move into savings.
SalaryFinance was founded late last year by Dan Cobley, the former boss of Google in the UK, former banking consultant Ashesh Sarkar, and former banking executive and entrepreneur Daniel Shakhani with ambitions to become a so-called unicorn startup with a billion dollar price tag.
The startup, backed by Cobley's Brightbridge Ventures, offers loans as an employee benefit through payroll at more competitive rates than some traditional banks and payday lenders, taking repayments from salaries in the same way as pension contributions or student loan repayments. It claims to save each customer £900 on average, the equivalent of a ten per cent pay rise based on some salaried
The London-based fintech startup is now planning to build upon this and offer savings accounts which would work in the same way.
"As those using SalaryFinance pay off their loans, we see an opportunity to offer a savings product to them which will help people not just manage their debts now, but manage their finances for the future," Sarkar told City A.M.
The startup was founded with the goal of offering better rates to people than other lenders and who may be paying more because of their lending or credit history. It offers a blanket 7.9 per cent rate, regardless of credit scores or income, with the connection to an employer acting as a signal of security and the ability to repay the loan.
"Those who earn less are more likely to get worse rates than those who are more able to pay the loan back, which just doesn't make sense, while those who've used payday loans in the past are often prevented from being able to take out other types of loan," said Sarkar.
Users are able to consolidate debts into one loan and pay them off straight form their salary. And as the first cohort to pay off their debt approaches, encouraging them to put away that free cash for a rainy day is the next step.
The founders want to be a responsible lending business in stark contrast to Wonga an payday lenders, making £1 on every £25 people save on their previous loan, and hopes the latest move can help people address the psychology of saving which may be holding them back.
More than one million people in the UK now use the service including staff of the NHS through MyTrust Benefits.