“Make fun of debt.” – Paul J. Burt, Chairman/CEO of SaveUp
Paul Burt, Chairman and CEO of SaveUp, talked to us about the culture of debt in America today. By walking us through SaveUp’s gaming model, Mr. Burt demonstrated a financial management tool that is fun to use, and incentivizes members to pay down debt and grow savings. He also describes a fresh network design that benefits account holders, members, and financial institutions alike.
What was the impulse behind SaveUp and what’s the state of the company today?
SaveUp was founded in 2010 by fintech visionaries Priya Haji and Sammy Shreibati. Priya had a vision of building a B2C social media product to help Millennials get out of debt. In 2014, Priya passed away suddenly. I purchased SaveUp in 2015 with the intention to continue her vision of building an altruistic company offering a true rewards platform that incentivizes financial wellness.
So SaveUp offers incentives to save and invest. How does the platform work?
The core of SaveUp is focused on games. We believe in the power of games to educate and engage. We also want to make saving and investing fun. We have seen that lottery and sweepstakes games drive positive savings behavior and site use. Here’s the catch: Traditional rewards systems require players to spend money to acquire credits. Our methodology allows members to gain credits by saving or investing money. In our sweepstakes and lotteries, you use credits generated from smart financial behavior rather than spending and debt based behaviors. We are licensed to run lotteries in all 50 states.
How can you earn credits?
A member can earn credits (to be spent on the games) three ways:
- Pay down debt – Earn 1 credit for every $1 spent towards a loan/mortgage payment. Earn 1 credit for every $2 credit card payment.
- Savings – Earn 1 credit for every $1 added to savings/401k/IRA. Earn 1 credit for every $1 increase in checking* account. *average daily balance over one month
- Education - You can watch videos and test your understanding with a series of question at the end.
How are you making money?
We look at SaveUp like Costco but we don’t sell any names or customer data. Let’s say we have a prospective credit card company looking to acquire new customers. We look at our member data and determine good candidates. We analyze member data further and determine if a potential credit card offering could save our member money. Instead of selling the member data to the credit card company, we “pre-qualify” our members and only accept unconditional offers from the credit card company which we then offer to our members. The member can then decide if they would like to take advantage of the savings.
Next, we took a look at debit cards. 50-60% of Millennials do not use credit cards. We asked, how do we build a distinct offering? Build a reward program for the debit cards. We are monetizing this now and are licensing the program through the debit card platform.
What features are launching soon?
SaveUp 2.0 will connect with many more stores and affinity groups. We plan to offer discounts at 400k stores and retailers around the country. We want to build an affinity network where a member can scan and get a 20% discount at restaurants, movie theaters, and sports venues. We not only want to offer discounts, but credits for buying from someone in network. For example, you could get 20% off a $100 purchase - you would save $20 and you get 20 credits. Other reward platforms are faulted. We should be saving money to get rewards, not spending money to get rewards.
Version 2.0 will also include products. If you use the discount but don’t want to use your credits for the games or lotteries, we will allow members to save credits and buy products in-network. We hope to offer this by Q3 or Q4 this year.
How has SaveUp impacted members?
We have facilitated $2.2 billion of debt being paid down and $2 billion of savings over the last 6.5 years. Our studies with PayPal showed a 59% platform adoption rate, dropping to 39% after one year. We are happy with the stickiness levels but still aim to improve. It goes to show that it is possible to profit off of savings, not debt.
What changes have you seen in the lives of your members?
Members who did not normally think about finances on a daily basis, now have a daily focus point. When you log into your profile, you see the dashboard and your financial picture. You must view this dashboard before you can play the games. You are forced to think about your obligations. If you were trying to lose weight and had the discipline to stand on a scale every day, you would be more accountable. We have financial scales. If you want to get to credits and play the games, you need to build awareness. If we can get 50 million Millennials out of debt, we’ll have done the right thing for the country.
What do you think is the biggest thing that most banks or financial institutions should be doing that they're not typically doing?
The Fintech industry needs to move towards the consumer base. What would a consumer do daily that they would enjoy doing? Standing on a scale doesn’t sound fun. Similarly, logging into a dismal savings account or negative checking account every day is probably something you’d want to avoid it. We realize that you don’t change behavior overnight. In my previous work at an employee benefits company, we tried to incentivize employee fitness programs, freebies, and days off. Ultimately, you can take a horse to water and can’t make them drink. Unless you use gaming.
Fintech has been slow to adopt gaming and yet gaming has become ever more popular. While gaming may impede some productivity, game play forces daily discipline. Habits begin to change. Fintech needs to shift technology to platforms that entertain… and in finance, make painful debt decisions more pleasant.
What do you think makes for a good fintech partnership?
Someone who cares more about their members or employees than they care about their bottom line. At SaveUp, we have a moral obligation to anyone who signs up as a member. We want to help people get out of debt. Millennials have grown up in a fearful financial environment. We put a spotlight on your finances so you can transparently see it grow day to day and build trust.
What is your biggest problem/roadblock?
Our client base is stellar, and barriers to compete with our model are stiff (licensing every state). However, changing habits is difficult and time consuming. It takes time for members to change focus. We want folks to change habits more quickly and save more money using the site. Debt is a painful reality. Five years from now the average Millennials are going to be 40. Realities start creeping in and it may be too late to get finances under control at that time.
Anything else you’d like to add?
Yes, I’d like to share a short member testimonial which highlights a SaveUp feature we didn’t discuss, fraud prevention. A few days ago, a member named Lauren commented, “I review my SaveUp account daily. This morning I noticed a suspicious charge on my credit card for $1.00. I was able to call the credit card company, confirm the fraudulent charge, and cancel the card before any additional charges could be made. The charge was posted on June 13. My husband asked how I was able to identify it so quickly and I told him it was because of this app. I know $1.00 is not much, but whomever took my credit card number could have gotten away with many more purchases had I not been able to catch it so quickly. This app makes reviewing my credit cards and bank account a quick easy step every morning. I would like to thank you for having a great app that not only helps people learn to save money, but helps combat fraud.” This comment is important for us because it demonstrates that while the fun and games help achieve stickiness and savings, taking a daily snapshot helps create a vigilant mindset. This mindset not only deters fraud, it helps build loyalty, trust, and positive habits.