The new Mighty Oak Visa debit card from Acorns has a solid foundation for success says a representative from long-time partner Helix by Q2. GM Ahon Sarkar said he’s not surprised by Acorns’ prosperity since the two companies first partnered seven years ago, which is an eternity in fintech.
Debuting in mid-November 2023, the Mighty Oak Card offers 3% checking API and 5% APY on an emergency fund with no minimum deposit or balance requirements. The heavy metal tungsten debit card includes Real-Time Round-Ups, where customers top up their purchases to the next dollar. A paycheck split service automatically saves and invests a slice of every check on payday. Customers gain access to Acorns’ financial wellness system including retirement planning service Acorns Later, bonus investments from 15,000 brands on everyday purchases and access to 55,000 fee-free AllPoint Network ATMs.
Acorns and Helix by Q2 – a long-term fintech relationship
Sarkar said Helix by Q2 first partnered with Acorns back in 2017 when they were a small microinvesting company. Back then Sarkar spoke with hundreds of companies about embedded banking-as-a-service, and few understood. Acorns did, and the companies have been together ever since.
Helix by Q2 doesn’t work with everybody. Sarkar said early meetings were a two-way process where both sides asked questions. Helix by Q2 looks for differentiated companies that provide unique value and have a knowledgeable team and customer-centric focus. Acorns checked every box.
That’s rarer than you think. In 2019-2020, venture money flooded into BaaS. Many companies rode the wave and signed every deal that was put in front of them. Sarkar said it’s somewhat understandable, as an entire industry was forming and business models were evolving on the fly.
Acorns still stuck to its mission and maintained that discretion. Today, the industry is in a third phase where capital is scarce. The ones who stuck with a viable blueprint, like Acorns, survived.
“Back in 2017, when we started talking to Acorns, it was immediately clear that this was a different kind of company,” Sarkar recalled.
What makes Acorns different
One feature immediately struck him. Every new Acorns hire must start in customer service. They hear and internalize customer concerns. That helps companies avoid the common issue of building solutions to non-existent problems.
“Many companies don’t start with a fundamental human understanding of what the other person is going through,” Sarkar explained. “What I found in Acorns is that like that, one little thing cascaded into building things with the customer in mind. When they built products, they thought about how are they going to support them. How are customers going to experience it? What are the problems going to be?”
In the beginning, Acorns identified the issue of decision fatigue and worked on solving it. They focused on things we subconsciously wanted to do but were too busy to focus on. When they built a banking product, they didn’t artificially inflate it with VC and marketing spends.
That listening continued as customers spoke of the need for retirement products for them and their kids. They succeeded in that rare area of providing plenty of customer value while still earning profit.
The balance between value and profit
“What Acorns managed to do, which in my opinion really difficult, is they managed to give the customers the two things they really wanted, which was take away the decision fatigue and help them get to where they wanted to go without them having to do it,” Sarkar said. “And at the same time, they didn’t compromise on the rate or the return that they were going to get back. So they got this really good set of customers that were loyal to them because they approached this in an empathetic way.
“As someone who runs a business, it’s easy to say that we care about empathy. It is hard to implement. It is hard to get a group of people who really care. That is so evident in the way that they have built the product and the thoughtful way that they have listened to those customers.”
It’s impossible to manufacture a relationship like the one Acorns has with its customers, Sarkar concluded.
The current state of embedded finance
I last spoke with Sarkar in mid-2023 for an article on the risks faced by embedded finance. Sarkar said the sector’s reconciliation phase reminded him of when the Dotcom bubble burst.
We’re in the thick of it now. Much like the early stages of grief, 2023’s second half saw many companies in denial. Some were spending and losing big to gain traction. They were kicking the can down the road.
There’s no road left and likely no soft landing to save us. Money has been printed at a higher rate over the past three years than it was for a decade. Rates were raised to curb overspending. Stimulus funds were spent on survival, but that’s in the past. Student loan repayments will soon be reported to credit bureaus. Companies are trying everything from selling at lower values to delaying when purchases get credited. They’re buying time for a better tomorrow that may never arrive.
“We’re in that period of time when the clothing is still on the rack, and it hasn’t gone on clearance yet because they’re hoping that somebody’s gonna buy it,” Sarkar said. “But you have a whole bunch of inventory you’re going to need to sell.
“You’ll see a lot more acquisition and a good amount of consolidation. The ones with a good business model are going to be in an amazing position to be able to grow their business, to grow their moat. Especially the banks. Some will be the acquirers, while others will try to evolve their digital experience to take advantage of this swath of competitors who are going through a set of challenges.”
Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.