Pinwheel Payroll data

Pinwheel to power Amex direct deposit switching

Pinwheel’s new partnership with American Express is the latest development for a fintech that has been quite busy over the past two years. The income and employment API is now American Express’ direct deposit switching partner for their new checking account. 

In a statement, Pinwheel said removing all friction from the account setup process is paramount for financial institutions. New checking account campaign retention numbers can be as low as 10%.

The art of the Pinwheel/Amex deal

Pinwheel partnerships lead Brian Karimi-Pashaki said Pinwheel and American Express first met when the latter’s venture arm Amex Ventures, was involved in discussions during Pinwheel’s Series B raise. Karimi-Pashaki credited Amex Ventures for connecting Pinwheel with American Express so they could explore some clear value propositions for their consumer bank.

“From there, Amex surveyed customers to get a pulse on the demand for direct deposit switching,” Karimi-Pashaki explained. “Since the majority expressed a desire, they decided to partner with us to bring it to life. 

“American Express wanted to know that the product would be easy to use for their customers. They also wanted to know if we could drive deposit growth for its first-ever checking account, launched last year.  

How it works

Pinwheel gets some clear branding early in the registration process. When customers register for an Amex account, they are prompted to use Pinwheel to instantly switch their direct deposit to their new Amex checking account. Karimi-Pashaki said it updates a laborious process where the customer previously had to complete a paper-based process. Annoyed, many abandoned it.

Brian Karimi-Pashaki of Pinwheel
Brian Karimi-Pashaki said UX was a key component in the development process.

Beyond the annoyance, the process also caused noticeable delays before the first deposit hit the new account. That squanders a crucial opportunity to engage with the new customer early when interest is high.

Karimi-Pashaki said the user experience was the main focus during the development process, given American Express’ strong brand reputation.

“Many of us have been very long-time users, and we recognized that American Express just has a different equation when it comes to reputational risk,” he said. “As an extension of that, their user experience is paramount.”

Security considerations were also significant. Karimi-Pashaki said Pinwheel prides itself on exceeding data security standards. It holds CISO, SOC 2 Type 2, ISO 27001, and PCI DSS Level 2 certifications. He added that the company is also a Consumer Reporting Agency (CRA), making Pinwheel the first and only major provider in the space offering Fair Credit Reporting Act (FCRA)-compliant income and employment data that lenders can use properly for credit decisioning.

There’s plenty more to come for Pinwheel

The Amex partnership is the latest of several announcements Pinwheel has made since a $50 million Series B in early 2022 valued the company at $500 million. This April, Pinwheel unveiled Direct Deposit Switch 2.0. It allows 100% of direct deposit users to easily switch their direct deposits to new institutions without paper forms or contact with HR. 

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The original version helped grow banks’ deposits by 75% without the blanket coverage of 2.0. The new version also taps into verified consumer data in real-time.

“Removing friction from the direct deposit setup is a win-win, allowing consumers to move more freely about the financial system to fintechs or banks that offer them the best products,” Karimi-Pashaki said. “This breeds innovation so banks and fintechs can keep their customers. 

“Customers can easily switch to places with the best rates and user experiences. It’s very important for the entire ecosystem. Ask yourself, why have you been with your bank for such a long time?”

The value in unlocking income data

Stay tuned, he advised. As soon as direct deposit friction is eliminated, the market will see a surge in unique and positive use cases for income and employment data. 

“Income is arguably the most important part of someone’s financial picture, and we’re just scratching the surface of how unlocking this missing data can create more positive outcomes for consumers and financial institutions alike,” Karimi-Pashaki said. “We expect to see the development of better underwriting methods, such as dynamic loans or earned wage access (EWA). We also expect better underwriting models for gig and creative workers who have different income streams relative to the types of workers banking systems have traditionally prioritized. 

“In aggregate, all of this means better access for more people while rates and product experiences improve for consumers.” 

  • Tony Zerucha

    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.