By Tina Giorgio
Many Americans are living paycheck-to-paycheck. In fact, the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017 concluded that more than 20 percent of adults are not able to pay their current month’s bills in full, and nearly 40 percent of Americans would have to sell something they own or borrow money if faced with an unexpected $400 expense.
With the recent government shutdown, this savings shortfall has been front-and-center for banks, so it was top-of-mind on my visit to Little Rock, Ark., to join the ICBA ThinkTECH Accelerator finalists at the Venture Center. While there, I was introduced to Invest Sou Sou, an ICBA ThinkTECH Accelerator finalist. This company targets the nation’s savings gap by offering banks an innovative social banking account that they can offer their customers as they save money and build strong credit.
Fonta Gilliam, Invest Sou Sou founder and CEO, says the offering allows a set of people with similar financial goals to open a group savings account that can be used as cash collateral for a loan guarantee. For illustrative purposes, let’s say your customer opened a Sou Sou account and invited nine friends with everyone agreeing to match her $100 monthly contribution. In month one, your customer would have a savings account balance of $1,000 as would her network of peers, each of whom now becomes a more favorable loan applicant prospect. Over time, as the account matures, each person’s credit score increases, unlocking the opportunity to service the individual group members with other products and services.
“Invest Sou Sou is leveraging the power of community and community savings to de-risk loans for consumers who otherwise would not be able to get a loan.” remarks Gilliam. “Data shows that people are much more likely to repay on time every time and to keep saving when their peers hold them accountable.”
Conceptually, this makes a lot of sense, and Invest Sou Sou’s offering provides community banks with another tool to help their customers. It’s a creative solution to solve a problem in the marketplace—and offer community banks the potential for deeper relationships, and perhaps, new customers in the process.
Brian Otteman, director of customer experience at $175 million-asset High Plains Bank in Flagler, Colo., was a recent bank participant at the Venture Center and got to spend some time with Invest Sou Sou, researching its offering.
“Interacting at these types of events as a participant, we are able to explore where we might want to go with our business,” he notes. “Learning about [Invest Sou Sou’s offering] and getting an opportunity to talk through the benefits, I think that expands the horizons for us and challenges us to know more.”
Overall, that’s the goal of each member of the Accelerator cohort—to provide creative approaches for addressing real problems in the marketplace. These companies provide products that speak to community banks.
“What was very impressive to me is that the companies that they selected have real, viable value propositions that banks will have interest and need for,” said Stephen Wooters, executive vice president, marketing, digital banking, and payments, at $1.5 billion-asset Fairfield County Bank in Ridgefield, Conn. “They’re solving real problems, not solutions in search of a problem,” says Wooters, another banker who provided valuable feedback to our fintech finalists.
What’s more, Invest Sou Sou’s problem-solving capabilities are ready for prime time. The company is launching its solution to a bank in the Washington, D.C./Maryland/Virginia region in the next 60 days.
“We see Invest Sou Sou as revolutionizing the way that people think about saving and credit building with peers,” says Gilliam. “Social networking can empower financial health and financial stability. That’s the vision and the way we encourage people to think about this concept of social banking.”
Tina Giorgio is President and CEO of ICBA Bancard.