By Emmalyn Shaw and Sarah Morgenstern
Even if you have cash on hand, managing personal finances can feel like a chore – being sure to set an automatic transfer to savings every month or remembering to pay off your credit card before the balance rolls over. But for the 78 percent of Americans living paycheck to paycheck, it can feel like walking a tight rope.
Lacking budgeting knowledge and a savings pool to turn to, many Americans with poor credit or average incomes spend $189 billion of their earnings on bank fees and on predatory loans every year, including $11 billion on checking overdraft fees. Most of these families accumulate debt rather than savings, often having to start from scratch when hit with several fees.
Nearly 100 million Americans are at constant risk from hidden fees and high interest, but research from the Consumer Finance Protection Bureau indicates that the vast majority of overdraft fees are paid by the most vulnerable Americans.
Missing a payment pulls you further into a downward spiral of mounting debt and worsening credit scores. Many Americans get caught in this trap, taking months to pay off an initial need for $50 or $100 in liquidity, and paying many times the principal in interest.
To address this pressing need, we invested in Brigit — a strong, mission-driven team with experience in startups, tech, and banking, Brigit is introducing a new model to help consumers save and plan for expenses or unpredictable income – with a customer-aligned business model.
Brigit’s proprietary technology offering:
- Analyzes data from billions of individual bank transactions to formulate a deep understanding of each member’s cash flow needs and spending habits.
- Provides members with free bill alerts, financial insights, and budgeting tools to avoid missed payments or surprise fees, advances to bridge cash-flow gaps, credit score monitoring, and $1 million of identity theft protection, all for a flat $10 monthly subscription fee, with no hidden fees.
Since it launched, Brigit has saved 1 million members more than $250 million in overdraft, payday loan, and late payment fees.With its subscription model, Brigit’s financial incentives are aligned with its customers’ financial goals. As customers learn how to budget better, save more, and borrow less, it costs Brigit less to service each customer. The average user pays $120 a year in subscription fees and in return, avoids more than four times that amount in fees while also accessing $1 million of identity theft protection, a $180 annual cost elsewhere
Brigit’s predictive analytics platform effectively assesses risk and evaluates users’ ability to repay, adapting as users’ financial health improves or declines over time. It’s based on underserved consumers.
Brigit’s founding team started by asking why banks rely on the same credit score when deciding whether to extend a $200 advance or a $2 million mortgage. It’s a question we’d like to help address. We’re proud of Brigit’s progress and accomplishments and are pleased to participate in Brigit’s seed and the $35M Series A round covered today in Forbes. With this cash infusion, Brigit can continue to expand its user base and develop new tools to help users build their credit scores, readjust bill payments, and address liquidity issues. At Flourish, we believe fair and transparent services like Brigit are critical for meeting the financial needs of underserved Americans at scale.