Fintech plans to double workforce, add banking partners in 2023

Michael Nelskyla wants to give consumers the opportunity to open a savings account that draws returns from the market instead of interest.

Save, a Houston-based fintech founded by CEO Nelskyla, closed the largest funding round, and first institutional capital, in its history. BNP Paribas led the increase, along with Webster Bank in Connecticut, to drive Save’s business-to-business strategy and scale up its current products. Fintech is accelerating growth at a time when markets are volatile and interest rates are rising, and many fintechs are struggling.

What Save does that is different from many other non-bank providers is to combine deposits insured by the Federal Deposit Insurance Corporation with higher returns from curated investment portfolios.

“There hasn’t been a lot of innovation in the retail banking space,” Nelskyla said in an interview. “It would probably be fair if I said there hasn’t been one in 100 years because the typical account you’re offered is a checking or savings account. And it’s the same wherever you go.”

Courtesy of Save

Save’s market-linked savings product, launched this summer, secures deposits with Stamford, Conn.-based Webster Bank while investing in ETFs allocated based on a client’s risk appetite and interest in environmental, social and governance assets. Due to FDIC-insured partnerships, customers will not lose any deposits, even if the investments do not pay off. The company charges management fees on its products unless they do not provide a return.

Higher-yielding bank products are an option to keep inflation, which has hit records this year, from eroding the value of money. Save does not guarantee returns, but currently projects an annual percentage return from its market savings accounts of 7.61% over a 1-year term, 5.73% over a 2-year term and 9.25% over a 5-year term, per its website . Save also offers a credit card that replaces rewards with investments and projects an APY of 3.81% on the “plus” card and 5.71% on the “premium” card. Returns are subject to long-term capital gains tax rather than income tax, which is less typical of bank accounts and potentially beneficial based on the consumer.

Save will use the capital infusion from Paris-based BNP Paribas and Webster Bank to double its workforce, which currently has more than 20 employees. Nelskyla founded Save in 2020 and hired the team from companies such as Goldman Sachs, UBS and NASA. The CEO said he expects Save to reach profitability by 2024. The company currently has 33,000 customers across its products.

The recent funding is also key to Save’s B2B strategy. The fintech plans to partner with more FDIC-insured financial institutions next year, ranging from smaller regional banks to leading U.S. retail firms, Nelskyla said. He also said the company will work to expand its investment portfolio options to cater to a wider range of consumers.

Matthew Smith, managing director and head of digital banking and corporate product at Webster, said in a prepared statement that the $65 billion bank was pleased to expand its partnership with Save and support its growth. Webster Bank, which has been Save’s exclusive banking partner since the summer, also made the announcement Monday it will acquire interLINK, another fintech that can boost deposits, for an undisclosed amount. interLINK facilitates the investment of cash from brokerage accounts to banks.

BNP Paribas has also increased its contributions to fintechs.

“BNP Paribas is committed to market innovation that responds to clients’ needs,” BNP’s Steve Nawrocki, head of equity derivatives and global equities Americas, said in a prepared statement. “As a leading European institution with technology as a key pillar of our strategic plan, we continue to partner with fintechs with scalable benefits for our global client franchise.”

In April, BNP Paribas invested in fintech-focused fund Anthemis through its Global Markets Strategic Investments arm. The financial giant also invested more than $200 million in UK consumer lender Fluro in October, and last month bought Kantox, a fintech focused on automating currency risk management.