Helix by Q2 provides highly flexible banking as a service (BaaS) to fintech firms that have developed innovative services and have then decided to offer a tailored banking component too.
Helix customers include clients such as Acorns, Betterment, Credit Karma, Empower, Gusto and M1.
“Our whole focus is how we help those companies build unique products inside what they are already doing,” said Ahon Sarkar, GM of Helix by Q2. “They are solving different problems for different demographics, and we’re going from one-size-fits-all to differentiated products built around people.”
Products that Helix by Q2 can offer include the building blocks of banking — accounts, cards, payments, data and controls, admin tools, and monetization solutions — to make it easy to embed personalized financial experiences.
For example, Gusto realized that the #1 problem many employees faced was cash flow management and the #2 problem was building savings, so they worked with Helix and launched Gusto Wallet — a way for employees to draw from their next paycheck for free instead of having to pay exorbitant interests to payday lenders. Gusto also launched an emergency savings product to help their customers build savings, something many users accomplished for the first time.
Betterment, a pioneer robo advisor, (or digital wealth advisor in their marketing speak), helps users create and maintain portfolios through its automated investing platforms. When customers wanted a way to spend cash that was in their Betterment account and to optimize the yield on the cash that they weren’t going to spend, Betterment partnered with Helix to launch a checking account alongside automated sweep functionality.
The checking account and debit card are provided through nbkc bank, originally National Bank of Kansas City, which is a member FDIC and both a local bricks and mortar bank and a national online bank.
Helix got its start about 10 years ago as Smartypig a goal-based savings product, said Sarkar with a very light-weight banking core. It rebranded as Social Money and then got bought by Q2 which calls itself a leading provider of digital transformation solutions for banking and lending.
“Then we [at Helix] realized this core was more interesting than the products we built on top of it. We started focusing on personalization. Everyone [in banking] was doing this one size fits all and we realized through our partnerships with fintechs that if you can actually personalize the product to each user and give them a progression, you see greater retention.”
They started with payments, then goal-based savings, investing, financial management with Credit Karma and wealth management with Betterment.
“Now we will see folks in lending, insurance, marketplaces and gaming —concentric circles of adoption,” said Sarkar. “People are willing to adopt a brand new technology they have never seen before if someone in an adjacent industry has shown success with it and they can figure out how to apply it.”
Helix expects some announcements of new clients in these areas soon.
Credit Karma has used Helix to provide banking services to its users. The company, which has been known for providing credit scores and advice on credit products, was acquired by Intuit at the end of 2020.
Credit Karma had up to 14 years of an individual member’s credit records — how much they had borrowed, their credit score, missed payments and how much credit they used.
“We had only one side of a member’s financial life — borrowing and payments,” said Poulomi Damany, senior vice president and general manager of assets and tax at Credit Karma. But with Intuit and TurboTax, it could gain access to the other side of the ledger for a member who used the tax preparation service, and granted Credit Karma permission to access the income information.
Equipped with detailed credit information on its users, Credit Karma looked at the idea of offering banking services. Three and a half years ago it decided to test the market by offering a high yield savings account to members, using Helix and MVB Bank, Inc.
“People trust us with their credit data, will they also trust us with their money?”
The answer was yes, they would, so about a year ago Credit Karma launched a checking account too.
“Banks make money through fees,” added Damany. “The first thing we said is we don’t want to charge any fees for these accounts. Our goal is to help members manage money better,” she said. “We have partnered with TurboTax to make [tax] refunds available sooner. If you have a refund and you deposit in a Credit Karma Money account we will make it available five days early. Similarly we have done refund advances. You can get a portion of your refund as soon as the IRS accepts it.”
Debit cards generally don’t offer rewards, she added and when they do, the rewards are very limited. “We have Instant Karma. Any time you use your debit card you could be refunded your entire purchase. The behavior we are encouraging is that you are spending the money you have and not going into debt.”
“Credit Karma Money wants to be the best checking account for your credit score,” explained Damany. “Our bill pay features help members stay on top of their bills. Through this, we surface bills found within a members’ credit report, as those bills matter most to their score, and we notify them when their bills are available and when they’re due. We take this one step further by identifying the best action a member can take to reduce their debt, including how much they should pay, which loan they should pay for and on which dates. Members who take action are likely to see their score increase.
Another innovation is a Credit Builder account, a locked savings account that looks like a line of credit. Members pay small amounts into it and that gets reported to the bureaus as payment on a credit line. “It is a credit line, to yourself,” she said. “Every time you save we help you build credit and in the end you wind up with $400 to $500 in emergency savings.”
As members improve their finance they get rewarded with early pay — paychecks made available two days early, and instant check cashing. New features are coming, she added.