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US-based fintech Credit Sesame, which helps consumers find suitable credit card offers from its financial institution partners, as well as mortgage refinance options,
is dipping into the digital banking space with a new product, dubbed Sesame Cash, per TechCrunch.
The bank accounts opened with Sesame Cash are held with the Community Federal Savings Bank. For context, Credit Sesame has over 15 million users and achieved profitability in 2016.
The new service sees Credit Sesame launch products that are similar to neobanks' offerings in the country. Sesame Cash's features include real-time notifications, an early payday option, a network of over 55,000 ATMs, and a Mastercard debit card with accompanying management tools within the app, among others.
Additionally, Credit Sesame plans to launch additional features in the coming months, including a smart bill pay function that manages cash to help improve users' credit scores; an automatic savings option that rounds up transactions; and other budgeting tools. These are all popular features already being provided by neobanks in the country, meaning that the service could face tough competition going forward.
Here are the two reasons why this move makes sense for Credit Karma:
- It'll help the fintech diversify its offering and boost loyalty and satisfaction of existing customers. Expanding into banking services on top of its existing product suite enables Credit Sesame to provide users with a more holistic offering - and strengthens user engagement after they meet their credit score goal. The fintech is essentially moving toward operating as a one-stop shop for financial matters. It'll likely be able to boost uptake for Sesame Cash among consumers who already use the platform for other financial needs: For example, the fintech will reward users with cash incentives of up to $100 per month for credit improvements, which could make this an attractive option for those looking to build their credit. That said, Credit Sesame might have a more difficult time luring in consumers who aren't existing users of its platform or aren't looking to focus on credit services, since it will then have to compete with the offerings of other, more established neobanks like Chime and Varo Money.
- Additionally - and potentially more importantly - it will give Credit Sesame access to more data from users, helping it enhance its existing offering. When a consumer uses Sesame Cash, the fintech gets more data on that individual's financial situation and habits in terms of repayment abilities. So, this product allows Credit Sesame to take advantage of more data points to accurately assess users' financials, helping it provide them with better advice on how to improve their credit score and meet their financial goals - further boosting the effectiveness of its platform.
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