Automatic savings programs embedded in e-wallets are breathing new life into the lucrative personal finance sector for digital natives, especially millennials age under 35.
Based in the historic city of Pontevedra in Galicia province, northwest of Spain, Coinscrap has created virtual piggy banks to help everyone save on a daily basis. The company reckons that “a 35-year old user, who begins to round up bill payments to the nearest €2 to produce monthly contributions of €25, could accumulate total savings of about €54,000 by retirement age.” It estimates that using Coinscrap as the preferred payment method could even create savings of up to €80 monthly.
The aptly named Coinscrap digitizes micro-savings and makes short- and long-term investments as simple as possible for consumers. Users can save through “coin scraps.” Imagine paying €10.50 for a pizza with a debit or credit card: Coinscrap will automatically round up the purchase to €11 and channel the extra 50 cents into your virtual piggy bank.
There's enormous growth potential in the millennial community where 55% of young consumers do not have savings accounts. The automated piggy bank concept will help them to optimize their personal finances through micro-savings and inculcate regular savings and investment traits in young people.
In Spain, saving rates are below 5%, one of the lowest in Europe. In 2019, the country's social security deficit reached almost €20m. Research by BlackRock asset managers found that over 80% of the population in UK don’t save regularly due to limited sources of disposable income.
“One of the primary challenges that the industry faces is reigniting the savings culture by making it easy for people to save very small levels of money frequently,” said Carol Knight, director of operations of the UK Tax Incentivized Savings Association (Tisa). According to Tisa, about 90% of people would be open to using digital tools to manage their finances. It's estimated that 90% of the mobile-addict millennials will look at their smartphones within the first 15 minutes of waking up. Using mobile apps to manage savings automatically will also create new investment opportunities.
Every cent makes a difference
Although the potential demand is evident, changing the investment mentality of people continues to be challenging. Despite the rapid expansion of internet banking, personal savings and investing are still often perceived as complicated and time-consuming.
Coinscrap also provides intelligent micro-savings through gamification. Small targets are set and periodic contributions made to your Coinscrap piggy bank, such as 5 cents every time your favorite football team wins a game. "In Coinscrap, we make saving fun and easy. Users can maintain their lifestyle while our automatic savings programs are running in the background," explained CEO and co-founder David Conde.
Specifically designed for app users, Coinscrap's software can be customized for financial and insurance companies to help them to engage more effectively with their customers, cross-sell and upsell services, or simply gather data on customer spending habits. Partnerships with well-known brands, retailers and associations are also pivotal in boosting the adoption of the savings app.
A popular donation feature was also added in collaboration with the Spanish Association Against Cancer (AECC), allowing users to donate part of their savings to support the fight against cancer. The project was a success within one year, securing 13,000 app downloads and over 1,300 active users.
Growing via partnerships
Launched in 2016, Coinscrap has been growing steadily, mainly thanks to strong alliances with key players in the finance and insurance ecosystem. In 2017, Coinscrap was launched commercially in Portugal and in Spain through collaborations with Fidelidade. the biggest Portuguese insurer by network, and Spanish insurer CASER, respectively.
Coinscrap's long-term partnership with CASER produced the Cling Cling card to encourage users to increase personal savings. Card agreements with major retailers like Decathlon and Ikea have been signed. Consumers can claim a 5% discount in a given shop or designate the amount to their savings plans.
On the B2B level, Coinscrap has created a modular solution through API integration that allows banks and insurers to grow their client base through better user experiences. Coinscrap Finance helps clients to cross-sell and upsell products to their customers. In 2018, the company signed commercial agreements with EVO Banco to add features like savings rules within the EVO mobile app.
Recently, Coinscrap announced a new collaboration to pilot a portfolio of services designed especially for millennials. The new services will be tested within Xpollens, a white label of digital payment services created by the French bank Natixis Payments in partnership with Visa.
Competition in the fintech space is getting more aggressive every day. The original rounding up savings app Acorns has launched Acorns “Found Money” program, similar to Coinscrap's Cling Cling card, offering partnerships with over 200 retailers. Mobile-first bank Chime has also reported that its two automatic savings programs have helped users save almost $400m within just one year in 2018.
Coinscrap recently secured funding of €180,000 from Bbooster Ventures, Indexa Capital and angel investors like Blanca Hernández of Magallanes Value Investors and Dario Cifrodelli, the former head of mobile in AXA Italy. Future collaborations in the banking and insurance sectors will be the fastest way to expand, tapping existing customer networks and app-happy shoppers around the world.