When it comes to financial planning, families have a lot of different options to choose from. One option that has become increasingly popular in recent years is prepaid payments. With this type of payment, families can put money aside each month to cover future expenses. This can be helpful in a number of ways. First, it can make budgeting easier because you know exactly how much money you have available to spend each month. Second, it can help you avoid financial surprises down the road.
Japanese fintech startup SmartBank completed a $20M Series A financing round to continue innovation using prepaid services and family financial planning and bring total funding to over $30M. Kate Park provides details in TechCrunch:
“SmartBank wants to enable anyone to manage finance, “from everyday spending to planning for the future” by offering its digital finance management service B/43, which is a Visa prepaid card and personal finance management app. The company is similar to challenger banks like Brazil’s Nubank and U.K. company Monzo, but its key differentiator (in terms of functionalities) is that it does not just focus on individuals but also offers joint accounts for couples. In addition, it will soon release services for parents and kids to manage finance together, the startup says.”
SmartBank focuses on dual-income families in Japan, a growing segment that currently cannot be served by traditional banks that do not permit joint accounts:
“In Japan, banks do not offer joint accounts for couples. As the number of dual-income households is increasing in the country, it is more inconvenient for them to keep the overall flow of money and savings compared to single-income families, (CEO Shota) Horii said. The startup has conducted over 250 user interviews and estimated that as many as 15 million double-income households face challenges managing household finance, Horii continued.”
Users of the B/43 platform prepay their monthly budget into the app and make payments from there, circumventing the traditional banking process. The innovative use of prepaid also allows SmartBank to operate under a fund transfer license rather than a traditional banking license, allowing multiple family members to be connected to a single account. SmartBank then collects interchange fees and also has loan product they call Charge Now Pay Later that collects a commission at the end of each month the product is utilized.
Overview by Jordan Hirschfield, Director, Prepaid Advisory Service at Mercator Advisory Group
Read more on prepaid services: Reserve Bank of India Aims to Grow Prepaid Services