Direct deposits are highly sought after by banks of all types, but securing them from their customers is not always easy. Users tend to use the account to which their paycheck is deposited more than other accounts, but the process of changing a direct deposit can be time consuming and confusing.
Pinwheel markets itself as a solution to this problem, and many neo-banks are taking note. By allowing neo-banks to connect with their users’ payroll information system, Pinwheel’s “payroll connectivity” API is reducing friction in this process and allowing neo-banks to secure more direct deposits than before.
It appears that Pinwheel is filling an important role in the market. Still nascent in its development, the company has seen 11x revenue growth in the last quarter and recently secured $20 million in Series A funding.
Tech Crunch reports more on the topic:
“[Pinwheel’s] proven very popular, particularly in the midst of the pandemic that saw millions switch jobs as well as neobanks reaching stratospheric growth as account holders searched for cheaper and more flexible banking options. The company saw 11x revenue growth last quarter and claims neobank Current and mobile payment service Square Cash as clients…
Once a client starts with direct deposits they start to migrate to other offerings, like paycheck-linked lending. As low-fee neobanks build up their consumer bases, they are frantically seeking revenue streams to cover their massive growth. Lending is one rich target, and having direct access to payroll data can make it significantly easier to underwrite a loan.”
Overview by Laura Handly, Research Analyst at Mercator Advisory Group
