A Catalyst for the Circular Economy - Why We Invested in Recurate
The term “democratization” gets thrown around a lot to describe what has happened in fintech over the past decade. Democratized access to the markets, better financial services, financial guidance, etc. Practically speaking, that has definitely happened – software has enabled many financial services and opportunities to become accessible to a much broader group of people. Hovering above that meaningful democratization is something greater – a freeing of money and a demystification of personal finance.
Managing money has historically been incredibly challenging and confusing. At every step, folks felt they needed experts to help – what elections do I make at work? How do I maximize my benefits? What should I be saving? How should I budget? When do I lease or buy? What do I invest and how? Most financial products required an advisor and an MBA to follow, and there were whole personal finance blogs around understanding fees.
It doesn’t help that the money itself was tethered to infrastructure that inhibited transparency or movement. Banking services weren’t free. Checks need to clear. Each financial service provider has different fees and rules, and few institutions historically talk to each other. It seemed like every service provider requested payment in a different way. Obviously, this hasn’t all been solved. Still, neobanks have paved the way toward a more transparent, lower-cost system. Free commissions and stock fractionalization begot startups that brought that same visibility into public markets. At the same time, a variety of players created entry points and clarity on financial products.
As the opacity and complexity of financial services slowly lift, consumers feel empowered to make better choices. In a general sense, we at Jump like to think we invest behind the technology that reduces that complexity and supports that resulting desire for self-direction.
While much has happened to investments, savings, mortgages, etc. - little has been done to free income. Employers determine pay cycles; consumers can’t opt to be paid at different intervals or when payments are due. Some employers allow the routing of that cash flow to more than one account, but only in fixed amounts on their schedule. Complexity and the need for direct employer buy-in & payroll integrations typically prevent outside providers from delivering solutions to these consumers. Employees have little optionality until payroll hits their checking account, after which they must navigate the additional hurdles of how each lender or service provider accepts payment and when.
It should come as no surprise, then, that we were excited about Highline’s vision as soon as we met Geoff. With Highline, consumers are empowered to route incoming funds where they need to go, without employer buy-in, integration, or even knowledge. Their software automates bill payments directly from payroll, powering a seamless experience that sends the right amounts to the right providers and ensuring consumers still have the remainder of their paycheck accessible that day. Highline frees income and empowers the employee to control the inputs of their financial equation.
It also empowers in another way: lenders have long sought direct access to payroll, given the massive reduction in defaults that result. Unfortunately, direct integrations and existing providers didn’t fully offer compliant, flexible solutions or tolerable consumer experiences for deductions. By abstracting away the complexity of pulling money directly from payroll and automating the distribution of those dollars, Highline solves a conceptually simple but highly technically complex problem. With Highline, lenders can offer lower rates to consumers who opt into payroll deductions or approve loans to a wider audience of borrowers, including individuals with FICO scores 100 points lower than traditional underwriting thresholds.
Highline feels like a long-awaited solution in a fintech revolution rapidly chipping away at the barriers between consumers and their cash flow. We are thrilled to partner with Geoff, Arun, and the Highline team and be part of their journey to free incomes for all.