Point-of-sale lender Affirm is gaining traction with its newly launched savings product, Chief Capital Officer Geoff Kott told Bank Innovation. 

“Americans are saving at a historic rate,” Kott said, adding the direct-to-consumer lender is tapping into the trend with “a natural extension of our [POS] product offering.” 

Affirm Savings, which launched in early June, is seeing “north of 30%” of customers use the savings account for recurring deposits. “We’ve seen very strong and consistent deposit behavior, both in terms of folks signing up but also users that are signing on for recurring deposits … they’re not just one-time depositors but they’re actually depositing as much as weekly.” About half of recurring depositors are injecting accounts on a weekly basis, he said.  

This recurring behavior is an optimistic sign for Affirm, as many fintechs launching savings accounts run into the common challenge of maintaining activity and building liquidity. “Many people use them as a second bank for lifestyle banking, while keeping their salaries and assets at their primary high street bank,” Ron van Wezel, senior analyst at Aite Group, previously told Bank Innovation. 

Read also: Inside look: The Meteoric rise of point-of-sale lending in the U.S.

Affirm has been “in beta for a while,” since last year, Kott said; initial reports about the savings account were published as early as January 2019. The savings account has a 1.30% APY, no minimums and fees, and is backed by Affirm’s bank partner, Cross River Bank, where Kott was previously chief financial officer. Affirm declined to disclose the number of its savings accounts. 

Another potential hurdle for Affirm is its need to grab marketshare in a crowded field of neobanks and fintechs hawking high-yield savings products. Upgrade, which launched a mobile deposit account last month and is also backed by Cross River, is already developing savings account features for its new product. Robo-advisers Betterment and Wealthfront both offer savings accounts, as does the neobank Varo Money, which is slated to become an FDIC-insured bank this summer. Marcus by Goldman Sachs, meanwhile, offers a savings account and, as of April, has $72 billion in deposits.  

That said, the launch coincides with “exceptionally strong” growth in finance volume, nearly doubling year over year despite market volatility induced by the coronavirus pandemic, Kott said. In 2019, Affirm facilitated $4 billion in financed transactions, and works with more than 4,000 merchants to provide 5.3 million customers point-of-sale financing. 

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