Envestnet acquires Harvest Savings & Wealth Management for automated savings tools

Financial advice technology firm Envestnet today announced its acquisition of Harvest Savings & Wealth Technologies, a platform that provides automated personal savings tools and wealth management solutions to banks and financial institutions. [caption id="attachment_218096" align="alignright" width="300"] Image: Konstantin Evdokimov/Unsplash[/caption] Harvest’s savings tools will help Envestnet “target banks we don’t really have a footprint in,” Dani Fava, head of strategic development at Envestnet, told Bank Automation News . In addition to helping the wealth tech firm expand its footprint among banks, Harvest’s automated account-opening solutions will be offered to existing Envestnet clients, and add efficiency to its customer acquisition process, Fava said. The terms of the acquisition were not disclosed. Founded in 2014, San Francisco-based Harvest has raised a total of $42 million over seven funding rounds, the most recent of which was a debt-financing round for $23 million in September 2019, according to Crunchbase. Harvest provides algorithmic savings solutions that can be integrated into a financial institution’s website or mobile application and used by customers to set up personal savings goals. Harvest also offers tools that help speed the account-opening process for savings, wealth and trust verticals by automating forms, procedures, and compliance requirements. “This acquisition optimizes our API-based financial wellness ecosystem, and also helps strengthen our foothold to enable embedded finance,” Stuart DePina, president of Envestnet, said in a statement. Embedded finance is a business model wherein banking-like services are offered by non-bank entities, enabled by technology and bolstered by consumer demand for simplified financial services, according to a recent note from consulting firm McKinsey. Harvest’s automated micro-saving technology delivers data to the bank or financial institution, which can also offer inputs on the right time to move a customer from a savings solution to a wealth management offering. “Honestly, it’s a bit of an arms race right now,” Drew Sievers, chief executive at Harvest, told BAN. He said increased competition from digital-first entrants, like neobanks, in financial services has upped the ante for incumbents in the space, and Harvest grew out of a desire to give banks and credit unions exposure to the same tools that were being used to eat into their margins. Harvest’s saving tools can be executed two ways. The “set it and forget it” approach asks a consumer to set a specific recurring dollar amount, then automatically shifts it to a savings bucket. The second approach uses an algorithm to look at historical account data, then normalizes the “peaks and valleys” in saving and suggests a “safe-to-save number,” Sievers said. Envestnet is already a key player in the financial data market through its data aggregation offering Yodlee , and has in the past entered into agreements with financial institutions such as Charles Schwab, JPMorgan Chase and Citibank. “What customers don’t want is multiple apps on their phone,” to manage their finances, Sievers added. Harvest helps banks and financial institutions tackle this by integrating into their existing platforms while also eliminating the minimum balance requirements and fees associated with maintaining a savings account. Going forward, Envestnet plans to leverage its established network among banks and financial institutions, including 17 of the 20 largest U.S. banks, to “expand Harvest’s distribution quite a bit,” Fava said. The publicly traded Envestnet has $4.1 trillion in total platform assets. The COVID-19 pandemic led to a significant increase in funds sitting in U.S. bank accounts. , where the personal savings rate jumped to 33.7% in April 2020 from 8.3% in February 2020, and is currently hovering around 13%, according to data from Statista . U.S. consumers have historically lagged behind other countries like South Korea or Germany, on saving. In 2019, gross savings as a percentage of GDP for South Korea and Germany stood at 34% and 28% respectively, compared to 18% in the U.S., according to World Bank data . Envestnet’s acquisition comes as banks are increasingly turning their attention to automation techniques that can help customers better manage their financial lives. Earlier this month, the $533 billion U.S. Bank announced it had partnered with Personetics to deliver an AI-powered savings tool to its customers, and the $2 trillion Bank of America launched a personal finance tool called Life Plan in October 2020 that helps customers establish savings goals across categories like family, health and work. Although personal savings tools have typically appealed to “a very small subset of consumers, those that are budget hawks,” said Stephen Greer, analyst at financial research firm Celent, he told BAN that vendors and banks alike are now betting that seamless technology and one-stop solutions, combined with historically high savings, could spur more people to drop extra pennies in the piggy bank. Bank Automation Ignite, on April 13-14, is the event for inspiring automation initiatives and investment in financial services. At the virtual event, financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register at www.BankAutomationIgnite.com .

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