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Squirrel’s self-description is:

a smart new way of budgeting and saving that helps you resist that temptation to spend. We work in partnership with employers, local authorities, housing associations and credit unions to bring better money management to the widest possible audience.

Squirrel’s 7,000 clients range from those on benefits to those earning more than £100k – as Emanuel puts it “there are spenders and savers” and this tendency he believes is already formed when a child is still in single digits – and hence in place later regardless of adult income levels.

In this episode though, for the main course we focus on “socially beneficial Fintech” – or in less euphemistic terms what Fintech as a whole can do for those with little money. All too often the vast majority of Fintech – for all the PC buzzword terms like “financial inclusion” ends up just being a tool for the top 1%/10%.

Recent benefit changes in the UK have led to significant problems for folks who are unemployed or underemployed and these are only going to get worse if current plans are rolled out further. In this episode Emanuel, co-founder and Chairman of Squirrel takes us on a deep dive into the economic circumstances and changes. He also talks very honestly about his own personal and significant struggles with debt.

In this show topics discussed include: – university life in the early 80s, end of 90s, and at present

– Emanuel’s personal (and significant) experience with debt as a student and in business leading to being helped by the debt management charity StepChange

– entrepreneurialism in recruitment

– “poor money management cuts across the income spectrums”

– “people become spenders or savers” … “it’s not the amount you earn that defines it but your attitude to money which I think is bred at a very early age”

– the average UK household has less than £500 of savings (& the recommended amount is 6mts of bills); there is a big problem in the UK that enough folks don’t set aside money

– big debt problem in the UK – the average household has £7,000 in consumer debts

– historic money management eg via cash in gas meters; how that carries on today and how it costs far more to pay by cash rather than on credit

– less financially capable people don’t tend to switch energy tariffs and so pay more that way too

– there is a strong argument to say that poor personal financial management is about 4% of the company’s bottom line (via greater likelihood of absenteeism, stress, anxiety, productivity)

– “half of all marriage breakdowns have their root cause in financial problems”

– financial problems and mental health problems interplay

– recent government reforms (around Universal Credit – a simplifying/consolidating scheme of many schemes) to incentivise work; however the payment is now monthly which in trials has had a devastating impact on indebtedness (due to the tendency to spend a large sum of money suddenly arriving); eg in a Croydon trial rent collections dropped by 30%

– the single biggest cause of debt is “if I have the money I’ll spend it”

– hence Squirrels solution is for customers income to be paid into a client account at Barclays and then Squirrel trickle it into the clients usual bank account when needed as well as “jam jar saving” (for xmas, holidays etc)

– with social housing clients Squirrel can pay the bills directly from the Barclays account (hence avoiding the problems from benefit reform re cashflow)

– also helping folks living in hostels to move into homes by showing a track record of responsible spending

– “what we designed is almost by accident an antidote to the changes in benefits”

– customer service via online chat or telecon; dealing with emergencies

– Squirrel just completed a crowdfunding round of ~£600k; 9 staff

– beefing up advisory board right now – any strategically aligned companies get in touch

– “the system we have built is one that works”

– “people’s lives are being changed by this product”

– conversations with Credit Unions and other financial organisations

And much more more 🙂

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