In Brazil, 56% of consumers claim to struggle when it comes to saving money, a survey held by the platform Acordo Certo, a fintech focused on online negotiating debts, found out. The research, conducted with over 1,500 respondents in January, also pointed out that 50% of them also find it difficult to make a financial planning.
Many factors may lie behind these numbers: cultural traits and a history of political-economic instability are some of them. But Flourish, a digital engagement fintech based in Berkeley and founded in 2018 by Brazilian Pedro Moura and Mexican-Filipino-American Jessica Eting, wants to change this landscape. Supporting their plan is a US$ 1.5 million seed round led by the Brazilian venture capital firm Canary, announced this month.
“It was our first institutional seed round. Our goal as a company is to be able to bring in two to three banks this year,” reveals Moura in an interview with LABS. Through its digital engagement platform aimed to help financial institutions retain users, Flourish offers rewards and loyalty solutions through gamification.
“The innovative approach that Pedro and Jessica built to help people have financial education and better manage the family budget attracted us, as well as the technological solution that they can offer to different partners in a large region like Latin America,” highlights Marcos Toledo, partner at Canary.
In a nutshell, Flourish’s platform offers three main services for users: a reward system, which guarantees financial incentives to those who meet their goals of saving or investing; automatic micro-investment rules, which can be customized accordingly to user preferences – such as making them invest a small amount after each victory of their soccer team. In addition, there is a financial education tool that turns user’s transactions and spending into a question-and-answer game.
“This is linked to our rewards system, but [through this question-and-answer game] you are understanding your spending and possibly changing or having an alert,” says Moura. “This is very good for the bank: you are coming back to the digital shelf of this institution.”
If from the user’s perspective, Flourish is driven by empowering people to have healthy financial habits; from the banks’ side, it aims to give them assets to improve their relationship with customers – and ultimately, retain them.
Not by chance, the Brazilian open banking process, which kicked off this year, and a massive financial inclusion process in Latin American countries led by COVID-19 emergency funds seem to set quite a positive background for the fintech’s solution. “We believe that not only banks have an opportunity to connect with our platform, we see a great opportunity from other kinds of institutions, which have financial transactions that our technology can support: fintechs, retailers, telecom,” Moura summarizes.
With a software-as-a-service model that licenses the technology for other companies, financial institutions can connect to Flourish’s solution through a software development kit – an SDK – or via an API. Flourish charges a fee, paid by the institutions, for each active user of the service.
But before pivoting to the B2B model, the California-based fintech gathered experience and learning from a B2C pilot version, called Flourish Savings App, launched in the US. The application that now serves as a laboratory for testing new mechanics, offered users a digital savings account that rewarded them with prizes and fun experiences, such as games, at each advanced stage in their financial journey.
According to Moura, in 2020, using the app helped users get into the habit of saving, as they returned to the platform two to three times per week and generated average savings of US$ 600 over six months. “We learned a lot in this model and we saw an opportunity to scale using the system that was already there,” the exec recalls.
With partnerships with institutions in the United States and Bolivia, such as CommonWealth, Opportunity Fund and BancoSol, in Brazil, Flourish started its activities on a project with the credit union Sicoob. “We believe that our next two or three clients will come from Brazil. But we are seeing an interesting opportunity in countries like Mexico and Colombia,” Moura reveals.
To support this expansion roadmap, the US$ 1.5 million seed round led by Canary aims to help Flourish increase the number of financial institutions and users served in Latin America and work on developing new features for large companies.
Expanding the ten people team spread in the US, Mexico and Brazil is also one of its goals – and for that, Flourish will count on a new hiring: Cris Miano, former group product manager at the Brazilian neobank Neon.
With over 20 years of experience as an entrepreneur, Miano developed loyalty and engagement programs for large global brands such as Coca Cola, Honda financial services and CitiBank. At Flourish, the exec – who initially joined the fintech as an investor – will lead the area of strategic partnerships, helping Flourish to open new markets and playing a key role in the product area. “He strengthens and accelerates what we are seeking to build in Latin America,” Moura adds.