Jared Kaplan, CEO of fintech OppFi, told CNBC on Wednesday that he wanted to help ease Americans’ emergency savings worries.
OppFi’s target customer is the “medium-sized US consumer,” who earns approximately $ 50,000 annually and has a bank account, Kaplan said.
Artificial Intelligence OppFi aims to provide accessible financial services to those who do not have traditional options. So far, it has mainly offered installment loans brokered through banks. Revenue this year is forecast at $ 418 million after showing steady growth over the past five years.
Shares in OppFi, short for Opportunity Financial, rose about 2% on their market debut Wednesday after the company completed its merger with FG New America Acquisition Corp., a purpose-built acquisition company.
“We didn’t want to be like any SPAC,” said Joe Moglia, chairman of FG New America, in the “Squawk Box” in an interview with Kaplan on Wednesday. Moglia was also the former chairman of TD Ameritrade. “It was very important for us to work with a company that we really believe had a real plan and that they could implement with a really strong management team.”
Because of Covid, many Americans chose to save versus spend because of pandemic fears, shutdowns, and rising costs. However, people also saw more money in their bank accounts after receiving federal economic checks.
“The stimulus payments were short-term help,” Kaplan said. “The reality is that saving is a problem in this country. Despite this inflationary environment and rising incomes, the cost of living is still rising faster. He said, “Our customers have a few hundred dollars in their bank accounts.”
There are 150 million Americans, about 45% of the country’s population, with savings less than $ 1,000, Kaplan said, adding that those who also have poor credit ratings can feel “completely abandoned” when it does is about paying major or sudden expenses.
Almost 63% of respondents in an April survey by real estate company Clever said they lived from paycheck to paycheck and were unable to save during the pandemic. A poll by Bankrate published in January found that less than 40% of Americans could pay unexpected expenses of $ 1,000 out of their savings. People are even more optimistic that this year will be better for their finances, the report said.
Kaplan expects people to seek more credit access services to pay for their unexpected expenses, especially as mortgage and student loan payments pick up again.
“I think our prospects are just as good for the future, but we want to help our customers solve the problem,” said Kaplan. “It’s not just about offering credit access products because they can’t build savings today.”
He said it is also about “reducing their borrowing costs and helping them build savings so they can save themselves from the need to borrow for emergency expenses in excess of what they have budgeted for.”