The pandemic has caused a financial burden for millions of employees across the nation. It also impacts the companies that people work for due to lower productivity, distractions, and other factors.
A new Seattle startup called Secure is launching to help employers offer a financial wellness benefit to workers beyond their paycheck in the form of an emergency savings account (ESA). The company, which just spun out of Pioneer Square Labs, provides software that lets employees make automatic, post-tax payroll deferrals into a customized savings account.
“Employer ESAs have mainly appeared in the last three years, but given the renewed priority for emergency savings in light of the pandemic, they’re primed for explosive growth since they provide immediate access to savings during times of crisis,” said Secure CEO Devin Miller.
Around 40% of Americans struggle to come up with $400 for an unexpected expense, according to a 2019 survey from the Federal Reserve. That was well before the pandemic forced a nationwide economic crisis.
More companies are rolling out programs as of late that let employees save a portion of their paycheck automatically, The New York Times reported earlier this month.
Secure targets small companies that aren’t ready for a 401(k) offering, and larger businesses that want to offer more workplace savings programs.
“Employees can use our technology to set smart and achievable savings goals, make elective paycheck deferrals, and get matching bonuses from employers. Money can be accessed at any time,” Miller said. “For employers this is a high-ROI benefit, with a low total cost of ownership relative to other workplace savings programs and high employee affinity.”
The company’s main competitor is a “side-car” account that employers can offer within a 401(k). Miller said Secure differentiates itself by using research and behavioral science to promote participation. It can also reduce compliance and administrative costs by being separate from a 401(k) and other existing savings programs.
Miller previously led Balance Financial, a Seattle-area startup acquired by Blucora’s TaxAct subsidiary in 2013. He later joined Guidant Financial as executive vice president and later president.
“Bassam and I both come from more meager backgrounds and we know that financial stress looks and feels like,” Miller said. “We felt compelled to help make a difference and to finally build a purpose-built solution to help people save for and navigate financial emergencies. Our vision is to make Secure as synonymous with emergency savings as TurboTax is for taxes.”
Secure is one of six startups to spin out of Pioneer Square Labs over the past six months. Last week GeekWire reported on two other companies with COVID-19 implications: remote mental health therapy startup Joon Care, and Quivr, which built an AI-powered smart camera tool that can detect proper application of sprayed disinfectant and generate deep-cleaning reports.
Secure, which employs seven people and raised an undisclosed investment from PSL, is also the latest fintech startup out of the Pacific Northwest. The Seattle region has a growing cohort of fintech startups, and firms such as Madrona Venture Group are making an effort to expand Seattle as a fintech hub.