- Q2 is a digital banking and lending provider to companies like Credit Karma and Acorns
- Its digital banking unit building new banking products to expand its reach.
- The company plans to scale big enough to work with giants like Apple and Amazon.
Q2, a provider of digital banking and lending products to buzzy startups and fintechs, is giving its digital banking product suite a facelift.
General Manager Ahon Sarkar told Insider the company plans to launch three new banking products over the next year and a half to reach more consumers. But instead of going after the same consumers, its competitors are going after, it’s targeting underserved markets.
Sarkar oversees Q2’s digital banking product division named Helix, which provides embedded finance features to large-scale fintechs. It hosts over 12 million users and is set to process $40 billion in fund movement by the end of the year. Through Helix, Q2 offers clients like Credit Karma and Betterment a cloud-native core processing system—a piece of tech Q2 built to do what banks can do but faster—to embed financial product offerings on companies’ digital platforms.
In exchange for working with large enterprise clients, Q2 gets to tap into a larger market share. Credit Karma, for example, is used by more than 100 million consumers. That’s almost a third of the US population from just one of its partnerships, Sarkar said. When other companies like Betterment, Gusto, Empower, and Acorns, to name a few, are added in, Sarkar said the market share increases to 250 million.
But Sarkar sees Q2’s digital banking offerings reaching far more.
“We’re trying to get from the 250 million that we probably serve today to the full 330 by including minors; including people who don’t have a social; and then allowing us to branch into business,” Sarkar told Insider, referring to the US population.
After seeing fintechs like JPMorgan-backed Greenlight have had success with minor accounts, Sarkar says starting this fall, Helix will start the series of launches with digital bank accounts for the under-18 crowd. This could be a huge windfall for the BaaS company as Generation Alpha is on track to outpace Millennials as the largest generation and are banking at earlier ages than previous generations. Children between the ages of 5 to 9 saved an aggregate of $225 million in allowance in 2021, according to a Greenlight study.
“We’re really thinking about how do we reimagine minor accounts so that we can bring them into the economy,” Sarkar said.
In 2023, the company expects to pilot banking products for micro and small businesses and partner with banks to provide financial solutions to people who don’t have social security numbers — “people who honestly have been kind of underserved,” he said.
These efforts are also part of the company’s overarching goal to work with larger companies like Amazon and Apple. Sarkar said when it approached them, “they said ‘this is a really cool idea. Let me see it proved out at scale first.”
Q2, which caters to banks and credit unions, launched its digital banking unit in 2017 as Cambr and then relaunched it in February as Helix by Q2 as an offering to fintechs, tech companies, and consumer brands. Sarkar was at the helm of a previous iteration of the business and helped scale it.
Helix had 40 people in 2020 and now has 160 people with plans to add 20 more positions in product engineering, deposit, operations, business operations, and sales by the end of the year, Sarkar told Insider.
