Followup question: How would a company be able to come in and offer what you describe and offer users savings, and take a cut for themselves along the way, so that the users and the new company wins, while the incumbent banks lose?
Some banks offer something a little bit in this direction (at least in the UK and Australia). I have heard of banks with 'savings pots' and online saving planners.
For a bank it is probably good for them if you save. Eventually you will spend the money and in the mean time the saved money makes them money because (due to how the banking system works).
The way I can see this playing out is based on consumer demand. Banks have little in the way of genuine USP. I mean they all pretty much offer the same service and must compete on service, interest rates, fees, branding, reputation etc. So offering a way to help people save could be a good USP for the right kind of bank.
shame.
However Max and Affirm justify their business, there isn't an algo smart enough to only offer small credit to people who won't get in to trouble. In fact there is a huge incentive to lure people into using credit when they won't be able to handle it. Which is evidenced by almost any consumer credit business in history. Even if they say they won't charge late fees (for now), to play up their ethics, believe they are still going to be monetizing outstanding loans. Businesses like this (payday loan/ small credit / auto title loan / rent-to-own) typically sell their bad debt to recovery agencies and still turn a profit on the interaction. Not to mention Affirm will get a point or 2 from the merchant in all cases, I assume.
No surprise about the $275M though.
Also this seems to be more of a failing of the education system. Young people should learn the proper financial skills in school instead of relying on corporations to just help them out. All these loans are voluntary and help plenty of people who need a way to borrow.
We did this in the UK, Wonga.com/samedaycash firms everywhere and the government had to legislate to stop them exploiting the poor.
I think the people that are more likely to save are also the ones less likely to default on loans. Maybe it's just over-simplified thinking, but I think the reason Affirm works wonderfully is because they keep audience in mind. They pull in a ton of data points to assess the risk on investments, and I would love to see the percentage/demographics of people that get loans.
Of course mortgage is debt but it is backed by an asset, usually comes with an excellent interest rate that is very close to zero or negative in "real terms".
What I'd like to see is a disruption to banks to encourage people to save properly, by integrating proper budgeting and accounting into the bank account itself. I.e. walling money that is allocated for future expenses such as insurance, utilities, presents etc. On the other hand with no extortionate fees for going overdrawn. I'd love to see something like that.