While Deserve is less than a decade old as a company, its origins date back to founder and CEO Kalpesh Kapadia’s arrival to the United States nearly three decades ago.
A digital-first, mobile-centric fintech, Deserve recently unveiled its Digital First Card, a proprietary mobile-first program that powers mobile cards for major co-brand partners, affinity groups and corporations. Credit card partners can customize rewards programs with incentives for on-time payments, category-specific purchases and anything that can be digitally captured with an API.
Mr. Kapadia came to the United States a quarter-century ago to complete his master’s degree. Despite a similar economic background to his American peers, he had trouble obtaining credit. The students coming after him have had an even harder time as post-9/11 incoming students were no longer assigned a social security number. Then came post-2008 regulations that made it harder for banks to market to students. The whole system, with its decades-old FICO scores and legacy tech built on COBOL needed to change.
“I started the company with the simple premise that this whole legacy system and the whole way of business is leaving a lot of deserving but underserved populations out of the credit fold,” Mr. Kapadia said.
Deserve expanded their reach to people between 18 and 29, which is some 40 million people in the United States. Almost half have at most one credit card. That strategy also worked, with companies wanting to acquire Deserve outright.
Mr. Kapadia didn’t sell but he offered his expertise, as Deserve’s original B2B model fit in perfectly with the need. One early client was Sallie Mae, which in 2018 invested in Deserve, who in return built them a credit card infrastructure in nine months. Then there was Goldman Sachs, who through a partnership with Apple spent $300 million trying to build their own system, only to invest in Deserve.
Deserve is a digital first card for a generation eschewing pen and paper. While old acquisition strategies see at least half acquired through direct mail, 59 per cent of applications are completed online and 90 per cent of credit card management is completed on one’s device. Even companies with older clientele like AAA want to offer these services, with features including budgeting controls the user can set for different sectors like restaurants.
Credit cards are the best fintech innovation for many reasons, Mr. Kapadia believes. They are a more secure form of payment that works everywhere. People are growing more wary of paper money and debit cards do not protect as well against fraud. Credit cards work better with mobile wallets and all online and offline scenarios. They are also immediate loans where one can immediately borrow money.
Deserve’s system is complex as among its multiple layers is an ID system built for the digital world, Mr. Kapadia said. Verification is a much more difficult task when you cannot meet people face to face.
The Deserve Digital First Card is now available in the Apple store, and coming soon to the Android App store.
