Communion might sound like a new Christianity app, but it’s far from it.
It’s a new savings app targeting disgruntled 25- to 35-year-olds who are likely renting with no hope of saving for a house, and its founding message is more anti-establishment than holy.
The plan is to help users create something of a “fuck you fund”, CEO and founder Daniel Hegarty tells Sifted in an interview. By building financial autonomy with the app, users can say “eff you” to the “predatory landlords” and “sadist bosses” that are making them worse off than they want to be, he says.
Hegarty stepped down as CEO of digital mortgage broker Habito in July this year and is somewhat of a fintech veteran, having started out at defunct consumer payday lender Wonga over 15 years ago.
Communion is the second fintech Hegarty has founded and is best described as an easy-access savings account crossed with a financial education app. That’s a bridge across two rather saturated markets right now, but nonetheless it’s gained backing from some serious fintech names.
It’s just raised a £2.5m pre-seed funding round led by Revolut backers Target Global, alongside angel investors Max Rofagha (founder of retail investing content platform Finimize), Greg Marsh (serial entrepreneur and founder of personal finance app Nous) and Erin Lantz (chief revenue officer at Softbank-backed US life insurance startup Ethos).
What does Communion do?
Communion’s core fintech product is nothing new. It’s offering people an easy-access savings account with 3.66% AER, through an app that’s initially only available to iPhone users. Android users can join a waitlist for a launch that Hegarty says is coming a “little bit later in the year”.
Communion won’t charge for accounts at first but plans to introduce a subscription fee further down the line — though Hegarty says the company hasn’t worked out when this will be or how much it will cost.
In order to set up their account, users have to go through an “initiation phase”, where on downloading the app they must deposit £1 a day for 10 days into their account.
Once they’ve completed this, they’ll have access to three months’ worth of daily 90-second “explainer”-style videos of Hegarty talking about savings strategies and the like. They can also chat to the app’s team of ‘Money Guides’ (a mix of financial professionals and behavioural scientists) through its live chat function to get advice on the right savings strategies for them.
An ever-saturated market
This is a very popular idea right now, amid record high interest rates and a cost of living squeeze. A number of new investment apps like Shares and Gather Investing have burst onto the scene with star-studded marketing campaigns and the promise of opening up wealth building to anyone, with no minimum deposit. Financial education apps like Female Invest and Your Juno are aiming to bridge the gender wealth gap. It’s never been easier to launch a shiny new wealthtech interface by building upon tech from infrastructure providers like WealthKernel.
But with every new entrant onto the scene, customer acquisition costs jump higher, and the likelihood of getting significant customer deposits wanes.
Communion is attempting to outrun the competition with a customer acquisition ploy that offers a ‘top up’ feature allowing members to earn an additional 2% on their standard rate of 3.66% AER by inviting friends to join them in the app. If those friends sign up and remain members of Communion, they’ll also benefit from a 0.2% bonus and can then invite their friends, and so on. Communion says this means customers could make a return on their account of up to 5.66%, which would be the most competitive easy-access savings account rate in the UK market today.
Until it introduces a subscription fee, Communion is paying for this customer acquisition tactic with its new equity raise. But Hegarty is confident that with “thousands of customers with probably somewhat low average bounces, in aggregate it’s probably not going to add up to as much as you could blow on Google or TikTok ads in a bad week”.
Creative studio Uncommon, for whom Habito was a founding client, will be leading the marketing campaign and has been given shares in Communion. Hegarty plans to grow his team from its current five full-time members over the next year, but won’t share by how many.
Communion is not regulated itself but is working with external engineers at software development company Vention to build out the app and FCA-regulated Bondsmith for its app infrastructure, while customer funds will sit within Santander accounts. Hegarty says he has “no immediate plans” to build these components in-house in future.