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business models, strategies and technologies

Squirelling your money away – a new business model for savings

Squirrel is a “financial wellbeing company” – with a refreshing angle on the basics of what things are called, and how we can think about them

Financial freedom (seemingly) made simple

Squirrel blurbs itself as “Britain’s number one financial wellbeing benefit that builds good financial habits, helping your staff feel happy, secure and supported.”

Notwithstanding being a good candidate for a sloppy grammar award, this business model seems to provide a refreshing new perspective on personal savings. These are usually seen as lying squarely within the realm of the private individual and self-determination. No big-brother interference wanted or countenanced …  “keep your hands off my money” is one of the cornerstones of the liberal ethos.

Launched in 2014, Squirrel seems to provide a convincing alternative to this traditional approach of keeping the employer and the employees’ private finances strictly at arms’ length from each other. By reconfiguring the financial landscape, the Squirrel setup seems to introduce a refreshingly innovative business model.

"Brits are good at bad taste" website

“Brits are good at tacky” website

From savings to financial freedom

One little stroke of genius here lies in recalibrating the “savings” word (dull, dusty, old-fashioned and not very sexy) to a focus on what such savings can give us (financial freedom – what’s not to like?).

We work with employers to empower employees to achieve financial freedom.

Squirrel is billed as a way for the individual to “improve your saving and spending habits”. Your salary is siphoned into a Squirrel account and thus kept separate from your bank account, the ATM on the corner and your credit cards, to minimise any temptation to over-spend. Money goes from Squirrel to your bank account only when you need it, or when you’ve arranged it.

The Squirrel presentation video pretty much presents this as an “anti-temptation vault” service, with funds from your salary specifically allocated and scheduled to help you with managing your money, and thus help you avoid frittering your hard-earned dosh on doubtful whims. Squirrel’s description of the scenario seems to place it squarely in the realm of “fad of the month” urban yuppiedom, but the basic idea seems pretty solid.

It’s an anxiety-reducing savings, budgeting and bill management tool that’s linked to your employer’s payroll, helping you save directly from your wages/salary, or to get emergency funds straight from your accrued wages should you need an unplanned cash injection. By safeguarding staff from being lured into credit card overspends or pay-day lending debts that quickly spiral into attention-draining, stress-inducing inefficiency, Squirrel is supposed to benefit the employer’s bottom line, too.

The employer angle

What’s different/interesting about the Squirrel angle, however, is that the setup goes via your employer. it’s your employer that pays your salary into your Squirrel account, and Squirrel charges the employer a fee, thus elegantly repositioning the service as an employee benefit.

Obviously, it’s a great way to help boost staff satisfaction as well as do something active to help retain good staff. As a Squirrel-wielding employer, you’re really helping your staff to get more out of any salary you decide to pay, which is a delightfully innovative approach.

Banks won’t like it – but we will

If it survives and catches on, the Squirrel business model seems to be yet another nail in the coffin of one of the few remaining interfaces that banks have with salaried workers – the account that their salary gets paid into. So the banks won’t like it – but so what, when they don’t actually provide any meaningful service in this context?

By rethinking and reconfiguring the whole relationship between employer, employee and his/her money, Squirrel carves out a new configuration for doing business in something so eminently traditional and “central to our existence” as the wages for our sweated labour. That gives the company a huge potential market, and there are oodles of fairly obvious potential add-on services/benefits associated with optimising the flow of filthy lucre.

The only objection/observation I might have is that the idea in fact seems to be better than Squirrel’s description of what the idea can achieve. And that the idea will probably be diluted over time by the Barclay-banked commercial underpinnings.

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