At Tearsheet, we’ve been following the growth and maturity of neobanks over the past few years and all in, with the billions of dollars invested, products launched and customers acquired, the path to good unit economics has been elusive for some.

Joining me on this podcast today is Stuart Sopp, CEO and co-founder of Current. In this episode, Stuart gives a behind-the-scenes look at how Current has managed to thrive throughout the fintech winter by adjusting the dial on its marketing spend without compromising its growth. Stuart also delivers a masterclass in product development and finding the right product-market fit for digital financial products.

Sopp dives into Current’s development pipeline and the go-to-market strategy behind its new Earned Wage Access product and credit builder card, as well as what he’s seeing in demand for these new products.

It’s a conversation about what it takes to build a neobank that doesn’t only survive, but thrive.

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The big ideas

1. Finding the best deal for customers and company: Banks have really given consumers a terrible deal. There’s a lot of fixed fees, like overdraft fees, that everyone’s very familiar with. When people switch to Current, it’s a rare triple win in the sense that as we acquire customers from banks, these customers get stronger on unit economics, we get stronger, because we can do it profitably, and then the customers get a great deal.
2. An eye on the market and an eye on the product: There are multiple banks coming out, saying regulation changes are coming, and we’re going to have to charge monthly account fees, and we can’t do this properly. Current has spent the best part of nine years building for this moment where we knew these headwinds for everyone else would come in and we have strategically positioned ourselves in a very advantageous position.
3. Playing the long game: The way to look at Current is it’s a longer term play. But the market being a long term weighing machine, I think we win over time. We’re starting to see that product moat really come through for Current this year.
4. Bigger isn’t always better when it comes to marketing: We did use influencers like MrBeast years ago. I would suggest large multinational corporations would probably be best suited for the largest YouTube influencers now because of their global reach for a 13 to 30 year old. We’ve naturally stayed focused on the U.S. market, so that’s why it’s very hard for us to maintain effective CPMs using generalist influencers.
5. The future of Earned Wage Access: Some states are saying we don’t like EWA, and we don’t want to do it. And that’s fine. We will not have active users in those states. But I think what is happening, and what will happen over the next three to five years, is very similar to lending licenses state by state. It’s just going to be only lending licenses for people 620 and above, and EWA licensing 600 and below.

The tides of change at Current

We’ve seen a lot of change. More specifically, since the middle of 2023. What we did, as the interest rate market came undone and the cost of money went up for everyone right across the world, we really dialed back on our marketing and extended our runway to deliver two new products that we thought at the time, and now we can confirm, are working synergistically together. And that’s really built upon our proprietary technology stack that many listeners will probably be familiar with by now.

The first one is the Build Card, which is a secured charge card. That works in a really interesting way, and I’ll go into that in a second.

And then two, we launched an Earned Wage Access product that works well with the rest of the value and products that we’ve launched and built on Current over time. We launched that internally in October last year, and then started leaning in marketing, basically at the beginning of this year. So those are the two big changes. Those were sort of strategic changes for us. Our customers are sub 620 FICO customers, deep subprime. Many of them are not in the business model of banking — they didn’t really fit it very well, because even in aggregate, they don’t have a ton of deposits together.

So banks have really given them a terrible deal. There’s a lot of fixed fees, overdraft fees, which everyone is very familiar with. It’s a rare triple win in the sense that as we acquire customers from banks, these customers get stronger on unit economics, we get stronger, because we can do it profitably. And then the customers get a great deal. They get liquidity, they get credit building, they get all this other stuff. But the banks are really unable and unwilling to deliver to this type of customer.

Current’s new products

The Build card is a secured charge card. It’s unique to Current in the sense that it has one balance and one ledger. You can imagine the competitors using I2C or Galileo, those in-between processors that link to the networks. Of course, then they maybe have multiple issuing banks, which has its own problem. We could probably spend a lot of time talking about that, too. It’s very topical now. So you can imagine having a debit credit card, these multiple ledgers, multiple issuing banks, different rules and regulations between them all — it is very hard to get a really good attach rate and a really succinct, nice, and simplified experience for pretty much everyone else.

So using our own ledger and our own core, we were able to build this unique experience which allows you to build credit with every swipe.* And you collateralize the account with as little as $1.

Obviously, we prefer that you move your paycheck over because a lot of liquidity then gets unlocked with that. But the Build card builds credit for our members. We’re looking at 10 to 20 points [credit score improvement] within the first month or two. And so it’s a great product for the customers because the debit and their secured charge card are deprecating one balance. There’s no moving money around, or anything like that. We’ve taken all that complexity on the infrastructure and the product side, and really just simplified it and rendered it to like “Hey, open a Current account and you get these two cards: one virtual, then one physical.” Then members have one balance on Current that gives them access to the same benefits with the opportunity now to build their credit with every swipe.*

So that’s a market leading product. Customers who have a sub 620 FICO score, one of their main problems is their credit score. And they know that access to liquidity or credit is being hampered by either thin file, no file, or some form of events. So banks aren’t able to service them. This is an amazing product for them to really fall back into and start getting that good behavior going. So then building that credit score, it benefits the company for us, because we’re moving a lot of our spend from a debit to credit, which obviously has higher interchange. It has different dynamics in terms of disputes and chargebacks, and things like that as well. So there’s a different dynamic, and there’s a different regulation set for credit. But the way we have built the infrastructure and the product experiences, we’ve managed to mitigate and help some of those product experiences for the customer. So what that really does at the top of the funnel is enable us to have 100% eligible, no fee, no APR, no funny business low charge off, secured charge card that allows our members to build credit with every swipe.*

That’s a different product of what’s out in the market to even neobank competitors, but also, more importantly, to some of our bank competitors, because they have a very narrow credit box. They’re trying to get the graduation of high charge offs. It’s not a profitable product, it’s very hard to deploy in marketing. It’s just obviously tough for the banks to compete with this product. As you’ve seen in the press, there are multiple banks coming out, saying regulation changes are coming, and we’re going to have to charge monthly account fees, and we can’t do this properly.

Well, Current has spent the best part of eight or nine years building for this moment where we knew these headwinds for everyone else would come in. We have strategically positioned ourselves in a very advantageous position from a company standpoint, but more importantly, from a customer standpoint, as the best option. So we launched that in June-July last year, which, you could argue, was multiple years of work enabling that product pinnacle. It’s almost like an iceberg, right? It’s like everyone says, Oh, you launched that in nine months. We did… but really, it was building upon a lot of hard work at the company to get to that point. That’s been very exciting to see that product rollout build, and also just, frankly, build credit.

I use it myself personally too. Being a foreigner it’s been very useful for me, as well. So that has been great, a tremendous amount of growth in terms of deposit, spend, and revenue through that.

How Current differentiated its card product

Secured charge cards that build credit have been around for a while, right? Community banks have been building them forever. I would say 70% of the money center banks have some form of credit builder. There’s lots of comps out there. We really listened to our customers. You can imagine your 600 or 580 FICO score customer: you need money, you’re working two jobs, you are a good credit risk, but you’re just not in that system. So you can imagine applying for a credit card or a loan or something like that, and you’re just getting turned down.

So whenever these credit card companies or personal loan companies go wide, they tend to do pre-approvals. And for very good reason, it is because people who really need money are not in that system or they don’t have a high enough credit score. So you can imagine when they go wide, 80% to 90% of those applications are turned down. That is a terrible experience for pretty much everyone. It’s not good for them, and it’s a terrible experience for the consumer. They’re just not able to underwrite in the way that we are because they don’t do all the cash flow underwriting. They’re not focused on banking services. And so you can imagine Current coming up in these third party marketplaces and all sorts of other places where there’s two problems: One is they need to build their credit score. And two is they need access to liquidity.

So when we were ideating, about two years ago, for the next stage of Current, we were like, okay, we know we need a credit builder. We know we need it to be 100% eligible. How can you make a 100% eligible credit builder? We have also learned from our – I would say – biggest competitor out there on the private markets. They’ve already had a relatively successful charge card product. So we knew what a path could look like. But they also might have what potentially looks like an attach problem.

Watching how the market moves

At Current, the strategic thing at the end of 2021 and going into 2022 was that we thought CACs will come down over time, because they grew very high in the bull market. 20% of all VC dollars were in fintech, everyone’s a fintech. Apparently, at that point, everybody’s bidding for the same customer. Which is why a lot of people tried to do B2B. We’re doing some interesting things there. But we were like CACs have gone so high that there’ll be consolidation. There’ll be winners and losers, but they’re probably not going down all the way to 2018-2019 levels.

To get a truly interesting high growth business, you need to increase LTV. So from a corporate standpoint, we had to find the problems and that solution set for our customers. But it also helped us on our LTV. The Build card was really, really helpful on that. That was step one of our journey. And then as soon as we got that up and running and iterating through most of last year, we went straight into the Paycheck Advance product, which I’m sure many listeners will be very familiar with.

[Our product offers] up to $500 between paychecks. We call it PCA internally. We launched that in October, internally and expanded it. Now the interesting thing is the paycheck advance/earned wage access product is not credit. There is no recourse. The interesting thing for Current specifically is this is another product for us, it is not our only product, or our only revenue. We’re a payments business. 80% of our revenue is from interchange. So we are not leaning on this product, like maybe some others are in the public and private markets. And that enables us to do a few different things. So no dark patterns, no funny business, no subjugating subscriptions, and all this other stuff that you may see in other places.

No recourse, not credit, but very valuable liquidity for our customers. Because you can imagine low credit scores means I am out of the credit system and in many ways, but you still need access to your paycheck, you’re still working, maybe you’re most likely working two jobs. 25% to 30% of our customers are working more than one job. That data structure and classification alone is just very hard for others, like bank or credit card companies, to even get a handle on. They’re not really doing that. They’re just heavily relying on that FICO score.

There is an increasingly massive demographic of America that is experiencing a climate where jobs have changed and cash flow has changed. So cash flow underwriting is really important, but it’s also very complex. We’re uniquely positioned to really satisfy and serve these customers in that way. We provide really valuable liquidity.

Now liquidity has always been an important part of neobanking in America, in my view. You can have different views, I think, in different countries,  but we’ve led with two days early payroll and affecting off the balance sheet as soon as that hits from the employer. That was a period of liquidity led growth in the industry. And now we have married this sort of $500 earned wage access product into banking, switch your paycheck over, very neatly for Current, I think.

We’re experiencing probably top decile growth right now, when you look at our Paycheck Advance product really working synergistically with that Build Card. So it’s been busy the last year.  We’ve been iterating most of this year, and really sort of making sure everything works perfectly, and that we have great product experiences, and that the customers are happy.

Product-led growth

When I talk to potential investors, the growth will speak for itself. But then you’ll always get people going: “Which channel is this?” Which is a fair question, because when you see exceptional growth, you’re like, oh, well, they’ve tapped a channel. And that’ll go away over time.

Well, no.

We have some of the best competitors in the market in our space and the best funded, very intelligent, smart people and we’re able to grow probably at top decile right now because of the product moat that we have established and will continue to establish and build upon that verticalized tech stack that we’ve really leaned into.

The way to look at Current is it’s a longer term play. It takes longer to get to this point. Because third parties are much easier to stick together. But the market being a long term weighing machine, I think we win over time. We’re starting to see that product moat really come through for Current this year.

Influencer marketing, MrBeast, and the need to focus

The influencer world is still very interesting. Some of the influencers that we had used over the years — MrBeast was one of them — grew to be the biggest in the industry. And good for them.

That dynamic changes when you go international. We are US based at the moment. We have a vision statement that is to connect the world financially. So we would love to go international, but we haven’t won America yet. So we’re still focused.

When you look at someone who has just an amazing international reach, you’ll see a lot of the CPMs are used for international, and if you can’t monetize those CPMs, you cannot get an effective rate that makes sense for both parties.

I would suggest large multinational corporations would probably be best suited for the largest YouTube influencers because of the global reach, particularly for 13 to 30 year olds. We’ve naturally grown and grown slightly different ways geographically, so that’s very hard for us to maintain effective CPMs. That’s one aspect of it.

The other aspect is, we just got a lot better at CAC. Strategically, I don’t think CACs go down that much. We were pleasantly surprised about the product synergies and how we’ve managed to really stitch everything together. There is another level beyond that which is data governance, classification, and really focusing on data as our tech and general advantage. And so very similar to trading, there’s a little bit of a binary decision making: Can you get the customer before the next person? If you can do it five milliseconds before them, you win. There’s an element of that in how we are growing. That has really helped us this year, as well.

Also our conversions are doing very well to what we would classify as a “full customer”. As you get really good at a few of the distributed and diversified channels, you tend to get spotty in some of these other channels. You tend to find other channels are not as efficient, which is great because you have to scale all the way back up. We’ve seen that dynamic a little bit, as we got really good as a company. I think we have a lot of horsepower left to go back up into very significant growth in this industry.

Jimmy’s reach is insanely good and brand recall is amazing – best in the business. And I have other multiple points of confirmation from many countries that Current is well known in, which would just blow you away. Definitely in Asia and Eurasia. It’s absolutely wild — people in Japan, Korea, and Australia know the Current brand and have asked when we’re coming there. So, we’ll see. We have definitely primed the pumps in many countries.

Fintech’s infrastructure challenges

You have infrastructure challenges when you stick everything together, which is that I have two ledgers as a fintech and I’ve got these two issuing banks. I got two Reg Z rakes and all these different regulations for disputes and holding money. That level of complexity and moving those two together means that more often than not, you’re going to get a neobank or fintech just saying, “These are two separate products, two separate teams, you’re going to have to move money over here, we’ll create that eligibility criteria to keep the chargebacks low.”

We took a fundamentally different view. We want this to be the engine. We want everyone in America who is eligible – which should be everyone who’s a real person – to be able to have a secured charge card.

So when you take that kind of brazen stance, we have to ask, as Trevor Marshall, our CTO and co-founder said, how do we create this? We worked out how to do it. And then it was like, how do we get the attach rates as high as possible? Because there’s also challenges on the network under categories and the MCCs, because there are different rule sets, like I’ve mentioned. For example, Visa+, it doesn’t work on credit cards, you can’t move money, you have to move money on debit. There are certain categories like gambling and some adult sites that don’t work on credit cards and that just won’t be accepted, due to that profile of charge offs, and losing money. So they’re only on debit.

So from a customer experience perspective, you still can’t quite displace debit with credit. And that’s fine, right? But for the majority of the use cases, there’s probably some positive selection bias when you get someone who wants to build their credit, but that’s also good. So it was marrying these two experiences together. So there was a backend thing and there was a top end thing from a product experience and that was all mashed in the middle.

Currently, we have some great people who managed to overcome some significant challenges in that. And we also worked with Visa — they were very helpful in this product. We were there with them for the best part of the year ideating on how to get this product over the line.

Where Early Wage Access is going

In the past, EWA has been tarred with payday lending, which is a pejorative term and, you know, 1,000%, APR and all that other stuff. So this whole industry has a bad rep. But, why does it exist is the right question to ask. These are people who are working hard, who need access to liquidity. The tool set that banks, credit card companies, and lending have just doesn’t work very well for sub 600 or 620. It has to go from credit and credibility – and that trust element – to cash flow underwriting and understanding the heartbeat of the flow of money in and out. What they’re spending on and things like that.

It just has to do that. And then in terms of a product strategy and ideation, it’s the more affluent customers you can have. You can have all these verticals and you can separate people, you can pick and choose, and you cross sell. That’s what banks are really good at in financial platforms. But when it comes to a less affluent customer, there is less demand for a lot of these products and services because they’re really focused on living and trying to get money and gas and all the rest of it. So what you see in the product construct is conflation.

They need to work. There’s elements of them, but they’re not maybe standalone products, and they need to work very cleverly, very synergistically and move money quickly in. The money movement has to be quick and very clearly communicated to the customer. That’s almost a product construct. The ethos is that you have to be quick, it has to be clear and clearly communicated: That you still need access to some of these products, but in a lighter, simplified way.

So when it came to Early Wage Access, or PCA products, I was put off by the industry a little bit until about a year and a half or two years ago. Then, you started to see a shift in regulatory requirements and compliance. So in regulation we started to see the federal system talking more positively about it: What we should probably do is regulate, get licensing by states.

I think what’s going to happen, and we applied for these licenses, state by state (and some states are still not there). Some states are like, look, we don’t like it, and we don’t want to do it. And that’s fine. We will not have active users in those states. We will not market there. But I think what is happening, and what will happen over the next three to five years, is very similar to lending licenses state by state. It’s just going to be only lending licenses for people 600-620 and above, EWA licensing for 600 and below.

I think that’s product marketing. This will be as big as credit cards and lending, in my view. So that’s exciting. We’re getting clarity from regulators. I think from a technology and product experience, we can do it in a cheaper, faster, more effective way that isn’t reliant on some of these things that I’d already mentioned like dark patterns, you can never cancel and all this stuff — we didn’t want to do that, obviously.

Because we have the banking tail, we make more than enough if we can get you as a primary user — a payroll user – that’s more than enough for us for our RPO and LTV. Basically, we were ready as a company as we already had the regulation and compliance angle. And then I think the market from a macro point of view — inflation is insane still, and it’s not going down. I mean, from a rate of change, it’s going down, sure. But from an absolute price point perspective, we’re up 25% to 30% on staple goods. I think that there’s a lot of pressure on the middle class all the way down. There’s a lot of pressure on the household. So this product is just at the right time for the populace as well.

The neobank plans for an IPO

I’m personally looking forward to these fintech IPOs, and I’m sure a lot of people in Current are as well. I think IPOs in any sector are great. We can mention the names if you want, but we’re looking forward to seeing them do well and get over the lines. That would be good for everyone and it lifts all boats when a frenemy or a competitor-mate (as Trevor would call them) do well. I think the market has in the process picked winners. Throughout you see these bubbles, and it happens every time, right?

Clearly fintech, and tech in general, was in a bubble of bubbles. So what you see from that is it’s much harder to get funding from this point on because the market – rightly and fairly– says “Hey, we kind of did it so far and so who’s doing what from this point on?”

I could argue the other side of it, which is you hear a lot in the public or Twittersphere: A lot of money has gone into fintech, when is the change coming? This sort of idea that “we want to see banking change forever, and we want it now.”

That’s important. But on the other hand, we look at the BaaS situation, and people breaking rules and trying to make things happen… and then we complain about that. In fintech or banking, it’s slower than you want it. As long as it’s moving in the right direction. Some of these products and services, customer feedback, rate of growth, it’s phenomenal. And so we’ve been very deliberate about who we’re servicing right now. Commentating on fintech in general, a lot of our customers are just trying to live a normal life. So maybe there’s a bubble outside of the feedback loop there that needs to be tapped into a little bit. But I think there is great progress happening. IPOs are coming to market and winners are being selected.

And I think you can gain real confidence from some international names, right? So you look at Revolut and they’ve gone multinational, they’ve solved a problem mainly in Europe. You look at Nubank and they’ve solved the South American problem really well, amazing penetration in terms of their TAM. And so America needs a winner or winners. We still think it’s up for grabs, and it’s a harder problem set to solve. But once it’s solved, it’s going to be very powerful.

So we focused on really iterating on these two products. Launched within 12 months. So there’s still all that going on, which is a decent amount of work, making sure that the expected behaviors, forecasted behaviors, and the actual behavior, is the way you want to see in the business. And it is so fun. That has been phenomenal. Whereas, as we go forward into the rest of this year into next year, we are focused on profitability, just like everyone else. So in unit economics you don’t get there without those first. And so our unit economics are great and getting better.

They will continue to be because of our product moat and being able to do all these things. We’re focused on, I’ve said this in a few conferences over the years, I said that that deposit was largely done in that sense, right? That was like the low hanging fruit. And then the really complex thing is the liquidity, credit and lending side of things done safely. The great thing about EWA is you have very fast paybacks, and so you learn very quickly. In a credit card company, it takes 10 years to get amazing data. You got to see a couple of bubbles and a couple of cycles. And then you’re like, okay, I’m a real credit card company, like that’s a really long time.

For us, we have two week cycles. And so we’ve already had the equivalence of 10 or 15 years of credit card data equivalence. And we’re able to learn very, very quickly. So our underwriting team and product teams are learning very quickly.

Plans for the future

That enables us to be stronger and on the front foot going into the things that would be capital intensive, harder to do longer term. So more traditional lending, installment loans, things like that. And also clever sort of ways of looking at liquidity for products and services that are typically gated against people that need large premiums or deposits. So you can imagine, there’s a lot of things out there without giving everything away.

We’re focused on those over the next 12 months. Those will be ARPU expansions, as well as going into new customer segments, although we don’t really need to at this point.

We’re more than happy at our growth rate of close to 100% a year. Just chugging along, we’re doing all right.

*Individual results may vary. Using your credit card responsibly may allow you to improve your credit score. Credit building depends on various factors, including your payment history, credit utilization, length of credit history, and other financial activities.

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