Financial technology company Current announced that it closed its series A fundraising round at $5 million. This round was led by QED Investors, with participation from Cota Capital. As part of the deal, QED’s Founding Partner Frank Rotman will join Current’s Board of Directors.
Current is building a mobile, digital-first payments platform. The company’s focus has been on families and, in particular, teens.
“More and more consumers and retailers are eschewing cash for digital payments, yet the market seems to want teenagers to start off with a traditional checking account,” said Current Founder and CEO Stuart Sopp. “We are introducing teenagers into the financial system with digital payments and a set of mobile tools that leave behind the outdated structures of traditional banking and better prepare them for the future.”
There are 30 million teenagers currently in the United States, with five million more aging into this demographic each year. Teens approach money, transactions and value differently than their parents’ generation – they’re abandoning cash more quickly, only using it when absolutely necessary and half as often as adults. Teen behavior on Current follows this trend, with ATM withdrawals representing less than four percent of transactions.
“While the need for a family banking product has been around for decades, the available technology wasn’t able to address these needs,” said Rotman. “With the proliferation of smartphones and the increase in digital payments being accepted universally, the timing is perfect for a company like Current to emerge. Traditional bank products designed on top of legacy infrastructure can’t solve the problem. Current can.”
The system works by offering a Visa debit card that’s linked to the child’s account with the funds. Parents can fund the child’s account by transferring money from their own bank account.
However, the app isn’t just for managing the money transfers. It also allows parents to set up a chore list that need be completed and reviewed before the allowance is paid. In addition, while the card allows kids to have a sense of autonomy, parents can also manage the child’s spending by setting daily spending limits, limiting ATM withdrawals and blocking certain categories of spending.
“For Current the focus on teens was a strategic decision and one of our paths to differentiation,” Sopp said. “Not only do we see an opportunity to create solutions for problems families were having with money that were not being addressed by the marketplace, we see an opportunity to work with a customer demographic that has never been exposed to traditional banking. It is an untouched audience that is open to and interested in a pretty different financial experience than previous generations.”