Empower raises $20m Series A as challenger bank market continues to ripen

US challenger bank Empower has collected $20m in its Series A round as the appetite for digital banks continues to rise.

The round was supported by first-time Empower backers Icon Ventures, Defy Ventures and Nubank founder and CEO David Velez. Previous investors into Empower, Sequoia Capital and Initialized Capital, also contributed to the Series A.

Empower offers a digital banking platform which combines AI and human coaching to offer personalised personal finance services which include high-yield deposit products, easy budgeting and spend tracking, bill negotiation and subscription management, and personalized recommendations.

In addition to offering financial products, Empower aims to improve the financial planning of millennials. This includes planning for retirement and managing student debt.

The FinTech is investing into its data science and financial expert team to better help their customers.

Empower co-founder and CEO Warren Hogarth said, “Empower is democratizing access to financial experts and products that used to be available to only the top 1% wealthiest people.

“There’s growing demand in the market for financial knowledge to be more practical – and that means actionable, personalized information in real time to create better outcomes. We combine human coaching with the latest technology, including AI, to continuously monitor our customers’ accounts and provide intelligent alerts, prompts, and analyses to improve their financial decision-making in the moment and build financial literacy. We’ve designed every product feature to make it dead-simple to save more and grow their wealth.”

Research from analytics company Gallup found that when millennials are unhappy or dissatisfied with their bank, they are not afraid to switch. People from the generation are 2.5 times more likely to switch hat baby boomers and 1.5 times more than generation X.

A study from Juniper Research also claims that the rising use of digital banks are expected to user numbers exceed 3.6 billion by 2024, increasing from the 2.4 billion users in 2020.

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