Finterview: Qapital’s Erik Akterin
Plaid’s Chelsea Allison and Qapital’s CTO and co-founder chat about about what makes saving so difficult for so many, the differences between Sweden and the United States, and getting a fintech startup off the ground
Erik Akterin and George Friedman founded Qapital in 2013 in Sweden, and expanded to the American market in 2015. By allowing users to set savings goals and providing easy ways to contribute to them by building on everyday purchases, Qapital has revolutionized and streamlined a process that has traditionally been so difficult for so many people. Plaid’s Chelsea Allison had a chance to chat with Erik about how Qapital got started and where it’s headed. Their conversation has been edited for clarity and brevity.
CA: Where did the idea for Qapital come from? How did you and the team discover that savings wasn’t a goal in itself, but that it would be helpful to make savings the reward itself?
EA: Both George and I had worked in banking before, but felt that there was something missing in how traditional banks approached savings. It was obvious to us that it was time to rethink the traditional idea of “savings” and “savings accounts.”
Not only did we feel that concrete savings goals, rather than an abstract savings account, were key, but putting together a toolkit of automatic triggers also felt like a very important piece of the puzzle that nobody was really doing. These are used to seamlessly get you started and keep you on track with your savings, which is that little nudge that so many of us need.
CA: Why is tying savings to a short-term, concrete objective so important in saving for a vague future?
EA: Because thinking about the future is really hard. It’s easy to see what concrete benefits I get out of buying a coffee now, but much harder to visualize what my general savings funds will get me. The future is vague, but the now that we live in is very concrete. So that’s what we’re trying to do with Qapital: make the future more concrete.
You can see this in short-term goals, like when you’re saving up for a vacation. A concrete goal makes it much harder to “cheat” and use that money for everyday spending, since you consciously have to prioritize that fancy shirt you just saw over your family vacation.
But this also applies in longer-term goals. It affects much more than your financial behavior, because it also affects your life in a broader sense. According to Dan Ariely, Professor at Duke University and Qapital’s Chief Behavioral Economist, research shows that just earmarking an account as a college fund for your kids rather than a general savings account makes you push and encourage your kids more, since you set the expectation that they will one day attend college.
CA: When you decided to shift the company’s focus from Sweden to the United States, what was the biggest challenge? Besides having a different market size, do consumers here behave differently?
EA: There have been so many different challenges, from having multiple offices in different time zones to new technology and system integrations. But it really wasn’t about the challenges but about the opportunity we saw in helping millions of Americans save money for what they want in life. And while there are many differences between Sweden and the United States, the core problem is the same: People just have a really hard time saving money.
CA: You have experience in the Swedish banking industry. How different are the two countries’ approaches to the financial industry?
EA: On the surface they seem quite different. In the US there are thousands of retail banks and credit unions, big and small. In Sweden you can pretty much count all of them on your fingers. In the US there are still paper checks, which is mind-boggling to a Swede. There are differences in infrastructure and standards, but the main difference that I have experienced is actually the positive dynamics evident in the US financial industry. Despite a lot of regulation and red tape, there is a genuine willingness to embrace innovation. There are so many ambitious and interesting startups, both consumer-facing ones like Qapital and infrastructure providers like Plaid, and there are banks both big and small that are eager to partner with startups in order to explore new opportunities. The Swedish financial industry feels much more conservative and cautious in those respects.
CA: What was your biggest technical challenge as you built Qapital? How did you solve it?
EA: Looking back on what we’ve built so far, it’s hard to pinpoint specific technical challenges. Qapital owns the consumer interface and the core logic around our savings service, but a lot of the infrastructure that we use behind the scenes is provided by others, such as Plaid and IFTTT. Integrating all these various third-party platforms and services while retaining control and providing a unified experience to our customers is probably the greatest challenge, and continues to be so as we expand our offering going forward.
CA: What are some of the most popular goals? Do people find more success when they choose to incentivize good behavior or disincentivize bad?
EA: Some of our most popular goals are for travel, new apartments or houses, new cars, or to pay off debt. We have data that shows that our “Spend Less Rule,” whereby you set a weekly or monthly budget at a certain merchant and save the difference between what you actually spend there and that budget, is a more effective way to save than our “Guilty Pleasure Rule,” whereby you simply save a fixed extra amount every time you make a purchase at a particular merchant. So this would indicate that incentivizing good behavior is more effective.
CA: It seems like Qapital is especially important in an era when it’s easier than ever to spend money—now that there’s very little “pain of paying” associated with the process. How do you combat the pain of savings by making the Qapital user experience simple?
EA: It’s all about combining goals, rules, and everyday behavior. We let our users set their own personal Goals, visualize them with images, and then automate saving toward them using fun Rules and everyday behaviors. For examples, the Guilty Pleasure rule helps you save when you buy your morning coffee, or something as simple as a Round-up helps save on every card swipe. Automation is key in this, as it helps you stay on track without you having to make a conscious decision to save over and over again.
The goals also make it more painful to spend your savings money: It’s a lot harder to take money from your beach holiday fund and spend it on coffee than it is to “borrow” a few dollars from your general savings account.
CA: What has surprised you most about what makes people either achieve or deviate from their goals?
EA: How this program just works. I love reading our App Store reviews about users who have never managed to save money before and who have now put down a deposit for an apartment, paid off their credit card debt, gone on a dream holiday or honeymoon, or felt secure enough to leave their jobs and start their own business.
CA: What’s one thing you wish you’d known before starting Qapital—and one thing you’d point out to budding entrepreneurs?
EA: I thought I had a pretty good idea of what being an entrepreneur entailed. I had read a lot, and I had a good grasp of the technical requirements of the system we were building, but I really had no clue about the company-building part of it. The ultimate responsibility, at the end of the day, rests with the founders. Building a team, a company, and a culture that perseveres and thrives doesn’t happen on its own; it requires hard and constant work. It pays off so much when you get it right though.
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