Legal & General has invested £40m into a fintech startup that partners with employers to offer loans to workers, according to Business Insider UK.
SalaryFinance was started by Dan Cobley, former MD of Google in the UK. The startup enables staff to apply for loans of up to 20% of their annual salary with interest rates from 3.9% APR. The mechanism can also be used to set up automatic savings accounts.
The startup calls itself a ‘financial wellbeing’ business, offering tools to manage money and educational opportunities as well as loans. It is used by employers including Metro Bank, Hays recruitment and Hackney Council.
Bernie Hickman, CEO of Legal & General Insurance, said the investment was part of a new fintech arm of the business that “brings together the many benefits and strategic advantages that Legal & General enjoys with the fast pace, technology first, customer-centric approaches of successful startups, such as SalaryFinance.”
The £40m investment will enable the startup to fund expansion into the US market. Legal & General is following in the footsteps of other financial services companies experimenting with fintech, including Aviva.
The move comes after an announcement in September 2017 that Goldman Sachs would invest £100m into SalaryFinance’s rival Neyber, which also describes itself as a financial wellbeing business and offers loans secured against pay cheques.