DSU fintech partnership aims to bridge wealth gap

DOVER  — Investor Cash Management (ICM) is now offering members of the Delaware State University community a new financial option that grows wealth and opens new investment opportunities beyond typical bank accounts.

Continuing the commemoration of the university’s 130th anniversary, ICM announced a partnership with DSU to offer cash management accounts to DSU students, faculty, staff and alumni free of charge. Powered by API technology, the platform is designed to manage cash and earn high-interest rates in bank accounts and investment products, like government money markets and exchange-traded funds.

The cash management account would jump start wealth growth for DSU students with higher interest rates and offer easy investment opportunities. | PHOTO COURTESY OF DELAWARE STATE UNIVERSITY

“One way to think about this is like a benign Trojan horse. It will make unbanked individuals bank, and it will turn banked individuals into investors,” Investor Cash Management CEO Fred Phillips told the Delaware Business Times. “The goal is to enable people to build better financial outcomes for themselves and their families, and we wanted to change the narrative the same way DSU is right now when it comes to how people think of historically Black colleges and universities.”

Founded in 2018, ICM launched with $6 million raised from venture capital and investors like MBNA co-founder and former Mastercard chairman Lance Weaver, Morningstar founder and chairman Joe Mansueto on the board of directors. Now with 30 employees, the Chicago-based financial technology company recently closed out a $10 million Series B round of fundraising. In August, ICM announced a partnership with Visa and added Ariel Investments Co-CEO and Chairman John Rogers Jr. to its board.

Key to the ICM experience is an all-in-one product that allows users to bank, save and invest in a single account, providing quick liquidity like a checking account and high-interest rates on investments. Interest rates for ICM accounts range from 0.55% for a bank account to 1.61% for a long-duration investment account. In comparison, the average interest rate for a FDIC account today is 0.03% for a checking account and 0.06% for a savings account.

ICM enrollments are limited to wealth management or asset management firms, or partnered organizations, which makes the DSU partnership more exclusive. ICM partners include PIMCO, SEICU Member Benefits, NEA Member Benefits, Foundation 99, Wisdom Tree and more, but DSU is the first HBCU signed on with the fintech company.

With this partnership, DSU leadership hopes to improve financial literacy among its students as the Black community has been historically plagued by economic inequalities. A white family had at least 10 times the wealth as a Black family, a gap that stems from the low homeownership numbers, according to a 2019 survey from the Federal Reserve.

“[Our students] need more than their degree to change the economic trajectory for themselves, their families, and their communities. They need to know how to build wealth,” DSU President Tony Allen said in a statement. “That takes planning, time and tools. We are already committed to comprehensive financial literacy training, and the new Delaware State University CMA provides our entire community with a responsible financial product built just for us. We hope many of our sister institutions will join us as well.”

Fred Phillips

Phillips was mindful of the need for financial literacy, as his mother is a Mexican immigrant who worked in a Houston hospital.

While he went on to direct financial technology and services for ABN AMRO and The Carlyle Group, he wanted to give people like his mother the tools to succeed in investments, even with limited funds and immediate need to spend it on necessities.

“If we can build a product that slices through those sources of friction like a Gordian knot, it ought to be catalytic in transforming individuals into investors and helping them get better financial outcomes,” Phillips said. “We hope that DSU can be an enormously successful proof of concept that will be able to speak for us when we’re able to speak with a network of HBCUs.”

DSU students and staff who open an ICM account may manage their funds through a web-based portal or the smartphone app, and spend their money through a DSU-branded Visa card.