4.2%*: The Number That Tells You Whether a Fintech Is Aligned with You.
Most 'free' financial apps make money when you do worse. We made a structural choice to do the opposite.
Here's the math, and the philosophy.
I want to write today about something I have been thinking about for a long time, and that I think most people working in financial services know but are reluctant to say publicly. The dominant business model in consumer fintech is misaligned with users' well-being. I will explain concretely what I mean, because the pattern is worth naming clearly.
How most 'free' fintech actually works
When a financial app advertises that it is 'free', what it is actually saying is that the direct cost is zero. The indirect costs are how the company makes money — and they are almost always larger than the headline 'free' suggests.
For most credit-card-driven fintech, the company makes money when you spend more — through interchange fees on every transaction, through the encouragement of higher transaction volumes, and through partnerships with merchants who pay for promoted placement in the app. For most lending-driven fintech, the company makes money when you borrow more — through interest, fees, and the structural incentive to keep customers in revolving credit indefinitely. For most account-driven fintech, the company makes money on your idle balances — by paying you 0–2% on funds they earn 8–9% on by lending those funds out themselves.
In every case, the financial wellbeing of the user is something the business model has to work against in order to grow. The user spends less — the company earns less. The user borrows less — the company earns less. The user moves their balance to a higher-yield product — the company earns less.
This is not a moral failure on the part of any specific company. It is a structural feature of how the consumer fintech industry has chosen to monetise. But it has consequences. The most important consequence is that nearly every financial app you use has, somewhere in its incentive structure, a quiet hope that you will behave slightly worse with your money.
The Sticitt choice
When we built Sticitt, we made a deliberate decision to refuse this model. Our 4.2%* rewards rate isn't a marketing number. It is a structural commitment that keeps our incentives aligned with our users.
Here is what that means in practice. When a school's balance grows on Sticitt, two things happen. The school earns 4.2%* on those funds — meaningfully more than they would earn parking the same money in a traditional bank account. And we earn a third of what the School, Parent or Learner earns. We grow when our customers grow. We earn more when our parents save more. On top of that, our users gain all the benefits our transactional platform offers our Schools and Parents/Learners.
This sounds obvious when I write it out. But it is surprisingly rare in practice. Find me a major South African consumer fintech whose business model genuinely improves when its users behave more responsibly with their money, and I will show you a company worth paying attention to. In general, Asset Managers offer the same aligned interest, but they offer no transactional and banking-related functionality that the Sticitt platform offers its Schools, Parents and Learners.
The CFA lens
I am a CFA charterholder, and I want to put that hat on for a moment to address something specific. There is a misconception that 4.2%* is somehow promotional, or that it will get cut once we are 'established'. It will not. The reason it will not is structural — it is not a discount, it is the design.
Our cost base is fundamentally lower than a traditional bank's. We do not operate physical branches. We do not carry the legacy IT debt of a 50-year-old institution. Our acquisition is driven by school partnerships rather than mass-market advertising, which is dramatically more efficient. Every rand we save on overhead, we have a structural ability to pass back to our users — and a structural commitment to do so. The 4.2%* is what we can sustainably offer while running a healthy, growing, profitable business. It is not a loss-leader. It is the equilibrium of a different cost structure meeting a different philosophical choice.
The generational lesson
Honestly though, the financial mechanics are not the part of this that excites me. The part that excites me is what 4.2%* does to a child.
A few months back, my 5-year-old son (yes, 5-year-old) gave me goosebumps. He had been saving toward a specific goal for a few months, and one Saturday morning he pulled up his Sticitt Account and noticed his balance had grown. He had not made any deposits that week. He had not earned anything new. He turned to me and asked: 'Why did it go up if I didn't do anything?'
That question is the foundational question of wealth-building. It is the question every personal finance book is trying to answer. It is the question most adults never really internalise — and the failure to internalise it is one of the largest single drivers of generational financial stagnation.
A 5-year-old who asks that question, understands the answer, and then watches it play out in his account over the next five years, is going to enter adulthood with a fundamentally different relationship to money than his parents probably had. That is worth more than 4.2%*. That is worth a generation.
The bigger industry question
I want to close with a challenge to the broader South African fintech and banking ecosystem, because I think we are at an inflection point. For the last decade, the global fintech narrative has been about access — getting more people into the financial system, lowering the cost of basic services, expanding what is possible.
The next decade is going to be about alignment. The companies that win the next ten years will be the ones who can prove, structurally, that their growth is aligned with their users' growth — that they win when their users win, and not when their users behave badly. That is a higher bar. It excludes a lot of current business models. It rewards a different kind of company.
Sticitt is one of those companies. The 4.2%* is just one number in that bet. Watch the others — our pricing on school collections, our obsession with figuring out how to only use debt for developmental purposes (watch this space), our reinvestment of platform revenue into financial literacy tools — and you will see the full pattern. Doing good is, unequivocally, good business. We just have to be willing to design for it from day one.
When in doubt, paddle out.
*Linked to SA Repo Rate
