Fintech races against banks

The Wall Street Journal has 2 articles about “fintech” today without defining this new word.

What is “fintech”?

**What Is Financial Technology – Fintech?**

**Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ???At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. Fintech, the word, is a combination of "financial technology". ... Fintech now includes different sectors and industries such as education, retail banking, fundraising and nonprofit, and investment management to name a few. ...** [end quote]

By this definition, online banks have been using fintech for over a decade. But non-banks are seeing opportunities in fintech.…

**Walmart-Backed Fintech Startup Is Acquiring Two Firms and a New Name**
**The startup, to be called ONE, is helmed by former Goldman executives and aims to build a ‘financial services super app’**
**by Sarah Nassauer, The Wall Street Journal, Jan. 26, 2022**

**ONE Finance Inc., a financial-services mobile app known as a neobank that allows users to manage money and apply for a debit card or other services that come with lower fees than traditional banks typically charge....ONE aims to become a one-stop shop for a range of mobile-based financial services that appeal to customers from a variety of socioeconomic groups...** [end quote]

This is aimed at the large number of people who don’t have bank accounts, largely poorer people who are likely to shop at Wal-Mart. It could also appeal to young people who live on their cell phones. It’s a good concept and could be profitable for Wal-Mart.……

**Fintech Companies, Facing Competition From Mainstream Banks, Step Up Their Offerings**
**They are taking advantage of their size and low costs. But can they stay a step ahead for long?**
**By Cheryl Winokur M unk, The Wall Street Journal, Jan. 26, 2022**

**Fintech companies have established themselves as viable competitors in the financial-services business, but now they face a new challenge: Some mainstream banks have started to offer fintech-inspired services such as early paycheck access and no-fee overdrafts...**

**Fintechs, taking advantage of their technological prowess and lower costs, are offering more features that banks generally don’t, such as analysis of customers’ spending and saving patterns, credit-builder products and lending products designed specifically for consumers who banks don’t typically target, like individuals with little or poor credit history. Fintechs also are placing bets on up-and-coming services such as helping consumers plan to reach their savings goals, cryptocurrency investing and crowdfunding....Fintechs typically have more-versatile technology than banks, and they have low overhead, giving them the ability to offer more low-cost or no-fee services than banks generally can...** [end quote]

The article mentions fintech companies like Dave, Chime and Current. There was no mention of the FDIC in the article. I don’t know whether these fintech companies are regulated by the government the way that banks are.

Out of curiosity, I went to The web site says:
Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC
Put your savings to work with 4.00% APY

This sounded too good to be true so I checked with the FDIC. Sure enough, Choice Financial Group is a member of the FDIC.…

Well, I’m not an old fuddy-duddy! If a fintech company pays 4% on savings, it’s because they are giving a bigger cut of the lending profits than conventional banks do. I’m going to look into this.



Followup: I downoaded the Current app onto my cell phone. The premium checking account pays 4% on up to $6,000 but has a $5 per month fee. Current doesn’t have a savings account. This wasn’t worth my trouble so I didn’t join.

I can see that having an easy-to-access mobile-based checking account for direct deposit of pay checks and many other services would be very useful for young and un-banked people. Definitely a threat to brick-and-mortar banks – but not helpful in getting people to save money.


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Hi Wendy -

I checked out current (didn’t download the app, but read the Agreement) and have to agree that this looks like a place where folks that are underserved by our current banking facilities might be attracted to this, however it’s not a place to dump a lot of cash looking for interest.

I’m not sure if you are aware of HM Bradley Bank. Again, this is a “fintech” company and is affiliated with Hatch Bank - backed by the FDIC. You can earn up to 3.5% on balances up to $100,000 if you play by their rules, which seem to change somewhat frequently. The account requires at least 1 direct deposit monthly.

But, my wife and I did get in with large chunks of cash which we manage carefully to ensure that we meet the requirements to get the maximum interest rate.

HM Bradley requires you to sign up for their credit card and you must put $100/month on the card. They also pay 3%, 2% and 1% on the top 3 categories of charges (restaurants, auto, retail, etc.) as cash back on credit card purchases. We’ve nailed that as well by using DW’s card for groceries and my card for restaurants - which we easily hit the $100/month minimum.

If you do have the time and energy to get everything automated with these accounts, they can be profitable on a monthly basis.

Best ~

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but has a $5 per month fee.

Apparently if you enter “coupon codes” when setting it up, they [might] waive the monthly fee.…

See comment #1322342