What’s in a bank?

To badly paraphrase Shakespeare, a bank by any other name might be known as a Wallet. Or a Neobank. Or possibly a Challenger Bank. Or maybe even a Pocket.

We have lots of names for what we build in the fintech space, and the list of financial features we’ve enabled is even longer. Round up your savings on every transaction? You can do that now. Let robots invest your money? That too. Put crypto in your IRA? Yep (I checked.)

But do any of these innovations make a bank by themselves? Or are real banks still concrete buildings where we keep our money?

The hard truth is that despite all of the innovation in fintech in the last few years, the vast majority of banking revenue remains with larger, established banks. Most people still keep at least one bank account (often their primary bank account) directly with a brick-and-mortar bank.

If most customers haven’t trusted fintech startups enough to shift their primary bank accounts over yet, it seems like despite all of the flashy innovations in the past few years there’s still room for thoughtful innovation that builds trust.

Lloyd’s of London in all its concrete corinthian-columned glory
Is this what you think of when you imagine a bank? Could we imagine financial services with less concrete?

So what do we think makes a bank? Well, not to duck the answer, but we’re going to let our customers give us the final word on that after we launch in the next few weeks.

That said, we have some careful hypotheses on banking we’ve formed based on conversations with customers over the last few months (and based on how customers have used our first product, the Flat Tire Fund.) We’ll be testing these hypotheses with customers in a few weeks when we launch our first full banking product.

So without further ado, here’s some of what we think makes a bank worth banking with:

  1. Dependable banking basics. Stuff like a checking account, a debit card that works. A routing and account number so you can get transfers (like your paycheck). It should always be up, and of course it should be ridiculously easy to check your balance.
  2. Customer service that counts. It’s a truism in fintech that it’s tough to compete with the brick-and-mortar presence of the banking teller who is literally down the street. We think getting help from your bank when you get stuck should actually be easier than walking down the street to your bank. Because if you can get help when you need it, you’re more likely to trust a bank to be there for you.
  3. Innovation that’s useful, not fancy. Maybe we gave it away at the top of the article, but we think some of the innovation in the fintech space in the last few years hasn’t necessarily been focused on solving customers’ daily problems. We think innovation that counts over the long haul will be focused rigorously on solving actual financial problems for customers. Stuff like “I can’t afford groceries until payday” or “my car broke down and I am having trouble getting to work.” The fact that we still see these kinds of cash flow problems in our communities suggests there’s still room to solve real problems at scale here.
  4. Be up front about how we get paid. There’s no magic money, and amid challenging times authenticity has never been more important. Being up front about our business model helps us build trust by showing customers that we really do have a way to get paid without nicking them on fees. Being honest about how we get paid also reminds customers that we are building a real business, and that gives customers confidence we’ll be there as a going concern for the long haul.
Shopping for groceries shouldn’t give you a headache!
What if shopping for the weekly groceries didn’t give you a budgeting headache?

The four elements I’ve listed above are effectively promises we make to customers. They’re not easy to keep. They’re not easy to scale. And that’s what makes the job fun! (If you think it sounds fun too, feel free to check our job postings over at Angel List.)

Stay tuned,

Nate

Product @ Palolo

(You can find more of Nate’s product musings are on TikTok and Twitter)

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A sassy startup on a mission to build a bank that gives you credit for the hard work you do!

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Palolo

Palolo

A sassy startup on a mission to build a bank that gives you credit for the hard work you do!

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