I came to the U.S. from India in 2004 with $100 in my pocket. Eventually I founded a tech firm, AMSYS Group, that’s now worth more than $350 million. But I will never forget how difficult it was as a new immigrant to use the U.S. banking system. I clearly recall how just opening a bank account and getting a loan was a serious challenge.
Underserved communities, including immigrants, can pay excessive bank fees or even get completely pushed out of traditional banking services. That’s not acceptable, and that’s why in 2021 I launched Fair, a mission-driven neobank that works to make real change for the better.
Neobanks are becoming the face of modern banking, particularly for those who haven’t been well served by traditional financial institutions. Many of these online and mobile-first fintech companies promise low fees and transparency and are presented in a user-friendly interface. Plus, the latest mission driven neobanks take on an additional challenge: addressing the particular and wide-ranging needs of underserved communities.
After all, bank accounts and loan agreements are complicated and loaded with fine print. Many people have trouble understanding it all and often end up just skipping the process entirely. Plus, when contracts aren’t in your native language and the entire system is foreign, as it was in my case all those years ago, it’s hard to know when someone is trying to take advantage of you.
These banking challenges are real and measurable. For example, in 2020, a Bankrate survey found Black and Hispanic respondents paying twice as much in banking fees as white respondents. That’s unacceptable and unnecessary, and I’m excited by the opportunity that neobanks can address these disparities.
For example, at Fair, we’ve created a membership-based platform that’s easy to understand. With a no-cost membership, you can get access to a wide range of banking services, and you don’t have to worry about being nickeled and dimed by countless fees.
Mobile- and customer-first approaches can help communities in need
When banks shut down branches in poor neighborhoods, the resulting banking deserts leaves residents with few alternatives. Unfortunately, nearby check cashing stores are often the most convenient – and costly – option. Plus, the lack of local banking services means less access to capital, making it difficult to start or grow a business.
Neobanks offer a convenient and user-friendly mobile experience, a major step in the right direction for populations. In2019, the Pew Research Center found approximately 25% of Hispanic and Black Americans are only able to access the Internet at home with their smartphones. Only 12% of white Americans are in the same situation.
It’s also heartening to see how neobanks are expanding beyond basic banking services to create personal finance platforms. You can get key budgeting, investing, and lending tools built right into the same mobile app where your paycheck arrives.
For example, our free international money transfers are very appealing to immigrants who send money back to their home countries. And parents like our option to provide their children with free debit cards to help teach them how to manage money. Later this year, we hope to launch interest-free home, auto, and small business loan products. Plus, we’re building a “robo-advisor” to help members save for the future with Socially Responsible Investing (SRI) options. And our wealth building investment feature that can return annual dividends of up to 4% for members is very popular.
I believe a mindful focus on intent and impact is required for fintech companies to genuinely help underserved communities. To me, that means doing more than just creating a nice aesthetic on top of a white-labeled banking product.
By listening to customers, we have truly invested in technology that directly addresses their specific needs. We also have the humility and flexibility to adjust course as necessary to benefit our customers. We are also nimble: we can act quickly and change course, if needed. Finally, we are making real changes for the greater good.