Banks committed the biggest heist of all in convincing us they were free
🌎Ben Soppitt
CEO Unifimoney | Embedded Digital Wealth Management for Community Banks and Credit Unions
And how you can now stop paying with unifi.money
This article was first published in Medium - see more articles by Ben Soppitt here.
You can buy an iPhone 11 Pro Max for $41.67/month. Seems pretty good value.
Millions of Americans are paying more than twice that today for their banking — or more than the cost of two iPhone 11 Pro Max’s. Almost all unaware of how much “free banking” really costs.
If a bank suddenly told people it would cost $80/month for a bank account, and the more money you have the more you pay, their customers would immediately leave.
But isn’t banking free?
The top 6 banks in the US made record profits last year. If banking is free, who is paying?
You are!
Photo by Slim Emcee (UG) the poet Truth_From_Africa_Photography on Unsplash
The combination of cash held in checking accounts paying no interest, unused credit card rewards and poor investment practices is costing the average middle-class family over $80K over the 30 years of their working life. We are paying premium prices for used car value.
Source: Flickr
Unifimoney has been created to solve this and give back the hidden costs in banking to help people build and protect their wealth. Our members automatically and by default model best practices in personal financial management, effortlessly.
No one likes to be ripped off, we all still carry the natural and instinctive sense of fairness from childhood— having a toy grabbed, being cut off on the road, pushing in line, getting overcharged.
Sometimes these moments become ingrained — an unfair tax gets introduced but gradually people get used to it and it’s taken as part of the natural order of things. How long can you really stay angry, at some point you just need to accept it and get on with life. These things become invisible to us.
“Grant me the serenity to accept the things I cannot change. The courage to change the things I can, and the wisdom to know the difference”
Reinhold Niebuhr
What happens though when something changes from being something you cannot change to something you can? What happens when you suddenly have an alternative?
Such as when an involuntary “tax” becomes voluntary.
That’s why we created unifimoney — to offer the first real alternative to traditional banking services, one that works in the best interests of the consumer to maximize the returns from their own money.
We make your money work for you, not the bank.
We do this by changing the long-established model of banking from being high cost and high margin to low cost and low margin. We still want to make money, but we do it in a way in which we put consumer’s interests first.
Free banking isn’t free — it’s darned expensive!
Curiously, despite being apparently free, The 6 largest banks in the US alone made record profits last year, over $100bn. That’s over $300 for every adult in the US — every single year. Chase and Bank of America are the 6th and 9th most profitable companies in the world!
Banks rely on their profits on consumers thinking it’s good value and there are no alternatives. If banking was a psychological condition it might well be Stockholm Syndrome. Free banking must be one of the most successful marketing initiatives ever, we are all paying whilst believing its free, it’s a “hidden tax”. We often do things that are illogical and against our own best interests, and it can cost us a fortune, this is one of them.
It should not surprise us that banks are so keen to continue this model and to assist in that they invest vast sums to convince consumers it’s all OK — the top 6 banks spent over $10bn in advertising last year alone.
Despite this there is no anger, we just accept it, it’s the way it’s always been and after all, what’s the alternative — right?
Where does all the money come from if banking is free?
For those fortunate to have cash in the bank — a large proportion of this cash is typically held in a checking/current account with the average checking account Paying 0.06%. These same funds are lent by banks to other people at rates up to and above 12% in mortgages and loans. Over $2 trillion is held in checking accounts in the US earning little or no interest for consumers.
That $2 trillion can earn banks a potential $400bn+ in revenue every year in loans and mortgages. That’s a lot of executive jets.
For those less well off fees can rack up fast. For many banks, up to 40% of revenue is fee-based. Everyone pays, rich or poor, one way or another, pretty similar to a tax really.
We are utterly reliant on banks as a utility but we have not seen them change as quickly as they could and should have done. Technology has enabled consumers to access money in more ways — phone, app and online.
Technology has also helped banks reap rewards from increased efficiency and speed. But we have not seen the dividends from technology in terms of the increased returns to consumers. The digital dividend has been pocketed by the banks.
So what’s the alternative?
We are — unifimoney
www.unifimoney.com
Unifimoney is leading the market in the integration and automation of everyday money management, saving, spending and investing.
We give back the hidden costs of banking to consumers, we can afford to do this because we have created a uniquely low-cost model that also integrates multiple traditionally separate functions. Our users can instantly open a single account that incorporates a high-interest checking account, credit card, and investment account.
Each time you use your card, receive cash-back or interest it’s deposited in the investment account. Users are able to create a long term investment fund effortlessly from the money they save.
Saving an estimated $1,000+ a year for an average member.
In creating a high-interest checking account 100% of your money is earning maximum interest 100% of the time. No need to open and maintain multiple savings accounts and move money between them. Just like a checking account when you need your money it’s yours. No need to transfer back to your main account or delays or limits in access. This is a true DDA account, FDIC insured and even comes with an old fashioned checkbook, just because sometimes you just need to write a check.
We also have a credit card that pays the highest cashback in the market for online and in-app spend. Our customers are highly technically engaged and are increasingly shopping online so we reward what they do most of. We have also designed a number of unique innovations into the credit card experience that we will be rolling out over time.
An investment portfolio is a necessary part of a holistic personal financial strategy — combining the benefits of dollar-cost averaging and compound growth with low fees and diversification. We help our customers do this effortlessly by passively drip-feeding cashback and rounding up transactions on the credit card into the investment account. In addition, deposit interest and an automatic monthly contribution are paid into the consumer’s investment account, accessed at any time. Our Robo advisory platform charges the lowest fees in the market at 15bps a year.
Over time we will bring selected 3rd parties offering other services into the platform and personalized and curated merchant offers for customers to use when they need or want them.
It’s a radical departure from the established model we have all grown used to but the benefits of the digital dividend are enormous. Over the working life of an average family with two incomes, it could be worth in excess of $80,000, money used to pay the mortgage, renovate a home, feed the family, keep the car going and living life — or a month of costs for the corporate jets for a bank.
We think there is a better way to manage everyday money.
So what happens when people are suddenly confronted with a better alternative where none was expected? We are just about to find out.
To find out more, please visit us at www.unifi.money and sign up to become one of the first to enjoy unified money. We rely on our early users to help us with feedback and to perfect the experience. In appreciation of this our 500 most active early members will receive an iPhone Watch Series 5 as a thankyou.