The neobank does not offer funding to entities that work against the environment and provides benefits to customers who support social and environmental causes:
Aspiration is a neobank in California in the US that provides its members not just with some unique banking services but also tools required to reduce carbon footprint and make a social impact. A person holding a cash management account, or CMA, in the neobank will be able to support purpose-driven businesses and watch the difference that his or her deposits or spendings make. At the same time, he or she will also benefit from cash back rewards, the fees structure chosen and get access to more than 55,000 ATMs. Founded in 2013 by Andrei Cherny and Joseph Sanberg, the neobank has raised over $250 million in funding.
NO BANKING CHARTER
Aspiration has vowed never to use customer deposits to fund environmentally disruptive practices like oil and gas exploration. It is again a banking institution but does not have a banking charter nor does it use a partner bank. It depends on cash management (investment) accounts versus deposits. Customer deposits are not held in its own hands but sweeps them into community banks that it certifies as fossil fuel free in their own lending practices. Also, the neobank expects its customers to pay whatever fees that they chose (which could be $0), instead of relying on overdraft, late, out-of-network ATM and service fees for revenue. It donates 10% of these fee payments to charities. It does not have a single branch.
The neobank has created a feature called Aspiration Impact Measurement (AIM), which it markets as a ‘digital Fitbit for sustainability’. Customers using the feature can view their personal sustainability score based on their spending. For $7.99 a month, the platform offers a premium subscription service, which automatically provides offsets for users’ gasoline purchases. About 75% of Aspiration’s customers have chosen this service.
PLANT YOUR CHANGE
Its another feature, launched in 2020, called ‘Plant Your Change’, allows customers to round up any transaction to the nearest dollar to plant one tree. On its website, people can use a simulator to see how many trees the neobank will plant on their behalf. By April 2021, the neobank’s customers have collectively planted over 10 million trees.
The neobank has a credit card offering, called the ‘Aspiration Zero Credit Card’. The card offers cash-back rewards and allows cardholders to offset their carbon footprint by turning every purchase into a newly planted tree. The benefits of the card align with the neobank’s environmentally conscious mission, which includes planting a tree each time a customer swipes his card, an option to plant an additional tree for each purchase if the customer rounds their purchases up to the nearest dollar, a $300 welcome bonus for clients who spend $3000 within the first 3 months of getting their cards and 0.5% cash back on all purchases each billing cycle, which increases to 1% cash back if the customer manages to plant at least 60 trees with his card usage in that cycle.
SPEND & SAVE
Aspiration’s CMA, called Spend & Save, is basically a hybrid checking and savings account. There are 2 versions. The basic Spend & Save account has up to 3% annual percentage yield, or APY, on savings up to 5% cash back and an optional monthly fee, which is as per the customers’ decision on what is fair. The premium Aspiration Plus plan offers up to 10% cash back and up to 5% APY. There are 2 impact investing accounts available too, meaning an account holder can invest in companies with sustainable businesses and social causes.
Aspiration as a neobank is ideal for socially and environmentally conscious customers who are comfortable with neobanks and non-traditional financial institutions. It also fits people who prefer to earn interest in a cash management account, and want a bank that cares about sustainability and social issues.
Customers who opt for Aspiration CMA, which is a single account for checking account and savings account get a debit card with the account, which earns cash back on purchases from a variety of retailers and customers also earn interest on money that is not spent.
NO CASH DEPOSITS
One major drawback is that Aspiration does not allow deposit of cash. Customer deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, essentially because the deposits are held at one of Aspiration’s partner banks, all of which offer FDIC insurance.
Aspiration serves banking customers who worry about the social and environmental impact of their financial choices. A customer can be rest assured that the deposits with Aspiration are not funding fossil fuels. Besides, one’s purchases can also reward him with cash back. And there is flexibility of choosing one’s monthly fee and accessing the savings more often than 6 times per month.
