Three Things We’ve Learned from the Paycheck Protection Program

The U.S. Government’s Paycheck Protection Program (PPP) was set to expire yesterday, but the Senate voted to extend the loan program by five weeks, making the new deadline August 8, 2020.

Since it was initiated on April 3, the PPP has helped banks provide billions in working capital to 4.8 million small businesses. The extension offers businesses more time to apply for the $130 billion in unspent funds that remain in the program.

The PPP has had a rocky existence, caused by a muddy application system, confusion from both businesses and banks on the terms surrounding the funds, and the fraudulent (or at least unethical) acquisition of loan money by major corporations. That said, there are a handful of lessons learned we can take away from this experience. Here is a summary of the top three.

Open banking would have made a positive impact

In the height of the coronavirus, many small businesses struggled to find a bank that would lend PPP funds to them. Much of this was due to the fact that banks had difficulty underwriting loans of new clients. With open banking, businesses could opt to share their data with other financial institutions. This availability of data would not only help businesses speed up the application process at the bank of their choice, it would also offer banks access to crucial data regarding businesses’ historical finances.

It is possible for the government to move fast

“Move fast and break things” is typically a mantra of agile startups, and not a slow-moving government. However, given the serious economic threat that the coronavirus-induced stay-at-home orders posed, there was no time for a lengthy revision process and regulatory approvals.

The PPP is part of the CARES act, which includes multiple provisions for unemployment benefits, tax rebates, grants, and more. Early voting on the bill began March 22 and by the morning of March 25, Senate Democrats and Republicans announced they had come to an agreement on the 300-page document. A few hours after the agreement, the President signed the bill into law.

“Like all compromises, this bill is far from perfect, but we believe the legislation has been improved significantly to warrant its quick consideration and passage, and because many Democrats and Republicans were willing to do the serious and hard work, the bill is much better off than where it started,” said Democratic Senate Minority Leader Chuck Schumer.

Communication and transparency are king and queen

One of the biggest speed bumps encountered was confusion around the terms of the loans. Businesses not only had difficulty during the application process, many also had trouble in determining if they were eligible for the loans. And even if they were eligible, many businesses still didn’t understand if the funds needed to be repaid and what the stipulations for repayment were.

There is no other loan in America where the applicant is unaware of their responsibility to repay. Because of this confusion (and the legal and regulatory ramifications), in early June President Trump signed a new law relaxing some of the PPP regulations and addressing some of the original flaws.

This mistake is easy to excuse, given the tight deadline to organize and originate the program. However, it doesn’t discount the need for lenders to maintain transparency and ensure borrowers know what is expected when it comes to repayment. It reminds me of a millionaire I once met who, after originating a mortgage on his new home, didn’t understand that he was expected to pay his mortgage every month. He assumed that the bank would automatically deduct the funds from his account each month on his behalf. After 6 months of missed payments, his credit score was trashed.

Since we have yet to conquer the virus and are reeling from low unemployment, we still have a lot to learn. One of these lessons is to take things one day at a time. As we do so, let’s take stock of lessons learned so that we can help each other during this crisis.

Photo by Kyle Glenn on Unsplash

4 Things We Know for Sure Now that 2020 is Almost Halfway Over

Between extreme wildfires, murder hornets, and the ever-present coronavirus, 2020 has been quite the year so far. Now that the year is almost halfway through, it’s a good time to catch our breath and look at some of the lessons learned.

In some ways, it seems as if we packed decades worth of news, digital developments, and economic losses into the first six months of this year, so there’s a lot to cover. That said, we still have another six months to go before we reach 2021 so there is plenty more room for further changes in the fintech industry.

To help digest what’s happened, we’ve picked up four key things we know for sure now that 2020 is halfway over.

Digital is the new brick-and-mortar

If there is a bright side of the coronavirus for the fintech industry, perhaps it is the positive effect stay-at-home orders have had on firms’ digital initiatives. When consumers aren’t able to conduct banking activities in person, they are pushed to online and mobile channels, even if they have never used digital banking in the past.

For banks that already had a robust digital strategy in place, this has been a time to shine. However, those that were still in the midst of developing and implementing their strategy have found themselves trying to catch up. In this instance, however, they are not catching up with their competitors, they are catching up with the new, online-only status quo.

What we know for sure is that this digital push is here to stay. Forced into the digital channel, consumers have had to adapt to practices they have never done before, such as remote deposit check capture. Now that they’ve experienced the benefits of the digital experience and have adapted their habits, many of these users won’t be visiting their bank branch as frequently.

Economic hardships will persist

Even though stay-at-home orders are being lifted in some areas, Consumers have decreased spending across the board. Whether it is because they have lost income or because they are afraid to leave their home because of the virus doesn’t matter– they are spending less and spending in different areas, which will cause many businesses to go under. In fact, it already has. The Washington Post recently reported that more than 100,000 small businesses have closed their doors forever.

Many have predicted that the worst of economic hardship is yet to come. And in all likelihood we won’t begin to fully recover until there is a vaccine. This means that it remains crucial to focus on supporting the customer. Banks can find even more creative ways to help consumers through their financial hardship and retain communication with them so that they know what to expect. In doing so, they will end up with a stronger consumer relationship on the other side of the crisis. Fintechs, on the other hand, have the opportunity to scoop up new clients who are in need of innovative products such as budgeting tools and services for gig economy workers.

Consolidation has begun

Fintech industry analysts have predicted that the economic side effects of COVID-19 will bring consolidation in the sector. And while some will acquire or become acquired, others will shut down as VC funding constricts. We’ve already seen a bit of M&A activity in the space over the past 6 months, though it is difficult to attribute all of it to the coronavirus.

In one vivid instance, neobank Moven announced in late March that it plans to shutter its B2C business and focus on the B2B side of things. The reason for the bank’s closing, explained founder and CEO Brett King, was that a major round of funding that Moven had in the works fell through. Since Moven’s enterprise business was growing because of the high number of banks making the move to go digital, it made more sense for the company to invest all of its resources into that side of the business.

In the traditional bank space, rumors began to circulate last week that Goldman Sachs is looking to merge with another bank. Among the potential partners are Wells Fargo, PNC, and U.S. Bancorp.

Payments will change for the better

Consumers in the U.S. have been hesitant to adopt a digital payments solution. That is, until now. The pandemic-fueled low-touch economy has both consumers and merchants looking for ways to transact without touching cash, cards, or keypads.

One of the most promising, pre-existing mobile payments technologies for the region is Apple Pay. Adoption for the tap-to-pay technology has been growing since Apple launched it in 2014. Now, six years later, Apple Pay transactions account for 5% of all global card transactions.

At the start of 2020, that 5% figure didn’t seem like bad traction. However, now that almost 100% of consumers are interested in making payments with the fewest number of touch-points, we’ll see hockey-stick growth not only with Apple Pay usage but also with its competitors Samsung Pay, Google Pay, and even peer-to-peer money transfer technologies such as Facebook Pay and Square Cash.

Three Ways Digital Identity is Combating the COVID-19 Crisis

Technology companies from every corner of the globe have been lending their talent, resources, and solutions to help deal with the health and economic implications of the COVID-19 crisis. While those firms in health technology have obviously played the lead role, innovators in virtually every field of technology are bringing their unique expertise to the challenge.

Here are three ways that companies specializing in digital identity and identity management are helping organizations, institutions, and individuals manage the global pandemic.

Know Your Carrier

One of the key ways that countries like South Korea have “flattened the curve” of the pandemic is through an approach called “test and trace.” This strategy relies on accurately identifying those who have the coronavirus and then tracking down all those individuals who have had contact with the infected individual so that they can be tested for the virus.

For example, In China, in addition to temperature checks outside of public places like restaurants, officials are leveraging smartphones and QR codes to identify those who are infected with the virus, and to track their recent movements to locate others who may have been in contact with the infected person. In the West, the news that Apple and Google are collaborating to develop a contact tracing solution that will help us meet this specific challenge is a positive sign. Yet as hopeful as this opportunity may be, it is not without caveats.

“It’s really important to get the cooperation of the public,” Recode Executive Director Kara Swisher told CNBCs Squawk Box Monday morning during a discussion on the Apple/Google initiative. She flashed her sleep and activity-tracking Oura ring, noting that wearables could be among the mobile technologies that could be used to make contact tracing as seamless as possible. “More power to the tech companies means more power to the tech companies,” she said. “The only question is will they give it back when this is over?”

Know Your Customer

Getting money into the hands of unemployed and furloughed workers is one challenge. Getting money into the bank accounts of businesses forced to close their doors during this period of quarantine and social distancing has proved, in some ways, to be an even steeper challenge. Many in the small business community were caught off guard, for example, when they learned that in order to access federal COVID-19 relief funds they would need to have a relationship with a participating financial institution.

The issue is that, even in an emergency, knowing your partner is paramount. And in order for banks to be financially responsible, they need to pursue the same measure of KYC diligence on applicants for emergency funding as they would for any other banking customer. To fail to do so would leave these institutions vulnerable, potentially, to massive fraud losses – turning an already challenging environment for banks even worse. Making it easier for financial institutions to engage needy SMEs by leveraging many of the innovations in Big Data and advanced machine learning – while remaining compliant and financially responsible – is a slam dunk opportunity for a sizable number of fintechs.

This is a reminder that regtech may not be appear to be the most important subsector within financial technology. But in the same way that the global pandemic is causing us to think as much about epidemiologists as we do about emergency room doctors, the current challenge in KYC also reminds us of how important innovations in regtech are not only within technology, but also for society as well.

Know Your Crew

While many are understandably eager to “re-open the country,” it remains likely that thousands of workers will continue to work remotely – at least in the near term. This phenomenon has been a boon for companies like Zoom that provide technology that enables online conferencing and makes it easier for workers who do not traditionally work from home to do so.

One major challenge for these newly-homebound employees is ensuring that they are logging into their company’s networks and platforms in a safe and secure manner. Beyond having the infrastructure to support remote work, having the capacity to authenticate legitimate remote workers, and to make sure that the data they are transmitting back and forth remains out of the hands of hackers and cybercriminals is critical.

Indeed, one of the discontents of the “Zoom Boom” is that many people using the platform have raised major privacy concerns, including reports that Zoom conferences have been infiltrated by hackers, interrupting live presentations with obscene images.

As with KYC, this is another area where fintech’s regtech calvary is coming to the rescue. Firms like Onfido and Jumio, among many others, have made their identity verification technologies available for free to organizations and institutions in the health and home care fields that are on the frontlines of the fight against the virus.

3 Ways to Avoid Occupy Wall Street 2.0

In a COVID-19 world, the rich may not necessarily be getting richer, but it has become clear that the virus is taking a toll on lower income populations. And with this, the global pandemic is shining a light on income disparity.

Do you remember the last movement to highlight income inequality?Occupy Wall Street. The movement started in September 2011 as groups assembled at major financial districts and banks to make their voices heard about income distribution, bank reform, student loan forgiveness, and capitalism in general. Nearly 200 protestors camped out in Zuccotti Park in New York’s financial district, ultimately costing the city $17 million.

So with the income inequality fresh on consumers’ minds, here are a few ideas on how banks and fintechs can be their ally instead of their perceived enemy.

Be flexible

While you don’t need to bend over backwards, offering some flexibility is key. And even though offering flexibility on payment plans can be essential, it’s not all consumers are looking for. Your call center, for example, is likely overloaded right now. Instead of having callers wait on hold, can you direct them to a chatbot or make an option for them to request a call back from an agent at a certain time?

Straying from traditional operations and bending some rules (in a compliant manner, of course!) can make a huge difference to a stressed-out consumer that is just looking for someone to understand their situation.

Be generous

You don’t have to forgive a customer’s mortgage payment for them to like you. Peer-to-peer payment company Venmo is doing a great job at engaging with its customers during this time. The company is depositing $20 into consumers’ accounts in exchange for their generosity toward healthcare workers or others in need.

Select an idea that works for your organization’s image. You can give away gift cards to Netflix or offer free gift cards to local restaurants for take away meals. The giveaways can be in under $10 and done at random or as a daily or weekly online drawing. For something more simple, you could host a larger cash giveaway with only one or two winners.

Show unity

Play a role in your community, even if it’s not an in-person effort. Advertise in the local paper that your staff is volunteering to drop off groceries for elderly citizens, display uplifting sayings to encourage passersby, or even place rolls of toilet paper on front steps of houses in nearby neighborhoods. If toilet paper isn’t your style, mail coloring sheets and simple art supplies to customers with small children. For smaller banks, publish the phone number of a representative who can help customers sort through financial issues.

Small actions can have big outcomes during a crisis like this. During a time when people are “looking for helpers” as Mr. Roger’s instructed, banks have a great opportunity to be the helpers in their community.

Fintech Joins the Fight Against the Coronavirus

Photo by Anna Shvets from Pexels

How are fintech companies lending their technology and talent to help the world better manage the COVID-19 pandemic? From insights into the impact on financial services to digital identity solutions to help with remote medical services, fintech companies from across the world are all-in when it comes to coping with the current global health crisis.

One of the key early posts on the impact of the coronavirus on financial services was put together by Jim Marous, co-publisher of The Financial Brand, owner of Digital Banking Report, and host of the Banking Transformed podcast. Looking at both negative and positive impacts of coronavirus on fintech, Marous’ How Will the Coronavirus Impact the Banking Ecosystem, is an excellent first stop.

Another worthwhile read is Ron Shevlin’s Forbes column, which lists fintech companies that are providing technology help during the crisis. The continuously updated list, started on March 23rd, currently has more than 125 companies that are “extending free, discounted, or accelerated deployment offers to financial institutions.”

Here’s a look at three ways that fintechs and financial services companies are doing their part to make a difference.

Safety First

In times of crisis, leadership is paramount. Much of the fear and anxiety that comes with tough times can be alleviated by giving people and institutions clear guidelines on what the best practices are in order to manage the challenge.

In this regard, credit to the American Bankers Association for their guidance to community banks, issued earlier this week, on the importance of communicating “early and often” with customers. As a dinosaur who still visits his bank branch a couple of times a month, I have found it fascinating – and a little disconcerting, at first – to watch my local bank transition from gloved bank tellers (and no more free cookies!) to drive-up service only.

With this in mind, the ABA both encouraged branches to emphasize their digital channels, as well as provided suggestions on how to make in-branch visits safer for those customers who still required that access. Similar recommendations on personal responsibility (“if you feel sick, stay home”) as well as social distancing were made for bank employees whose jobs require them to be physically onsite.

Go Digital

The trend toward cashlessness and digital currencies is one area of fintech that will be positively affected by the social distancing of the COVID-19 crisis. Both the central bank of Russia and the National Payment Corporation of India have urged citizens in their respective countries to use digital payments in lieu of cash to help stem the spread of the coronavirus.

Africa, where mobile payments have helped contribute to financial re-inclusion, is also finding these technologies to be a potential resource for supporting public health. With cash deemed a conduit for the spread of the coronavirus by the World Health Organization, countries where mobile payment technologies are emergent are likely to see an even more accelerated rate of mobile and digital payments adoption.

Note that Safaricom, the telecommunications company behind the region’s leading mobile money service, M-Pesa, announced that it would waive fees on all P2P transactions under $10 for three months. Mobile money services in Ghana also have been encouraged by the country’s central bank to waive fees and lower KYC requirements to ensure access.

Maybe the image of a dystopian future in which books are incinerated will be replaced by one where massive bundles of cash put to the figurative – if not literal – torch. ” ATM Marketplace’s David Jones recently reported a conversation with an analyst who granted that reports of cash being disinfected or burned in Asia are making a pretty good case for the future of contactless payments.

Serve Somebody

Conducting their normal operations is one of many challenges businesses are facing at present. Fortunately, firms like U.K.-based challenger bank NorthOne are providing free banking services to SMEs and restaurants during the crisis.

“Small business owners across the country are having incredibly hard conversations right now around the kitchen table and desperately trying to figure out how they can keep the lights on through this crisis,” NorthOne co-founder and CEO Eytan Bensoussan said. “The last thing they need to worry about is finding a branch or paying bank fees.”

But the loss of revenue due to the various lockdowns and stay-at-home orders issued in many countries is even more of an acute problem. While governments haggle over publicly-sourced solutions for small businesses, a group of U.K. fintechs in the lending business – Trade Ledger, Wisefunding, and NorthRow – have teamed up to offer a turnkey origination and underwriting platform to enable banks and lenders to digitally fund SMEs.

“The government’s capital injection is a massive boost to an underserved market at an extreme time of need,” Trade Ledger CEO Martin McCann said, “but it’s impact will be lost if lenders aren’t able go get these loans to their customers quickly.”

The technology community in general, and to some degrees fintech, as well, has come under various strains of criticism of late. From overvaluation to questions of work culture to concerns that the innovations of Silicon Valley increasingly cater to the young and affluent, many of these critiques have merit. But all that said, as many of these companies are showing, there may be in the current crisis an opportunity for technology – and fintech – to remind the world of its enduring value to us all.

We would be remiss not to highlight our Finovate alums that are offering their services and solutions to help during the COVID-19 pandemic. These alums include Alpharank, Banno, Cunexus, Datanomers, Digital Onboarding, Finovera, Finscend, Horizn, Hydrogen, Inspirave, Invest Sou Sou, Kasasa, Moxtra, Pinkaloo Technologies, Plinqit, Q2, StreetShares, Temenos, and Teslar Software.

Searching for Fintech’s Top Female Tech Talent

Photo by Chelsi Peter from Pexels

The number of women in technology in general, and fintech in specific, is growing. That’s the good news.

As Julie Bort and Rachel Sandler wrote in their 2018 feature on female engineers for Business Insider, “for all the arm waving about the lack of women in STEM professions, the truth is, there are some powerful role-model female engineers having fabulous careers and creating tech used by millions, if not billions of people everyday.”

A report from consulting firm Korn Ferry supports this. The study, conducted last year and looking at the top 1,000 U.S. companies by revenue, noted an increase of 2% in the number of women who held the role of CIO or CTO last year. “The industry with the highest percentage of women CIOs/CTOs,” the report noted “is financial at 25%.”

By comparison, the number of women fulfilling the role of Chief Technology Officer within the tech industry remains fewer, maybe even far fewer, than you might suspect. By industry, Korn Ferry ranked technology behind financial, healthcare, retail, and consumer, besting only the services industry.

Women like Padmasree Warrior, who served as Cisco Systems’ CTO between 2007 and 2015 and, before that, as CTO for Motorola for four years, have been among the relatively few women at the top tier of technology leadership – especially at the largest tech companies. Elissa Murphy, at GoDaddy, Selina Tobaccowala at SurveyMonkey, and Raji Arasu at StubHub are just a few of the female CTOs in charge of technology at some of our economy’s newer, most innovative companies.

Pamela Rice, former SVP of Technology at OnDeck and current CTO of Earnest, during her presentation at FinDEVr Silicon Valley.

Turning to fintech – and our own experience at Finovate – a woman like Pamela Rice comes to mind. The former Senior Vice President of Technology at OnDeck who represented the company at our developers conference FinDEVr, Rice is currently Chief Technology Officer for Earnest. The San Francisco, California-based company she joined in 2019 provides consumer financing options for underbanked populations including recent college graduates. Last summer, she participated in a company-hosted, Tech Meet-Up on Diversity and Inclusion, sharing her thoughts on the value of making diversity “part of the DNA of everything you do.”

We took a look at how the fintech industry was faring in terms of female representation at the CTO level. There is still a great deal of progress to be made. Here is a sample of the women who are increasingly providing technical leadership for fintechs large and small.

Marianna TesselIntuit – With more than 20 years experience as a VP of Engineering for companies like Ariba, Docker, and VMWare, Tessel took the helm as Intuit’s Chief Technology Officer in January 2019.

Educated at Technion – Israel Institute of Technology and the Weizmann Institute of Science – and having served as a captain in the Israeli Army – Tessel was praised by new Intuit CEO Sasan Goodarzi as a “transformational change agent” who has created “an engineering culture that has accelerated innovation.”

At Intuit, Tessel is responsible for leading the company’s product engineering, data science, information technology, and information security teams around the world. She first joined Intuit in 2017, leading product development for the firm’s Small Business and Self-Employed Group, including the company’s QuickBooks product family.

Rija JavedMarketFinance (formerly MarketInvoice) – After more than four years as an engineer for Wealthfront, including roles as Director and Senior Director, Javed joined U.K.-based MarketFinance as the company’s Chief Technology Officer in 2018. This made her one of the first female fintech CTOs in the country.

“Having Rija on board underlines our focus on hiring the best talent and building innovative technology to deliver business finance solutions,” MarketFinance CEO and Co-founder Anil Stocker said. “It’s the foundation we’ll use to help thousands of business(es) access funding quickly and easily.”

While at the Wealthfront, Javed built the company’s first mobile app. Transitioning to the company’s investment products platform, she helped scale Wealthfront’s offerings including the development of a new brokerage and banking platform. With degrees in Electrical and Computer Engineering from the University of Toronto, Javed is also a mentor for the New York Academy of Sciences.

Ekate KuznetsovaToken Transit – Sometimes the only way for a woman to make sure that there’s a woman’s place at the tech table is to build the table herself. That’s the approach of Kuznetsova, who parlayed her experience in software engineering at Akamai and Google into launching a fintech startup of her own. Token Transit, for which Kuznetsova is founder, CEO, and Chief Technology Officer, provides mobile ticketing and payment verification solutions for public transportation.

Launched in 2016 and available in more than 75 cities in the U.S. and Canada, Token Transit enables people to pay for fares and passes with their credit, debit, or commuter benefits card and provides them with a digital ticket that is stored on their smartphone.

Kuznetsova earned her Bachelor of Science degree from Massachusetts Institute of Technology, where she studied Mathematics and Computer Science.

While the ranks of female CTOs in fintech remains modest, it should be mentioned that there are women – from VPs of Engineering to Chief Scientists – who are not only currently leading tech teams, but also are likely among the CTOs of tomorrow. For a peek at one shortlist, check out Angie Chang’s spotlight on 21 female executives who could become one of the Fortune 100’s next CTOs.

Know a woman who’s driving technology innovation at one of your favorite fintechs? Send us a note at!

“And In This Corner …” A Look at Germany’s Top 10 Challenger Banks

How is the battle of the challenger banks manifesting itself in Germany? As FinovateEurope gets started in Berlin this week, we take a look at some of the top challenger banks in the country.

Bitwala – Based in Berlin, Germany, Bitwala leverages blockchain technology to offer a banking experience for holders of both fiat and cryptocurrencies. Co-founded by Benjamin Jones, Jorg von Minckwitz, and Jan Goslicki in 2015, Bitwala has raised more than $21 million in funding. Late last summer, the challenger bank launched its all-in-one mobile bitcoin app, enabling customers in 30+ countries to open a German bank account with an integrated Bitcoin wallet and trading functionality.

Consorsbank – Founded in 2014 – and sporting an origin story that goes back to 1994 – Consorsbank is owned by BNP Paribas SA Niederlassung Deutschland. The bank offers a current account and two free debit cards, as well as a securities trading account with fee-free trading in ETFs and funds. In 2018, Consorsbank introduced its new installment loan product, and last year, the company went live with both Apple Pay and Google Pay.

Fidor Bank – Headquartered in Munich, Fidor Bank was founded in 2009, and serves both retail and business banking customers. The firm was acquired by Groupe BPCE of France in 2016, one year after Fidor Bank began operations in the U.K. Fidor offers a business account and card solutions, as well as financing products including installment loans and lines of credit. The bank also facilitates customer investment in foreign currencies and online savings bonds. Fidor Bank celebrated its 10th anniversary last May, and currently has 250,000 private and 40,000 business customers.

Fyrst -Bonn-based Fyrst Bank is the latest challenger bank in Germany to offer financial services to freelancers and the self-employed. Launched in 2019, Fyrst charges no account management fees and offers integrated accounting and invoice management, instant payment transfers and inexpensive financing options. Fyrst is backed by DB Privat- and Firmenkundenbank AG, and is a division of Postbank.

Insha – Founded in 2018 and proclaiming itself to be the first interest-free mobile bank in Europe upon its launch a year later, Insha is a spin-off from Turkey’s Albaraka Turk Participation Bank. Insha is headquarted in Berlin and offers a mobile account and Insha Mastercard debit card, money transfers, and financial wellness tools inSave and inSight to help customers manage their money better. Insha also provides a zakat calculator to help Islamic customers accurately determine the amount of their annual zakat obligation.

Kontist – A bank that specializes in serving freelancers and workers in the gig economy, Kontist is based in Berlin and was founded in 2015. The challenger bank calls itself the only bank that calculates and sets aside taxes in real-time – responding to a major pain point for workers with irregular or untraditional sources of income. Kontist offers its customers a mobile app and business account, and supports its customers accounting by keeping banking and bookkeeping in “permanent sync.” Kontist also provides a Mastercard Business debit card. The company is a strategic partner of solarisBank.

N26 – Berlin-based N26 provides mobile and online banking services to customers throughout the E.U. Earning its banking license in 2016 and rebranding from Number 26 to N26Bank, the company has raised $683 million in funding, including a $470 million Series D completed last summer. This funding was accompanied by the bank’s expansion to the U.S. With a valuation of more than $2.7 billion, N26 is regarded as one of the most valuable challenger banks in Europe.

Penta – Founded in 2016, Penta provides banking services – including expense management, accounting, and corporate cards – for SMEs and startup companies. Penta customers can establish sub-accounts to more readily monitor various business cash flows, and take advantage of a variety of small business financing options. Headquartered in Berlin, and acquired by finleap in spring of 2019, Penta introduced its all-in-one founder’s package, Kompass, in January. Kompass includes a set of legal documents and guidelines to help ensure successful company launch.

solarisBank – A self-described technology company with a banking license, solarisBank was founded in 2016, and has both its own banking license as well as a banking platform to help other firms to offer their own financial solutions. The Berlin-based firm offers a suite of RESTful APIs to enable its partners to integrate its modular financial services solutions within their own product line. solarisBank announced a partnership with Penta last fall to support the business banking platform’s expansion into Italy. In December, the bank launched its subsidiary, Digital Assets, to provide a custody solution that takes advantage of the growing ownership of cryptocurrencies and other digital assets.

Tomorrow – Tomorrow offers a current account that gives customers the opportunity to make a positive difference on the environment. The bank finances renewable energy and organic agriculture, as well as other climate-supporting initiatives. The challenger bank’s account features a digital budget with automatic categorization, and real-time, push notifications for every transaction. Tomorrow was founded by Inas Nureldin, Michael Schweikart and Jacob Berndt and is based out of Hamburg. Tomorrow closed its first round of funding in 2019, pulling in €8.5 million from impact investors.

8 Banks You’ll Compete with if You Offer More Than 2% on Savings

Banks are facing an increased number of competitors these days. Not only are traditional banks vying for customer deposits, but fintechs and challenger banks want part of their funds, as well.

The average U.S. savings rate is just 0.09% APY, so any amount banks can offer beyond that is a differentiator. However, some banks have gone all out and are offering more than 2% interest. The highest APY we saw totaled a whopping 6.17%.

Here are the 8 financial institutions (listed in alphabetical order) we found that are offering accounts currently paying more than 2% interest:


2.1% APY with a minimum balance of $25

Digital Federal Credit Union

6.17% APY on first $1,000 with a minimum balance of $5

Elements Financial

New accountholders can earn 2.1% APY for one year on a minimum of $2,500 that has been transferred from another financial institution.

Fitness Bank

Members earn 2.20% APY on a minimum balance of $100 if they walk 12,500 steps or more per day (or 10,000 steps per day for those age 65 or older) as calculated on their fitness tracker.


Users earn 3% APY, which is paid on a maximum of $10,000 and is held in a separate account that the consumer is unable to access until the account anniversary. The high yield savings account must be opened in tandem with Green Dot’s Unlimited Cash Back account, which pays customers a 3% cash-back bonus on all online and in-app purchases. The account charges a $7.95 monthly fee if a consumer’s purchases (excluding mobile bill payments, ATM withdrawals, and ACH transactions) are less than $1,000.

T-Mobile Money

Users earn 4% APY on balances of $3,000 or less. Any amount over the $3,000 threshold earns 1% APY. There is no minimum balance requirement but account holders must deposit at least $200 per month into the account to earn 4% APY.


2.1% APY on balances of at least $5,000 and no more than $500,000.

Vio Bank

2.02% APY with a minimum deposit of $100

Many of these financial institutions are able to offer higher-than-average rates by keeping their operating costs low. In most cases, the lower operating cost is the result of being an online-only bank. However, two of the banks listed above (Digital Federal Credit Union and Elements Financial) have physical branch locations, as well.

Another aspect that helps with offering high interest is setting appropriate limitations. Interestingly, the two banks on this list that have branch locations (re: higher operating costs) are the two with the most stringent restrictions on their savings accounts. Setting up appropriate limits on account earnings can make banks’ offerings look attractive without costing too much. Conversely, too many restrictions will frustrate consumers and, perhaps worse, compromise trust.