Sometimes it seems that big banks have treat customers more like victims. Banks make it difficult to understand when money is available for withdrawal and the “float” on checks makes it difficult to know what the checking account balance really is. This makes it difficult to avoid overdraft fees.
Increasingly, moderate income people are turning to payday lenders and check cashing services to avoid high banking fees, often leaving them no better off.
Enter Motiv. This new banking service provides customers with a no fee debit card. Motiv makes its money off of the fees merchants invisibly pay when customers use their Motiv cards.
Motiv also offers a savings accout structured to build credit for customers who need to establish or re-establish credit.
Interview with Ed Preuss, the Co-Founder, CEO of Motiv.
The following is the pre-interview with Ed Preuss. Be sure to watch the recorded interview above.
Revenue model: Motiv makes money when users deposit funds into their account and make purchases on their Motiv Visa® debit card. Importantly, the account is free for users.
Scale: Motiv began accepting enrollment from its waitlist in July, and currently has a few thousand account holders. The company’s user base is doubling every month, although its waiting lists continues to grow faster than the company’s invitation rate.
What is the problem you solve and how do you solve it?
Traditional bank accounts charge too many fees, and are designed to make money when users make mistakes. They rarely offer services that help customers understand credit and build their credit score, so users are on their own to figure it out, and all to often end up stuck in the credit Catch 22. The magnitude of the problem is staggering; nearly 70M US adults are underbanked or unbanked according to the FDIC, and nearly 45M are unscorable in traditional credit models. This means they’re forced to relying on expensive, oftentimes predatory financial services. According to the Center for Financial Service Innovation, Americans pay +$170B in fees annually for these high-cost services.
Motiv turns this model on its head by offering a free bank account that has savings plans that build a user’s credit score. Someone can enroll regardless of their income, credit score, citizenship status or banking history in less than five minutes, receive a free account, and start building credit by saving rather than going into debt.
More about Motiv:
Motiv is the free mobile bank account that helps users build their credit score. Most traditional bank accounts have minimum deposit requirements and charge monthly fees and overdrafts. They don’t help users build credit or develop healthy financial habits. Motiv does the opposite; the account is 100% free, helps users easily monitor their income and spending, and offers savings plans that also build a user’s credit score. Accessible to anyone regardless of citizenship, income, or credit, Motiv’s mission is to make banking and credit building easy, transparent and free.
Ed Preuss’s bio:
Ed’s background is in corporate lending, investing and consumer banking. Prior to starting Motiv, Ed worked for a banking start-up in Bogota that was focused on bringing free internet banking to Latin America. Before that, he spent four year working in corporate lending and investing for Bain Capital. Passionate about social entrepreneurship and service, Ed has been an active volunteer for decades, from fieldwork building housing and distributing meals, to serving on advisory boards for nonprofits. His experience in banking and lending and his passion for driving change through business led him to launch Motiv in 2014. Ed hold an MBA from Harvard Business School and a BBA in Finance from the University of Notre Dame.