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I assume they're trying to break the inertia people have with major banks. There's no reason to change bank unless there's some substantial incentive like favor
by deminature 8y ago
I assume they're trying to break the inertia people have with major banks. There's no reason to change bank unless there's some substantial incentive like favorable interest rate to offset the hassle involved. I'm not sure there's an ulterior motive here other than customer acquisition.
- mikeash 8y agoRight, but that incentive is only substantial if you’re going to park a lot of money there, which is exactly the sort of customer they don’t want according to the comment I replied to.
- deminature 8y agoThey may be playing this on two sides: the more obvious one which is acquiring customers to feed their trading business, and simply trying to evolve into a financial institution, which should bolster their valuation in their inevitable IPO in 2019 or 2020. Their backers might be content to burn money for a year or so to get a larger multiplier at some point in the future.
- VRay 8y agoThey might be able to actually make a profit off the float in this case, too Or maybe they're going to be able to sell people's transaction histories...
- dragonwriter 8y ago> Right, but that incentive is only substantial if you’re going to park a lot of money there, You are assuming that customers make this decision rationally; marketing very often leverages the fact that humans very often don't do that.
- icedchai 8y agoI'll move my ~$100K emergency fund into there just to get free money. And move it out somewhere else when the rates change. Over the years I've moved accounts between Dollar Savings, Emigrant, Orange, Ally, and probably 2 or 3 others...
- yclept 8y agoWould you really move your emergency funds into a less secure more likely problematic service though?
- icedchai 8y agoI would have to read up on the transfer times. If it's reasonably standard (2-3 days) and doesn't have any daily limits, then yes. It's a US company, FINRA approved, SIPC insured, so the risk is minimal.
- kevinmchugh 8y agoSIPC says they don't think they have to insure this.
- pjc50 8y agoNice way to humblebrag there.
- fullshark 8y agoAgreed, they are trying to buy customers, if it turns out that they can't convert these customers into traders they will lower the rate to a breakeven amount and not care if they lose those accounts.
- deminature 8y agoPerhaps true, there's been an opening for a 'cool' millennial-oriented financial institution for a while now, so perhaps fewer customers will drop off than expected.
- rchaud 8y agoSeems like a weak market to go after, given that people likely to respond to a "cool" financial services brand may be a poorer demographic that maybe doesn't have any prior experience with "legacy" financial services providers. So just because they create accounts @3% doesn't mean they'll also open trading accounts.
- deminature 8y agoMillennials may not have money now, but they'll accumulate more wealth as they get older. If you can convert them now, the friction to changing again is high enough that you'll probably still have them when they're worth something.
- theturtletalks 8y agoYep that's a good play, but their page says that the 3% can change depending on the market. So if that percent changes a few months after you create an account, I would bet many people would leave cause of the bait and switch.
- jimbokun 8y agoAnd many won't leave, because many of us are lazy.
- shawn-butler 8y ago> There's no reason to change bank unless there's some substantial incentive Or you bank at Wells Fargo or some other institution whose corrupt practices spill out into public.