Technology has seen rapid advancement over the past two decades. The advances made in mobile technology as well as the innovations made by startups and titans of the industry alike have significantly changed the way we live our lives.
It’s impossible to imagine life now without the convenience of summoning a cab or having food show up at your door with just a few taps, even though in reality, these services have only been around for over a decade.
A similar monumental shift has also been witnessed in the banking industry. Banks proudly count themselves among the industries that have withstood the test of time. They have been around for over a century.
The pace of innovation in the banking industry, at least as far as making it easier for the average joe to conduct their transactions, had been woefully slow.
It was only when the internet made its mark on our lives and fintech startups shook these giants of the industry out of their slumber did we start to see things change.
Gradually customers were provided services that made their lives easier. They could perform much of what they previously had to visit a branch for online.
Whether they needed to check up on their balances, make money transfers, pay bills or make investments, they could do all of that through either the mobile app or the online banking interface.
Fintech startups and neobanks have taken this one step further. They have capitalized on this digital banking revolution to offer new products and services that put them in direct competition with some of the biggest names in the industry.
They have also revolutionized the way customers interact with their banking institutions. The change that they have sparked has been so rapid and sudden that many now question whether the branch-based banking model of yore is sustainable enough.
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The Community Federal Savings Bank was launched to provide friendly “old-fashioned” service to the community. It started doing business in July 2001 and has since grown its footprint in the community.
CFSB has primarily focused on relationship banking, a model that relies entirely on in-person interaction between the bank’s employees and customers.
It provides customers with a variety of services including but not limited to merchant processing, loans, card services, and more.
CFSB provides customers with a whole suite of personal and business banking products. This includes checking and savings accounts, certificates of deposit, commercial lending, and other payment solutions.
It also offers global payment solutions, allowing its customers to accept payments for their businesses.
Merchants, consumers, and businesses requiring payment solutions will find CFSB to be a worthy partner. Its Payment Services division offers settlement services that enable customers to accept ACH and wire payments.
It even enables fintech companies and third-party payment processors to issue payment network cards. Businesses looking to accept card payments can utilize CFSB’s merchant acquiring services as well.
Wide range of lending products
CFSB offers a decent variety of lending products. Its customers can participate in the Paycheck Protection Program loans through which the US government is extending support to businesses hit by the pandemic.
Commercial lending and commercial real estate loans are also provided by CFSB. The solutions include commercial lines of credit, mortgages, equipment financing, and letters of credit.
Business money market account
The bank’s money market account enables businesses to earn interest on their money while remaining liquid. This enables them to grow the balance without having to resort to a fixed instrument which is something that not many businesses can opt for.
CFBS is quite limited in the markets that it serves. It’s far from being a nationwide bank. Since the bank was created with the express purpose of providing community banking services, it’s understandable why it hasn’t pushed a relentless growth strategy outside of its target markets.
High minimum deposits and fees
The aforementioned business money market account may be a great financial product but it comes with several strings attached. Customers should keep in mind that the minimum balance required to open the account is $10,000.
If the balance falls below $10,000 on any day of the cycle, these accounts are subject to a $15 monthly maintenance fee.
Aspiration is a neobank and it has quickly made a name for itself primarily because of its socially conscious values. While not a chartered bank itself, Aspiration is classified as a banking services provider. It leverages its relationships with banks to offer cash management accounts and other banking products to customers.
It operates entirely on the branchless banking model. This enables the company to keep its overhead low as it doesn’t need to maintain a retail footprint. The online-only model also allows it to target a much wider demographic.
Aspiration has made a 100% commitment to clean money. It promises that not a single dollar from customers’ deposits will be used to fund fossil fuel projects that harm the planet.
It has also put together the Giving platform. This platform lists vetted charities that customers can easily donate to. The charities help struggling Americans get back up on their feet.
Earn higher interest
Aspiration’s cash management account offers an APY of up to 1.00%. That’s quite a bit higher than what you get from other conventional or even noebanks for that matter.
Fees are lower
Since it doesn’t have any branches to run, Aspiration has a much lower overhead. It’s able to pass on those savings to customers by charging them significantly reduced fees. Aspiration customers only pay the fees that it costs the company to execute their transactions.
Green investment products
Aspiration offers customers investment products that adhere to their conscious values. Its investment funds only park money in companies that have the good of the planet at the center of everything that they do.
No business banking
Businesses can’t take advantage of Aspiration’s products and services. Like many other neobanks, Aspiration is only focused on individual customers, so it doesn’t provide any business banking services.
No variety of lending products
Aspiration doesn’t have a variety of lending products that customers can take advantage of. Those who require loans, auto finance, mortgages, and other similar products will have to look elsewhere.
No payment solutions
The neobank doesn’t provide any payment processing solutions that customers and businesses can use to start accepting payments online or in their retail stores.
Interest rates – CFSB vs. Aspiration
CFSB prides itself on providing customers with competitive rates on its investment products. The rate of return on its savings products ranges from 0.15% to 0.35%. Certificates of deposit can fetch rates of up to 0.55% on tenures as long as 60 months. This is the highest APY that CFSB offers on any of its deposit products.
Customers can get an APY of up to 1.00% on Aspiration’s cash management account. That’s the better option here since unlike a certificate of deposit, the funds in the customer’s Aspiration account remain liquid while it continues to accumulate interest.
Target market – CFSB vs. Aspiration
CFSB’s target market is limited since it was set up in Woodhaven, NY, with the express purpose of providing community banking services. As such, it’s not an option for people who reside outside of its target market.
Aspiration doesn’t suffer from such limitations. Since everything happens entirely online, it’s able to cater to a much wider market. Anyone with a permanent US address and a US Social Security Number who is above the age of 18 may open an account with Aspiration regardless of where they may be located.
Which is better?
CFSB and Aspiration are quite different from each other. The former was set up to provide community banking services and it does a good job at that. However, this limits the bank’s potential to provide services to a much wider market.
Aspiration caters to everyone eligible to open an account. It also provides a higher rate of interest on customer deposits apart from the firm commitment that no customer deposits will ever be used to fund fossil fuel projects like oil rigs and coal mines that damage the planet.
Thus Aspiration is a much better option largely because of its universal approach, the simplicity of its services, and the ease of use that it provides. You can take advantage too — by signing up for an Aspiration account. It only takes a few minutes to get up and running.