Ben Soppitt

Ben Soppitt

10 Reasons Not to Use a Neobank

After our wildly successful earlier article “10 Reasons Not to Change Your Bank,” we now add “10 Reasons Not to Use a Neobank”.

More reasons to keep the status quo and keep giving your money to those who really need it: Big Banks. #saveourbigbanks #sobb

Do you have any idea how much it costs to own a Gulfstream G550?

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It’s not just the $50m to buy it. It’s the running costs that really hurt — the fuel, the crew, maintenance, it just goes on and on. And then, if you have 3 of them like JP Morgan Chase — not to mention the 9 other aircraft they own—it really adds up.

Don’t mention the cost of maintaining the decades-old IT infrastructure, the fancy HQ buildings, the branches (although these are being shut at a fair clip), the hundreds of thousands of employees, and the marketing costs! The top ten US banks spend in excess of $15bn a year in marketing! For that price, you’d think they were selling high-end consumer products, not an everyday utility that barely differs from bank to bank.

If all this was not bad enough, shareholders need to be kept happy as well. Feasting on record profits year over year, the pressure to keep maintaining profit growth is brutal.

Who pays for this all?

We do.

Banks offer their services for free, of course — it’s only when you screw up that you end up paying directly (overdrafts, credit card interest, etc.). But they also make money from us indirectly — by taking deposits, lending them out and giving nothing back. So, maybe we should free-ish. You pay through the nose but you don’t see it or feel it, so it’s OK. OK?

If this alone wasn’t sufficiently challenging, the Big Banks now have a new type of banking-services company trying to upend the highly established traditional model we all know and love.

“Neobanks” typically have none of the structural costs associated with conventional banks and are less encumbered by old tech and traditions, free to innovate and challenge the status quo. Most don’t even have to spend on the upkeep of a single Gulfstream!

  1. No one really needs innovation — the old established ways are the best. Just because we gave up fixed-line phones, cable TV, taxis, and hotels — there is no reason to change everything. Especially not money; some things are better left as they are.
  2. All banks are the same anyway — you are just trading in a big established company for a small less established one — what’s the point? Yes, sure, you may get more return on your money — but that’s just money. That’s not what you look for in a bank. You might get way better tech, but again — is that really an important part of managing your financial life? Didn’t think so. It’s not like Big Banks got to dominate the market on the back of better features and functionality. You want tradition and stability and lots and lots of advertising. Big Banks do that better than anyone else.
  3. It’s risky to change — you don’t jump headfirst into a swimming pool you don’t know. The same is true of banks. Think of the risk. I mean, sure, any bank worth looking at will have deposits protected by the Federal Government FDIC scheme. But, still, the point stands — if you don’t know it, you shouldn’t do it. Stasis is what powers innovation. And there’s nothing wrong with being a follower.
  4. It’s so much effort — direct deposits (ergh, talking to HR!), bill payments, subscriptions (be honest, you don’t even know how many subscriptions you have) — is it really worth the time and effort? It’s not like you spend half your life at work or thinking about it in order to earn money. Or that you spend a lot of time and effort spending money. Why should you spend any more effort to manage it better?!? Enough is enough! Leave it as is and don’t think about it — that’s the trick.
  5. They don’t have branches! — this one is about as clear cut as it gets. Not a single neobank in the US has a branch — not one! We won’t ignore the fact that over 12,000 bank branches have been closed the last decade and Big Banks are closing branches as fast as they can now that almost everything can be done faster and more conveniently via a phone. Nevertheless, it means something that your bank has little offices all over the country. Even if you don’t need them.
  6. You are happy as you are — don’t give in to fashion and fads. If you haven’t thought about changing how you manage your money, then don’t. It’s not for you. Social pressure, group-think — you, my friend, are an individual and you make your own decisions. Even when the decision is to do nothing. Haven’t you seen the commercials? Your Big Bank cares! Be the stream, don’t swim against it.
  7. Consistency — new job, new country, new city, new house, new partner, kids! We tend to make changes in batches for some reason — whether we need to or not. Change is stressful; the comfort of the known is a good fall back. Don’t underestimate the value of consistency. Only you decide when to change banks and no one is going to hold a gun to your head to do so. So relax and let that one decision you made years ago just sail on uninterrupted…
  8. Disappointment — the grass is always greener until you get there. Just because your Big Bank upset you is no reason to move. Don’t think it’s going to be better or different elsewhere. Loyalty means sticking with the disappointment you know.
  9. You just don’t care enough — exactly right! What you don’t know can’t hurt you. Head down and keep on keeping on. You can always change your mind later. What have you got to lose?
  10. You’re selfless— there are real people behind these faceless corporate entities — let's not forget about that. Without your money, how would some of the most highly paid executives in the country eat? They work hard and deserve everything we can give them. So, thank you for giving up so much of your future, so they can live a better life today.

Save our Big Banks (#SOBB) is committed to the task of keeping the status quo and protecting those who need it the least.

Join us!

Or rather stay with us!

And never ever stop paying.

Thank you! Your money makes our world go ‘round.

*Important information and disclaimers

The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.