Andrei Cherny took a blend of personal experience and modern technology to create an online bank that actually does put its customers, and the planet, first.
Mr. Cherny is the co-founder and CEO of Aspiration, a banking and investment firm adding thousands of customers every week.
Their motto is “Do well, do good”, one they live out in different ways. Customers are allowed to set their own fee on bank and investment accounts, under the belief good work should be paid fairly. Its checking account was named Money’s “Best Checking Account in America” thanks to higher interest rates, no ATM fees anywhere in the world, and the provision of a personal impact score.
Aspiration also offers its customers opportunities to improve the world by designing products allowing people to invest in sustainable companies, vetting charities in seven different sectors that customers can support, and by donating 10 per cent of all profits to microloans and financial mentoring for people with low incomes.
Mr. Cherny has lived an interesting life.
He has advised Fortune 100 companies, including many financial institutions. A senior fellow at Harvard’s John F. Kennedy School of Government and the Center for American Progress, Mr. Cherny co-founded and was president of Democracy Journal. President Bill Clinton described him as “a critical part of the team” that fostered the economic successes of the early 1990’s when Mr. Cherny was a White House aide. A graduate of both Harvard and UC Berkeley law school, he wrote The Candy Bombers, a history of the beginning of the Cold War, the Berlin Airlift and 1948 elections and The Next Deal a description of how technology transformed consumer expectations.
Discuss some of the experiences that led to you founding Aspiration
As a child of immigrants who was helped by food stamps, I’ve always had a passion for economic opportunity for all. I’ve spent my career working on those issues, whether it was in the White House during the Clinton administration, as a financial fraud prosecutor, or working with then-law professor Elizabeth Warren to help launch the fight for the Consumer Financial Protection Bureau. Through these experiences, I continued seeing examples of how the current financial system takes advantage of consumers.
In the wake of the 2008 U.S. financial crisis, I began thinking of ways to create a financial firm that consumers could actually trust – one that emphasized social good just as much as making a profit. In 2013, my co-founder Joe Sanberg and I started Aspiration, the financial firm with a conscience, founded on the idea that profits and purpose can go hand-in-hand.
Over the past few years, I have seen more and more startups with a demonstrated social component. Why do you think that is and why is it part of Aspiration?
For Aspiration, social good is core to our mission and to why we began the company in the first place. We wanted to fundamentally move the needle on issues like financial fairness, wealth inequality, and the climate crisis. Young people place a higher emphasis than other generations on ethics and purpose across all aspects of their lives as consumers, which inspired the creation of our Aspiration Impact Measurement feature of our checking account last year.
That is especially true in a financial industry facing record levels of distrust. Our average customer age is 32 – and we’ve seen our sustainable and impact investing solutions experiencing unprecedented demand among this age group over the past few years.
Talk about the decision to allow people to pay what they think is fair. Is that a response to the public’s disenchantment with high fees at traditional institutions?
Absolutely. The average American pays over $150 per year in unnecessary banking fees. We eliminate unnecessary fees by allowing our customers to use any ATM in the world for free and preventing debit card users from over-drafting on purchases. But it’s more than just high fees, its fees at any level that are not aligned with the customer and their success.
It’s a problem of incentives. When we were starting Aspiration, we felt that in order for our customers to trust us, we’d have to start by placing trust in them. Lack of trust is one of the biggest problems facing the financial industry overall, especially after the 2008 financial crisis and recent Wells Fargo scandals — in fact, more than 20,000 Wells Fargo customers have switched over to Aspiration since news of the scandals broke.
People are fed up with a system where their bank makes money off their personal financial struggles. Our “Pay What Is Fair” model is how we expect our company to succeed in the long run and the vast majority of our customers are choosing to pay.
Discuss Aspiration Impact Measurement and what it shows people about their spending impact. What lessons can they glean from it?
Aspiration Impact Measurement (AIM) lets people see their own personal sustainability scores for the first time ever, as they spend with their Summit checking account.
AIM uses a proprietary algorithm that examines more than 75,000 data points (including diversity, employee pay, energy efficiency, carbon reductions and more) to provide individual “People” and “Planet” scores for each customer, based on the scores of the places where they shop. This shows how well their favourite stores treat their employees and the environment and how competitor stores are doing in comparison.
The goal of AIM is to help our customers understand the importance of “voting with your dollars” and help them think about the social and environmental impacts of their everyday spending. Americans spend approximately $36 billion a day as consumers, making decisions based on cost, convenience and quality. Now, our customers have an easy way to make spending decisions based on their consciences, too. We feel that moving those dollars to eco-friendly and socially conscious businesses can make a big difference.
When many people hear micro-loans, they think of a few dollars having a tremendous impact in developing regions. Talk about the impact microloans can have for Americans with low incomes.
We give 10 cents of every dollar that Aspiration earns to microloans that help struggling Americans as a way to give back to the community. Aspiration’s primary mission is to expand economic opportunity in the U.S. and we’ve seen that microloans can have a large impact on struggling Americans’ lives. We work with respected partners such as the Accion U.S. Network, America’s largest provider of microloans, to give people a leg up to transform their own lives.
I’ve had many entrepreneurs discuss technology’s ability to make it easy for people to do social good. Discuss potential avenues for its application that we may see in the near future.
Large businesses have had the technology and resources to dedicate towards social good initiatives for years but, as technology becomes more accessible, there will continue to be an increase in startups with social good components. At Aspiration, we knew from the start that we would use technology to develop efficiencies and cut costs that a traditional brick-and-mortar would have to deal with and use those savings to give back. I think the desire to make a social impact is a common thread among new entrepreneurs and we’ll continue seeing technology used for good.