If You’re Banking at a Non-Bank, Read the Fine Print
The supply chain of financial services is only as strong as its weakest link.
SoLo Funds markets itself as a new type of financial institution. “Banking* is better in a community,” the Los Angeles-based business trumpets on its website. The asterisk is important because SoLo isn’t a bank. Rather, it’s a financial-technology venture that connects consumers to an insured depository institution via another financial-technology company.
Over the past few years, many such fintechs have sprung up as alternatives to traditional banking. They promise higher savings rates, a better user experience and more aligned corporate values. The biggest, Block Inc.’s Cash App, has 56 million monthly active users, including 2 million who deposit their paychecks on the platform. Privately held Chime recently revealed it has 7 million customers, most of them with paycheck direct deposits set up.