Banking customers are increasingly coming to expect better money mobility solutions from their financial institutions, such as early access to direct deposits and fee-free overdraft protections. In the Money Mobility Tracker, Current’s Josh Stephens discusses how neobanks have driven those expectations, as well as the importance of seeking the next money mobility frontier.
Money mobility — the ease with which money can be moved into, out of and between accounts — is critical for both consumers and account providers, whether the latter are financial institutions (FIs) or other kinds of financial service platforms.
“People expect to get things instantly,” Josh Stephens, vice president of product at neobank Current, told PYMNTS in an interview. “Now we live in a world of instant gratification, and I think money is really no different there.”
Despite the demand for greater money mobility, the banking system is still relatively archaic in how it handles the transfer of funds, he said. Especially in the U.S., the automated clearinghouse (ACH) system still drives how money moves from one bank to another. Consumers do not understand all the infrastructure involved in transactions or why they get delayed, though. They just want to see results.
“[The demand is] being driven, certainly, by a younger demographic [that] has a need for things to be faster and quicker, but also because [for] folks who really need access to money, getting it quicker becomes the main pain point,” Stephens said.
Lifestyle shifts have influenced the demand for better money mobility, he said. From paying shared rent to splitting the bill for a meal or just sending money to friends, consumers want their electronic transactions to be just as fast and simple as cash transactions — without having to figure out change.
“These are things that we expect to happen right away, and the need to continue pushing in that direction is pretty critical right now,” Stephens said.
Making Money Mobility a Priority
Stephens said Current, as a neobank, has always prioritized ensuring that account holders can move their money as quickly as possible. One of the first features the company offered was the ability to make direct deposits available to account holders two days before these funds would normally appear in their accounts.
“Over time, we’ve invested in everything from instant deposits to instant peer-to-peer transactions to instant cash deposits,” he said. “All of these things are driven by the idea of getting money to people as quickly as possible.”
Even Current’s approach to overdraft protection works to help with money mobility. Stephens said the program permits account holders to overdraft by as much as $200 without linking to another account or taking any other measures. While there are some eligibility restrictions, the program permits account holders to avoid overdraft fees or unpaid bills because of late deposits or small miscalculations.
“We help people bridge that gap with instant access to funds that we know they are good for because it’ll be coming in their next paycheck,” Stephens said.
Current’s instant cash deposit system enables the neobank to provide cash deposits without having any physical branches. Through a partner FinTech, Current offers account holders the ability to take cash to several national retailers and have it credited to their accounts. The account holder uses the Current app on a mobile device to find a location, and the app generates a bar code that can be scanned from the mobile device’s screen. At the chosen location, the customer only must hand over the cash and have the barcode scanned for it to be credited instantly.
“Although I think we’re moving toward a cashless world, that’s certainly not the case right now,” Stephens said. “So, it’s still very important for us to be able to handle quick experiences when it comes to cash, whether that’s putting money in or taking money out.”
Keeping the Leadership Edge
Smaller neobanks and FinTechs have been leading the way in offering money mobility solutions, Stephens said. From faster access to direct deposits to innovative overdraft solutions, many of the features that larger FIs now offer have been available for some time from companies such as Current. He said he believes smaller, digital-first companies may be nimbler, yet they are also driven to find innovative solutions to stand out. As innovations become more mainstream, neobanks and FinTechs will continue to find the frontiers that larger players have yet to touch. For Current, that means ensuring that customers can access their money as quickly and easily as possible, Stephens said.
“This is not so much about, ‘How do you rewrite the rules?’” Stephens said. “It’s rather, ‘How do you [remove] the complexities and complications that exist right now in the financial system and not put it on the consumer to have to figure out why their money is taking three days to deposit into their bank?’”
Stephens said that Current uses the term “banker’s hours” — the historically short working hours of traditional banks — to refer to a time when banking cared fairly little about convenience or availability. For FinTechs and neobanks that want to stay at the cutting edge of money mobility, it will be essential to recognize whether a hurdle is truly immovable or just a case of “banker’s hours.”