My thoughts on fin-tech

Anyone who knows me well has probably heard me complain about the banking system at some point. Although there are many fundamental issues with the system that one party can’t address, such as the ridiculousness of banking if you happen to be under 18, ACH’s & wires, and more, there have been some innovative fin-tech players that have grown in dominance over the past few years. You may have heard some names before, like Robinhood and Acorns, but others are gaining prominence and are personal favorites. The only traditional players that I really tolerate are AMEX, Charles Schwab & Chase. Today, I wanted to share some of the favorite tools we use that are disrupting the traditional banking system. Maybe there are a few you’d be interested to start using. Let’s get right into it;

Ally Bank

Ally is where I do most of my personal banking (in a joint/custodial account, of course). They are entirely internet-based, which means they operate with far less overhead than traditional banks. This allows them to pass some of the savings onto you with higher interest rates for your money. The rates have dropped drastically with COVID but still, sit at .5%. Historically, they have been above 2% at some points. Although they are based 100% online, their customer service rocks, and they still have all the backing a traditional bank has. You can still get a debit card, you can still use an ATM, and it still has FDIC insurance (up to $250,000, of course). They have hardly any fees and are transparent about the ones they do have. Right now, my two major complaints are that they don’t offer business banking and don’t offer a credit card. 

There are many internet-based banks out there, but Ally is the most prominent and is where I’d put my money. They aren’t just a higher-interest savings account. They are a fully functional bank that happens to have some great interest rates — heck, their interest rates on checking accounts are better than most bank’s interest rates on savings accounts.

Stripe

If you haven’t heard of Stripe, you probably live under a rock, but I still thought I’d mention it because lots of people don’t understand the full power of what Stripe does. Over the past few years, they have given businesses of all sizes the tools that previously only large organizations had, which happens to be what we’re all about at Z Mark
When most people think of Stripe, they think of that payment processor that lets them process payments for 2.9% with a few clicks. This itself is a remarkable feat – I would not wish the process of setting up a custom payment stack on anybody. I won’t bore you with the details, but you have to find a processor, negotiate the fees, get underwritten and approved, and sign a contract. You may think you are done, but at this point, you are just getting started. You still have to find a gateway, integrate that processor with your gateway, and then integrate that gateway with whatever you are using to take payments. In theory, you are done at this point, but in application, usually, the UI’s are so hard to navigate that you need to use a tool like Chargedesk to even work with any payments. All of these costs add up, and if something breaks, your whole infrastructure is damaged. Stripe streamlines all of this, but what’s crazier is that you are granted instant approval with a flat fee; it’s not a drawn-out process. Not to mention their customer service rocks.

They don’t stop at a payment processor, though. Other products they offer include Stripe Issuing, which allows you to create virtual or physical credit cards for your customers, your team, and yourself, Stripe Connect, which allows you to forget about accounts payable and easily distribute payments to vendors, and now Stripe Treasury which offers banking as a service. Although these are just a few of the many products Stripe offers, you could argue that some such as Billing and Radar should not be marketed as separate services and add extra fees. Either way, Stripe is undoubtedly an innovative company that needs to go public soon (maybe via IPOF)

Privacy

I’ve been using this more and more over the past few months. It allows you to create virtual cards for use at one merchant. You can set spending limits and quickly turn them off. Plus, earn 1% cashback. It’s a simple concept but can make a world of difference in managing your finances. 

Cash App

It pains me to include this in the list, considering I’m not the biggest fan of Jack Dorsey, but I enjoy Cash App. It’s user-friendly, has great design, and has lots of great features. Especially for those who are new to managing & investing money, it makes things simple with stocks, securities. Not to mention the debit card is surprisingly good, and the core feature of sending money to folks is solid.

Plaid

Plaid is a disruptor, and I guess that you have used it without even knowing. Ever connect your bank or even a credit card to a financial service or just to pay for something quickly via ACH? That’s Plaid. They take what was historically a multi-day long process filled with complexities and make it almost instant. Be it for a simple ACH payment or analyze each transaction from a bank account for a book-keeping service, Plaid streamlines the process.

Wise

Wise (previously know as Transferwise) is by far the easiest way to send money abroad. You can send money using Western Union, PayPal, or even try using your bank. Still, the issue is the conversion rate — even if you don’t know it, the conversion rate is being marked up drastically, meaning you are paying more than you should. Wise makes sending money abroad easy because it never actually crosses any borders. You send the funds to their U.S. account, and they pay out your vendor through the account in the relevant country.

There are, of course, other players in the space, which I wasn’t able to mention today. Some honorable mentions are Zelle, a peer-to-peer service allowing you to send funds directly to someone’s bank account, Cushion, which works to get any bank fees you encounter waived and refunded. And lastly, Sofi — I’ve never actually used it myself, but have heard great things about it. Essentially it centralizes all of your finance tools — loans, bank accounts, credit cards, investment, mint.com type tools, and more. 

I’d be curious to hear if there’s any fin-tech companies you think I should know about, and I hope I was able to help you discover a new tool or two!

Bitclout

Over the past few days, I’ve seen some buzz about Bitclout. Earlier today, I sat down to learn more about it, and I have to say, the model intrigues me. 

I’d encourage you to take a look at the whitepaper, but if you don’t have the time, here’s the key takeaways;

  • Every person on the platform has a coin. The price increases as people buy the coin, and decreases as people sell the coin.
  • The platform also includes a social network similar to Twitter.
  • The idea behind the network is you can essentially bet on people. Be it Elon Musk (who’s coins currently valued at $83,000 ~ or me who’s coins currently valued at $25);
    If people understand this, then the value of someone’s coin should be correlated to that person’s standing in society. For example, if Elon Musk succeeds in landing the first person on Mars, his coin price should theoretically go up. And if, in contrast, he makes a racial slur during a press conference, his coin price should theoretically go down. Thus, people who believe in someone’s potential can buy their coin and succeed with them financially when that person realizes their potential. And traders can make money buying and selling the ups and downs.
  • The network has it’s own cryptocurrency backing it – the only way to buy that currency is with Bitcoin. So really, two factors affected the price of a coin; the volume of it being bought/sold in addition to the network’s crypto itself.
  • Everything’s decentralized.

The whitepaper details possible features that will be built out down the road, all of which look exciting. In case your curious, my “investment” strategy looks like this;

  • 57%~ in my coin, friends/connections, people I believe in
  • 37%~ in public figures (GaryVee, Tulsi Gabbard, Elon Musk, Mark Cuban, Joe Rogan, Russell Brunson, Chamath, Patrick Collison, Craig Clemens, Kara Swisher, Adam Grant, Andrew Yang, Casey Neistat, Edward Snowden, Dean Graziosi)
  • 4%~ in companies I believe in/think will go up in value (Notion, Disney, Wendys, Vox, Harrys)
  • I’ve heard that it’s good to hold some of your money in the crypto itself and not in any specific coin as it goes up in value as more people buy-in. I’m not doing much of this right now but plan to in the near future.

What’s important with things like this is you don’t invest any more than you are comfortable losing. Right now, you can’t even pull your money off-platform (I’m sure that will change in the future). For all we know, there’s a chance this is a giant Ponzi scheme. I just put in about $150, although, over the next few days/weeks, I’m sure I’ll slowly invest more. I want to dip my feet in the water, though, and see what all the buzz was about. In some coins, I only have a couple of bucks invested. 

This is definitely an exciting platform, and I am excited to play around with it more. If you want to take a look at it, I’d encourage you to, but remember the risks involved. Here’s what I’d do if I were you;

  1. Signup for an account and verify your phone number – you’ll receive about $10~ in coin for doing this alone. When you signup be sure to write down/store your private key – this is the equivalent of a password. It’s the only way to get back into your account.
  2. If you want, add in additional Bitcoin. If you don’t already have it, the easiest way to buy it is probably Cash App. Coinbase and Robinhood are options as well.
  3. Setup a profile. 
  4. BUY YOUR OWN COIN. I didn’t do this right away, and that was a mistake — if you don’t buy your own coin before anyone else does, the price will be much higher, even if other folks only buy a small amount. 
  5. Invest in other coins — in case you want to grab a few cents of my coin, here’s a link

That’s about it! I’m by no means an expert, but I just thought I’d share this. There’s always the first mover’s advantage with platforms like this, but I can’t stress how important it is to be careful—looking forward to seeing what comes out of this.

Update as of 4/12/21 – I’m now about 80% sure Bitclout is at the very least overhyped and possibly a big elaborate scheme. I’ve stopped investing new money into it and am keeping an eye on it. With that said, I haven’t pulled any money out (via selling to a third party) and don’t have any immediate plans to do so. If you do explore Bitclout, enter with caution.