Photo: Daniel Acker/Bloomberg via Getty Images
The pandemic and fintech might put an end to overdraft fees

Hello and welcome to Protocol | Fintech! This Friday: Ally Bank drops overdraft fees, neobanks might be underrated for small-business lending, and Ant Group gets back on track.
(Was this email forwarded to you? Sign up here to get it in your inbox every week.)
Ally Bank, the biggest all-digital bank in the U.S., is getting rid of overdraft fees. It's a big move for a major U.S. financial institution, which highlights the new pressures on traditional banking.
The pincers are coming from Washington and Silicon Valley. Congressional critics of Wall Street, particularly Sen. Elizabeth Warren, have made overdraft fees a populist punching bag. But challenger banks like Chime have also wooed consumers with accounts that don't charge for overdrafts.
Pro-overdraft bankers argue the fees encourage responsible behavior. But the reality is that they punish the most vulnerable consumers, critics say.
The pressure from fintech is growing. Overdraft fees have been a significant money-maker for banks for decades. But fintechs have demonstrated that "penalizing someone for being short on cash by taking even more money from them" is "a ridiculous notion," Moor Insights & Strategy analyst Melody Brue told Protocol.
Will Congress force big banks to act — or will competition? It's more likely that lawmakers will roast banks than regulate them.
There's one more tech-driven reason why banks might want to rethink their reliance on overdraft fees: Real-time payments are coming. With faster access to deposits and a clearer view of balances, consumers might be less likely to overdraw their accounts in the first place.
—Ben Pimentel
Trusted since 2011, there are over 73M Blockchain.com Wallets that have transacted nearly $1T in crypto.
Whether you want to trade, earn, custody, or access full-stack institutional solutions, Blockchain.com is a market leader in retail and institutional crypto products.
Robinhood bets on free crypto orders. The trading app sees fee-free digital currency trades giving it stronger momentum as it prepares to go public.
SoFi's impressive debut. The personal finance company's stock jumped 12% as it began trading on the Nasdaq.
Shopify's game plan. Kaz Nejatian, the company's vice president of product for merchant services, explains how Shopify is taking on on rival Amazon.
Robinhood's new directors. The trading app, which is expected to go public soon, named veteran execs from Apple, PwC and the World Bank to its board.
Banks watch your every move online. How financial institutions are using AI-powered behavioral analytics to battle fraud.
What fintech trend is most troubling for you?
I think we want to be wary of small-business lending becoming predatory. What's most important is helping small businesses keep their cash flow moving properly in the first place, and ensuring they get paid faster for work they've done. That way, they don't have to turn to loans as frequently, which can oftentimes impose high interest payments. Over 80% of small businesses fail because of cash flow issues, and it's a major pain point we're focused on solving for our customers.
What's been your biggest professional blunder, and how did it help you?
When my co-founder James Lochrie and I started Wave in 2009, we fell into the trap of hiring people much like us from our networks — essentially, white and male. It led us down a path similar to a lot of tech companies which feels unwelcoming to diverse employees. In 2015, we purposefully set out to change the culture of Wave and that has led to a far more diverse workforce and a much stronger culture by all measures. This has had a significant impact on business performance, employee satisfaction and engagement.
What fintech sector or company is most underrated and overrated right now?
I believe neobanks are still very much underrated in North America, especially in the small business sector. We are only scratching the surface of innovation in a multi-hundred-billion-dollar industry. For years, the industry wondered what would happen to small business lenders during a down cycle. We found out last March, and I don't think it was pretty for many players.
Trusted since 2011, there are over 73M Blockchain.com Wallets that have transacted nearly $1T in crypto.
Whether you want to trade, earn, custody, or access full-stack institutional solutions, Blockchain.com is a market leader in retail and institutional crypto products.
That's the number of New York City households considered unbanked. Mayoral candidate Andrew Yang has proposed a nonprofit People's Bank.
Thanks for reading — see you Tuesday.
To give you the best possible experience, this site uses cookies. If you continue browsing. you accept our use of cookies. You can review our privacy policy to find out more about the cookies we use.