"Money is depressing," says Bill Harris, former CEO of PayPal and Intuit. "Most people are scared of their money." Harris is building a Miami-based challenger, Nirvana Money, that's designed to help people understand their finances, and simultaneously build their savings and credit.
Nirvana will offer a credit card to people who can't get one elsewhere, but who are willing to deposit their paychecks at the company. That card will start with some characteristics of a secured card, but without fees, he says.
Harris is a fintech superstar: He has founded 11 tech and fintech companies, including PayPal, Personal Capital and One. His work is closely watched by banks and fintechs alike.
We caught up with Harris at the Finovate conference in New York last week. He shared his plans for Nirvana, which he expects to launch Oct. 23.
Some people would say this is a tough environment to launch a new challenger bank.
BILL HARRIS: I would say it a little differently. I would say it has been an easy environment — too easy, maybe. And now I think it's hard, but appropriately hard. Startups are not easy and they shouldn't be, because otherwise you get too many of them and that wastes too much money and there's too much confusion for the customer.
How will Nirvana Money be different from other neobanks?
There's this whole category of neobanks that try to build a better bank account. Many of them are built on prepaid card platforms. One [the
That's bad, because if you don't understand what's going on with your money, how can you make it better? But it's not only bewildering to have all these apps and all these different institutions. It's also economically punishing, because each one of these has their own fee structures. And the worst thing about it is most of the fees are gotcha fees. If you step out of line, bang. Some banks are starting to reduce or eliminate overdraft fees, but late fees still exist on the credit card side. Cash advance fees, which are horrible, still exist. And foreign transaction fees and balance transfer fees and the list goes on.
And so it's not just the money. The money's important for people who can't afford it, it's often many hundreds of dollars a year when you add all this stuff up. But it's not only that, it's the stress and the emotional impact of, Oh, I'm three days late paying the bill. Oh, I went negative on my bank account by $50. And so the biggest problem that people have with their money is not even the complexity that we've built and the lack of ability to understand. Most American households are living unexamined financial lives and money is too important.
So how are you going to help people?
If I take a step back and think of the eight [fintech companies I started] prior to Nirvana, all of them have been good products in one way or another. But in some ways they've made the problem worse, not better, because it's a point product here and a point product there. Along the way, it gets so complicated that you need a personal financial management application to figure all that out. And the vast majority of people won't use a PFM. I've built three of them. They're all great products. It's too much work. It's too much work. In Nirvana, the people that we're trying to help are middle income and moderate income and they get the raw deal in financial services because the banks are increasingly focused on the affluent and they take the middle market for granted.
And of course, if they can't get quick, good credit, they end up at payday lenders, which have 500% effective interest rates, or even worse. They end up using overdraft, which has thousands of percent effective interest. And even worse than that is secured cards where the effective interest rate is infinite because you're paying interest on your own money.
The serial entrepreneur has created a challenger bank called One for middle-income people with complicated financial lives.
What we're trying to do is give somebody who would otherwise have no option but a secured card, something that can allow them to get on the credit and savings ladder and progress up. And you can use our card in the same way without all the fees, but then you don't need to get rid of the product. You can just migrate up with the same card, same account, but now we're giving you more credit and helping you build savings.
Because it is a combination of credit and debit card, we are essentially like a bank account as well as a credit card. And we've got ACH routing and account numbers and all that. So we can reasonably compete for the direct deposit. With the direct deposit, we can start anybody who has recurring income off with a credit card. We'll work with them over time.
You had a hybrid card at One, right?
It was more like what many neobanks do, which have a debit card, a bank account, with the ability to get a small amount of credit in a separate pocket. We're pulling it all together into one thing with one balance, and we're a real credit card. And as you work with us, or if you come in with a good credit score, we'll give you a significant credit, but then always work to take any cash and pay off expensive credit.
We will work with people to minimize the credit balances, build the cash balances and savings and let them come up with the ladder. We can't do it for them. They have to be ready, but if somebody is truly ready to try to improve their financial life, that's what we're here for.
Is it really one account or is it two accounts with one piece of plastic attached?
Way, way under the covers, It's two accounts, but the experience is a single account with a single piece of plastic. So as far as the customer is concerned, it might as well be one account, one card, one app, one balance. The balance can go positive or it can go negative.
If somebody is running short, they're at the grocery store, they have charged up $150 and they only have $120 in their account, can you do something quick, in the moment, to help them?
Yes. In fact, you don't even have to do anything. It's right there. It's one account and it does both credit and debit.
How are you going to help people understand their finances?
Simplicity. You start with one account and one card and you don't need anything else. So we are attempting to get rid of everything we possibly can. If you look at most financial apps, it's a sea of numbers. Nobody wants to go look at a sea of numbers. You're usually looking for one or two numbers. Everything that's not essential is ripped off the screen.
What is your path to profitability?
Like every consumer tech startup, we will be unprofitable at the beginning. It all depends on scale and unit economics.
It does seem like the neobanks that offer credit from the beginning do much better because they're getting that interest income, rather than relying on interchange fees.
Credit is important, but the other reason credit is important is that that's what consumers need. There are plenty of places to store and move your money. But getting good credit, particularly for the middle and moderate income market, is hard. That's what people need. If you can provide that in the context of everything else, you're more likely to attract customers.
Anybody who is willing to put their direct deposit into this account on a recurring basis, they're already demonstrating a certain long-term mindset.
You lived and worked on the West Coast for a long time, right?
Thirty years. Miami is beautiful. The sunshine makes everybody happy and happy people are productive people. And by the way, whether we're productive or not, I just think people should be happy. That's the first of our core values: happiness, not only our customers, but our employees.
How do you make employees happy?
We try to get rid of some of the crazy stress. We got rid of the traffic on 101.
In Miami, it's outdoor living and it's sunshine and you're not clustered.
