Neobank for 62+ crowd touts early Social Security withdrawals

There is a new neobank for people aged 62 and older.

The idea is counterintuitive, given that many fintech founders talk about technology as the way to reach younger customers. But Charlie, which launched on Tuesday, has a specific perk to appeal to this audience — early access to Social Security benefits — and the belief that older consumers are more amenable to digital solutions today than in the past.

"We believe that a growing number of those in the 62-plus community prefer a solution that is custom-built for their unique needs," said Kevin Nazemi, co-founder and CEO of Charlie, via email. "The pandemic necessitated using technology to access healthcare services and communicate with loved ones. If someone retired in the past few years, their goodbye party was likely over Zoom."

Charlie will be available as an app and via desktop. Its features include a no-fee demand deposit account that pays 3% on all balances and a debit card. It will also offer a form of "early pay" but in this case, users can withdraw their Social Security benefits up to four weeks early at no cost. Social Security benefits are typically paid in the month that follows the month in which they are due. After users confirm they are receiving Social Security payments and transfer their Social Security direct deposit to their Charlie account, they can request early access on or after the first of the month. Charlie will then advance the funds into the customer's account and get the funds back when the scheduled payment comes in from the Social Security Administration. 

"Part of the reason Chime got so popular is it advanced payday," said Mary Wisniewski, editor at large at Cornerstone Advisors. "You have to create a more interesting carrot to get people to sign up. This could be something people would need."

At the same time, she cautions that one concern in accessing money earlier is that the recipient will have less later on.

The primary way that Charlie will make money is by interchange fees.

Wisniewski notes that this could be a shaky business model. "Other neobanks are showing that is not a path to profitability," she said. "To launch now and say the revenue model is interchange doesn't have legs."

The five co-founders also chose or designed navigation, font sizes and color contrasts that are meant to be accessible to those with visual or physical impairments. Three of them designated their mothers to be early users and testers of Charlie as well. The name "Charlie" is meant to evoke a "smart, kind and trusted nephew who is in the know, but not a know-it-all," according to the co-founders. 

Customer service will be based in the U.S. The co-founders chose Alloy for know-your-customer verification, user authentication company Okta for authentication, and Galileo Financial Technologies for transaction monitoring and additional know-your-customer checks. 

The underlying deposits are held with Sutton Bank, which has $1.8 billion of assets and is based in Attica, Ohio.