| Hi Taylor
- I saw that Square launched a new bank. What's the deal there?
Can any business become a bank? Are they trustworthy? How do I decide
where to keep my money?
Hi Lauren - When you step back to look at it, the evolution of
banking and finance has been nuts over the last decade. Depositing
checks on our phones, taking payments with personal credit card readers,
and doing all of our banking through companies that exist entirely
online. It's a far cry from the days of piggy banks at home and cash
in a credit union vault.
There's no reason to be afraid of the Square bank. In fact, like so
many digital banking options, there are some serious benefits to consider,
assuming you qualify for their services.
If you're having trouble letting go of the brick and mortar
bank, rest assured that the online options are still FDIC insured
and offer all the protections of a Chase or a Wells Fargo or a
B of A. The company has strong liquidity and a lot of leverage
with its existing platform, so it's hard to imagine this venture
falling apart. The fact that Square got a bank charter is kind
of a big deal, since most fintech banks partner with larger companies
to use existing charters.
2. Loans and limited deposits. From what I understand,
not just any person off the street can open a checking account
with Square. This move into the banking world is to accommodate
all the clients who use the payment app, now allowing them to
take out small business loans as well as depositing cash directly
into the Square bank instead of taking a payment and then transferring
that money on to another account. It's pretty easy to get a Square
reader and start taking payments, but your sales volume probably
has a lot to say about whether or not you can open an account.
3. Fintech is the future. Clearly, digital banking wasn't
just a flash in the pan. This alternative to traditional banks
still offers great interest rates and a lot of flexibility for
checking and savings accounts. The banks we all grew up with have
taken a lot of steps to get their piece of the digital pie and
that's only accelerated the popularity of online banking. Whether
you keep your invisible cash with Square or Ally or USAA, there's
no reason to have less faith in that company than you have in
whatever bank building is closest to your house.
| No reason to
rush out and get an account with Square, but it's a development worth
keeping an eye on and a reminder that the fintech movement has only
made the financial sector stronger. Thanks for the question, Lauren!
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