‘Hippie’ Immigrant Launches Good Money Banking Co-Op For The People
This post was originally produced for Forbes.
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Gunnar Lovelace, founder and CEO of Good Money, was raised in a “hippie commune” in California. He doesn’t think much of the banking system in the U.S., so he’s launched Good Money, a consumer banking platform structured as a customer-owned cooperative, to change things–radically.
In the video player above, you can watch our full interview. This is how he framed our discussion:
Just to clearly frame the problem–the average U.S. consumer today spends $360 a year for a s****y banking product where banks pay practically zero on your money as a customer then leverage your money on a 10x ratio to go fund things like the Dakota Access Pipeline and private prisons and make a bunch of money on that and then pay you nothing. As a consumer you kind of say that out loud that “I’m going to give you money to make money on my money, messing things up while paying me nothing” is the definition of insanity. You double click even a little bit further than that. The top banks today make $30 billion a year in overdraft fees just out of people’s checking accounts and they will run a large check first so that all of the small checks in a check clearing cycle cause an overdraft fee. They then run and share a blacklist amongst each other so that if you don’t pay the overdraft fees you get blacklisted out of the traditional banking system into a much more predatory and pernicious prepaid debit market and payroll market system.
To be fair, the cash customers deposit via Good Money will be held in banks subject to FDIC insurance and corresponding regulation. And, not all banks are guilty of the practices he describes. Southern Bancorp, operating in Arkansas and Mississippi was founded 30 years ago with a goal to provide banking services to low-income people and communities. Beneficial State Bank on the West Coast is owned by a nonprofit and strives to serve its communities rather than to extract money from them.
Gunnar Lovelace, Good Money CEO CREDIT: GOOD MONEY
Still, controversy and scandal swirl around the banking system like flies in a barn.
Lovelace, who also founded the successful Thrive Market organic online retailer, hopes Good Money will represent a significant change in the way consumers experience banking.
First, customers will be granted ownership in the business. Over 15 years, he says he expects the customer share to rise to between 25 and 75%. Until the company registers the shares, as it would do in an IPO, however, the customers won’t have voting rights.
Another difference is what the platform will pay its customers as interest and charge them as fees. Good Money commits to paying a 2% yield on deposits. Because it operates no branches, check deposits are made via the mobile app and ATM withdrawals are free via a national network. The accounts are checkless, so there are no overdrafts and no overdraft fees. But if you don’t have the $1.89 in your account for a soda, you’ll walk out of the store thirsty.
Additionally, 50% of the platform’s profits have been pledged to impact, either in the form of impact investments or philanthropic giving. “Our goal broadly is to identify, collaborate with and fund profitable programs ultimately that actually drive more scalable impact,” Lovelace explained.
Good Money raised $30 million late in 2018 and is enrolling people on a waitlist now.
Lovelace, whose ventures have left him well-heeled, has a unique view of money. His mother, considered a dissident in Argentina, left in the 70s, at a time when an estimated 30,000 people disappeared under the military government’s rule.
Arriving in the U.S. as a young boy, his life experience was framed by his stepfather, who started an “intentional community” where he was raised. “Growing up really poor, I saw money from very early on as a way to take care of people that I love and do good.” Now he’s hoping to spread that values-based approach to money with everyone.
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