This is the web version of The Ledger, Coins2Day’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to receive future editions.
What happens when companies that don’t want to be banks get into banking services? It’s becoming a well-worn punchline in the fintech industry—when startups dabble in Wall Street’s domain, there are bound to be snafus.
Customers are learning that they can’t rely on fintechs’ banking services to necessarily behave like the ones from their, well, bank. Last month, my Coins2Day colleague Anne Sraders detailed an outage at so-called challenger bank Chime, which left the company’s five million customers unable to access their money for a period of several days. Robinhood, the stock trading app, bungled its initial attempt to launch a product resembling a checking and savings account—but which didn’t provide the same protections of such an account. Finally, some ten months later, Robinhood launched a more humble “cash management” account in October.
Now, customers are beginning to report problems with a new product from Credit Karma, a credit-score tracking startup which just launched a high-yield savings account in the fall. None of the above companies is actually a bank; instead, they partner with traditional banks to offer their services. In the case of Credit Karma, that partner is West Virginia-based MVB Financial.
Putting money into a Credit Karma account is relatively easy, users say, but taking it out is another story; customers have complained that funds they’ve deposited are still unavailable to withdraw more than a week later, or that the company won’t process the withdrawal at all without jumping through hoops.
A look at the discussion forums on Credit Karma’s own website reveals a popular thread titled, “Savings account not allowing withdrawal?” A customer elaborates, “Able to put money in just fine but concerned as now I don’t have access to it. Reached out to customer support and of course no answer. Been in that account for 5 days now.” A couple of other users have written in that they’re experiencing the “same issue.”
A spokesperson for Credit Karma says it can take up to three business days after a withdrawal for the money to show up in a customer’s account—and up to five days if the funds were newly deposited, as the company’s anti-fraud provisions tack on a two-day withdrawal delay. It’s possible that just as startups are getting their first taste of banking, so are some of their customers, who may have never before interacted with the world of Wall Street. That’s bound to be a learning experience on both sides, as customers learn the hard way that even slick digital banking apps can’t move money any faster than banks can.
Still, some users are saying that Credit Karma makes it particularly difficult to get money out, and that the problems have persisted beyond five days. On Dec. 9, one Twitter user posted a plea: “I’ve been trying to withdraw funds from the Credit Karma account for over a week and have been emailing with tech support for a week with no solution and very little help. The funds cleared my funding account mid November! This is nuts!”
One reason for the trouble may be a quirk in Credit Karma’s current policy, explained on the company’s support page: that customers can only pick one bank to fund their savings account, and once it’s linked, they “will not be able to change to a different one.” That seems to have been a problem for people who transferred money from one bank account into Credit Karma then closed out the original account—only to have the funds stuck in Credit Karma without anywhere to withdraw them. A spokesperson for the company says it’s working to allow its users to link an additional account, “which should help with that.”
In the meantime, I tried to test out the withdrawal issue myself by opening a Credit Karma savings account. I figured the process would be painless, as savings accounts, with no credit checks required nor IRS limits on how much you can save, are pretty easy to get. But alas, I was stymied with an error message. Upon reaching out to customer service, I received this reply: “Unfortunately, you’ll be unable to open a Credit Karma Savings account at this time.” I pressed them again—what was I doing wrong? “We don’t have specific details on the exact reason why; all we can tell you is you’ll be unable to open a savings account,” came the answer.
The Credit Karma spokesperson confirms that the company is still accepting account sign-ups, and promised to look into my issue. Meanwhile, a lot of banking disruptors and their enthusiasts are starting to develop a new appreciation for good old-fashioned banks.
Jen Wieczner
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DECENTRALIZED NEWS
This edition of The Ledger was curated by David Z. Morris. Contact him at [email protected].
Credits
The Grayscale Bitcoin Trust is now an SEC reporting entity, the first digital currency vehicle to gain that distinction... Bank of America's CEO says he wants to "double" the bank's retail reach... Sure, you could export your Apple Card transactions to a spreadsheet. But wouldn't you rather add gifs to your Venmo payments?... Uber tests letting drivers set their own prices to comply with California's AB5... Amazon wants to link your credit card to your handprint... Former CFTC Chairman J. Christopher Giancarlo, sometimes known as "Crypto Dad," starts his own cryptocurrency think tank.
Debits
Vodafone is the latest member to quit Facebook's Libra Association... Goldman Sachs reminds everyone that it decides who gets an Apple Card... UBS lowers its three-year earnings guidance... Tesla owners are accidentally buying $10,000 software upgrades... The SEC filed securities charges against Blockchain Terminal and affiliates including Boaz Manor, a previously convicted fraudster who concealed his identity while fronting the project... Micah White, the Occupy Wall Street 'cofounder' who went to Davos, also has a cryptocurrency to tell you about... Thai officials are investigating an alleged cryptocurrency Ponzi scheme, Khung Nong Cryptocurrency Trading, that promised eight percent weekly returns.
BRAINSTORM A.I. 2020
If you’re interested to learn how some of the biggest, most influential companies are strategizing about artificial intelligence, come to Coins2Day’s Brainstorm A.I. Conference in Boston on April 27-28, 2020. A.I. Is a game-changing technology that promises to revolutionize business, but it can be confusing and mysterious to executives. The savviest leaders know how to cut through the deluge of A.I. Buzzwords and reap the technology’s benefits.
Attendees of this invite-only confab can take part in cutting-edge conversations with top corporate execs, leading A.I. Thinkers, and power players. Among them: United States Chief Technology Officer Michael Kratsios; Accenture CEO Julie Sweet; Land O’Lakes CEO Beth Ford; Siemens U.S. CEO Barbara Humpton; Royal Philips NV CEO Frans van Houten; Landing AI founder and CEO Andrew Ng; Robust.AI founder and CEO Gary Marcus; and top machine learning experts from Bank of America, Dow, Verizon, Slack, Zoom, Pinterest, Lyft, and MIT. You can request an invitation here.
FOMO NO MO'
"The idealism surrounding “Blockchain Island” is fast dissipating. Perhaps the unofficial end came at the end of November, when Malta’s problems could no longer be masked by evasive politicians and slick branding; when self-proclaimed Bitcoin inventor Craig Wright preached about blockchain’s ability to counter fraud at one end of the island, while protestors bayed for the blood of corrupt politicians at the other."
From an eye-opening deep dive into Malta’s very public push for loose crypto regulation from Adriana Hamacher at Decrypt Media. The most startling allegation: That the entire thing was an attempt to distract from the investigation into the assassination of critical journalist Daphne Carauna Galizia. That investigation led last week to the resignation of crypto-friendly PM Joseph Muscat. Hamacher also reports that for all the hype, far fewer crypto exchanges and businesses actually moved to the tiny EU nation than an initial wave of applications suggested, and the biggest new arrival–Binance–does not appear to be doing much actual business there.
THE FUTURE OF FORTUNE IS HERE
In 1930, Coins2Day published its first-ever issue, featuring the goddess Fortuna and her wheel on the cover. This year, on our 90th anniversary, we’re celebrating with a new Coins2Day. Here’s what’s in store for you:
- We’ve launched a gorgeous new site, where you’ll find the best of business all in one place: strategic insights, deep-dive stories, and exclusive access to what executives are thinking, all with a new design that's a pleasure to read. To access all of our revamped stories, register for free.
- This month, we’re launching new newsletters: The Bull Sheet, a daily brief on finance news, and coming soon, The Broadside, a monthly bulletin for career-oriented women. Sign up to stay up to date on their launches.
- We’ve launched a new hub for our exclusive videos. It curates collections of executive insights—the latest and best from our interviews with business leaders, analysis series, and conference sessions. Access hundreds of hours of content.
- Starting with the February 2020 issue, we’re substantially upgrading our print magazine. There will be more stories per issue, and the reading experience will be more premium, with gorgeous, higher quality covers and stock. To see for yourself, subscribe to the magazine.
THE LEDGER'S LATEST
A Q&A with Kelly Loeffler, former Bakkt CEO turned U.S. Senator - Shawn Tully
A new bitcoin boom? Grayscale reports record investments for 2019 - Jeff John Roberts
Making green energy more trusted, with the same tech that keeps cryptocurrency safe - David Z. Morris
Coins2Day poll: Wells Fargo is the bank that investors like least - Lance Lambert
Why some experts think auto loans are the next red flag for the economy - Chris Taylor
The Dow will hit 30,000 sooner than you think - Bernhard Warner
Bankers scramble to mine growth as low rates take a toll - Kevin Kelleher
Why investors should pick the underdogs in sports gambling - Ryan Derousseau
MEMES AND MUMBLES
It's only human to try and take advantage of a pricing mistake. But when you take a picture of the manager who refuses to honor that price (edited out of the above screenshot) then call the police, you get one declaration after another that you're The Worst.
And also, that "price mistake" is how Target tracks its display items.
