Aspiration

overall rating:

1.25

planets

Mia Warren
8/18/2021
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Aspiration Inc is a different kind of banking and investment firm. The business was founded in 2013 by Andrei Cherny and Joseph Sanberg, but unlike similar companies that offer digital banking services like Revolut and Monzo, Aspiration is hyper-focused on rewarding its customers for their ethical purchases. Admittedly, Aspiration is not a chartered bank, but a personal finance company that offers a range of services including savings accounts, managed investment portfolios, and life insurance. In many ways, despite being an untraditional bank, Aspiration is not dissimilar from the more popular Tridos Bank: both companies prioritise social responsibility and climate justice. The major difference, however, is that Aspiration is entirely digital, they do not have brick and mortar branches. Despite being a virtual banking platform, they are still a full-service institution that can perform wired transfers, ACH (Automated Clearing House – an electronic funds-transfer system that facilitates direct deposits) transactions, and mobile banking, creating a versatile banking experience for its customers.

What it's made of:

1.75

There are two options available for customers planning to open a savings account with Aspiration – their ‘Base Plan’ and ‘Plus Plan.’ Notably, there is no monthly membership cost to join Aspiration’s Base Plan. Instead of a traditional joiner fee, the company has adopted a Pay What You Think is Fair policy which gives customers the discretion to decide whether or not they will pay a maintenance fee with a maximum monthly contribution capped at $10. This technically means a customer can choose to pay nothing whatsoever for Aspiration’s services. Similarly, their checking accounts cost just $10 to open, which is comparatively smaller than many of the major American banks like Wells Fargo which requires a minimum $50 opening deposit. For this reason, it seems that Aspiration is committed to delivering affordable banking solutions for everyone.

How it's made:

1.25

A key advantage of using Aspiration’s banking services is they offer unlimited, fee-free withdrawals from all point ATMs. However, while Aspiration is quite transparent about the charges attached to their different services, unless a customer has read their fine print, they may not be aware of some of their other fees like the $5 charge for any account with a negative balance after 30 calendar days. It seems unfair to penalise someone for having a negative balance and surely introducing this added expense will only exacerbate their financial insecurity. Another issue that struck me was Aspiration’s holding policy: all cheques and cash deposits have a holding period of 2 business days before clearing, while cheques that exceed $5000 have an extended waiting period of 5 business days. So, in theory, if you deposit a cheque on Friday, you won’t have access to that money until the following Thursday at the earliest. This holding period could pose potential problems for individuals that depend on being able to access their funds immediately.

It should also be noted that because Aspiration is an online bank with no high-street branches, you *technically* cannot deposit cash. Instead, you would need to either visit a Walmart, Western Union, or another bank and purchase a Money Order which would cost between $1-5. Alternatively, you can make a mobile cheque deposit by taking a picture of the cashier’s cheque on the Aspiration app. Not being able to deposit cash is not only a costly inconvenience for customers, but it also complicates the environmental benefits of being a branchless bank. The whole idea of being a digital bank without physical locations is cutting down foot-traffic and operational as well as carbon output from car journeys; in this case, Aspiration’s customers would still generate carbon emissions each time they were forced to visit a Walmart or Western Union just to deposit a cash sum. Importantly though, Aspiration guarantees all its customers – both those on their Base and Plus plan that no deposits will be used to fund fossil fuel businesses. Aspiration’s commitment to fossil fuel divestment is a crucial step in the right direction, particularly as the banking industry has continued to play an instrumental role in funding these harmful industries – in fact, according to a report published by the Banking on Climate Chaos organisation, a horrifying $3.8 trillion has been invested by banks into fossil fuels since the 2016 Paris Agreement.

Another issue with Aspiration’s services is the time it takes to apply for a new debit card; if your card was misplaced or stolen, you would have to wait approximately 7 business days for a replacement to arrive. For comparison, JP Morgan and Chase aim to deliver a new card to customers within 3-5 business days. Aspiration’s delivery time can be expedited providing you pay a costly $35 fee, but this means those who cannot afford the additional charge are effectively locked out of their account in the meantime. This issue is compounded by the fact that Aspiration’s customer service has received scathing reviews – earning an overall weighted rating of ‘poor’ on Trustpilot. While they have a customer helpline, they do not offer live chat support like most other major banks, so it can be difficult for Aspiration’s customers to receive help quickly in the event of a crisis.

At first glance, Aspiration’s interest rates on their checking accounts seemed incredibly generous given that the US national average APY (annual percentage yield) on savings accounts is a measly 0.07%, but, upon closer inspection, I uncovered a number of stipulations with their advertised 1% APY rate. Firstly, this 1% interest is only available for customers who have upgraded to the Aspiration plus plan which means you would need to pay the mandatory $5.99 monthly charge to even be eligible – it is here in the fine print that the cracks begin to emerge in Aspiration’s ethos of bringing “the best financial solutions to everyone.” Additionally, you need to consistently spend $1,000+ a month to be entitled to the 1% APY, and this interest rate only applies for the first $10K in your saving account, anything over this amount earns just 0.1% APY. Furthermore, if a month passes and a plus-plan customer fails to spend over $1,000, their balance will only earn 0.25% APY. In my opinion, this is a major issue given that Aspiration tries to market itself as the bank for the ‘everyman,’ when in reality the major perks of its savings account plan are only available to a select number of its premium customers. I find the minimum $1,000 monthly spending on top of the $6.99 premium subscription charge particularly egregious when you consider that 40% of Americans don’t even have $400 in the bank for emergencies according to a report published by the Federal Reserve.

But, what really distinguishes Aspiration from many of its major competitors, is its commitment to environmentally-friendly initiatives. Once you’ve made a few purchases with your Aspiration debit card, you can access the mobile banking app where it will calculate your AIM (Aspiration Impact Measurement) using a proprietary algorithm; this feature tracks your spending history and produces a personalised rating depending on how ‘sustainable’ the retailers you’ve shopped with are. CEO Cherny likens this feature to “a Fitbit [but] for sustainability.” However, Aspiration’s explanation of their own ‘sustainable’ criteria is woefully vague – the FAQ answer they provide on their website is only 80 words long. This could potentially be an issue for some people as sustainability is a hotly debated term that means different things to different people – so, Aspiration’s definition of sustainability may wildly differ from many of its customers. Generally speaking, Aspiration evaluates a company’s sustainability according to their People score (based on metrics like employee pay, access to healthcare, equality of benefits, job security, diversity, etc.) and their Planet score (total greenhouse gas emissions, energy efficiency, renewable energy use, water usage, etc.). However, it’s not entirely clear how the company balances out these two scores – for instance are we to assume that both scores are treated with equal importance? Could a company’s low greenhouse gas emissions compensate for a lack of diversity? Does excelling in one area cancel out poor performance in another?

Another environmental perk of Aspiration’s services is their Plant Your Change feature, if you choose to opt into this program, Aspiration will round up every purchase you make to the nearest dollar and deposit the difference into planting a tree. Impressively, regardless of how small the rounded-up sum is, Aspiration has pledged to plant one tree for every transaction. Not only does this program give customers the satisfaction of making a difference, but there is also a monetary incentive for taking part. For every 30 trees you are responsible for planting, you receive $5; for every 100 planted, you are entitled to a further $10 cashback and so on. But, as Alia Al Ghussain of Greenpeace rightfully points out, while restoring natural ecosystems is essential as “one of our best lines of defence against climate change,” this mitigation tactic “can’t be a substitute for reducing carbon emissions directly.” In this way, Aspiration’s Plant Your Change scheme is indicative of a much larger falsehood peddled by many major corporations: planting trees will magically address our long history of rampant deforestation. It seems that Aspiration is well aware of this glaring issue – given that their FAQ post in response to the question “Do carbon offsets really work?” shiftily dodges answering the actual question. Instead, the post simply explains what carbon offsetting is and the concept of ‘additionality’ rather than debating whether or not it is a legitimate strategy to tackle the climate crisis.

Aside from the Plant Your Change scheme, Aspiration also offers a cashback scheme on select retailers. The cashback percentage is between 3-5% depending on the individual company’s ‘sustainable’ rating. Aspiration has also partnered with a number of sustainable companies to form what they have dubbed the Conscience Coalition, which includes brands like Blue Apron and Girlfriend Collective. Those who are subscribed to Aspiration’s Plus Plan will be entitled to a generous 10% cashback on all purchases from members of the Conscience Coalition.

Furthermore, the Base Plan has a totally optional maintenance fee. But, providing you make some form of monthly contribution, Aspiration will donate 10% to a charitable organisation while the remainder covers their operational costs.

Aspiration also offers the Aspiration Planet Protection scheme, but this is an exclusive perk for its plus plan customers. The Aspiration Planet Protection scheme automatically tallies up your gasoline purchases and estimates your carbon output, Aspiration then pledges to buy offsets to counteract your carbon consumption, effectively making your car carbon neutral.

Who makes it:

1.5

Aspiration was founded in 2013 by Harvard graduates Andrei Cherny and Joseph Sanberg. Cherny has spent the majority of his professional career establishing his reputation as a trusted political advisor and speech writer, serving in the Clinton administration and providing strategic advice to a number of hugely influential American politicians like Barack Obama, Joe Biden, and Al Gore. Notably, Cherny is also the co-founder and president of the progressive public policy journal, Democracy. It hardly seems surprising given Cherny’s interest in climate justice that his political inclinations would be liberal and left-leaning. Additionally, Cherny’s business partner, Joe Sanberg, is a vocal supporter of the Democratic party and has been instrumental in a number of non-profit initiatives to address social justice issues. Sanberg is the founder of CaIEITC4ME – an outreach program based in California that aims to help low-income families by providing education on how state tax credits are awarded. However, it is also important to note that Sanberg is an investor in the weekly, subscription-based meal kit company Blue Apron – who have come under criticism for their excessive use of plastic packaging to deliver weighed ingredients to customers. Furthermore, despite the criticism faced by Blue Apron, the company is actually part of Aspiration’s Conscience Coalition cashback scheme. In my opinion, I feel Blue Apron’s sustainable credentials are not particularly impressive and the company is only part of the cash-back scheme in order to enrich the pockets of Sanberg, which is very disappointing (this is just speculation - please don’t sue me).

Despite being a relatively young company in the early stages of its development, Aspiration has attracted a lot of attention from high-profile celebrities and corporations alike. As of 2020, the company has raised in excess of $250 million. Aspirations’ investors include a number of celebrated Hollywood elites including Robert Downey Jr., Leonardo DiCaprio and Orlando Bloom. Given DiCaprio’s extensive environmental advocacy work it should come as no surprise that he has a staked investment in Aspiration.

One of Aspiration’s major investors is the boutique investment bank, Allen & Co. This investment bank is notorious for its aversion to publicity and media scrutiny, but has been instrumental in the underwriting for a number of major IPOs and acquisitions. For instance, the bank is currently run by Herbert Allen Jr. who bought significant stakes in Columbia Pictures and made significant returns on his investment when the company was sold to Coca Cola in 1982. Since this hugely lucrative sale, Herbert Allen Jr. has had a position on Coca-Cola’s board of directors – this is important given that Coca-Cola is infamous for being grossly environmentally irresponsible and one of the biggest polluting corporations. In fact, a 2020 report based on the litter collected by volunteers from a number of environmental charities found that Coca-Cola was the world’s largest plastic polluter with over 2.9 million tonnes of plastic waste produced annually. It perhaps seems strange then that one of Aspirations biggest investors should be so intimately collected with the Coca-Cola company and raises questions about the company’s commitment to transparency and climate justice.

Conversely, another one of Aspiration’s major investors is entrepreneur and former president of eBay, Jeffrey Skoll. Since his departure from eBay, Skoll has devoted his time to raising awareness of climate change and social justice issues – for instance, he founded the Participant production company in 2004, which has helped to produce a number of critically-lauded movies that shine a spotlight on topics like racial justice, climate change, political unrest, and sexism in such movies as Food Inc, An Inconvenient Truth, Judas and the Black Messiah, and On the Basis of Sex. Perhaps even more impressive is Skoll’s philanthropic ventures; in 2009, he donated $100 million to establish the Skoll Global Threats Fund to address climate change and water security among other issues. Furthermore, Skoll is often credited with leading the way for responsible “impact investing.” In 2001, he created the Capricorn Investment Group which aims to manage “globally diversified long-term portfolios … with sustainability integrated at the core of the investment process.”