US gets new challenger Level Bank by Zero creators
The US has become home to another challenger bank. Created by the same California-based team which founded the “debit-style” credit card offering Zero, Level Bank has been created to target millennials dissatisfied with the incumbent banking options.
Founder and CEO of Zero, Bryce Galen says the new venture is “the highest annual percentage yield (APY) deposit account in the US”, boasting a 2.1% APY and 1% unlimited cash back on online and signature purchases. The company says its APY is 35 times the national average if you look at bank balances holding less than $100,000.
The challenger joins a crowded market, already home to the likes of Ally, Varo, German-founded N26, Stash, and the $5.8 billion-valued Chime. The emergence of the neobank comes following Zero’s $20 million Series A funding round last year from Plaid and Robinhood-backer New Enterprise Associates (NEA), SignalFire, Eniac Ventures and Nyca.
Zero now has tens of thousands of users according to TechCrunch. Its new sister company Level, which is itself not a bank, holds its customers’ funds in accounts insured by the Federal Deposit Insurance Corporation (FDIC) through Evolve Bank & Trust.
The neobank offers early access to users’ paychecks up to two days before payday – a feature offered by many challengers now. There are no monthly, overdraft, foreign transaction or add-on ATM fees associated with a Level account, and it even promises to reimburse ATM fees worldwide up to three times each month for up to $4 a withdrawal.
“Although several challenger banks have launched in recent years and most compare favorably to traditional banks, surprisingly few of them deliver a strong enough customer value prop to truly compel people to switch their primary banking,” Galen tells TechCrunch.
“For instance, Square Cash has a reliable app with rotating cash back perks, but lacks FDIC insurance or phone customer support. Chime has FDIC insurance and phone customer support, but lacks meaningful customer rewards or 24/7 support availability,” Galen adds.
Level’s founder has not revealed whether its high 2.1% APY rate will remain a long-term feature, or whether it is part of an introductory offering to draw customers in.