wait so there's a new startup bank that will pay for $5,000 medical bills, groceries, rent......and u *don't* have to pay it back?? ummmm what???
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But *contingent on* is doing an awful lot of work. The core insight here is that of the population of people who is currently stably employed, very few of them will cease work due to medical necessity in the very short term, particularly if you have positive adverse selection.
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(For example, if you model early adopters of a new app-based banking product as likely to skew young, that as an actuarial matter likely decreases their risk. If they're well-educated, professionals, or own iPhones, that actuarially decreases their risk. etc, etc)
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So I would assume the bank isn’t actually taking this risk and instead is paying for private unemployment insurance. Quotes vary but from what I see probably runs $5-$10/month, with possible bulk discounts. So $5/month is probably a safe-ish guess.
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I don’t see an interest rate referenced either, doesn’t look like a savings account is offered. So I would assume interchange fees + possibly a interest rate haircut, makes this a very profitable move.
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Re: Dangerous Professionals, I’m also curious if they’re able to use “Bank” in their name. I remember Simple as having had to change.
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