Aspiration is an American personal finance company founded in 2013 by Andrei Cherny and Joe Sanberg. Cherny started the company to realize his vision of a financial institution that cared about society and the environment.
Aspiration’s “Pay What is Far” model encourages customers to pay whatever they like for a range of account and investment products. However, the company does charge interchange fees, wire transfer fees, and card expedition fees on cashmanagement accounts.
Aspiration also makes money by collecting interest payments and an annual fee on its carbon-neutral credit card scheme. Furthermore, the company charges a monthly or annual fee for Aspiration Plus, a premium CMA.
Business Model Element
Analysis
Implications
Examples
Value Proposition
Aspiration’s value proposition revolves around: – Sustainable Banking: Offering banking services that align with environmental and social values. – Fee Transparency: Providing customers with the option to pay what they think is fair in fees. – Impactful Investing: Enabling sustainable and socially responsible investing. – Carbon Offsets: Automatically offsetting carbon emissions for customers. Aspiration appeals to customers who want their financial choices to align with their values and offers a unique fee structure and carbon offsetting.
Attracts customers who prioritize sustainability and social responsibility in their financial choices. Encourages transparency and trust by allowing customers to set their own fees. Appeals to investors interested in sustainable and ethical investing options. Provides a clear and actionable way for customers to reduce their carbon footprint.
– Sustainable banking services aligned with values. – Flexibility in setting fees based on individual preferences. – Investment options focused on sustainability. – Automatic carbon offsetting for customers.
Customer Segments
Aspiration serves a diverse set of customer segments, including: 1. Conscious Consumers: Individuals who want their banking and investments to have a positive impact on society and the environment. 2. ESG Investors: Investors interested in Environmental, Social, and Governance (ESG) criteria for their portfolios. 3. Sustainable Businesses: Companies looking for banking services that align with their sustainability goals. Aspiration caters to a range of customers who prioritize sustainability and responsible financial choices.
Appeals to conscious consumers seeking banking products with a positive impact. Attracts ESG-focused investors interested in sustainable investment options. Serves businesses that want to align their banking with sustainability goals. Addresses the needs of diverse customer segments committed to responsible finance.
– Individuals wanting banking with a positive impact. – Investors interested in ESG criteria for portfolios. – Businesses looking for sustainable banking solutions.
Distribution Strategy
Aspiration’s distribution strategy includes: – Mobile App: Offering a mobile app for convenient account management and transactions. – Online Presence: Maintaining an online presence for customer access and engagement. – Partnerships: Collaborating with mission-aligned organizations and nonprofits. – Referral Program: Encouraging customers to refer others to join Aspiration. Aspiration ensures accessibility through its mobile app and online presence, leverages partnerships for growth, and incentivizes referrals for customer acquisition.
Provides customers with the convenience of mobile app and online access. Collaborates with mission-aligned organizations to expand its user base. Encourages word-of-mouth referrals to attract new customers. Offers multiple avenues for users to discover and engage with Aspiration’s services.
– Mobile app for account management and transactions. – Maintaining an online presence for customer access. – Collaborating with mission-aligned organizations and nonprofits. – Encouraging referrals for user acquisition.
Revenue Streams
Aspiration generates revenue through several streams: 1. Monthly Fees: Charging customers monthly fees for using banking services. 2. Investment Management Fees: Earning fees from assets under management in investment products. 3. Interchange Fees: Earning a percentage of transaction amounts made with Aspiration debit cards. 4. Carbon Offset Contributions: Generating income from customers’ contributions to carbon offset projects. Aspiration diversifies its income sources through fees, investment management, interchange fees, and carbon offset contributions.
Earns revenue from monthly fees for access to banking services. Generates income from managing investments in sustainable portfolios. Benefits from interchange fees when customers use Aspiration debit cards. Supports carbon offset projects through customer contributions. Diversifies revenue streams for financial sustainability.
– Charging monthly fees for access to banking services. – Earning fees from managing investments in sustainable portfolios. – Benefiting from interchange fees on debit card transactions. – Generating income from customer contributions to carbon offset projects.
Marketing Strategy
Aspiration’s marketing strategy involves: – Digital Advertising: Utilizing online advertising channels to reach potential customers. – Content Marketing: Creating informative content to engage and educate users about sustainable finance. – Mission Alignment: Collaborating with mission-aligned organizations to promote its services. – Referral Program: Encouraging customers to refer others through incentives. Aspiration focuses on digital advertising, content marketing, mission alignment, and referrals to attract and educate users interested in sustainable finance.
Reaches potential customers through digital marketing channels, targeting a broad audience. Engages users with educational content to enhance their knowledge of sustainable finance. Collaborates with mission-aligned organizations to promote its mission. Utilizes referrals to expand its user base and incentivize recommendations. Implements a multifaceted marketing approach tailored to its target audience.
– Utilizing online advertising channels for user acquisition. – Creating informative content to engage and educate users. – Collaborating with mission-aligned organizations for promotion. – Encouraging users to refer friends and family through a referral program.
Organization Structure
Aspiration’s organizational structure includes: – CEO and Leadership Team: Led by the CEO responsible for strategic direction. – Product Development: Teams dedicated to app and platform development. – Marketing and Growth: Engaging in user acquisition and marketing efforts. – Customer Support: Providing assistance and support to users. – Finance and Operations: Managing financial aspects and operations. Aspiration maintains a structure that supports product development, user acquisition, customer support, and financial management.
Led by a CEO responsible for strategic direction and decision-making. Emphasizes continuous app and platform development. Engages in user acquisition and marketing initiatives. Offers dedicated customer support for user satisfaction. Manages financial aspects and ensures smooth operations. Maintains a structure aligned with core functions and business goals.
– Led by a CEO responsible for strategic direction. – Teams dedicated to app and platform development. – Engaging in user acquisition and marketing efforts. – Providing assistance and support to users. – Managing financial aspects and operations. – Aligning with core functions and business goals.
Competitive Advantage
Aspiration’s competitive advantage is derived from: – Sustainability Focus: Specializing in sustainable banking and investing, catering to values-driven customers. – Fee Flexibility: Offering fee transparency and allowing customers to choose their fees. – Mission Alignment: Collaborating with mission-aligned organizations to amplify its impact. – Carbon Offset Commitment: Automatically offsetting customers’ carbon emissions, aligning with environmental goals. – Diverse Investment Portfolios: Providing a range of sustainable investment options. Aspiration’s strengths in sustainability, fee flexibility, mission alignment, carbon offset commitment, and diverse investments position it as a leader in responsible finance.
Distinguishes itself by specializing in sustainable banking and investing. Attracts customers with fee flexibility and transparency. Amplifies its impact through collaborations with mission-aligned organizations. Demonstrates a commitment to environmental goals through carbon offsetting. Offers a variety of sustainable investment choices. Maintains a strong position in the responsible finance sector.
– Specializing in sustainable banking and investing. – Offering fee flexibility and transparency for customers. – Collaborating with mission-aligned organizations for impact. – Commitment to carbon offsetting and environmental goals. – Providing diverse sustainable investment options. – Leading in the responsible finance sector.
Aspiration is an American personal finance company founded in 2013 by Andrei Cherny and Joe Sanberg.
The platform is aimed at socially responsible consumers who are tired of doing business with traditional financial institutions.
Before starting Aspiration, Cherny was a speechwriter and tackled climate and economic opportunity in both the private and public sectors.
He also served alongside Republican senator Elizabeth Warren as a financial fraud prosecutor, where he observed a dire need for a financial institution that made customers a priority and had a positive impact on society and the environment.
The Aspiration platform launched online in 2015 as a brokerage offering a cashmanagement account (CMA).
The company incorporates the somewhat revolutionary pay-what-you-want model allowing ordinary American consumers who pay an amount they think is fair.
In exchange, the platform provides access to environmentally and people-friendly investments that avoid companies associated with pornography, oil, nuclear power, gambling, alcohol, arms, military, and tobacco. The company also offers zero-fee individual retirement accounts (IRAs).
As noted in the previous section, the company lets its customers choose how much they would like to pay – even if that amount happens to be zero.
Aspiration calls this arrangement “Pay What is Fair” because it believes that by treating its customers fairly, it will receive fairness and loyalty in return.
The fee can be changed at any time, with ten cents in every dollar being donated to charities involved in spreading economic opportunity to American citizens.
The remaining 90% is paid to portfolio managers, fund managers, and everything else from “computer servers to coffee.”
However, the Aspiration platform is not completely devoid of fees. We’ve explained some of the charges a customer may come across below.
Interchange and expedition fees
Aspiration’s unique fee structure has made it more dependent on debit card interchange fees.
These are charged to the merchant by the card issuer whenever a purchase is made from the user’s branded debit card.
The card issuer then shares a portion of this revenue with Aspiration, which is typically around 1.2% of the total transaction value.
Aspiration also charges a $35 expedition fee for customers who want to receive their debit card earlier.
Aspiration Zero
Aspiration Zero is a credit card that awards users for going carbon-neutral. Every time the credit card is swiped, the company plants trees to reduce the customer’s carbon footprint and gives them 1% cashback on the purchase.
Aspiration Zero credit cards come with a $60 annual fee and a variable APR between 11.65% and 21.45%.
Aspiration Plus
Aspiration Plus is a premium CMA offering customers unlimited free withdrawals, up to 10% cashback for eligible purchases, and the ability to plant a tree for every roundup.
Aspiration charges $7.99/month for Aspiration Plus, reducing to $5.99/month if paid annually.
Wire transfer fees
Aspiration also charges wire transfer fees for cashmanagement account holders:
Domestic transfers – $0.82.
Incoming international transfers – $2.50.
Outgoing international transfers – $15.00.
Key Highlights
Founding and Purpose: Aspiration, an American personal finance company, was founded in 2013 by Andrei Cherny and Joe Sanberg. The company emerged with the goal of creating a financial institution that not only cared about profit but also about society and the environment.
Business Model and Approach: Aspiration employs the unique “Pay What is Fair”model, allowing customers to decide the fee they are comfortable paying for a variety of account and investment products. The company focuses on catering to socially responsible consumers who want to break away from traditional financial institutions.
Revenue Generation Strategies: Aspiration generates revenue through various means:
Interchange Fees: The company depends on debit card interchange fees, sharing a portion of the revenue charged to merchants when users make purchases with their branded debit cards.
Cash Management Account Fees: Aspiration levies fees such as wire transfer fees, expedition fees, and monthly/annual fees for its Aspiration Plus premium CMA. These fees contribute to its revenue.
Carbon-Neutral Credit Card: The Aspiration Zero credit card scheme involves planting trees to offset carbon footprints and offering 1% cashback on purchases. The company earns revenue through a $60 annual fee and variable APR.
Formation and Vision: Aspiration was established to meet the needs of ethically conscious consumers seeking alternatives to traditional finance. Founder Andrei Cherny, a former financial fraud prosecutor, recognized the lack of financial institutions prioritizing societal and environmental welfare.
Service Launch and Principles: In 2015, Aspiration launched as a brokerage platform with a cashmanagement account (CMA). The company’s innovative pay-what-you-want approach offers users access to investments aligned with ethical values. The platform excludes businesses related to sectors like pornography, oil, gambling, etc.
Public Listing Plans and Growth: In August 2021, Aspiration unveiled plans to go public via a merger with InterPrivate. The SPAC merger valued Aspiration at $2.3 billion. The company demonstrated exceptional growth with a 645% YoY revenue increase in the third quarter.
Fee Structure and Fairness: Aspiration’s “Pay What is Fair” model lets customers determine their fee, including zero payment. Ten cents of every dollar goes to charities promoting economic opportunity, while the remainder sustains the platform’s operations.
Specific Fee Categories:
Interchange and Expedition Fees: Interchange fees from debit card transactions contribute to revenue. An expedition fee of $35 applies for expedited debit card delivery.
Aspiration Zero Credit Card: The Aspiration Zero credit card carries an annual fee of $60, offering carbon-offsetting and cashback benefits.
Aspiration Plus: This premium CMA subscription, with features like free withdrawals and cashback, charges $7.99/month (or $5.99/month when billed annually).
Wire Transfer Fees: Aspiration applies fees for various types of wire transfers, including domestic and international transactions.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
