A number of startups are taking on big banks with new apps that offer modern, mobile banking experiences, innovative features and reduced or even zero fees. Entering this now-crowded market is Level, a challenger bank and banking app with advantages like 1% cash back on debit card purchases, 2.1% APY on deposits, early access to paychecks and no fees.
The banking service is the latest from the same team behind the “debit-style” credit card called Zero, aimed at millennials who want the benefits of credit without the potential for overspending. As Zero, the company last year closed on $20 million in Series A funding from New Enterprise Associates (NEA), SignalFire, Eniac Ventures and Nyca, bringing its total raise to date $35 million. It now has tens of thousands of users.
Level takes on rival challenger banks by offering a higher 2.10% APY on its FDIC-insured deposits, without requiring a minimum balance. The company notes that’s 35x the national average, based on U.S. bank balances with a less than $100,000 balance.
It also snags a feature popular with credit card users, by offering 1.0% unlimited cash bank on debit card spending. This cashback applies to both signature-based and online purchases, and is paid out on accounts that have at least a $1,000 monthly direct deposit.
Level could benefit from consumers believing that running a card as credit takes an extra step. In some cases, customers may skip this when they’re in a hurry and run the card as a debit instead — allowing Level to keep the fees for itself.
Also like most other banking startups, Level ditches the numerous fees big banks charge. There are no monthly, overdraft, foreign transaction or add-on ATM fees, says Level, and no minimum balance is required to have an account. It will even reimburse ATM fees worldwide up to three times per month, at up to $4 per reimbursement to take the sting out of the increasingly costly fees to access your cash.
Level additionally includes features that have now become part of the baseline experience for challenger banking apps, like being able to see transactions on a map, lock a missing debit card from the app and receive push notifications for purchases, refunds and transfers.
However, like most of the digital banks operating today in the U.S., Level itself is not a bank. Its customers’ funds are actually held in FDIC-insured accounts (up to $250,000) through Evolve Bank & Trust. Level, meanwhile, provides the technology, the customer-facing experience and banking services.
“Level was built to challenge the status quo in banking and put an end to the era of big banks holding people’s money while giving them no interest, a clunky app experience, and frustrating customer service,” said Level founder and CEO Bryce Galen, in a statement.
“Level addresses this by leveraging the technical foundation, team experience, and bank partner deals that undergird Zero to deliver better customer value across all dimensions — app, support, and economics — in a highly accessible product,” Galen said.