SPAC-Bound Green Banking Startup Aspiration Bets On Conscientious Consumer Demand

Long before its SPAC announcement on Wednesday (Aug. 18), green banking startup Aspiration was making waves in the FinTech space, with its ESG-friendly business plan aimed at helping its five million customers become financially successful without impacting the environment. When customers use its services to pay bills or make purchases, they’re also helping to make the world a greener place, as the company plants trees for every transaction instead of offering more traditional rewards such as cash back, discounts or travel perks.

“We’re planting more trees than there are in Central Park every day,” said Aspiration Co-founder and Chief Executive Andrei Cherny in an interview with PYMNTS. “We think of our payments mechanisms as sustainability delivery mechanisms.”

Now, Aspiration is taking that model to the public markets, having just announced a merger with Interprivate III Financial Partners Inc., a special-purpose acquisition company (SPAC), which will see it listed on the New York Stock Exchange with a projected initial valuation of $2.3 billion, perhaps as soon as the end of this year.

Read more: FinTech Startup Aspiration Considers $2B+ SPAC

“We want to be able to tell the markets a story about what we believe is the first environmental, social and corporate governance-focused financial institution of its kind,” Cherny said. He explained how Aspiration’s story is one that revolves around what he terms the “conscientious consumer.”

“They are the consumers who are thinking about sustainability and ethics as they make their daily purchases in a grocery store, a coffee shop, buying clothes or whatever else it is,” he said.

Cherny’s idea is to appeal to the desires of those consumers to make the world a better place. One way the company does that is through its Aspiration debit card, which allows people to build sustainability into their daily spending and saving. “We’re making their debit cards and savings sustainable by ensuring that those deposits will never be lent to fossil fuels or oil and gas exploration pipelines,” he said. “The Aspiration Impact Measurement allows people to see their own personal sustainability score as they’re spending on their Aspiration card.”

Meanwhile, Aspiration’s Planter Change initiative allows consumers to fight climate change more directly. Whenever they make a small purchase, such as a newspaper or a cup of coffee, the amount they pay is rounded up to the nearest dollar, with the spare change used to fund the planting of a tree.

More like this: The Creative Destruction Of Banking: Aspiration Or Ultimatum?

“We launched that last April, and so far we have planted 35 million trees in Aspiration communities,” Cherny said. “These tools are helping people integrate sustainability into their lives.”

If there’s one thing that Aspiration’s customers share, it’s that they are all very conscientious consumers. And that puts Aspiration in a unique position to think about offering its user base even more ways to bring environmental sustainability into their lives.

“We have seen 59 percent cross-adoption between our products, meaning those spend and save customers sign up for at least one other revenue-generating product,” Cherny said. “That’s a big number, and we’re excited to grow it from there.”

Aspiration’s next move is to try and tempt its users with the idea of sustainable credit cards. The Aspiration Redwood card will be the world’s first and only credit card built around fighting the climate crisis. “Just by using it once a day, the average American will be able to offset their carbon footprint,” Cherny noted.

You might also like: Funding Pours In For Food Sustainability Efforts As Consumers Seek Eco-Conscious Options

There are material benefits for Aspiration’s users, too. Cherny pointed out that one of the company’s main advantages is its network of 55,000 ATMs across the U.S. that can be used free of charge – bigger than that of Bank of America, Wells Fargo and Chase combined. Customers can also receive their paychecks a couple of days earlier than with other banks, he added.

That said, Cherny conceded that Aspiration’s vision of sustainability won’t appeal to everyone, and that when it comes to healthy cash-back rewards and the like, people may be able to get a better deal elsewhere. “We’re not the place where the financial optimizer will go,” he said. “We’re the place for conscientious consumers who see different kinds of rewards as more important.”