Catherine Berman, a former managing director at Schwab and Yuliya Tarasava, have put together their decades of experience creating financial products to launch an innovative new impact savings product called CNote.
CNote’s target, its founders say, will be women and Millenials, who disproportionately have higher liquidity in assets like portfolios holding stocks than in say, real estate equity. Or Hispanics, another example, who are fearful of conventional banks and lenders, according to non-partisan research authored by Susana Restrepo.
What CNote IsWhat CNote Is
CNote is an alternative savings product that combines the longer horizon of an investment security like a bond and the liquidity of a conventional savings account.
CNote promises to pay a 2.5% return to account holders annually, compared to the measly 0.06% that most banks, on average, offer.
Nerdwallet actually recently compiled a list of which banks offered savings account at which APY% – a sampling below:
- Chase – 0.01% APY
- Bank of Americaa – 0.01% APY
- Wells Fargo – 0.01% APY
- Alliant – 1.12% APY
- Capital One – 1.20% APY
- Discover – 1.20% APY
- Barclays – 1.30% APY
- Goldman GS – 1.30% APY
Impact – Funnel to CDFI
CNnote then invests 100% of your money in highly vetted Community Development Financial Institutions (or CDFIs) – financial entities across the U.S. that have a primary mission of promoting community development among their target markets, and that are certified by the US Treasury’s CDFI Fund.
There are over 1,000 certified CDFIs in all 50 U.S. states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. CDFIs lend to minorities, women, low income or otherwise under-served entrepreneurs that may, say, suffer lending bias by big banks.
Impact Investly advocated for the permanence of the New Market Tax Credit last year largely because of the demonstrated impact it has made to CDFIs in the U.S.
The Product’s Catch
As its FAQ clearly states – CNote is not an ATM, and funds will not be as immediately liquid as those that sit in a conventional banking savings account.
CNote does allow account holders to withdraw funds once a quarter (or once every 3 months) and with a 30-day notice. Entire balances may be withdrawn at the end of every quarter, but in amounts not exceeding, on average, US$20,000. Larger withdrawals are possible, depending on account balance levels, but are subject to a 10% withdrawal cap per quarter.
The withdrawal cap rules allow CNote to maximize interest returns to account holders and the impact of funds to CDFIs as they are put to work in communities.
SXSW Winner
CNote won last March’s SXSW accelerator pitch contest in Austin, Texas. The annual event, its 9th this year, won CNote $4,000, various SXSW sponsor gifts and perhaps, most importantly, exposure to SXSW attendees and potential investors who are always looking for the latest opportunities in cutting-edge technology and innovation.
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