DeFi

tiiik isn’t a bank (and why we’ll never be one)

July 29, 2021
Dean Batcheldor

You may have noticed recurring headlines about misbehaving banks, and the resulting outcome. Often a small fine compared to the huge amount of profit generated each year.

This happens because banks are built on foundations ill-suited to the modern world. They are incentivised to increase executive bonuses by clipping the returns generated from client funds.

On top of this, they also need to factor in expensive operational and labor costs required to keep the lights on. In a low interest rate environment it is easy to see how they are not offering much benefit anymore.

Here’s how banks profit

Interest rates

When you deposit your money into a bank account, it looks like it just sits there earning interest.

What really happens?

In the back-end your money is loaned out to people for buying houses, businesses, cars and whatever else people borrow for. They might pay you 1% p.a. while they loan it out at 4% p.a. profiting from the difference.

Fees

In order to increase bank profits, a range of fees are applicable depending on the account:

– monthly account fee
– paper statement fee
– overdraw fee
– ATM access fee

The list goes on..

While these might seem insignificant for an individual — a couple dollars here, a couple dollars there, they add substantial amounts to bank profits at the expense of the client.

How are we different?

We put funds to work using digital assets and take part of the variable yield available.

Topping up is free while withdrawals cost 0.5% of the amount withdrawn.

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