Betting consumers are tired of bad bank behavior, Aspiration raises $47 million for its alternative

A who’s who of celebrities, investors and celebrity investors have come together to invest $47 million into Aspiration, the company launched by a former speechwriter for President Bill Clinton to challenge the traditional banking industry.

For Andrei Cherny, Aspiration’s founder and chief executive, the company’s business is an inversion of the business model of the typical modern bank.

“The problem with how banks make money off of most people is that often times banks make money when the consumer fails,” says Cherny.

Everything from overdraft fees to late payment fines to ATM fees are the cash cows for retail banks, says Cherny. “Those moments when the customer is feeling pain is when the banks make their money,” he says. But they also make money off of selling products that consumers don’t actually need (and in the case of Wells Fargo, those banks might not even sell you a product).

It’s in this environment that Cherny saw the opportunity for a new kind of bank. One that would cater to a customer that is concerned with where their money is being invested by their financial institution and how their financial institution treats its customers.

Marshaling Hollywood celebrities and athletes from the Los Angeles community, along with some of the biggest names in finance, Cherny was able to pull together what he says is the largest Series B in financial technology investment history for an online banking company in the U.S.

Investors in the round included Allen and Company, Omidyar Network, Alpha Edison, AGO Partners, Reyl & Cie and Capricorn Investments, as well as individual investors like the actor Orlando Bloom, Los Angeles Clippers coach “Doc” Rivers, former Citigroup chief operations and technology officer Deborah Hopkins, Bad Robot president Brian Weinstein and Rustic Canyon Partners founding partner Tom Unterman.

The core product for Aspiration is its Summit personal banking account. The checking account provides 1 percent interest and is fossil fuel free. The checking account also lets its banking customers track their sustainability score by monitoring where they spend money and checking it against a sustainability monitoring and scoring system that Aspiration created (the scoring mechanism tracks companies’ corporate social responsibility on a number of different metrics).

“If we can start driving people to spend in a way that puts ethics at the core of their daily spending decisions you can totally transform the incentives that companies have when it comes to how they treat the environment and how they treat their employees,” Cherny said of the monitoring program.

So far, Aspiration has accounts totaling $350 million in savings, with about $2 billion per-year now transacted across the Aspiration platform, Cherny told me.

Unlike other banks, Aspiration makes money by charging a fee set by the customer for the services they use. “What we see is that the vast majority of customers are choosing to pay across all products and most are choosing to pay a very fair amount,” Cherny said. The online bank also offers investment and retirement services.

Cherny said the new capital would be used to help develop a new suite of credit and ending products to further build out its array of banking services.

For Cherny, all of this can be placed in the context of the current political environment. “People understand that in the absence of positive leadership from Washington that they have not only more personal responsibility but they have a huge amount of individual power. When, as individuals we’re spending $36 billion a day, the individual decisions that we make can add up to an enormously powerful lever even if government doesn’t step in in a positive way.”

When customers pay fees for banks and financial services firms, a large portion of that money goes into lobbying for things that are beneficial to the financial services community and few other people… or the country at large. Financial services firms actually spend three times as much money as the next biggest spender on lobbying for the federal government.

Beyond the prompts it gives to its customers about their spending habits, Aspiration is one of the most charitable financial firms in the country, giving out 10 percent of its earnings to charitable micro-loans and mentorship programs for low-income Americans, the company said.

“Aspiration has seen astonishing growth in just a couple of years and we’re convinced this is just the beginning of an even bigger trend,” said Ibrahim AlHusseini, managing director of Social Impact Finance, which led the company’s latest round of funding. “Consumers are ‘voting with their money’ now more than ever, which means they are increasingly investing in companies that share their values. Aspiration is the world’s leader in bringing this spirit of investing with a conscious to the financial services industry.”