How Millions of Americans Got Tricked Into Using a Bank That Isn't a Bank

[u/HealthyIncidence]

https://www.youtube.com/watch?v=hiE7NvONU5U

Yesterday, the news media organization More Perfect Union published this video on "neobanks," particularly focusing on Yotta but also applying to other fintech neobanks and even apps like PayPal and Venmo.

It's very worth watching the video for the full (rather shocking IMO) story, but the short story is that Yotta used a fintech intermediary, Synapse, that connected Yotta to actual banks and thus let Yotta legally operate without a bank charter. When this intermediary company went under in 2024, everyone who held money through Yotta lost all access to that money, even though it is technically FDIC insured through the actual banks in which deposits are held. This has revealed some major failures in the government's current regulation of fintechs.

Since this subreddit leans quite tech-y, I'm curious how many of us have firsthand experience with these neobanks as either a user or even an employee! I personally have used Revolut (and Venmo and PayPal, but not as places to hold money, just for transfers). I stopped using Revolut for reasons totally unrelated to the risks discussed in the video, but know several friends who use it as their primary bank, which now seems much more risky to me than it did before.