Unbanked No More: An Interview with the Founder of ‘Fair’ A New Financial Service Platform
This spring, the news is stuck on immigration reform, minimum wage hikes, and stimulating the economy by depositing cash in the bank accounts of millions of Americans. The goal is to help the working class, immigrants, and people who often find themselves at the mercy of not only poverty. They are often the most preyed upon populations in the banking sector as well. In fact, millions of people will be receiving their stimulus funds in the form of a check. This is where the problems begin, where the banking industry gets their claws in on the biggest legal scheme in America. It is also where Khalid Parekh’s financial platform Fair can help.
An Immigrant’s Story Starts It All
When Parekh immigrated to the U.S. from India, he did everything he was supposed to. “I got a job the third day I was here, but that was not enough money for me to survive and send back.”
Like so many immigrants, Parekh had a family back in India to support as well. “I did not have enough money to pay rent, eat and also send money back home to do family maintenance for my parents and my brothers [in India]. So, I had to work in a gas station. I have worked in the gas station. I have cleaned toilets, I have done it all, and I will do it again today, because I have no shame.” Parekh was actually eager to dive in and take advantage of this country likes to call “the American dream.”
Helping the Unbanked
However, just as quickly as he found work, Parekh found out why its so hard for Americans to climb out of poverty. He found that banks take full advantage of the unbanked through predatory fees — for check cashing charges and wiring fees among other items. Parekh also discovered that he could not get a bank account without a U.S. issued ID.
“So, one of the goals that I had, I promised myself that once I become successful enough, I [was] going to create a finance platform that allows underbanked immigrants, students, and everybody like us with low income…to do banking, lending, investments, and retirement, all from a single platform.” That goal led to Fair.
Fair is a financial platform that, as Parekh envisioned, offers banking, lending, investments, and retirement in one place. The platform serves the unbanked by using systems that can ID a person without a U.S. ID and/or social security number. Instead, Fair uses your passport. Parekh says, “it’s made for low income, for immigrants, for people, minorities who cannot afford to pay exuberant prices.” He goes on to say what we all know that the banks are taking the fees from the very people who can least afford them, essentially preying on the poor, largely people of color and immigrant populations.
Financial Services for Everyone Without the Predatory Behavior
Gone are the excess fees that eat away at the paycheck every time its cashed. These are fees that prevent the unbanked population from rising out of poverty, much less saving, investing and putting away for retirement. Parekh gives a great example from his own experience.
“Joe owns a construction company. There are 40 workers working for him. He abuses them and pays each of them only $10 an hour. So, at the end of every Saturday, he pays them 400 bucks. They take this 400 bucks, and because they don’t have a bank account, they go to a check cashing place. They pay 1% to cash that check, which is a $4 fee. Then they go next door to a Western Union, stand in line for 15–20 minutes. They sent $200 to Mexico. But they pay $10 to send that $200 to Mexico, and they do this every Saturday. So, on a $400 check, they have paid $14 just to cash the check and to send money back home.”
There are also fees for paying cash to cover utility bills at a payment center (as none of the utilities are open on Saturdays when Joe pays his workers). Parekh says that Fair gets rid of those fees by giving the workers access to receive and manage their money online. There, it only takes seconds to move the money from one country to another. And, it’s free. That’s because the accountholder is just moving the money from one bank account to another.
The Mission is in the Name and Changing the Game
“What is Fair? Fair is a pro consumer financial platform that thinks about the consumer first. The thing is, we want it to be fair. That’s why it’s a pro consumer brand. We want it to be fair. The word “fair” is in our name, you know. Our mission is in our name.”
Parekh is not only changing the way the unbanked controls their finances, he is also changing the lending game with equity-based loans. In this arrangement, the bank and the borrower both enter into a joint agreement to buy the home, instead of turning to the mortgage system that the unbanked usually cannot access. He explains how it works.
“Fair and Jo [the customer] are going to come into a joint agreement, and this joint agreement is going to buy this home. Every month Jo’s going to make a payment to this joint agreement, [which] will be one payment divided into two things. One is for the rent that she’s paying — to live in that home. The second thing is, she’s paying every month to buy the house shares from Fair. So, over the course of 30 years or 15 years, she can own the home herself.”
Parekh says that if for some reason, the borrower must default on the loan, the house is lost. However, the equity that the borrower paid is returned to them. In this way, “the equity-based loan is pro consumer. It is made for the consumers,” says Parekh.
Revolutionizing the Banking Industry
Fair offers so many more products and services. Some of them work to also educate the consumer while they are members are the bank. Fair apps are available in a range of languages. There are also services to help parents teach their kids financial responsibility.
Fair is not just another bank. They even offer a membership service that eliminates those overdraft fees that also end up eating into the paycheck. This makes Fair a perfect partner for people who are struggling to gain control of their finances for whatever reason. The entire platform will revolutionize the banking industry once it catches on, making a rise from poverty more than just a dream while protecting a whole population that was once prey to predatory banking practices. Parekh’s goal has been fulfilled. Now, he’s helping you fulfill your own.
Check out the Fair website for more information.