Green Banking With Atmos: Founder Q&A
Q&A with Atmos Financial Co-founders, Ravi Mikkelsen and Pete Hellwig
Atmos Financial is a climate fintech that empowers individuals to take direct action on stopping climate change through their bank deposits.
September 30, 2021
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What inspired you to start Atmos?
The world needs better banking options. The world around us has been financed by banks for the past 200 years. Banks don’t weigh climate impact when they make lending/credit decisions. They consider things like reputational damage, the likelihood of repayment, return, but no social or climate-oriented issues.
Is this beginning to change? Perhaps for a few banks, driven by outside pressure, but it’s far too slow. Atmos gives everyone the opportunity to use their money to help build the world they want to live in, a world in which our children and their children can grow and prosper.
If the status quo continues, that basic premise/assumption for so many – that we all absolutely take for granted – is no longer valid. The climate challenge is not something we can ignore and hope it goes away. It isn’t something somebody else is going to be able to solve for us.
We need local and federal governments making change, but we need individual action to prompt that as well – that will drive legislative decisions. Top-down is just as important as bottom-up. And it will take all of us, every single one of us, to make some effort.
Aligning your money is the single easiest thing you can do because it’s passive, and it’s among the most impactful things you can do. The impact/change can happen in the background while our customers go on living their lives. We hope they take further action, and we will help them do that with time.
Pete: On a more personal level, about seven or eight years ago, I decided that this problem was so big and scary that I needed to dedicate all of my energy to it. Doing anything else seemed irresponsible, reckless, and selfish. My background in banking gives me a unique perspective on how banks work, run and what they need to take bigger steps towards being a part of the solution rather than a big part of the problem… hence Atmos.
It’s not an opportunity I saw. It’s a frustration with how the system operates that I recognized and feel inclined to help fix. When I met Ravi, and we started talking about our vision and how we could move it forward, we realized that we complemented each other well with different skill sets but a similar goal.
Ravi: I’ve been working to stop climate change since my freshman orientation in August of 2000, when I had a moment of epiphany where I knew that my life’s mission was to help the world transition off of fossil fuels. Since then, I’ve always looked for the most impactful way that I could make a difference, primarily in energy generation or management.
In 2015, I switched to capital deployment, developing a novel loan model for residential solar, which has been used to finance over $4 billion worth of loans.
In 2018, after I read the IPCC special report Global Warming of 1.5 ºC and saw that we needed to 10X the amount of money being spent every year on the clean energy transition to over $3 trillion, I knew that the only entities on Earth with that much money were a couple of national governments and the global banking system.
Since I couldn’t find a bank already focused on solely financing climate-positive assets or anyone working to build such an entity, I knew that I had to do it. Shortly into my Atmos journey, I met Pete, and his skills, experience, and approach were different enough from mine to be additive. But more importantly, we found that we were aiming for the same goal and so joined forces to build and launch Atmos together.
In your view, to what extent are the big banks contributing to climate change?
Banks have influence over society in many subtle ways, more than many of us realize. Through access to the credit markets, banks and other financial intermediaries can bolster or bankrupt individual companies and entire industries.
Through low-cost mega loans and other favorable financial products, most of the world’s largest banks directly prop up companies that many of us would never consider supporting on a personal level. And yet we are doing just that because they are doing it with our money, and we’re earning next to nothing on our deposits.
More directly, and as we alluded to above, climate factors are a new consideration for banks. Many banks have been around for decades but still don’t know how to weigh climate risk in their underwriting protocols.
When we look at what banks, in particular the big banks, have funded over the years, there is a very large carbon footprint there. Fossil fuel extraction refining and use, generic real estate, fast fashion, factory farming, chemicals, and plastics.
Pete: I don’t think many banks have moved much beyond the marketing side of the equation yet. This is, of course, a generalization, but the teams that tend to think about climate positioning are usually on the marketing and PR side, while the credit and lending professionals tend to sit on a different floor. When you dive into bank disclosure statements, this is confirmed.
Banks still hold large percentages of their portfolio in extractive businesses, while anything resembling climate lending is a fraction of where it should and could be. In most cases, it’s not even mentioned or disclosed.
Do you think that most customers are aware that their deposits are funding fossil fuels? Is the level of awareness changing?
Most customers are not aware of the carbon footprint of their bank deposits, though this is starting to change.
The connection between climate and equity investments has been growing steadily since the early 2000s and has led to the divestment of billions of dollars in holdings and thousands of public proclamations.
Pete: I find this really interesting because public equity markets, by their very nature, have a secondary impact. The perceived value of a company/stock is important, but it all still just exists on paper. Through making loans, banks actually create the world around us and thus have a far more important and primary role in financing green, socially responsible initiatives. Until recently, they have largely been left out of the conversation.
I think this is a product of people just not knowing how banking works in general. Banking is not the commodity product many people like to think. One is not just as good as another. Every credit decision a bank makes has a lasting impact for decades on the economy and on climate.
As the need for swift climate action gains more and more oxygen, people are looking for solutions and discovering that one of the highest-leverage actions they can take is to shift who they bank with and what their money funds when they’re not using it.
Your promise to customers is that their deposits will never fund fossil fuels. What projects are deposits currently funding, and how do you pick them?
Ours is a complicated model because banking is a complicated and heavily regulated industry and climate change is an extremely complicated problem.
We don’t directly fund projects. Atmos deposits need to go to FDIC-insured banks in order for us to offer FDIC insurance to our customers. What makes our model different and pushes us beyond the status quo is that we have a very strong opinion of what those deposits are doing once they hit the balance sheet of our partner banks.
We work with banks to fund more climate-positive projects broadly. Our collaboration with banks pushes more money into these sectors. In the immediate future, we’ll be releasing some features to connect our deposit customers to the projects that have been funded and to visualize the impact that they’ve had. We’ve been laying the foundation since we opened our doors, and we’re very excited for this feature release as transparency is a core pillar of who we are.
Our goal is to move beyond the negative filter of “no fossil fuels” and towards a positive filter of only supporting climate-positive loans. The negative filter is where the industry has gotten stuck, but the positive filter is where our power and impact come from. Atmos customers will increasingly see more and more of this as we can lean into it.
Switching banks is hard. Do people who switch from one of the big banks to a green neobank like Atmos are sacrificing anything?
Banking with Atmos is about getting more, not having less. We try to reduce the switching costs as much as possible by first making it dead simple to apply with a less than two-minute average time.
We offer higher savings rates, cash back rewards and rebates on mission-aligned purchasing and have foregone the big-bank fees of monthly maintenance and required minimum balances. The economic incentive is there. The impact is there. Through our UX/UI and rapid onboarding in less than two minutes per application, the technology is there.
We have lots of ways our customers can get in touch with us, and it is us. Our team is small, so you may get one of the founders when you ask for help. So customer service is there.
Our product suite is currently more narrow than bigger banks, so Atmos might be an inconvenience for some consumers. For example, we won’t have an in-person banking branch network, so if visiting a physical branch is important, then we’re not going to be a compelling option for you.
However, more often than not, we’re finding that most people use their banks in a more limited capacity and prefer to bank simply from their pocket or from their homes. They don’t need many of the ancillary products that the bigger banks have. For this community of people, they will come out ahead by using Atmos.
We also welcome the idea of splitting your deposit relationship. If people just can’t do without a specific account at a traditional bank, opening an Atmos account and connecting it to that external account is a great way to have some impact and earn a better rate with minimal change to your financial self. Connecting accounts takes seconds, and it’s free to transfer money back/forth.
While you can have a greater climate impact by moving your entire banking relationship, we try to meet everyone where they are and make sure they are empowered to take climate action.
Although Atmos just launched earlier this year, what have you been able to attract in terms of deposits and customers?
We don’t share specifics about those metrics, but what we can tell you is that our pre-launch customer avatars were pleasantly quite off. Neobank customers tend to be younger, 18 to 25, which is also the most vocal demographic about climate change. We also saw this group as a primary customer segment. It is, of course, still a primary audience for us.
In reality, we’re seeing a relatively flat distribution of customers by age and accumulated wealth. We’re very proud that a significant portion of our customers is from older generations who are able to shake off the shackles of traditional banking and adopt newer technology. Climate change has no borders and no age requirements. We all need to get involved. Our goal is to offer the best products that work for anyone and everyone, to allow everyone to be an impact investor through their FDIC-insured cash accounts.
Why did you decide to start with savings accounts and only then add checking accounts?
It was a conscious choice. It’s not easy to start a neobank, and we’re still a small team, so a lower touch product was a natural choice. We also wanted to get a better understanding of what our customers really wanted. We’ve informed our product roadmap based on the feedback we continue to get.
Checking was a natural next step, and we’ll continue to enhance certain features within this retail segment for the immediate future to provide a full retail banking experience for many of our customers.
Do you have any plans to launch a green credit card?
There’s strong demand from our customers for one, so we’re actively exploring it. Other “green” credit cards have focused on offsets, which are a good start, but they won’t get us to the climate-positive future that we need. We’re working on a program that matches our mission and climate-positive business model.
Several green neobanks have launched in recent years, including Aspiration, Ando Money, Climate First Bank, and BankPurely. What makes Atmos unique?
Climate First Bank and BankPurely are regulated banks, and of the two, only Climate First Bank is actually green. BankPurely plants a tree with every new account, but I’m not sure we’d call this an accomplishment.
We’re good friends with the team at Climate First Bank and are working together to help deploy more climate-positive assets. In general, we have a very different value proposition from a traditional regulated bank. No matter how they’re positioned, regulated banks will have diversified portfolios.
On average, real estate comprises about 50% of a bank’s portfolio. Because Atmos partners with multiple banks and sits outside the traditional regulated banking framework, 100% of our portfolio can be used for climate action. Very soon we’ll be presenting our customers with a detailed view of the impact of their money. This is not something that conventional banks can do or compete with on their own.
We also have created a donation platform that is pretty unique to the banking sector. We encourage our customers to donate to any one or many of the participating environmental nonprofits on our platform.
Specifically, we enable customers to donate a portion of their savings rate, a fixed monthly amount, make one-time gifts, or even round-up purchases with their Atmos debit card.
We incentivize this behavior of giving to frontline organizations by increasing the rate our customers get on their savings, and we keep track of each customer’s donations for tax purposes. We want to create a platform that encourages an ecosystem of giving across a broader population.
We all need to help these environmental organizations build recurring revenue so they can continue to push the envelope on bringing climate issues to light. Voices of these organizations and communities that are disproportionately affected by climate change need to be amplified.
You can learn more about Atmos at https://www.joinatmos.com/.
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