In this episode, hosts Gil Jenkins and Chad Reed speak with Ravi Mikkelsen, co-founder of ATMOS Financial -- an exciting new climate fintech startup that offers ethical banking and savings accounts for a fee-free and climate positive future. Ravi and the ATMOS team are on a mission to develop the best technology solutions and banking experience available so that you never again have to give up convenience or yield for doing the right thing.
In this episode, hosts Gil Jenkins and Chad Reed speak with Ravi Mikkelsen, co-founder of ATMOS Financial -- an exciting new climate fintech startup that offers ethical banking and savings accounts for a fee-free and climate positive future.
Ravi and the ATMOS team are on a mission to develop the best technology solutions and banking experience available so that you never again have to give up convenience or yield for doing the right thing.
Links:
How ATMOS Calculates Carbon Impact
Report: Banking on Climate Chaos 2021, Rainforest Action Network
Episode recorded: January 12, 2022
Email your feedback to Chad, Gil and Hilary at climatepositive@hannonarmstrong.comor tweet them to @ClimatePosiPod.
Ravi Mikkelsen: We need to spend $3, $4 trillion per year on this. I looked at realistically, who has that much money globally to do this. Outside of US, China, and the EU really it's the global banking sector that arguably has that much money. I knew that there needed to be a dedicated climate, positive banking entity.
Chad Reed: Welcome to Climate Positive, a podcast produced by Hannon Armstrong, a leading investor in climate solutions. I'm Chad Reed.
Hilary Langer: I’m Hilary Langer.
Gil Jenkins: I’m Gil Jenkins.
Chad: In this series, we host candid conversations with the leaders, innovators, and changemakers driving our climate positive future.
Gil: On this week’s pod, we sat down with Ravi Mikkelsen, co-founder of ATMOS Financial -- an exciting new climate fintech startup that offers ethical banking and savings accounts for a Fee-Free and climate positive future.
Ravi and the ATMOS team are on a mission to develop the best technology solutions and banking experience available so that you never again have to give up convenience or yield for doing the right thing.
Gil: Ravi, welcome to Climate Positive. We're excited to have you here. Thanks for coming.
Ravi: Thanks for having me, Gil, Chad. It's great pleasure to be here. It's very appropriate that we're doing the recording today as just one year ago on this day, we went live as a banking product.
Gil: What surprised you most as you're reflecting on the one-year anniversary in the market?
Ravi: A few things. One is just the inertia and stickiness of bank accounts. It's really hard to get people to switch where they bank. It's like with climate change. It's like, "Hey, here's all this data, let's get people to act." It's like, "Well, here's this data on the impact that you can have with your bank account." I thought we would get a lot more people within the climate clean energy communities switching over right away. It's like, "Hey, here's this thing." It's such a low priority event for people and because of the way that the legacy banking system has been set up, it's been such a hassle in the past to open a new account, change accounts, do anything within the banking system.
That fear and physical remembrance, it's like people have these physical reaction of thinking about dealing with their banks that when we say, hey, it only takes two minutes to submit your application and then a few minutes after you're approved to actually move money over. Even though we can present these facts, people have a hard time overcoming the discomfort and disdain, disgust, all of these negative emotions that they have with their current banking relationship carry over into their desire to switch.
That was a big surprise for me, having been in the climate clean energy space for two decades now. It's like this is so important for us to move our money that, of course, people are going to want to be like me and just move right away, but no, have not. I'd say that's the biggest one.
Chad: Gil and I both just opened accounts with you all and had heard about you on some other podcasts. While we're on your business model, walk us through it. How do you differ from a traditional bank? What market gaps are you really trying to address?
Ravi: One, the legacy banking model, really it's a branch model. It's a physical location. You go in, and many people, they're with the same bank or rather the same branch that they opened their first account with when they were a child? Oh, my parents banked here. I opened this when I moved from college, whatever and they've just stayed. It might have gone from a local community bank to one of the mega banks but they're with essentially the same bank and banking institution and team. We are wholly digital. Anywhere in the US, someone can open an account. They can open on a web browser, they can open on their phone via our mobile app.
It's very fast and convenient to submit the application. The other major difference that people will notice is the impact. Our four largest banks in the US are the four largest funders of extreme fossil fuel extraction in the world. Chase, Wells Fargo, B of A, and Citi. Then you get into the six biggest, 10 biggest banks, they're all up there. People should go to bankingonclimatechaos.org to just see the list of the biggest fossil fuel funding banks that are out there. Banks for safety, their regulators make them have a diversified holding. Chase and Wells Fargo, they're not 100% fossil fuel funding.
They also do small business lending, private prisons, roads, home mortgages, consumer lending, very diversified portfolio, whereas Atmos, we are not a regulated bank. We are a financial technology software startup that partners with regulated banks. We do offer FDIC-insured accounts just like a normal bank does but we are not controlled by those regulations for a diversified portfolio. If you put your deposits with us, we can promise a 100% climate-positive portfolio or very near to it.
What we do is we take in people's deposits and then they flow through our sponsor bank to additional counterparty banks and those counterparty banks are the ones who actually lend it out. We say, okay, if you take $10 million from Atmos, you will apply these $10 million into utility scale solar, wind, electrification, residential, solar, regenerative agriculture. That's how we're applying that impact lens.
Gil: I'll be honest, I've been looking for a product like this, certainly for a few years now, ever since reading the Rainforest Action Network Report that the big banks had tripled their fossil investments after signing the Paris Agreement. Do you think there's a growing awareness yet of these big banks and how they're financing climate destruction?
Ravi: The general population in the US globally, and even our community within the clean energy or climate industries, not everyone knows what the banks do. They don't know that our banks take our money and lend it out. It doesn't just sit in a vault or now a server somewhere. Having greater awareness is key and education is still happening for people. It's like your bank creates the world in which we live because our banks take our deposits and they make loans with them.
Those loans fund, as I said, pipelines or prisons or schools or solar farms or electric vehicles. We get to choose the world in which we live by where we place our deposits. It's really powerful once people understand that, but we have to get this message in front of people first.
Gil: Arguably, one of the simplest, most impactful things we could do, it's a largely passive decision, right? I remember those articles 10 years ago, put your LED lights in and now we're talking about buy an EV or get a heat pump. The thing we can all do today is just spend five minutes, switch our checking and savings account. I applaud certainly that education that you and others are trying to do and then making that user journey seamless because people want convenience. This is a big idea, so what did you do before co-founding Atmos, you mentioned you've been in the space 20 plus years now?
Ravi: Banging my head against this problem. I had a moment of epiphany, how I got into this space. I knew I wanted to be in engineering, I knew I would start companies, but when I got to the University of Washington and they split us into engineers and normal folk for orientation, this woman comes into our small engineering group and talks about this four-year research exchange program right away, do graduate-level research into eco-friendly materials, water quality testing, renewable energy, some, some, some, some.
When she said renewable energy, I couldn't hear anything else that she was saying. This voice in my head, and it was pounding and saying, "This is your mission in life." I was like, this is to help the world transition off of fossil fuels. I have been spending at least some part of every day, if not professionally, personally, working at that mission, having conversations with family, started nonprofits, started companies, a bunch of different things. It's always, how can I have the greatest impact?
How can I work towards achieving my mission? I originally thought that it would be on the development of new energy generation or management technologies and then six years ago now I got into a department of energy, sunshine accelerator program on reducing the soft costs of solar. Pitched the idea on moving solar into the mortgage for financing and it wasn't the right time, but now banks are more receptive and they want to use deposits and they want to get into this space to lend.
Fast forward a few years, I also run a network of entrepreneurs and startups, and investors here in the Bay Area, showcasing new technologies, having events and meetups in the climate tech space, and making introductions. Then after the intergovernmental panel on climate change released their special report in October 2018, I basically said if we want to have any chance of staying below one and a half degrees centigrade, roughly three degrees Fahrenheit, we need to 10X what we're spending on this transition.
We need to spend $3, $4 trillion per year on this. I looked at realistically, who has that much money globally to do this, and outside of US, China, and the EU really it's the global banking sector that arguably has that much money. $160 trillion in assets globally or at least that was the number a couple of years ago, but they do this on a regular basis. This is what they do. They take our deposit and they make loans. I knew that there needed to be a dedicated climate, positive banking entity.
I originally thought needed to start a whole bank and so I read a thousand pages of regulatory documentation. That is some exciting reading as page turners, but realized that a software startup can achieve the same mission without the regulatory oversight. I was lucky enough to meet my co-founder, who is a banker by training and we began our fundraising. Our first check came in January, 2020 so then--
Gil: Nothing happened around that time and after?
Ravi: End of February, 2020, all of our meetings that we lined up got pushed out five months. We were able to thankfully come back, raise enough money around August, 2020 to sign the contract with our first sponsor bank. Then we launched, like I said, one a year ago today with our high yielding savings account. It's just been gangbuster since then up into the right only, no challenges, [laughs] no setbacks.
Gil: I don't believe you.
Ravi: I had hair when we launched a year ago. [laughs] Don't believe that either.
Gil: No, bald guy to bald guy, I don't believe that. I can tell one of my own. Let's stay on, you talked about that epiphany in college. I heard that you had a son this summer and as a father of a new child myself, our second, no doubt that has left a mark on you in so many ways. Has there been a revelatory moment where you have reflected on your mission what you're trying to do with Atmos with the climate crisis? Tell us about how that's changed you.
Ravi: Huge. My son, Adi Pietro was born on September 2nd. Was due at the end of August or like two weeks prior and I was supposed to have a few weeks before we launched check in and mobile apps and some major product releases on the Atmos side. He decided to come two weeks late in dramatic fashion. Ultimately, had two product releases in very short order. It was a time filled with caffeine and adrenaline and love and challenge. The birth of my first child, what it really did was it personalized this mission so much more for me.
It's always been something I had to do like, this is my mission. This is what I will work on for the rest of my life. Now, there's so much more why behind the what. Building the world for him and for any future children that I have and that others have and that you have. It really brings it home of why I'm doing this and every day it's just like, I want to make the world safer for him.
Chad: I want to go back to the projects that you're investing in or that your partner banks are investing in. You've talked about a few different asset classes, as we say, resi, solar home electrification. Is it the partner banks that are sourcing these investment opportunities? How does that work exactly?
Ravi: Currently our bank partners are these counterparty banks are sourcing the deals and it's primarily utility scale up to now. What we're working on is having that established, but bringing it down scale into the rooftop commercial, residential scale. Finding more partners that are working in those areas and bringing deposits to them. That's what we're working on now, because ultimately what we love to do is to have people be able to see their deposits working in their communities. How cool would it be to see that your deposits are going towards your local bank and that local bank is funding solar and electrification in your neighborhood?
It's like, oh, you've helped fund so many electric vehicles in your community or your community has funded so many and it's like, here's the difference in air quality in your neighborhood because you shifted where you bank. You haven't really noticed you're still spending money, saving money, earning interest and that part has only gotten better because we pay more and we pay up to 20X, the national average right now. We give up to 5% cash back on mission line spending with the debit card.
There's no minimum account balance. There's no fees right now there. It's no sacrifice banking so you actually get a better product there creating a better world for yourself, your children, your community. That's the goal is really to bring it into the direct sphere of impact and experience for our customers.
Chad: Local climate impact, I think is a great aspiration and so how do you measure that impact, especially like the carbon impact of deposits? I know you have a pretty sophisticated tool I think that you all use to measure the carbon impact. Can you tell us about that?
Ravi: Yes. What we're doing right now, it's a modeled impact using the AVERT model. It's avoided emissions tool from the US Environmental Protection Agency, the EPA. What we're getting from our counterparty banks right now is pretty lo-fi data. Another reason why we want to bring it into the community as we can get higher granularity data on the projects. What we're getting right now is pretty lo-fi data and what we're able to share of the project size and location.
We're taking that data and then modeling out the avoided emissions and then we can see that on a bit of a timescale and then tying that to people's deposit balance as it changes. It's like you bring some more deposits in. You spend them. They go down. These deposits are a bit fungible. As you spend your money and Gil's depositing more, they balance each other out. There's this constant balancing act of deposits coming in and out to fund these projects.
That's how we're doing it now but as we get better data on the projects and as we can share more, the possibility for sophistication of what are your deposits doing on a 24-hour basis or on an hour by hour basis, rather, gets really interesting. We have customers who work on this specific thing and how to unsend in a three page, essentially, research report including differential equations and all sorts of reasoning behind. It's like, "Here's how you can improve your impact calculator and take into account this deposit helps fund this loan and this loan is being paid back so the attribution is shifting from us as the depositor lender to the customer who's paying off that loan. You're doing this in time series."
It's so fantastic to, one, to see the level of engagement by our customers that they want this to be better and so they are willing to commit and volunteer their expertise and their time to help. It really goes back to the strength of this community and that we're all working towards the same mission.
Chad: I think we should definitely connect. We have a metrical carbon count that we use to measure the efficiency by which each dollar we invest produces or avoids carbon emissions and we're looking to improve that to be more time-sensitive as well.
Ravi: Yes. Talking shop. I think there are ways for Atmos and Hannon Armstrong to work together, further building out your asset base and figuring out ways to further reduce cost of capital and the projects that you're financing, and so forth.
Gil: What's interesting about the dashboard as a customer that really resonated with me as someone who's in this space is the existing sophistication of you showing on the dollar value how much my deposits are avoiding carbon and then the nice equivalency using EPA AVERT. That, to me, gives a lot of credibility that you're not greenwashing. There's already a lot of sophistication as it relates and then there are new tools. We work with a company called REsurety that has locational marginal emissions at the hourly level that really shows the impact of a clean energy project depending on where it is on the grid at that moment in time.
It's pretty exciting to see that as opposed to maybe other offerings that they're just saying, "Hey, we plant a tree for this deposit." That's good too but when carbon is a problem, to be able to have that precision at a dollar level is really inspiring and attractive. One of the things that I'd love for you to talk about is how you're plussing up the savings rate by having customers elect to give a percentage to your nonprofit partners and give 50 nonprofit climate clean energy across the spectrum.
How did you choose those 50? It seems like you're adding more. Tell us about that. That's hard to do but really meaningful.
Ravi: Yes. It is definitely one of our big differentiators. It was complicated especially on the engineering side of managing these donations. What's really important for us, again, is going to how do we leverage multiple stacks of capital and multiple avenues for capital deployment. As you said, we just crossed over 50 nonprofits on our platform that people can donate to fee-free. Other fintechs may increase your savings rates if you spend so much money every month or invite so many friends and they'll give you a teaser rate say, "Hey, you earned 10% on your savings but you have to do so many different things that, more than likely, you won't get it and very few people actually get it."
What we wanted to do is make it relatively simple but also introduce people to a lot more of these nonprofits who are having an incredible impact. Major ones like Project Drawdown, who have done incredible research on the top 100 solutions to stopping climate change.
Gil: Great group. We've worked with them and As You Sow, I noticed it was on there. I selected them and CELI, you've got biodiversity nonprofits. Sometimes when you're given these choices, they give you three national ones and they're like, "Pick one of these three." I applaud you for the precision there.
Ravi: Thank you. We've got local. We've got national, regional, we cover everything. Endangered species protection, job training, research, industry associations like Telsome. They're climate change-makers to influence our leaders to do more on introducing clean energy legislation and passing that. We encourage people so it's either you can donate a portion of your monthly yield. Minimum is 10% or you could just do $1 a month if you don't want to try and do the math of what 10% of your 0.8% equals on a dollar basis. We'll probably raise that to $3 or $5 a month coming up soon. Right now, it's super simple, just dollar a month or 10% of that yield.
Then we go from 0.4% which is already almost 10x the national rate to 0.8% which is 20x. We really want to reward people for this behavior and give them the opportunity to do more. With our checking account and debit card, we introduce a roundup donation feature. You're going out, you're buying a cup of coffee. You're buying the electrification book by Saul Griffith of Otherlab. That difference in the purchase, if it's 95 cents, you could donate that five cents to one of these organizations or if you're saving up for something, you can pitch that roundup over into a savings account.
Gil: Staying on partners, I also love the, I guess, you call it the affinity partners, the discounting from other sustainable brands. Can you hit on a few of those and your thoughts on growing that?
Ravi: We didn't want to just give cashback for all spending because we definitely don't want to reward certain spending behavior like fossil fuel purchases or subsidize that in any way. While the bulk of somebody's carbon footprint and impact is within their energy consumption, do they have fossil fuel appliances? Do they have an internal combustion engine vehicle, et cetera? These daily purchases also matter and it's about societal change and choosing the economy and society we live in.
Everything from large national brands like Patagonia or REI and Cotopaxi for on the clothing side to Ben and Jerry's on the food. There's also a lot of small brands in there too that are up and coming or they're just getting launched. We're marketing them out and saying, "Hey, you do this," or we give 2% cashback if you have a Arcadia power subscription. That's community solar. If you're going to do community solar, we want to reward that and give you a little bit of cashback reward. Charging your EV will help subsidize that. We really want to nudge the behavior towards what we call mission-aligned spending which is ultimately moving away from fossil fuel use.
Chad: So where to next, Ravi? What other market adjacencies are you looking at to expand?
Ravi: Right now, with our customer base, it's replacing a lot of the core banking functions. Adding in BillPay, sending checks to people, integration with budgeting software, then it's also joint accounts for spouses or for children. These are the things that our customers are asking for, as well as commercial accounts. It's like, "Hey, I want my small business to do this," or, "I work at a climate tech startup, we would love to do this." Really, it's giving the opportunity for more parts of our community to move their money and have their money fund climate-positive assets.
That's what we're working on right now over the next, I'd say, half-year and as well on the lending side is continuing to find new partners to bring that impact more locally.
Gil: Ravi, let's turn to our hot seat. I'm going to ask you a series of rapid-fire questions to bring this home. The only requirement is that you say whatever comes to mind first and you try to do it with utmost brevity. The first one, the most important advice I have followed is?
Ravi: Be honest.
Gil: The most important advice or feedback I have rejected is?
Ravi: Be aggressive.
Gil: The word or phrase I most overuse is?
Ravi: Climate positive.
Gil: The biggest misconception about neobanking is?
Ravi: That we can't have impact.
Gil: Here are some open-ended ones. You're using AI for good. Does the potential for the bad scare you more than the ways you think it can improve humanity fight climate? I say this perhaps having watched Terminator too many times.
Ravi: No, it doesn't scare me in that ultimately, it is what we put into it, the rules and things and so we need to be conscious of how we develop it. Like in all things, it's the lack of consciousness and the forethought. That's the big trouble. We can protect ourselves against downsides. There are a lot of groups working on that. I do have faith.
Gil: Good to hear. The satirical Bros for Decarbonization Twitter lauded you and Atmos in a December tweet. As an early follower, they also named you to their "broalition". Care to comment?
Ravi: I love them. I don't know exactly who they are.
Gil: I thought you would know. I thought you would have the inside track. We all want to know who runs that.
Ravi: Right. They are a legion. They are many. I know that there are multiple bros of different genders in there.
Gil: That's the best part about it.
Ravi: It's not just male tech bros or energy bros, nuclear bros. They are bros for decarbonization and they span gender, they span location. You get some West Coast tweets, East Coast tweets. I think we've seen some Midwest, Southern tweets in there as well. They are about pushing decarbonization. They are customers of Atmos. They've chosen us because we are mission-aligned. We are pushing decarbonization.
Gil: That's right and they're good for a laugh and we all need to laugh these days.
Ravi: Very much so. I highly recommend following them.
Gil: How do you connect with nature?
Ravi: A few ways. One, in this little backyard office. I'm looking out onto our yard, seeing our flowers, some of our fruit trees. We have chickens. We feed birds. We get lots of different types of birds, chickadees, and finches, and jays but also, we go camping. Last weekend, we took our four-plus-month-old son camping in Big Sur. It was a little grey and a little cold and rainy but it was amazing. Went out, bathed in the creek. It was very chilly but it was very, very refreshing.
Gil: Finish the sentence. My climate role model is?
Ravi: Dr. Katharine Hayhoe. There are so many but she is one of the best climate communicators that bridge so many different groups. I wish I could communicate as well as she does. I wish we all within this space could communicate as well as she does and I'm grateful that she's out there.
Gil: Okay, last one. To me, climate positive means?
Ravi: It means leaving the world better than we found it.
Gil: Thank you, Ravi.
Ravi: Thank you guys so much.
Chad: Thanks for joining us, Ravi.
Gil: Climate Positive is produced by Hannon Armstrong. If you enjoyed this week’s podcast, please leave us a leave a rating and review on Apple and Spotify, which really helps us reach more listeners.
You can also let us know what you thought via Twitter @ClimatePosiPod or email us at climatepositive@hannonarmstrong.com.
I'm Gil Jenkins.
And this is Climate Positive.