You need to get past that clunky URL to understand Ffrees (yes, there are two f). It is worth it, trust me. Click here to avoid misspelling (you will find a very engaging video online and a clear pitch to simpler banking and zero overdraft fees).

A current account is a service. (Read, “checking account”, if you are in America). You pay for this service. The only question is how do you pay:

• Directly. This is the utility model. It is a markup model. If it costs me 10c I can provide the service at 20c and have a very healthy margin. Of course that means that a competitor can offer the service at 15c. There is a reason that bankers fear the utility model; price competition is brutal.

• Indirectly. This is the banking model. You offer a “free” service. For the richer customers who always keep plenty of cash in a current account, the bank can lend some of it, knowing that not all customers will ask for it back at the same time (unless there is a “run on the bank “). For the poorer customers, banks collect overdraft fees and penalties that are as expensive if not more so than Wonga.

That is where the concepts of digital wallets come in. Digital wallets are simply pre paid cards in digital form. Or cash in digital form. You cannot go into overdraft on the physical cash in your wallet. You cannot go into overdraft on your cash in a digital wallet. So, there are no overdraft fees.

This appeals to the prudent who don’t want to spend more than they have. These prudent-but-not rich are the “underbanked”. Not “unbanked”, which means really poor. Underbanked means, “living within modest means”.

The underbanked fall between the banking cracks. They are bad customers for the Indirect banking model – too poor to keep a lot of cash in a current account and too prudent to go into overdraft.

The utility model and Moore’s Law are a strange combination. The cost of providing a digital service falls closer to zero every year. In that utility model, it is totally a server scale game. Amazon or some P2P serverless model would win that game.

When you first encounter innovation it looks strange. As Fred Wilson of Union Square Ventures says:

“Ideas that most people derided as ridiculous have produced the best outcomes. Don’t do the obvious thing.”

VCs and journalists who look at a lot of startups have the lazy mental trick of putting everything into simple categories (aka “spaces”). True innovation does not fall into a space. A space is not a market. Payday lending is a space. Dozens of Ubers for…are in a space. The underbanked is a market – not a space. The underbanked is real people with real needs.

I probably would not have got past the clunky URL if I had found Ffrees online. Fortunately I met the CEO of Ffrees, Alex Letts, at a gathering of payment entrepreneurs.

Ffrees has a totally free option – the standard Freemium entry. Plus basic low fees. Not free, but cheap and transparent. iTunes won by being cheap, not free.

Alex spoke of helping customers to “save as they spend”. That was the bit I did not understand, so I asked him to explain it here in his own words:

“The business of model of Fffrees with its digital platform, allows it to tear up the preconceptions of how current accounts make money.  It does not depend on interest, or on credit products.  As a result we can focus on what might really help customers, which is, in the case of the underbanked, helping them put a cushion of savings between themselves and unforeseen financial upset.  We give them jamjars to ring fence small sums of money in their current accounts to pay bills and even save up (there is a “save £1 a day scheme also).  And as they use their debit card they generate cashbacks, which instead of getting lost in the current account wash, get stashed for them in jamjars, so they build up over time. None of this will make them rich, as it is a few hundreds of pounds of savings, but it might stop them becoming poor”.