US challenger banks: who’s who and what’s their tech
US challenger banks: who’s who and what’s their tech
With the US Office of the Comptroller of the Currency (OCC) now accepting applications for national bank charters from non-depository fintech firms, expect a flurry of challengers!
FinTech Futures has put together a list of the current challenger banks and banking services in the US and the tech they are using.
We’ll be revisiting and updating this list on a regular basis. If you have any additions to the list, please get in touch with our editorial team.
Last updated on 19 February 2021
Alpha Business Bank
A start-up bank aiming to serve SMEs.
According to the bank’s founder, Jacob Schuler, “US mega-banks do not understand small businesses, and small business owners go into business to do what they love, but usually fail due to financial trouble.”
The bank will differentiate from other US fintech start-ups in the SME space by gaining its own charter and FDIC insurance to provide full stack services to its members.
Alpha Business Bank is based in Spokane, Washington.
American Bank & Trust
A start-up bank based in Monroe, North Carolina, awaiting a banking licence.
It was founded by a group of local business owners and led by David Cutherberston, CEO of home building company True Homes.
Randy Helton, who in the late 1990s founded another local bank with a similar name, American Community Bank, is assisting with the venture. (American Community Bank does not exist today – it is part of First National Bank.)
American Bank & Trust hopes to raise $20 million in capital via an IPO.
Aspiration
A banking service, founded in 2013 and based in Marina Del Rey, California. Its CEO and co-founder is Andrei Cherny.
“We didn’t set out to build a bank. We set out to build a better world,” it states on the website. It offers socially-conscious and sustainable banking services and investment products, and donates 10% of every dollar its customers pay Aspiration to “helping struggling Americans build a better life”.
The services are provided by Aspiration Financial, an SEC-registered broker dealer.
Aspiration offers a cash management account that comes with a Mastercard debit card, no ATM fees globally, cashback rewards on purchases, a 2% interest rate, and customer’s own personal People/Planet impact score.
It also offers a savings account and a range of investment products that are 100% fossil fuel free.
Targeting 13-18-year-olds, AWSM Bank is designed both to be an dedtech and a fintech according to its two co-founders.
The neobank will launch in Q2 2020, beginning its offering with 100 courses on financial literacy – which count for two years-worth of content – alongside a full-service-banking suite.
The gamified solution will make its money through a $4.99 monthly fee for each family. It will then offer an add-on behavioural analytics subscription for an additional $1/50 a month.
Through the parent-sponsored card, teenagers can see what happens to their credit scores and learn the consequences of being irresponsible with money in a controlled environment.
Parents can then monitor their children’s spending and saving, receiving alerts when they stop putting aside money so they can help them tackle bad spending habits.
The challenger is backed by a federally chartered bank, which AWSM declines to name at this stage.
Following its teen users all the way into adulthood, the neobank will give them full access to all banking functionality once they turn 18.
Azlo
A fee-free online business banking offering for entrepreneurs and freelancers. The company was founded in 2017 and is based in San Francisco.
It is supported by BBVA Compass, which underpins the banking services of Azlo. BBVA also helped incubate the business in its New Digital Businesses unit in San Francisco and is an investor in Azlo.
Azlo’s account provides domestic and cross-border banking services which offer no fees or minimum monthly deposits. The company says its key differentiators include unlimited domestic and international payments, billpay, mobile cheque deposit and digital invoicing. It also plans to offer access to workshops, live events, and a community of entrepreneurs.
Bank of Austin
Founded in 2017 in Austin, Texas, the bank positions itself as “the city’s business bank”. It emphasises its personalised approach and local expertise.
It offers corporate banking, treasury management, private banking and residential lending, as well as insurance.
Bambu
Founded in 2019, this mobile-based challenger aims to target underbanked populations in the US with a “convenient and reliable” service.
Based in Memphis, Tennessee, the bank uses FIS’s Modern Banking Platform as its core banking system, and partners with New York’s Metropolitan Commercial Bank for card issuance.
BankMobile
A digital bank created by an established US-based financial services player Customers Bancorp. BankMobile opened for business in early 2015.
It caters mainly for students and offers a low-fee checking account with no monthly fees and no overdraft/non-sufficient funds (NSF) fees. It also provides personal loans.
According to its co-founder, president and chief strategy officer, Luvleen Sidhu, BankMobile is “the largest digital bank in the US”.
She describes it as “a hybrid model – a fintech company with a bank charter – that is revolutionising and disrupting banking”.
For its technology, the bank (as well as its parent) uses the IBS core banking system from FIS.
In 2017, a small bank in Florida, Flagship Community Bank, came close to acquiring BankMobile for $175 million (Flagship Community Bank has $112.5 million in assets). However, the deal did not go ahead as Flagship Community Bank failed to raise the required capital.
BankMobile also did its own M&A – in late 2015, it acquired Higher One, a student loan disbursement company and partner of Customers Bancorp since 2013.
A challenger bank which earns American Airlines miles instead of interest, created by Texas Capital Bank’s parent company Texas Capital Bancshares (TCBI). Customers get one ‘AAdvantage’ (AA) mile for every dollar they save.
“It’s a bold new platform — a stronger option for savers who aren’t getting much out of a traditional savings account,” says Bask Bank’s president Matthew Quale, who previously worked at major US insurance company Brighthouse, which he helped spin off from MetLife as chief marketing officer (CMO). Before this, he spent three years at American Express.
The challenger says it will offer an account opening bonus of 5,000 AA miles to its new customers, as well as “a variety of balance bonuses” which were not specified. “There are no fees, no minimum balance[s], it’s easy to sign up and savers enjoy unlimited potential to earn miles,” the start-up says in a statement.
“This new digital bank is the next step in Texas Capital Bank’s ongoing strategy to meet customer needs,” says Texas Capital Bank’s president and CEO Keith Cargill.
Be Money is the first LGBT+ challenger bank in the US, and looks to tap the 11 million people living in America’s queer community. The start-up will set up shop in Los Angeles.
Features including a wealth builder, an in-built charity donation platform so users can re-invest back into the LGBT+ community, and a service where users can get peer-to-peer (P2P) advice from LGBT+ advisors on money issues specific to their personal experiences.
Be Money will be entering the US banking market in partnership with an unnamed banking-as-a-service (BaaS) provider to ensure all deposits are FDIC-insured.
The start-up will have multiple revenue streams which do not hinge singularly on interchange fees, but it is yet to announce what these will be.
Before Be Money, co-founder Rob Curtis spent time as a city banker, before becoming managing director at Gaydar – a dating and social platform with 1.5 million users.
Fellow co-founder Matej Ftacnik is the chief experience officer (CXO) at Vacuumlabs, an engineering start-up based in Bratislava, Slovakia, which builds fintech products for tier one banks.
Beacon Community Bank
The bank opened for business in early 2018 and is based in Charleston, South Carolina.
“It’s a rare thing to hear someone say, ‘I love my bank,’ but that is exactly what we at Beacon strive to do,” the bank says on its website. It caters for consumers and SMEs.
The bank is led by president and CEO Brooks Melton, who comes from another local bank, CommunityOne Bank (merged into Capital Bank). CFO is Clay Heslop and COO is Craig Johnson – both formerly of Southcoast Community Bank (now part of Pinnacle Financial Partners).
For its tech, Beacon has opted for the Silverlake core banking system from Jack Henry & Associates. The solution is supplied on a hosted basis via JHA OutLink Processing Services (JHA OPS) and its entire IT infrastructure is supported by Gladiator Hosted Network Solutions.
BlueVine
The SMB lender, which offers ‘fast fund’ loans between $5,000 and $5 million, launched its ‘BlueVine Business Banking’ service in October 2019.
Business customers can now use a Mastercard debit card for everyday finances, get 1% interest on their balance and pay no monthly fees.
Designed specifically for small businesses, the debit card is issued through The Bancorp bank, which is based in Delaware, US.
“Credit is a core part of banking and with the addition of checking accounts to our existing suite of financing products, customers can have a truly seamless banking experience,” says BlueVine CEO and co-founder Eyal Lifshitz.
booyah! launched in 2019 to provide mobile and online banking. The banking services are back by the Federal Deposit Insurance Corporation (FDIC) member, Surety Bank.
The booyah! debit card is issued by Surety Bank pursuant to a licence from Discover Financial Services and may be used where booyah! Discover Debit Cards are accepted.
The neobank is powered by Nymbus’ banking-as-a-service platforms – Smartlaunch, Smartcore, Smartpayments and Smartdigital.
Customers can also benefit from getting paid up to two days early by making the money available as soon as its customers’ employer deposits it, which is earlier than most traditional banks for deposits made electronically.
Branch, founded in 2015, transitioned into full banking services via a partnership with Evolve Bank & Trust. The Branch Mastercard debit card is issued by Evolve Bank & Trust via a license from Mastercard.
The app started life focusing on personal finance and wellness, and now offers payday advance services for hourly workers through integration with employer payroll platforms.
Branch offers other financial wellness tools including budgeting, fee-free checking account, two-day early pay, and instant gas hold refunds.
The challenger initially operated on a $3.99 membership basis but went fee-free in October 2019.
Carolina State Bank
A start-up bank in North Carolina launched by another community bank, Blue Ridge Bank. The latter is a long-standing entity in Virginia, with its history dating back to 1893.
Carolina State Bank was founded in 2018 and is now open for business. It describes itself as “high-tech and down-to-earth” and emphasises its focus on the local community. It provides consumer and business banking services.
The bank’s president is Seth D Moore, who moved from The Fidelity Bank (a $1.9 billion bank in North Carolina and Virginia), where he was a senior commercial banker for one year. Previously, he was VP, commercial banking, at a much larger regional bank, SunTrust, for five and a half years.
Catalyst Bank
A start-up bank in Las Vegas, formerly known as Sterling Bank. No licence yet.
The bank’s CEO is John Miller, currently board member of Mission Valley Bank in California and a former board member of Pioneer Bank in Texas. According to his LinkedIn profile, he is also a co-founder and managing partner of Cast Cellars, a Californian winery “creating small production, artisanal wines”.
The bank’s president is Donald Murray, ex-CEO and president of Commerce Bank of Temecula Valley (which became Nano Banc in May 2018).
CBW Bank
Not your average community bank in the US. CBW Bank (formerly known as Citizens Bank of Weir) was bought by Suresh Ramamurthi, an ex-Google engineer, and his wife Suchitra Padmanabhan, a former Wall Street banker, in 2009 – right after the financial crisis. The couple used their own savings to purchase the 124-year-old community bank in the small town of Weir, Kansas, that was about to go bust.
The bank became operational once again within a year and was transformed into a “secret weapon” for fintech firms that rely on CBW’s technology and banking status to build their own businesses. Among these were Omney (now owned by Mastercard) and Moven.
The new owners took the bank apart and rebuilt it from the ground up (including all the hardware and software, fibre optic cables etc), so that today it can offer services on a par with the country’s largest banks. It was providing instant payments to any bank in the US, real-time information on payment transactions, direct remittances abroad and specialised debit cards before most of its counterparts did.
In the process, a paytech start-up – Yantra Financial Technologies – was born. Working with Yantra, CBW became the first bank in the US to publish its APIs, in 2016. The two launched the Y-Labs Marketplace, an initiative that enables banks to rapidly introduce new payments products and services with industry specific benefits via Yantra’s proprietary digital banking platform that enables real-time, contextual and conditional payments.
(Fun fact about Weir, where CBW’s head office is: it has a population of around 630 and flyswatter was invented there in 1906.)
Chime
Founded in 2014, Chime has raised over $100 million funding to date, values the business at around $500 million and has over one million accounts. It employs around 100 people.
Chime comes with a mobile banking app and a Visa debit card, and there are no fees. It has an agreement with The Bancorp Bank for the provision of banking services.
The challenger says: “Unlike traditional banks that charge consumers fees left, right and centre, Chime makes its money from Visa.” It explains that whenever a user makes a purchase using their Chime card, Visa collects the interchange fee from the merchant for processing the payment. A portion of this interchange fee is then paid out to Chime.
Chime’s co-founder and CEO, Chris Britt, says he wanted to create a product for mainstream consumers, who already have accounts with big banks, “but just aren’t particularly satisfied with those guys for variety of reasons – probably first, and foremost, the way they structure the products are quite punitive”.
By May 2018, it surpassed the one million customers mark, and by mid-2019 it grew to four million users.
Citizens Access
A nationwide, direct-to-consumer digital bank launched by Citizens Financial Group in mid-2018.
Citizens Access offers FDIC-insured online savings and certificate of deposit (CD) accounts “with attractive rates and no fees”, according to the bank. It takes “five simple steps that take fewer than five minutes to complete” to open an account with Citizens Access.
It has its own website and mobile app – “every aspect of the experience is digital”, including all documents and correspondence, and various digital tools are available to help customers “think creatively about how to save”.
Citizens Access operates separately from its parent’s retail banking offerings.
For its tech, it uses FIS’s Profile core banking platform.
Climate First Bank
This Tampa Bay Area-based start-up has selected Finastra’s full suite of banking software. This includes its Fusion Phoenix core banking system, Fusion Digital Banking, and Fusion Total Lending.
The start-up wants to become a full-service community bank which invests in climate-focused services, such as a “solar loan” option.
Six founding directors make up the Climate First Bank, chaired by Ken LaRoe. LaRoe founded two other banks, Eustis-based First Green Bank and Florida Choice Bank.
In the long-term, Climate First Bank hopes to become “the largest and most profitable eco-conscious” institution in the Southeastern US.
Cogni is a New York-founded digital bank aiming to combine banking, commerce, and lifestyle through a single platform. It launched in March 2020.
Starting off with an FDIC-insured basic current account offering with “no hidden fees”, Cogni promises its millennial users that they will be able to “easily reach a human being” if they need to.
Cogni says there will also be no account minimums, free cash withdrawal at more than 55,000 US-based ATM, free peer-to-peer (P2P) transactions, and single-use debit cards.
Accounts can be topped up via Visa Redylink, in-app check deposits, direct deposits, ACH Transfers and P2P transfers.
To date, Cogni has raised $6.6 million in funding from investors including Hanwha Investment & Securities, WorldQuant Ventures, and Barclays, which onboarded the 2016-founded fintech to its TechStars Fintech Accelerator.
Individual investors include co-founder of Hard Yaka Gregg Kidd, and global chief investment officer at Guggenheim Partners Scott Minerd.
The fintech’s platform head Scott Leff comes from core banking provider Fiserv, and its VP of member services Dion Davis comes from major US bank Citi.
Community Bank of the Carolinas
CBC is based in Winston-Salem, North Carolina, and is awaiting a banking licence. It will focus on the local community and the surrounding area, “emphasising personal service to individuals and small- to medium-sized businesses”.
The bank expects to receive all regulatory approvals by Q3 this year and open for business in Q4.
CBC is led by Simpson “Skip” O. Brown Jr. (chairman and CEO) and James “Jim” C. Monroe Jr. (vice-chairman and CFO). “There is a market for customers who prefer a personalised banking experience that is not being served by larger banks,” the founders say.
It plans to raise $30 million by selling common stock.
Core Commercial Bank
Core Commercial Bank (CCB) is a start-up in Newport Beach, California, focused on business banking. The bank was granted conditional approval in 2015, but is yet to open for business.
It plans to focus on SMEs with a revenue of $1-50 million, emphasising “relationship and value-driven banking”. Its target market comprises local professionals, manufacturers, wholesalers and distributors.
Mark Simmons, a long-time Orange County banker, is the proposed chairman of the board of directors for CCB. Senior management is led by CCB’s initial organisers Darrell S. Daniel III as chief banking officer and Jonathan Sigal as chief credit officer. Both have worked together for the past 20 years in the commercial banking and finance industry.
Current
Current started life as a prepaid card for teenagers. Following the addition of the adult current account earlier this year, the fintech now boasts over 400,000 active accounts.
The Slack-integrated fintech has reportedly become popular with gig economy workers. Account benefits include access to wages two days early, instant payments, an Insights feature and Savings Pods, which help customers to save towards specific goals.
The Current Visa card is issued by Metropolitan Commercial Bank and Choice Financial Group.
The fintech’s CEO is Stuart Sopp.
San Francisco-based Denizen offered what it called the “first true global, borderless account” for expats.
The account was available to expatriates living in the US and Spain (there are plans to roll it out to more European countries).
Denizen was co-foundeed by Joaquin Ayuso, previously responsible for Tuenti, described as “the Spanish Facebook”.
Denizen’s initial funding round was provided by BBVA Compass’ New Digital Businesses unit, which is incubating start-ups in its Silicon Valley-based fintech lab. BBVA Compass also underpinned the banking services of Denizen.
Denizen announced that it would shutting down in October 2019, with all account activity halting on 17 December 2019.
Dogwood State Bank
A start-up community bank in Raleigh, North Carolina. The focus is on homebuilding finance and small business administration.
The bank was set up in 2018 by a group of North Carolina residents: Scott Custer, formerly a long-standing CEO at Yadkin Bank (sold in First National Bank Corp in 2017); Fielding Miller, CEO of CapTrust Financial Advisors; Richard Urquhart, director, Investors Management Corp; Robin Perkins, CEO of Frontier Spinning Mills; Sepi Saidi, owner of SEPI Engineering; and David Brody, ex-director at Yadkin Bank.
The bank’s CEO is Steve Jones, who has over 25 years of banking experience, having worked for local financial institutions such as Centura Bank (acquired by Royal Bank of Canada and then by PNC Financial Services) and the aforementioned Yadkin.
The initial plan was to raise $75-100 million to obtain a licence, but the organisers voluntarily withdrew the application in late 2018. Instead, they decided to purchase an existing bank. In early 2019, Dogwood State Bank was understood to be in discussions with potential acquisition targets.
Endeavor Bank
Endeavor Bank opened its doors for business in San Diego, California in January 2018, following an initial capital raise of $26.6 million and the backing of over 450 investors/owners. It is a brand new bank, with no merger legacy.
Steven D Sefton is the bank’s founder. He’s been working on this venture since early 2015.
The bank focuses on “well-established owner managed local businesses”, Sefton says.
“Local companies want to do business with local banks. Large, national banking institutions don’t offer personalised services. Endeavor Bank isn’t a traditional bank and we aren’t traditional bankers,” he states.
It will offer “consultative banking” that will include “business counsel and advice” in addition to the standard banking services, he explains.
Envel
Envel is a Massachusetts-based start-up (founded in 2016) aiming to become “an ethical challenger bank in the US that is entirely different from any other”. It says it is focused on “improving customers’ financial health”, and is looking to target millennials with its digital offering (mobile and desktop).
It describes itself as “the world’s first AI-powered bank that autonomously manages customers’ money”. The tech was researched with the help of specialists from Harvard, Oxford and MIT.
Envel’s founder and CEO is Steve Le Roux. The team comprises four core members from Harvard and MIT, four advisors and five developers.
“Envel” is short for “envelope”, which “depicts the way in which our elders used to split their income into envelopes for expenses such as bills, holidays, savings etc”, the bank explains. It is a trademark of Artler Capital, also based in Massachusetts.
Envel is not a registered bank yet, but plans to get a charter in due course.
Texan challenger Fair says its features include a 2% annual dividend for savings, international transfers, interest-free microloans, equity-based lending, investing, retirement packages, and debit cards for kids.
The start-up’s founder and CEO, Khalid Parekh, also heads up Houston-based AMSYS group.
Parekh, who immigrated to the US from India some 20 years ago, claims Fair will remain an “ethical” banking alternative – planning to donate 2.5% of profits to refugee charities.
Washington-based Coastal Community Bank will serve as Fair’s FDIC-insured bank partner.
Finn (decommissioned as of June 2019)
Finn was a digital bank account for smartphones created by JP Morgan Chase. It was initially launched in October 2017 in St Louis (where Chase has no branches), and then rolled out nationwide in summer 2018.
Designed for millennials (and with its own trendy website), Finn allowed customers to open a bank account, make deposits, track spending and set up a saving plan. It offered free access to over 29,000 ATMs, 24×7 customer service, and the option to deposit cheques via phone.
In early June 2019, JP Morgan announced the end of life for Finn, as it failed to get sufficient traction. Customer accounts were moved to Chase.
Gainey Business Bank
A de novo bank, in organisation, based in Scottsdale, Arizona. Like the majority of other start-up community banks, Gainey Business Bank, is locally owned and run, and emphasises its personalised, “relationship-banking” approach.
The bank’s focus is on SMEs, non-profits and individuals – helping “local businesses control their own destiny by providing them with cutting edge financial services”.
It also promises “superior technology”.
The bank is authorised by the Arizona regulators to raise $11-13 million in capital by selling shares ($10,000-550,000 investments).
Gateway First Bank
Gateway First Bank was created in spring 2019 as a result of a merger between Gateway Mortgage Group (a full-service mortgage company founded in 2000) and Oklahoma-based Farmers Exchange Bank.
Headquartered in Jenks, Oklahoma, Gateway First Bank has $1.2 billion in assets, five banking centres in Northwest Oklahoma, 160 mortgage centres with operations in 40 states and the District of Columbia, and over 1,200 employees. It is one of the largest banks in Oklahoma by asset size and one of the largest bank mortgage operations in the US.
For its technology, the bank opted for core banking software from US tech heavyweight FIS and the vendor’s Digital One omnichannel platform (for online account origination). The new platform replaced the legacy tech from FIS’s rival Jack Henry.
Loan servicing is supported Sagent LoanServ, hosted on a private cloud. The POS system for lending/mortgages is provided by Blend, a Silicon Valley software developer. It is hosted on Amazon’s AWS cloud.
GoBank
GoBank was launched in 2013 by Green Dot Corporation, which claims it to be “the first bank account designed from scratch to be opened and used on a mobile device”.
The GoBank account includes a checking account with a linked Visa debit card and a second integrated bank account called the “Money Vault” for GoBank members to put money away for savings.
Accounts are demand deposit accounts (DDA) with deposits insured by the FDIC and full “Regulation E” consumer protections.
There are no overdraft fees or penalty fees and no minimum balance requirements.
It offers fee-free withdrawals from more than 40,000 ATMs (more than twice the size of Chase or Bank of America); instant money transfers to friends and family; checking the balance without logging into the account; mobile cheque book; bill pay; multiple deposit options; budgeting tools; and debit card customisation (customers can get the card with the image of their choice).
“Most people today, and especially people under 40, aren’t satisfied with their current banking options. Many traditional bank accounts have long and complex fee schedules with terms and conditions that favour the bank; not the customer,” says Steve Streit, founder and CEO of Green Dot.
Designed from the ground-up to be “the bank account for the smartphone generation”, once you start using it “controlling your money becomes as intimate and addictive as checking Facebook or texting friends”, he adds.
Grasshopper Bank
Start-up bank Grasshopper (formerly New York Venture Bank) applied for a banking licence in 2017. The licence was obtained in spring 2019 and the bank opened for business in June that year.
The bank’s private placement raised approximately $116.2 million, which followed an earlier seed round offering that raised $15 million. Combined, this is believed to be the largest capital raise for a start-up bank in the US.
Grasshopper provides banking products and services to businesses, particularly in New York, where it is based. These include term loans, lines of credit, and owner-occupied real estate and asset-based lending, as well as deposit products.
Judith Erwin, former executive at Square 1 Financial, is Grasshopper’s CEO. The bank’s CTO and co-founder is Minerva Tantoco, who has held senior positions at UBS, Merrill Lynch, Fannie Mae, and served as the first CTO of the City of New York.
For its tech, the bank opted for the Temenos’ T24 core banking system.
Backed by PayPal founder Max Levchin and other fintech heavyweights, HMBradley will offer an “unparalleled banking experience” and pay “the industry’s highest interest rates” for savers.
HMBradley offers a digital bank account that combines both checking and saving features. Its variable APY tiers are based on what percentage of the customer’s income are saved each month.
The challenger gives users a combined checking and savings account, fee-free ATM usage, and an underwriting process that lets customer apply for credit with one click.
A launch is planned in early 2020.
Iam Money
Iam Money has its HQ in Chicago and an office in San Francisco. It also has two offices outside the US, in Dublin and London.
It has secured $3 million of funding, and plans to have $20 million when it launches.
Iam calls itself the “Apple store” of banking and targets millennials. It plans to roll out free learning and therapy-based financial workshops across the US and UK to “educate and empower consumers around their financial decisions” – the “first of its kind”.
It offers money management, micro-investments and micro-loans.
Iam’s founder and CEO, Lee Travers, says customers “still prefer the safety and security of traditional banking” and so its digital presence is going to be complemented by branches (although it will remain “digital first”). In 2017, it reportedly started to make an acquisition to get its US banking licence.
According to Travers, Iam plans to create more than 21,000 partnerships with retailers to enable cashback, and also potentially build an in-house find management team.
Infinity Bank
A de novo bank that opened for business in February 2018, based in Santa Ana, California. It focuses on the local business community, offering depository products, business loans and commercial real estate financing.
The bank went for an IPO in H2 2017 and raised $33 million, prior to receiving the necessary approvals from the state and federal regulatory agencies.
“With so many locally-owned banks purchased in the past several years, we see a great opportunity to fill a gap like only a community bank can,” says Infinity Bank’s founder and CEO, K.P. (Bala) Balkrishna.
Jelli
It’s not clear where in the US Jelli is based, but the start-up is piggybacking off FDIC member, Metropolitan Commercial Bank – which is based in New York.
The fintech offers what it calls ‘envelope-style’ budgeting, allowing users to automatically distribute direct deposits to their various ‘Jars’. The mobile banking app also allows users to set up group-funding projects, events, and expense splitting for payments like rent.
Its ‘JelliCARD’ gives users between 1-5% cashback on qualifying purchases. This offering is powered by fintech Dosh.
Deposits are FDIC insured up to $250,000, and users are protected from unauthorized purchases through Visa’s Zero Liability Policy.
Joust
Joust was founded in 2017 and is based in Denver. It unveiled its financial app for freelancers, entrepreneurs and independent contractors in early 2019.
The Joust app – developed in partnership with financial services toolkit Cambr – enables users to open a free, Federal Deposit Insurance Corporation (FDIC) insured deposit account backed by a community bank.
In addition, it offers a merchant account to process credit and debit card payments for their products and services; and protect themselves from client late payment and non-payment with PayArmour, which guarantees invoices up to $5,000.
In January 2020, it launched a new version of its app, adding an analytical dashboard, Joust Visa debit card management and invoice creation. Throughout 2020 features including P2P payments, savings goals and remittances, direct deposit, invoice estimate creation, and payment reminders will all be rolled out.
Co-founder and CEO Lamine Zarrad says Joust wants “to eliminate the pain points independent workers feel by creating an ethical banking system for freelancers and entrepreneurs”.
Cambr integrates what’s known as the StoneCastle Deposit Network – a deposit platform of more than 800 community banks across the country – with Q2 Open’s CorePro digital processing platform, and uses relationships with partner financial institutions like NBKC that serve as banks of record.
In August 2019, the challenger raised $2.6 million in a funding round led by PTB Ventures, with help from Accion Venture Lab, Financial Venture Studio and Techstars.
Karat
Seattle-founded Karat promises to be the mobile bank for influencers.
Founded by a team of engineers from Instagram, Facebook, and Standford university, it offers “risk-free capital” based on future revenue streams drawn from a social media personality’s follower counts, ad income or subscriber numbers.
“Traditional banks and lenders don’t get you,” the start-up states. “They want collateral, assets and income statements. We understand how you work – subs and views, merch and brand deals. We know how much you’re really worth.”
Kard
The French mobile banking start-up has recently announced its expansion to the US, with the aim to address the needs of what they believe is an underserved market in mobile banking – people under the age of 21.
Kard was founded in 2018 and is based in Paris. The start-up raised €3 million in January this year from Kima Ventures, Jean-Pascal Beaufret, Jambu Palaniappan, Francis Nappez, Julien Lemoine, Jason Dorsey and David Amsellem.
For its US service for teens, its waiting list is already open.
Lakeside Bank
Lakeside Bank, based in Lake Charles, Louisiana, was the only start-up bank to be granted a banking licence in the US in 2010-2013.
It offers business and consumer banking services and products, emphasising the local team and expertise.
The bank’s president and CEO is Morgan “Mike” Harmison, a US navy veteran. His experience includes senior roles at Lakeside National Bank, Cameron State Bank and Iberiabank.
Matt Fruge is CIO and CTO.
For its technology, Lakeside Bank uses the Phoenix core banking from Finastra (formerly D+H Corporation).
LikeBank
A start-up bank based in New York, with a mission to offer banking services within a messenger service. LikeBank will sit within Facebook Messenger, Viber and Telegram. This means no branch visits, no app downloads, and a 100% digital card delivery with Apple Pay, Google Pay or Samsung Pay.
The founder is Elliot Goykhman, a Russian living in New York. His previous employers include Alfa-Bank and B&N Bank in Moscow.
Goykhman describes LikeBank as “the most digital and lightest bank in the world”. It will target millennials/Gen Z as well as self-employed and freelancers. Goykhman plans to partner with a “large Russian bank” for launch in 2019.
The California-based digital challenger says it’s developed a “modern private banking” experience.
The start-up is spearheaded by Drew Wilson, a senior software engineer manager from multibillion-dollar web hosting service GoDaddy.
Wilson previously founded Plasso in 2014, which he sold to GoDaddy in 2018 for an undisclosed sum.
Letter is looking to tap America’s high-net-worth individuals (HNWIs). The US houses around 5.19 million HNWIs, according to Statista.
The numberless card has a configurable limit. And users can issue multiple cards under their account to family and staff.
When a customer uses one of their cards, Letter automatically sends a fully tax-deductible donation to a charity.
Created by the same California-based team which founded the “debit-style” credit card offering Zero, Level Bank is set to target millennials dissatisfied with the incumbent banking options.
Founder and CEO of Zero, Bryce Galen says the new venture is “the highest annual percentage yield (APY) deposit account in the US”, boasting a 2.1% APY and 1% unlimited cash back on online and signature purchases.
Level, which is itself not a bank, holds its customers’ funds in accounts insured by the FDIC through Evolve Bank & Trust.
The neobank offers early access to users’ paychecks up to two days before payday.
There are no monthly, overdraft, foreign transaction or add-on ATM fees associated with a Level account, and it even promises to reimburse ATM fees worldwide up to three times each month for up to $4 a withdrawal.
Marathon International Bank
A start-up bank for the Ethiopian American community, based in the Washington DC area. Its founders are Tekalign Gedamu, a retired economist and former MD of the Development Bank of Ethiopia, and Tesfaye Biftu.
“Our vision is to help transform the Ethiopian community into a far more economically engaged, creative and vibrant member of the wider and diverse US community,” the bank says.
Gregory Garrett, formerly president and CEO of Texas-based Platinum Bank, will serve as Marathon International Bank’s CEO, it is understood.
It filed an application to organise a district bank in early 2018 and plans to raise $22-25 million by selling common stock.
M1 Finance
Chicago-based M1 Finance plans to launch a checking (or current) account and debit card that integrates in its current app.
The new product, penned for launch in H1 2019, is called M1 Spend. It will allow users to directly deposit their salary into M1, pay bills, and spend money with an M1 Visa debit card. It’s also launching a premium version with interest and cash back on purchases. In its view, this is “one account that does it all”.
Users can invest via the app and choose their own stocks or funds or select from curated options (M1 Invest). They can also use money as an asset to back up a line of credit to offer liquidity of those investments (M1 Borrow). M1 Spend will complete the foundation of its money management account, the company says.
All three will be integrated within the app, and money can move instantaneously between all three.
M1 Spend is Federal Deposit Insurance Corporation (FDIC) insured as the money in the account are held with Lincoln Savings Bank.
Marcus
An online platform launched by Goldman Sachs – named after Marcus Goldman, one of the firm’s founders – offering no-fee personal loans and high-yield savings to consumers.
Marcus has no fees; offers fixed rates throughout the term of the loan; and lets customers choose their monthly payment date and a payment option. Goldman Sachs says automated machines are not preferred as it offers US-based loan specialists (i.e. humans) who “deliver live, personalised support”.
For its technology, Marcus uses Infosys’ Finacle core banking system for lending (deployed in the private cloud) and FIS’s Profile for deposits.
Medici Bank
A descendant of the original Medici banking family has launched a digital bank, Medici Bank, in Puerto Rico.
Co-founders are Prince Lorenzo de’ Medici and Ed Boyle, former Fidor Bank Americas managing director. The fully-licensed, US chartered bank will target international businesses and family offices.
Medici Bank is promising “convenient, transparent, and easy-to-use services for customers that need a fast, secure banking option”. It was “born out of frustration with the current financial services landscape”.
Among the technologies the new Medici bank is hoping to harness is blockchain.
Meed Banking Club
A digital/mobile banking service aimed at fostering savings for customers.The firm says is not just a savings or checking account, but actually provides similar benefits to a club, as its name implies. It says it was purpose-built from the ground up with a focus on better banking basics and “exceptional” member benefits.
For a subscription of $9.95 per month, Meed provides banking, insurance, travel features, discounts at selected stores, personal finance management and so on.
Oklahoma-based Vast Bank (formerly Valley National Bank) provides banking services to Meed. Vast Bank is itself in the process of modernising its technology with SAP and Axxiome.
Meed was established in 2013 and is based in Santa Monica, California. It is led by Les Riedl (CEO) and Stephen Landry (COO and CTO). Both come from Bank Solutions Group.
Mi Bank
This start-up bank in Michigan was set up in 2018 and expects to launch in the course of 2019.
The bank’s founder, chairman and CEO is Rob Farr, was a long-standing president and CEO of another Michigan-based financial institution, Birmingham Bloomfield Bancshares, which was acquired by Arbor Bancorp in 2016.
Mi Bank will focus on local businesses and plans to offer them a full suite of banking solutions including core account processing, commercial lending, digital banking, remote deposit capture (RDC), wire transfers, and 24-hour account opening.
For its technology, the bank opted for a suite of products from Fiserv, including the DNA core banking system.
Monzo
UK-based start-up Monzo was granted a full banking licence in April 2017. It opened a waiting list for the US in summer 2019. “We’re doing things differently,” it states. “Help us build the bank you want to see.” Monzo is calling on the US consumers to collaborate with its team to help make Monzo “the ideal bank account for the US”.
The bank is “starting simple” in the US as it understands that “American customers’ needs won’t be exactly the same as in the UK”. The initial offering – an account with a Mastercard debit card and mobile app – provides instant spending notifications, P2P payments, fee-free spending abroad, pots to split savings from spending money, and 24×7 human customer support.
In H2 2018, it closed a funding round of £85 million and announced plans to raise further £20 million, and to launch a business current account.
It has partnered with Thames Card Technology for debit card production and personalisation. GPS is the processor for Monzo in the UK.
For banking ops, it decided to build its own platform. Technology used is mainly open source: Linux, Apache Cassandra distributed database (used by the likes of Apple and Twitter), Google’s Go (golang) programming language at the back-end and PostgreSQL relational database.
The infrastructure is hosted on the Amazon Web Services (AWS) cloud. The bank’s two data centres are for interacting with Mastercard’s systems.
Moven
Launched in 2011 by Brett King, Moven describes itself as “the world’s first real-time mobile money tool”. It is a digital bank account with a mobile app.
It partners with CBW Bank and other vendors to provide digital banking services to consumers.
In early 2018, it was reported that Moven was seeking to acquire a bank in the US, to help it scale faster and access more services for its customers.
It also works with banks in the US and globally to provide its financial engagement and digital experiences platform on a white label basis. This is done via Moven Enterprise. The solution is provided on a Software-as-a-Service basis.
In early 2018, Moven Enterprise announced a multi-million dollar investment from Japan’s SBI Group. The investment is part of a joint venture agreement between the two, in which SBI will bring Moven’s technology into Japan under the Moven brand, offering mobile banking tools to domestic and international banks. The agreement also gives SBI one of six seats on Moven’s board of directors.
N26
A challenger bank from Germany, now working on its US presence, including obtaining a banking licence. It opened early access to users in the US in October 2017 and has an office in New York with eight staff.
“A fully licensed bank at your fingertips,” it states on its website. “An account you’ll love to use, including your own N26 account number, sort code and Mastercard.”
In spring 2018, N26 raised €110 million ($134 million) in its Series C funding round. In early 2019, it raised further $300 million in Series D. This new capital injection will help it gain a foothold in the US banking market.
N26 currently operates across 17 European countries, with services including instant overdrafts, international transfers, and savings accounts from banks across Europe via its deal with German deposit marketplace Raisin.
N26 was founded in 2013 by Valentine Stalf and Maximilian Tayenthal.
For its core processing technology, the bank uses Mambu’s core banking system, provided on a hosted basis.
Newbridge Bank
New York, Broadway-based Newbridge Bank plans to offer a transaction processing engine integrating businesses and their digital-native customers for banking services.
This will feature RESTful APIs, microservices, straight through processing (STP), robotic process automation (RPA), a fintech marketplace, and artificial intelligence (AI) powered personalisation.
Ed Boyle is Newbridge’s GM for blockchain and digital banking.
New Valley Bank & Trust
A new bank in Springfield, Massachusetts. It was set up in 2018 and by early 2019 was working towards obtaining a bank charter and federal deposit insurance and completing a funding round. It plans to open its first branch in the course of 2019.
The bank promises to offer personalised services and “best-in-class product suites that are thoughtfully designed to elevate the financial prosperity of customers”.
Its founder and chairman is attorney Frank P. Fitzgerald, who founded The Bank of Western Massachusetts in the mid-1980s and grew it to over $1 billion in assets by 2009 (when the bank was sold to Peoples’ United Bank).
Jeff Sullivan is president and CEO. He has 30+ years of financial services experience, and previously served as COO and chief lending officer at two local community banks in New England.
Kate Gallo Megraw is the bank’s CIO and COO. She moved from United Bank, a large regional community bank, where she spent six years in a variety of tech and operational roles, most recently as director of IT planning and portfolio management.
New Valley Bank & Trust sees its competitive advantage over large banks in its “authentic commitment to accountability and responsiveness”.
Nexos National Bank
Nexos National Bank is based in Stamford, Connecticut. It was founded by Gordon Baird, CEO, and has Kathleen Romagnano as president and COO.
It plans to serve consumers and SMEs with brick-and-mortar branches and online offerings.
The bank expects to start operating in 2019/H1 2020, contingent upon approvals from both the OCC and FDIC.
Novo
Novo is a business banking service provider, founded in 2016 and based in New York. It targets start-ups and entrepreneurs with a checking account and debit card solutions.
Novo doesn’t have a banking licence, so its deposit account services are provided by Middlesex Federal Savings, a community bank in Massachusetts.
Its products can be connected with other financial accounts, and Novo steps in to provides recommendations based on a user’s financial picture.
Novo is currently being offered to small businesses for free. Users can link accounts, pay bills, process ACH transfers, cancel recurring subscriptions, and transfer money between accounts.
Michael Rangel and Tyler McIntyre are Novo’s co-founders.
One is a San Francisco-based neobank setting out to tap America’s middle class. It landed $17 million in a Series A funding round in March 2020 from Foundation Capital, Core Innovation Capital and Obvious Ventures.
The challenger, which is FDIC-insured through Coastal Community Bank, was co-founded in January 2019 by Bill Harris, former Intuit CEO and PayPal founding CEO, who now chairs the fintech and has put $9 million of his own cash into the venture.
As well as Harris, One also carries heavyweight Brian Hamilton, who co-founded the Capital One-acquired PushPoint, as its CEO.
The challenger launched at the end of September 2020.
Oxygen
San Francisco-based mobile banking service Oxygen focuses on the “gig economy” by offering banking services and credit lines to freelancers.
The start-up is backed by Y Combinator and raised $2.3 million in funding in early 2019.
“Even the most affluent freelancers are often denied lending services due to their variable incomes,” explains Hussein Ahmed, founder and CEO of Oxygen. “Oxygen is the only digital banking service offering modern banking services with no fees combined with fair credit line offerings, based on an intelligent, artificial intelligence (AI) driven analysis of individual freelancers’ income flows.”
Oxygen tracks freelancers’ bills, projects their income and offers instant credit – a “unique service combination that no other bank or payday lender offers”.
By January 2019, Oxygen had more than 13,000 bank accounts opened; a single digit default rate; a 19% return on capital and a $10 million line of credit.
Pangea
Money transfer company Pangea plans to launch a branded checking account.
Pangea’s current offering consists of a mobile app (the service is built by Green Dot) through which people can send money abroad for low fees. Its major target customer is Spanish-speaking immigrants who want to send money back to their home country in Latin America. The firm also caters to South East Asia.
Pangea is based in Chicago and is led by Nishu Thukral, CEO and president, who has been in the role since 2012. It is backed by KGC Capital, Chicago Ventures, Jump Capital, BW Capital Partners, OCA Ventures and other angel investors.
Piermont Bank
New York-based Piermont Bank describes itself as a “new generation” of commercial banking. It focuses on privately-owned business, especially multi-generation family-owned enterprises. “We appreciate, respect and honour family legacy, business history and aim to address banking needs in the most practical, effective and relevant way for our clients,” the bank states.
The bank has conditional approval from the OCC and the FDIC (for deposit insurance). It plans to open for business in 2019.
The San Francisco-based challenger bank ran a private beta for a whole year before launching its service in July 2020.
The fintech wants to reproduce the experience of a credit card, but with a debit card. Users can get 4x the points at Starbucks, 3x the amount at Uber, and 2x at Airbnb.
The bank went live on 8 November, following deals with Visa and Evolve Bank & Trust.
Point also offers a checking account, and savings account with 1.4% APY.
These points will rack up, and users can redeem them directly into their checking account. You get a point for every $1 you spend on the card. Each point is then worth $0.01 when redeemed back into a user’s account.
Radius Bank, an FDIC-insured bank bought by fintech LendingClub for $185 million in February 2020, protects Point’s deposits
The start-up landed a $10.5 million funding round in July 2020 led by Valar Ventures – the US-based VC fund co-founded by PayPal’s Peter Thiel.
Poppy Bank
Poppy Bank got its current name in November 2017, when it changed from First Community Bank. There are many “first community banks”, Deborah Meekins, then CEO and president, said at the time, but only one Poppy Bank. Meekins left the bank shortly afterwards, replaced by Khalid Acheckzai, previously the bank’s COO.
The original bank was founded in 2004 and is based in Santa Rosa, California. It provides business and personal banking services.
In spring 2018, Poppy Bank acquired a de novo bank in California, Blue Gate Bank, to expand statewide. Blue Gate, which opened in January 2017 in Costa Mesa after raising $30 million, was the first new bank in the state since the 2008 financial crisis.
Blue Gate chairwoman Molly Gallaher Flater comes from a banking family in Santa Rosa, where her father Bill Gallaher is the majority owner of Poppy Bank.
Primary Bank
A start-up bank in Bedford, New Hampshire, launched in H1 2015. The bank says it is in “pursuit of re-establishing local community banking values”.
Primary Bank offers products and services to businesses and individuals.
The bank’s president and CEO is William (Bill) Stone, formerly president of Bank of New England in Massachusetts. COO is Renate Wallem, who moved from a similar role at another Massachusetts-based entity, Admirals Bank.
In Q1 2018, DepositAccounts named Primary Bank as No 2 on its list of the “2018 Top 200 Healthiest Banks and Credit Unions in America”. (DepositAccounts evaluates the financial health of over 11,000 banks and credit unions in the US once per quarter, grading each institution on a number of factors, including capitalisation, deposit growth, and loan-to-reserve ratios.)
For its technology, Primary Bank uses Jack Henry’s Silverlake core banking system.
PurePoint Financial
PurePoint Financial was launched in early 2017 by MUFG Union Bank. It is a “hybrid digital bank” offering savings accounts and certificates of deposit (CDs).
PurePoint provides services online, over the phone and in brick-and-mortar branches – PurePoint Financial Centres – located in Texas (Houston and Dallas), Florida (Tampa and South Florida), Chicago and New York.
Each PurePoint Financial Centre offers “a modern, streamlined and cashless experience”, according to the company, and has a smaller footprint than a traditional bank branch (2,000 square feet on average).
PurePoint’s flagship location in New York City is more like a museum than a bank branch, featuring 15 pieces of art by a local artist on the walls. According to Maha Madain, head of enterprise marketing at PurePoint, “the art scene is part of New York, so what better way to showcase our commitment to the community than being part of the community”. There is also comfortable seating and complimentary refreshments. This concept is now being rolled out to other branches.
For its technology, PurePoint uses FIS’s Profile core banking platform, hosted in the FIS datacentre.
The Florida-based challenger rebranded from ‘youBelong’ in 2020. It aims to serve America’s disabled community.
The fintech allows users to receive disability benefits up to two days early. In 2020, it started working on a voice-powered banking service with Microsoft.
Founded in 2017, youBelong brands itself as the “very first social network for people with special needs”. youBelong later unveiled “youBelong Cash”, a mobile bank for families of children with special needs.
Its current account offering claims to have no hidden frees and no minimum balance requirement. As well as early direct deposits, it also offers a spending tracker and money transfers.
The challenger is piggybacking off the Bancorp Bank, whilst Mastercard issues its debit cards.
It’s currently using Galileo Instant issuing, with plans to move to Galileo Pro. This would see the fintech develop its own budgeting tools and custom interfaces.
Quontic Bank
Quontic Bank is based in the Queens neighbourhood of New York City and has offices in six states (New York, Indiana, Florida, Georgia, Massachusetts and Virginia). It also has online and mobile banking presence.
It emerged in 2009 when real estate developer and entrepreneur Steven Schnall bought a small troubled bank, Golden First Bank ($24 million in assets at the time). It received fresh capital and became Quontic Bank, with the name stemming from “ontic”, meaning real or factual existence.
“The truth is that there is an extraordinary diversity of circumstances in the real and factual existence of our customers’ lives. We believe banking needs to be adaptive to those circumstances, so we ask the Qualitative and Quantitative questions that enable us to do so,” the bank explains. “Hence Quontic – an adaptive form of ‘ontic’. We like how it sounds and what it stands for.”
In 2017, it had assets of $325 million and 220 employees.
Rebtel
Sweden-based digital bank for migrants Rebtel plans a US launch in Q2 2019. Rebtel says it is built by migrants for migrants. It has one million customers, the anticipated 2018 revenue of $100 million, and is profitable.
Philip Mikal, chief product officer at Rebtel, explains: “We are keen on building the best offer for our very clear user group: ambitious migrants who have established themselves in the US in search of a new life. Some have done it for love, others for career reasons, some have fled from war or poverty – they have in common a set of specific challenges that anyone who crosses a border has – not just the US one: they lack credit history and social networks, they might lack a job and so on. We work to fix those problems one at the time, and later in 2019 we turn to banking.”
The firm is backed by Index Ventures and Balderton Capital, and secured $8 million in funding in mid-2018.
Rellevate
Rellevate was founded by a Western Union alum Stewart Stockdale. It’s designed for US citizens who earn between $10 and $25 an hour and live paycheck to paycheck.
In January 2020, CEO and chairman Stockdale said it would be live by the end of March 2020. Its offering includes a debit card, payday advances, bill pay and international payments services. These are all tied up into one package which will largely be sold through employers, who can choose whether or not to subsidize the $9.99 monthly subscription fee.
The challenger selected Technisys to provide its API-friendly cloud-based core digital banking platform. Technisys also provides core banking solutions to incumbent banks HSBC and Canada’s ATB Financial. Visa is powering Rellevate’s debit card.
The neobank has also partnered with an unnamed bank which will hold Rellevate’s funds in federally insured accounts.
Stockdale tells American Banker: “I’ve worked with payday lenders, check cashers and money transmitters, and the common denominator for those three are onerous fees.”
By selling the product through employers, Rellevate can connect to their users’ payroll and offer an alternative to payday loans. The fintech pitches the idea to employers as a way of avoiding high employee turnover rates, as well as a route to improving job satisfaction and saving companies the stress of providing payday advances themselves to employees.
The idea is that if employees’ cash flow falls short in a certain situation, Rellevate can advance them instantly based on this pre-put together data on the limits they can borrow.
Revolut
European banking challenger Revolut opened early access to users in the US in September 2017. It says it aims “to clean up the American banking system”. It provides digital banking services to consumers and businesses.
“We’re going to America to replace your bank – it’s not a payments app with cool features,” states Chad West, Revolut’s chief marketing officer. “There are a lot of these neobanks doing niche small things, but no one’s offering the scale of what we’re offering – you can hold cryptocurrencies too.”
In spring 2018, Revolut raised $250 million in a Series C funding round, followed by another $500 million in a Series D round later that year. The new capital will be used to expand Revolut worldwide, including the US.
Revolut aims to onboard 100 million customers in the next four years. As of mid-2018, it had nearly two million customers (signing up 6,000-8,000 new customers daily) and processed $1.8 billion through its platform. It also boasts over 250,000 daily active users.
For its technology, Revolut relies on its own in-house processing and card issuing platforms. In early 2019, it signed a deal with start-up ClauseMatch to adopt its regtech to streamline management of internal policies, controls and regulatory compliance.
Rising Bank
A new digital bank, launched in early 2019 by Missouri-based Midwest BankCentre (MBC, which itself was founded back in 1906). According to Midwest BankCentre CEO Orvin Kimbrough, the challenger’s aim is to “make the community banking experience digital”.
Customers can open a new account in less than five minutes, and all Rising Bank accounts are FDIC insured up to $250,000 per individual account and up to $500,000 per joint accounts.
Rising Bank will initially offer a range of certificates of deposits (CDs) and high yield savings accounts.
For its technology, Rising Bank uses the set-up of its parent, MBC, which runs on Jack Henry’s core banking system.
Credit Sesame, the California-founded credit and loan finder, launching a new digital banking account called ‘Sesame Cash’ for its existing users in March 2020.
With insights into its users’ banking habits, Credit Sesame will use its already-accumulated credit score data to help promote more holistic healthy credit behaviours and good cash management for its 15 million customers.
CEO Adrian Nazari says 84% of the company’s customers “live paycheck to paycheck” and rely on immediate cash flows.
Sesame Cash will include a Mastercard-powered fee-free debit card account with no minimum balances and early access to paycheck funds.
Nazari believes the Sesame Cash feature will stand out on account of its extra credit features, such as analysing cash and repayment abilities against credit to recommend lower-cost credit cards and loans.
The account does not pay interest on balances, but customers do get rewards for improving their credit scores. For example, they get $5 if their VantageScore jumps by 10 points in a month.
Simple
Digital banking service Simple was founded in 2009 in Portland, Oregon. It describes itself “a tech company, not a bank”.
In early 2014, it was acquired by BBVA Compass for $117 million. At the time, BBVA said Simple had 100,000 customers (although various external publications and reports gave a considerably lower number of around 33,000 active customers). Simple accounts were migrated to BBVA.
Since then, BBVA wrote off $89.5 million. However, in early 2017 Carlos Torres Vila, CEO of BBVA, told analysts that Simple was “growing very well”, adding 30,000+ customers a month at a low cost of acquisition.
In 2016, it launched the Simple Shared account: people get two cards and one account – for “shared saving” and spending – so “your financial life becomes a collaboration”. Simple says it’s aimed at all “non-business partnerships: roommates, siblings, roadtrippers, romantic couples, and more”.
In May 2018, Josh Reich, co-founder and CEO of Simple, became the last of the original founders and senior execs to leave the firm.
SoFi
Social Finance (SoFi) is an online personal finance company that provides student loan refinancing, mortgages and personal loans. It was founded in 2011 and is based in San Francisco.
It went through a number of major funding rounds, including raising $1 billion in 2015 (the largest single round of financing in the fintech space at the time).
In early 2017, it raised another $500 million, and spent $100 million (in stock) on Zenbanx, a mobile banking start-up. Zenbanx offered a mobile account in the US and Canada that lets people save, send and spend money in multiple currencies. This deal demonstrated SoFi’s interest in branching into other financial services, with a wealth management tool in beta at the time of the acquisition.
Later that year, SoFi’s co-founder, president and CEO, Mike Cagney, resigned amidst allegations of sexual harassment and skirting risk and compliance controls. The CEO vacancy was filled in early 2018 by Anthony Noto, ex-COO of Twitter.
For its technology, SoFi uses the Profile core banking system from FIS.
Spirit Community Bank
A start-up bank in Statesville, North Carolina, awaiting a banking licence. It plans to raise $30 million via stock sale.
It will be a full-service bank, focusing on the local community, namely consumers and SMEs.
The bank emphasises that its organisers “all live and work in Iredell County and are leaders in the Statesville community, representing decades of business and civic service”. It hopes to “ignite the spirit of community”.
Spirit Community Bank’s president, CEO and chairman, William “Bill” Long Sr., has over four decades of banking experience, and was previously president and CEO of Yadkin Bank (now part of First National Bank). COO Kirsti Eller also comes from Yadkin Bank, where she was EVP and CIO. She has over 30 years of experience in the industry.
Stash
New York-based financial services platform Stash was founded in October 2015 by Wall Street veterans, Krieg and Ed Robinson.
In early 2018, Stash raised $37.5 million in Series D funding for product expansion, and shortly afterwards teamed with Green Dot Corporation and its subsidiary bank, Green Dot Bank, to launch mobile-first banking services (underpinned by Green Dot’s Banking-as-a-Service platform).
These include bank accounts with debit cards, no overdraft fees, and a network of free ATMs nationwide. Stash says it also provides personal guidance – from spending to saving, to retirement and investing.
According to Stash, it has over two million customers and five million educational subscribers, with approximately 40,000 new clients joining weekly.
Step
A new mobile banking service aimed at American teenagers, with a cashless-centric approach to banking. It targets the “pre-banked” population – children and under 21s in the US, who are forced to use cash.
Step was founded in spring 2018 by Alexey Kalinichenko, CTO (previously of Square and financial services start-up Token) and CJ MacDonald, CEO (he previously worked at gift card platform Gyft, which is now part of First Data).
In summer 2018, it raised $3.8 million in seed funding, and closed a $22.5 million Series A funding round in June 2019.
Step has partnered with Mastercard, Stripe and Evolve to launch the solution, aiming to be a teen’s first spending card and first bank account. The Step card is co-branded with Mastercard, providing zero liability protection against unauthorised purchases or charges.
Step will offer a combination of a checking (current) account, savings and a Visa card that works as both credit and debit, and is set up/authorised by the parents.
Step’s bank account is backed by Evolve Bank.
Studio Bank
In 2017, Tennessee-based Studio Bank filed an application to become Nashville’s “first newly chartered de novo bank in nearly a decade”.
Studio Bank describes itself as a “boutique bank” with a “hyper-local strategy”, with omnichannel and also physical presence. It will use an array of digital banking solutions, including self-service features like card on/off, mobile deposit, and commercial cash management.
For its technology, it has opted for CSI’s NuPoint core and mobile banking software, provided on a hosted basis.
Aaron Dorn, chairman, president and CEO of Studio Bank, says it has the “opportunity to be the first local bank in nearly a decade to design a client service model from scratch”.
TAB Bank
Transportation Alliance Bank (TAB Bank) was launched in 1998, and is a digital-only bank.
The bank targets SMEs across the US with lending and banking products and services, including checking accounts, treasury management, savings and deposits. It also offers personal banking – card and checking accounts and certificates of deposit (CDs).
TAB Bank’s HQ is in Ogden, Utah. Curt Queyrouze, the bank’s president, states the bank “has never had a branch, yet has been serving mobile customers since before smartphones, using innovative processes to allow customers to bank-on-the-go”.
“We are both a platform bank as well as an infrastructure bank to our partners,” Queyrouze says.
It delivers its products through partnerships, via its new API stack. The bank offers an open API deployed through Mulesoft and hosted on the bank’s private cloud.
It has Fiserv’s tech for core processing, hosted in the bank’s data centers; and a data platform that provides distributed storage allowing real-time analytics and machine learning.
Tennessee Bank & Trust
Tennessee Bank & Trust is a full service bank that caters for individuals and businesses.
The bank’s roots are in the Arizona-based Farmers Bank & Trust, which entered the Tennessee market in mid-2000s with branches in Franklin and Nashville. In mid-2017, a separate banking charter was obtained to launch Tennessee Bank & Trust as its own entity, and in October that year it was legally separated from Farmers Bank & Trust.
Tennessee Bank & Trust is one of seven banks wholly owned by Gaylon M. Lawrence Jr. and the Lawrence family.
T-Mobile Money
In spring 2019, T-Mobile’s marketing campaign in the US, Un-carrier, launched its T-Mobile Money mobile checking account. The offering was created in partnership with BankMobile (the digital banking subsidiary of Customers Bank; see above).
The account comes with overdraft protection and no fees. It offers up to 4% annual percentage yield (APY) on balances up to $3,000 (50 times higher than the average US checking account) and 1% APY on every dollar after that.
It allows paying bills, making mobile cheque deposits, setting up direct deposits, sending and transferring money, or paying with a mobile wallet like Apple Pay, Google Pay or Samsung Pay.
“Traditional banks aren’t mobile-first and they’re definitely not customer-first. As more and more people use their smartphones to manage money, we saw an opportunity to address another customer pain point,” says John Legere, CEO of T-Mobile. “You work hard for your money, you should keep it, and with T-Mobile Money, you can!”
Trustar Bank
A start-up community bank in Virginia, looking to serve the Greater Washington area. It is currently in organisation (Q1 2019).
Trustar’s founder is Shaza Andersen, formerly CEO of WashingtonFirst Bank. WashingtonFirst was launched in 2004 and grew to $2 billion in assets, 19 branch locations and more than 250 employees. In late 2018, it was sold to Sandy Spring Bank for $447 million.
Upgrade
Upgrade is a San Francisco-based challenger founded by French entrepreneur Renaud Laplanche, who previously set up LendingClub, a fintech which bought a US regulated bank in February 2020.
Built with lending at its heart, Upgrade offers users a contactless credit card which has built in pay-over-time features.
Since launching in October 2019, the fintech says its zero-fee, Visa-powered cards have seen an annual rate of $500 million in new credit lines being made available to consumers across the US.
Monthly charges are combined into installment plans payable over 24-60 months, committing people to paying down their balance every month.
Every Upgrade Card comes with a credit line of $500-$20,000. The card is issued by Sutton Bank, an FDIC-insured bank.
Unifimoney
According to Ben Soppitt, founder of Unifimoney and former head of business development at Samsung Pay, when a consumer opens a Unifimoney account “they automatically default to best practice in personal financial management.
Unifimoney plans to make its money from small charges for robo-advisory services, as well as a partnership program through which Unifimoney will recommend mortgages, insurance and car loans from selected participants.
The firm, which has yet to gain a full banking licence, aims to offer a combined checking and savings account integrated with “everyday money management”.
Varo Money
San Francisco-based mobile banking service Varo Money was founded in 2015. It applied for a national bank charter and federal deposit insurance in mid-2017, to form Varo Bank, and received the preliminary approval in September 2018.
Colin Walsh, co-founder and CEO of Varo Money, says the company offers more than just checking, savings and lending products. “We want to help our customers solve financial problems, fix the fundamentals, and guide them toward a better financial future,” he explains.
“As a national bank, Varo will be able to help Americans nationwide.”
Also in summer 2017, Varo Money launched in the Apple App Store through a partnership with The Bancorp Bank. The Varo app enables customers to manage cashflow, track spending and see all their accounts – not just those with Varo – while also handling everyday banking.
For its technology, Varo selected Temenos’ T24 core banking platform and the lifecycle management suite from Akcelerant Software (the vendor was purchased by Temenos in 2015). The solutions will be delivered on a hosted basis (cloud).
VisionBank
VisionBank is a start-up community bank based in Virginia and currently in organisation (Q1 2019). It says a decade of community bank consolidation has paved the way to a new opportunity – “to bring true community banking and unparalleled customer service back to the Greater Washington region, arguably the best banking market in the nation”.
The bank’s chairperson and CEO is Melinda (Mindi) McClure, previously of Bank of Georgetown (sold to United Bank in 2016). COO is Richard Horn, formerly of WashingtonFirst Bank (sold to Sandy Spring Bank for $447 million in late 2018).
The Texas-based start-up is a Latino-focused challenger banking offering founded in 2020.
The plan is to roll out the offering in Texas, focusing on Latino-heavy areas such as El Paso, San Antonio, and parts of the Rio Grande valley.
“We’re going to deliver a banking solution that truly speaks their language,” says Viva First’s co-founder, Natalia Muñoz-Moore.
With Latino clientele at the heart, the challenger will also be opening its doors to all types of consumers.
Each account will come with a Visa debit card, smart savings recommendations, and Latino-focused messaging.
Customers’ money is insured up to $250,000 by the FDIC. The fintech is piggybacking off Texas-based, Spur Security Bank.
Watermark Bank
Watermark Bank is a new bank in in Oklahoma, launched in January 2019. “Built by entrepreneurs for entrepreneurs,” it says on its website.
It aims to “build the best business bank” in Oklahoma by delivering highly personalised financial services to business owners, families and entrepreneurs.
It claims to have raised the largest capital for a newly chartered bank in Oklahoma’s history.
Watermark’s co-founders are Matt Pollock (CEO) and Gary McClanahan (CFO). Both are seasoned bankers.
Winter Park National Bank
Based in Winter Park, Florida, the bank was established in August 2017. Like many other de novo banks in the US, it emphasises its personalised service and local expertise. “More than just a boutique operation, we aim to be the bank that remembers your name before your account number,” it states on its website.
It names “community, care and conscience” as its fundamentals.
The bank serves attorneys, doctors, CPAs, contractors and local small business entrepreneurs.
The Californian challenger piggy backs off BBVA, the US subsidiary of Spain’s Banco Bilbao Vizcaya Argentaria, to FDIC-insured customer deposits.
In August 2020, the fintech launched its premium checking account in the US. Priced at $10 a month, it merges banking, payments and customer support capabilities.
Businesses can earn up to 1% annual percentage yield (APY) on their deposits. They can also send and receive various payments through the app, and get access to 24/7 live chat support.
The fintech is taking a partner approach to its offering. Payments unicorn Stripe, Canadian ecommerce giant Shopify and accounting helper QuickBooks are all on its partner list.
In April 2020, the fintech start-up – founded in 2018 – raised a $5.7 million seed round.
The San Francisco-based banking challenger offers couples joint cards. It landed $1.5 million in seed capital in February 2020.
The fintech offers its joint account through LendingClub Bank, insuring deposits up to $500,000
Zeta is a digital layer of banking services designed to set on top of pre-existing bank accounts.
The start-up makes money on partial interchange fees, with some of this also going to couple’s primary banks. In the future, it intends to roll out tax and prenuptial agreement-related products.
Zenus Bank
Zenus is a start-up bank aimed at global clients. It says it enables financial inclusion, not only at a global level but “also across all levels of society”.
The bank aims to resolve the local residency requirements that all top-tier banks have in accepting foreign clients, as it has an international banking licence. “We accept individuals and businesses to apply remotely for a multi-currency bank account and debit card using our advanced digital banking technologies”, Zenus says.
It also plans to expand to other services, such as merchant processing, investment accounts and correspondent banking.
Headquartered in San Juan, Puerto Rico, Zenus is led by Jose A Diaz-Ortiz as CEO.
Zero Financial
Credit card and checking account combo Zero Financial is looking to launch its products out to its waiting list of 200,000 people.
In May 2019, it managed to raise $20 million in a Series A led by New Enterprise Associates (NEA), and bringing the San Francisco fintech’s total equity and debt funding to $35 million.
Billed as a solution that allows customers to “bank like debit and earn like credit”, Zero offers a rewards credit card called Zerocard and a checking account.
Issued in partnership with Salt Lake City-based WebBank, Zerocard is a World Mastercard that is issued at four levels – ranging from Quartz, which earns 1% cash back on purchases, to the 3% cash back Magnesium card.
Zero Checking deposits are held at Memphis-based Evolve Bank and Trust and are insured up to FDIC limits.
We’ve also got comprehensive lists of UK and Australian challengers! Check them out here and here.
I think this list should be updated to reflect the fact that Chase has “decommissioned” Finn. Be interested in understand the story behind that decision.
List updated, thanks for flagging this. We are also digging into the story to find out more!
There are two challenger banks you’re missing Dave Inc and Acorns.