The Bancorp Ain’t the Innovation Engine It Used to Be

  • JJ Hornblass
  • February 3, 2016
  • 0

© Can Stock Photo Inc. / EcoPictureIt is a sad truth: AML violations have cut the innovation practice at The Bancorp.

The Bancorp, which released earnings yesterday, arguably has been a leading advocate for fintech over the last several years, notably providing the bank charter behind Simple.

But The Bancorp is facing regulatory scrutiny for its anti-money laundering shortfalls. The company said it spent $41 million last year cleaning up its AML mess — 71 employees were hired to deal with the banks BSA/AML woes, said CFO Paul Frenkiel. Total expenses last quarter tallied $14.8 million at The Bancorp.

The feds have restricted The Bancorp from growing its prepaid business. The bank has also paid at least two fines recently for compliance miscues.

All this compliance kerfuffle casts a pale over the interim CEO, John Chrystal, who commented on digital innovation.

I’m excited about the future of the Bank. Despite our growth restrictions, please remember our existing clients are growing at a very fast pace as is the financial technology sector as a whole. Our growth will mirror the growth of this sector. Simply put, we are in the right place at the right time. Every business line has demonstrated positive growth, process streamlining, and compliance improvements. The Bank punches well above its weight, and I expect it will continue to do so.

It is hard to imagine The Bancorp offering its bank charter to a way-out-of-the-box fintech company with such AML compliance issues still lingering. And that’s really a shame, because now there are but three U.S. banks that will really take flyers on fintech: CBW Bank, Webbank, and Cross River Bank. Three, alas, is too few.

Learn more about the future of fintech at Bank Innovation 2016, Feb 29-Mar 1 in Seattle. Click here for details.


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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at or 212-564-8972.

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