Community banks can also play the fintech game.
BankMobile — the digital bank, formerly a division of Customers Bancorp Inc. — was acquired by Flagship, a Florida-based community bank, for $175 million.
“We are an independent bank,” said Luvleen Sidhu, BankMobile’s co-founder, regarding the acquisition. “We are no longer a partner or a division of a bank, now we are the bank.”
Its acquirer, Clearwater, Florida-based Flagship Community bank, has about $100 million in assets, offering plenty of opportunity for BankMobile’s growth, according to Sidhu.
The local bank (which currently operates two branches in Clearwater) hopes the acquisition will help it create a larger digital presence, while staying locally owned and operated.
Such a model could turn the community bank into a proper fintech player, especially if BankMobile stays on the path to greater innovation. According to Sidhu, the digital bank’s primary goal is to continue to acquire and engage its customers; presently, the bank has 1.7 million student checking accounts—it caters primarily to students and millennials in the U.S.—and is creating about 500,000 new checking accounts per year.
The bank would like to bring that number up to 1 million a year, which would make it one of the largest digital banks in the country.
“We want to continue to be on the forefront of innovation—see how we can integrate with Alexa better, [use] conversational AI, machine learning,” said Sidhu. “We are really focused on creating engaged customers.”
Regarding the spin-off from Customers, BankMobile pointed to restrictions it ran up against due to the Durbin Agreement, a Dodd-Frank rule which currently limits the interchange revenue (the primary way BankMobile makes its money) of banks with over $10 billion in assets.
The transaction agreement is currently subject to all necessary regulatory procedures, but is expected to officially close in the third quarter of this year.1 - Reader Likes This Post