Remember when financial institutions would define checking accounts around niche markets? There might be an account to serve students or retirees or wealthy individuals, each tailored to appeal to the target audience.
With the trend toward digital-only banking and the availability of more efficient, cloud-based core banking and payment technology, some financial institutions are launching entirely separate banks or divisions of their primary organization with a unique brand to serve specific markets.
The largest banks have done this (Goldman Sachs, Wells Fargo and others) and fintechs (Chime, Moven and others). If you are Florida based Surety Bank, however, you launch three banks.
American Banker reported:
While several banks are experimenting with digital-only brands in the hopes of broadening their deposit footprint, Surety Bank in DeLand, Fla., is planning to launch three, each aimed at a different niche market.
The first one, introduced this summer, is called “booyah” and is aimed at college students and young graduates. The $122 million-asset bank sees it as a way to target a specific audience outside the central Florida area and boost deposits in order to ward off competitive threats from fintechs.
It already has two other similar efforts in the works.
“We’re looking to launch two more banks in 2020,” said Ryan James, Surety Bank’s CEO. “We’re currently working with former and professional athletes on creating a digital bank to support professional athletes and fans.”
Surety’s efforts speak to the continuing challenges facing traditional financial institutions, which have watched as fintechs have steadily made inroads among customers. It is a particular challenge for smaller banks and credit unions, many of which are reluctant to branch out with a digital-only offering because of compliance and resource concerns.
Surety Bank is launching their digital-only banks with the help of a new breed of neo-core banking providers, in this case, NYMBUS. NYMBUS advertises its ability to launch a digital bank in 90 days.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group