The phenomenon of brick-and-mortar banks developing online-only banking counterparts has been around since the 2000s. First National Bank of Omaha’s FNBO Direct and River Valley Bank’s IncredibleBank were among the first. Some, such as JPMorgan Chase’s Finn, made a splash before sputtering out. But in the last couple of years, traditional banks have launched a crop of digital-only brands to go after niche audiences, experiment with new technologies that could potentially feed back into the home bank, and acquire rising tech talent.
“A few years ago, a lot of banks were standing up a new digital brand to go after high-rate deposit offerings and grow funding,” said Matt Kelley, director at JAM Fintop, a joint venture that runs a venture capital fund with banks as limited partners. “When the pandemic hit, rates collapsed, liquidity flowed into the system like we’ve never seen before, and a lot of these strategies went dormant.” But more recently, banks have been resuscitating this idea, inspired in part by new technologies, he said.
Read Miriam Cross’ roundup of 5 banks that just launched digital-only brands in American Banker here.
