Contributors: Joe Fenech and The Travillian Group, LLC
For banks, the ongoing convergence of banking and technology is quite possibly the most intriguing development of the last decade. The companies that make up the first twelve of our Index, along with the others that will join this group in the months to come, are at the forefront of this convergence and have thrived. They hail from all over the United States and have been early industry adopters of financial technology with specialties such as Banking as a Service, Payments, Gaming and Crypto. These institutions have made bold decisions born out of consumers’ desires to transact differently and as a means to create inventive solutions for unique, underbanked or unbanked populations. They have also jumped at the opportunity to utilize their bank charter to provide the “plumbing” for FinTechs large and small.
Our “First Twelve” have been transforming their organizations and, in many cases, embracing new technologies well before an established peer group was recognized in the industry. As one Chairman told us, “we’re building an airplane as we’re flying it.” And, as they built these “airplanes”, the companies dramatically improved performance, with ROE’s of 20%, 30% and even 50%, and positioned their bank for a bright future.
Our “First Twelve” have been transforming their organizations and, in many cases, embracing new technologies well before an established peer group was recognized in the industry. As one Chairman told us, “we’re building an airplane as we’re flying it.” And, as they built these “airplanes”, the companies dramatically improved performance, with ROE’s of 20%, 30% and even 50%, and positioned their bank for a bright future.
How We Selected The Banks
As a reminder, this is a list of banks that we deem to be at the forefront of the convergence of traditional banking and fintech. Our main objective is to create a forum to highlight, discuss, and track interesting companies and trends within this unique subset of the bank sector. To that end, we wanted our initial list to represent a cross-section of this tech-forward bank subset, by size, geography, and tech specialty. We also decided to highlight a bank we deemed to be considered our “One to Watch” pick.
More companies will be added to the index, eventually comprising of over thirty tech-forward institutions. It’s important to point out that the order of appearance on our list is not a ranking or recommendation of, or a preference for, those companies (and stocks) that are listed first, but rather a source of information for bankers, analysts, investors, media, and others seeking to learn more about, and interact with, this group of tech-forward banks.
What Do We Intend To Do With This List
In the coming weeks and months, we will produce in-depth fundamental and valuation analysis of the group, conduct insightful interviews, host live webinars, publish “deep dive” analysis and highlight new developments at each of the subject companies, and unveil new members of the Index. As the convergence between traditional banking and technology accelerates in years ahead, we will look to increasingly brand these companies and tech-forward banks in general as a unique subset of the bank sector. We hope you enjoy the short introductory video presentations by executive leaders at the banks selected for our initial list. Much more to come!
As a reminder, this is a list of banks that we deem to be at the forefront of the convergence of traditional banking and fintech. Our main objective is to create a forum to highlight, discuss, and track interesting companies and trends within this unique subset of the bank sector. To that end, we wanted our initial list to represent a cross-section of this tech-forward bank subset, by size, geography, and tech specialty. We also decided to highlight a bank we deemed to be considered our “One to Watch” pick.
More companies will be added to the index, eventually comprising of over thirty tech-forward institutions. It’s important to point out that the order of appearance on our list is not a ranking or recommendation of, or a preference for, those companies (and stocks) that are listed first, but rather a source of information for bankers, analysts, investors, media, and others seeking to learn more about, and interact with, this group of tech-forward banks.
What Do We Intend To Do With This List
In the coming weeks and months, we will produce in-depth fundamental and valuation analysis of the group, conduct insightful interviews, host live webinars, publish “deep dive” analysis and highlight new developments at each of the subject companies, and unveil new members of the Index. As the convergence between traditional banking and technology accelerates in years ahead, we will look to increasingly brand these companies and tech-forward banks in general as a unique subset of the bank sector. We hope you enjoy the short introductory video presentations by executive leaders at the banks selected for our initial list. Much more to come!
- The First Twelve -
> Blue Ridge Bankshares, Inc. (Blue Ridge Bank) CharlottEsville, VA
Public - NYSEAM: BRBS
Headquarters: Charlottesville, VA Date Established: 4/14/1893, IPO Date: 2019 Asset Size: $3.16 billion Market Cap. ($M): 306.0 (as of 5/18/2021) 52 Week High/Low: 16.97 / 8.94 (as of 5/18/2021) FinTech Specialty: Tech-Forward/Crypto Key FinTech Partners: Unit, Flex, Grow Credit |
“We also have a partnership that has recently drawn some coverage working in the area of ISAs. We’re believers in ISAs as a means to affordable college education and allowing the empowerment of education access away from the traditional student lending model that puts students in situations where they rack up debt.”
- Brian Plum, CEO & President |
> Coastal Financial Corporation (Coastal Community Bank) [Full report below] Everett, WA
Public - NASDAQGS: CCB
Headquarters: Everett, WA Date Established: 4/1/1997, IPO Date: 7/17/2018 Asset Size: $2.03 billion Market Cap. ($M): 372.8 (as of 5/18/2021) 52 Week High/Low: 33.76/11.58 (as of 5/18/2021) FinTech Specialty: BaaS Key FinTech Partners: 21 active partners including: One, Carta, Aspiration, Ellevest, Novi, Sable, Cheese, Google Plex Chairman of the Board: Christopher D. Adams President, CEO & Director: Eric M. Sprink Website: www.coastalbank.com |
“Some of the recent success we’ve had has been building a diversified portfolio. 75% of our fin tech
founders and CEO’s are from communities of color or females, or are representing communities that don’t have normal access to the banking system.” - Eric Sprink, President, CEO & Director |
> Cross River Bank Fort Lee, NJ
Privately-Held
Headquarters: Fort Lee, NJ Date Established: 06/23/2008 Asset Size: $13.4 billion FinTech Specialty: BaaS, Payments Key FinTech Partners: affirm, best egg, coinbase, FINIX Payments, freedomplus, Rocket Loans, RS2, stripe, Upstart, Visa Chairman, President & CEO: Gilles Gade CFO: Kris Pease Website: www.crossriver.com |
“When we think about who Cross River is, it’s really a platform. It’s a platform that allows people to do really interesting things, solve difficult problems and to really think about what banking should be on their terms.”
- Jesse Honigberg, Technology Chief of Staff |
> Evolve Bancorp, Inc (Evolve Bank & Trust) Memphis, TN
Privately-Held
Headquarters: Memphis, TN Date Established: 6/5/1925 Asset Size: $670 million FinTech Specialty: BaaS, Payments Key FinTech Partners: Synaps Chairman of the Board: B. Scot Lenoir President, CEO & Director: W. Scott "William" Stafford Website: www.getevolved.com |
On Payments and ACH: “We work with all of the major processors: Galileo, i2c, Marqeta, as well as
having our own native, issuing stack…We were also proud to announce that in 2020, we were named to be one of the top 50 ACH originators in the country.” - Hank Word, Chief Technology Officer |
> Lincoln Savings Bank Reinbeck, IA
Privately-Held
Headquarters: Reinbeck, IA Date Established: 1902 Asset Size: $1.51 billion FinTech Specialty: BaaS Key FinTech Partners: Qapital, Acorns, M1 Chairman of the Board: Milton Dakovich President & CEO: Erik Skovgard Website: www.mylsb.com |
“The fun part for me, before we started our fin-tech relationships, we had about eighteen thousands customers,
and as of today we have over two million customers.” - Erik Skovgard, President & CEO |
> Live Oak Bancshares, Inc. (Live Oak Bank) Wilmington, NC
|
Public - NASDAQGS: LOB
Headquarters: Wilmington, NC Date Established: 3/31/2009, IPO Date: 7/23/2015 Asset Size: $8.41 billion Market Cap. ($M): 2,620.8 (as of 5/18/2021) 52 Week High/Low: 72.64 / 12.47 (as of 5/18/2021) FinTech Specialty: SBA Key FinTech Partners: investments in Finxact, payrailz, defense storm, savana, greenlight, apiture Chairman & CEO: James S. "Chip" Mahan III President & Director: Neil Lawrence Underwood Website: www.liveoakbank.com |
Live Oak is a digitally-focused bank serving customers nationwide. From innovations in small business lending, to digital banking, to its remarkable track record as a tech incubator, the company is clearly at the leading edge of the convergence between traditional banking and technology. Stay tuned for a video introduction by Live Oak’s senior leadership team and further in-depth analysis.
|
> Meta Financial Group, Inc. (MetaBank) Sioux Falls, SD
Public - NASDAQGS: CASH
Headquarters: Sioux Falls, SD Date Established: 2/22/1954, IPO Date: 9/20/1993 Asset Size: $9.79 billion Market Cap. ($M): 1,602.0 (as of 5/18/2021) 52 Week High/Low: 51.02 / 16.18 (as of 5/18/2021) FinTech Specialty: Payments Key FinTech Partners: MoneyLion, KyckGlobal, H&R Block Chairman of the Board: Douglas J. Hajek President, CEO & Director: Bradley C. Hanson Website: www.metabank.com |
“We looked at how we could reach into multiple processing platforms across the industry, so that we could provide the most flexibility and the most reach into the marketplace for all the fin-techs that are emerging…in order to facilitate and enable them to provide those services”
- Brad Hanson, President, CEO & Director |
> MVB Financial Corp. (MVB Bank) Fairmont, WV
Public - NASDAQCM: MVBF
Headquarters: Fairmont, WV Date Established: 1/4/1999, IPO Date: 2006 Asset Size: $2.64 billion Market Cap. ($M): 522.8 (as of 5/18/2021) 52 Week High/Low: 45.94 / 12.20 (as of 5/18/2021) FinTech Specialty: Payments, Gaming Key FinTech Partners: Credit Karma Chairman of the Board: David B. Alvarez President & CEO: Larry F. Mazza Website: www.mvbbanking.com |
“We have become a Banking as a Service (BaaS) bank and our biggest client right now is Credit Karma. 20 years it took us to open 20K accounts. When we signed on with Credit Karma, who is a market juggernaut, we opened up over 4M accounts within 18 months. Our life has changed dramatically and that’s what inspires us to say hey we can do this with a number of clients and probably impact a lot of people” -
- Larry Mazza, President & CEO |
> NBKC Bank Kansas City, MO
Privately-Held
Headquarters: Kansas City, MO Date Established: 3/29/1999 Asset Size: $1.20 billion FinTech Specialty: Payments Key FinTech Partners: Betterment, Joust, Truebill, Digs President & CEO: Brian A. Unruh CFO: Eric Garretson Website: www.nbkc.com |
“It’s really starting on the ground floor with a start-up (fin-tech) or a company that wants to launch a new
product. We are the pilot bank for them. And so we found that (to be) very successful. Some of those we’ve actually made investments in personally.” - Eric Garretson, CFO & EVP Fintech Strategy Leader |
> Signature Bank New York, NY
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Public - NASDAQGS: SBNY
Headquarters: New York, NY Date Established: 4/12/2001, IPO Date: 3/22/2004 Asset Size: $85.38 billion Market Cap. ($M): 14,028.6 (as of 5/18/2021) 52 Week High/Low: 260.37 / 71.45 (as of 5/18/2021) FinTech Specialty: Tech-Forward/Crypto Key FinTech Partners: Voyager, digital payments, polychain Capital, bitflyer USA Chairman of the Board: Scott Aaron Shay President, CEO & Director: Joseph John "Joe" DePaolo Website: www.signatureny.com |
Through its blockchain-based payments platform, Signet, Signature Bank has rapidly established itself as a leader in digital asset banking. The company banks the top five crypto exchanges and has seen extraordinary growth in low-cost deposits. Stay tuned for our deep dive analysis and future interactions with Signature’s management team.
|
> Silvergate Capital Corporation (Silvergate Bank) La Jolla, CA
Public - NYSE: SI
Headquarters: La Jolla, CA Date Established: 8/26/1988, IPO Date: 11/6/2019 Asset Size: $7.75 billion Market Cap. ($M): 2,482.1 (as of 5/18/2021) 52 Week High/Low: 187.86 / 12.05 (as of 5/18/2021) FinTech Specialty: Crypto Key FinTech Partners: Diem Networks US, Inc., Anchorage Digital Chairman of the Board: Dennis S. Frank President, CEO & Director: Alan J. Lane Website: www.silvergate.com |
“The Silvergate Exchange Network (SEN) is our proprietary real time US Dollar Settlement system,
that is API enabled…used by firms like Coinbase, Gemini, Square, Paypal, and Robinhood.” - Ben Reynolds, Chief Strategy Officer |
ONE TO WATCH > Communities First Financial Corporation (Fresno First Bank) Fresno, CA
Public - OTCQX: CFST
Headquarters: Fresno, CA Date Established: 12/23/2005 Asset Size: $957 million Market Cap. ($M): 129.0 (as of 5/18/2021) 52 Week High/Low: 44.43 / 20.95 (as of 5/18/2021) FinTech Specialty: Payments Chairman of the Board: Mark D. Saleh President, CEO & Director: Steven Kenneth Miller Website: www.fresnofirstbank.com |
“Our acquiring license and our appetite to want to play in [the payments] space gives us a seat at the table as a small bank. We think that’s where the fun stuff is happening.”
- Steve Miller, CEO |
- The Council -
Voting members of the Council
|
Ray Chandonnet
Founder/Managing Principal Bankstrategies.net |
Rilla Delorier
Independent Board Director Coastal Community Bank and Nymbus |
David Honold
Principal Patriot Financial Partners |
|
Alex Jimenez
Chief Strategy Officer Extractable |
Patrick Sells
Chief Innovation Officer NYDIG |
Dana Tarkowski
Managing Partner Actuate Law |
Non-voting members of the Council
|
Jesse Honigberg
Technology Chief of Staff Cross River Bank |
Larry Mazza
CEO MVB Bank |
Erik Skovgard
CEO Lincoln Savings Bank |
Eric Sprink
CEO Coastal Community Bank |
Joe Fenech is the Managing Principal of SMBT Consulting, LLC, which provides consulting services to banks. The article represents the views and beliefs of Mr. Fenech and does not purport to be complete. The information in this article is provided to you as of the dates indicated and the data and facts presented herein may change. You should not rely on this article as the basis upon which to make an investment decision; this article is not intended to provide, and should not be relied upon for, tax, legal, accounting or investment advice. Mr. Fenech is also the Chief Investment Officer and Managing Member of GenOpp Capital Management LLC, an investment adviser that maintains exempt reporting status in the State of Indiana. Affiliates of SMBT Consulting, LLC may recommend to such affiliates’ clients the purchase or sale of securities of companies discussed in articles published by SMBT Consulting, LLC.
