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 * Reading Now Can JPMorgan Chase fill the startup banking void? By: Anna
   Hrushka
 * Reading Now Citi moves deeper into e-commerce through digital couponing By:
   Suman Bhattacharyya
 * Reading Now A contact center “channel strategy” was your only option. Until
   now. By: Glia
 * Reading Now Citizens Bank of Edmond launches digital bank for military
   recruits By: Anna Hrushka
 * Reading Now Plenty aims to help couples build wealth together By: Gabrielle
   Saulsbery
 * Reading Now A year after ChatGPT’s launch, how do banks stack up? By: Dan
   Ennis
 * Reading Now Neobank Dave’s new chatbot achieves 89% resolution rate, CEO says
   By: Anna Hrushka
 * Reading Now Novo rolls out an embedded payroll tool for small businesses By:
   Rajashree Chakravarty
 * Reading Now Keeping track of multiple BNPL loans? There’s an app for that.
   By: Gabrielle Saulsbery
 * Reading Now Regions Bank partners with credit-building fintech By: Anna
   Hrushka
 * Reading Now Cannabis-friendly banks face pressure to differentiate By: Anna
   Hrushka



Trendline


CUSTOMER SERVICE


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NOTE FROM THE EDITOR

As the competition to provide banking services intensifies, financial
institutions have a choice to make. In the battle to serve cannabis companies,
for example, North Bay Credit Union chose to offer interest-bearing accounts.
Others have chosen to lower the monthly fees they charge a company they bank.
Still others promise a customer-service X factor — whatever it may be.

In this collection of stories, Banking Dive explores how financial institutions
respond to changes in the competition landscape.

When Silicon Valley Bank collapsed in March 2023, a number of tech startups lost
their top choice for banking services. In such a case, who steps in to fill the
void? JPMorgan Chase — which acquired another of last year’s failed banks, First
Republic — is betting on itself. It has added more than 200 bankers this year to
its innovation economy division, which serves startups.

Other banks may find an underserved niche and focus their strategy. Citizens
Bank of Edmond, for example, launched a national digital bank aimed at the pain
points faced by military recruits who enter basic training without bank
accounts.

Sometimes the broader question of customer service goes beyond the segmented
marketplace — to concepts. How will technology such as generative artificial
intelligence affect banks’ ability to provide effective customer service? The
answer may not be concrete. But a year after OpenAI introduced ChatGPT, Banking
Dive provides a status update as to where a handful of leading banks stand in
harnessing the burgeoning technology.

Banking Dive has gathered a collection of pieces to outline the missions,
successes and challenges financial institutions face in navigating their
relationships with their customers.

We hope you find this collection valuable.

Dan Ennis Senior Editor
 * Reading Now Can JPMorgan Chase fill the startup banking void? By: Anna
   Hrushka
   
 * Reading Now Citi moves deeper into e-commerce through digital couponing By:
   Suman Bhattacharyya
   
 * Sponsored A contact center “channel strategy” was your only option. Until
   now. Sponsored content by Glia
   
 * Reading Now Citizens Bank of Edmond launches digital bank for military
   recruits By: Anna Hrushka
   
 * Reading Now Plenty aims to help couples build wealth together By: Gabrielle
   Saulsbery
   
 * Reading Now A year after ChatGPT’s launch, how do banks stack up? By: Dan
   Ennis
   
 * Reading Now Neobank Dave’s new chatbot achieves 89% resolution rate, CEO says
   By: Anna Hrushka
   
 * Reading Now Novo rolls out an embedded payroll tool for small businesses By:
   Rajashree Chakravarty
   
 * Reading Now Keeping track of multiple BNPL loans? There’s an app for that.
   By: Gabrielle Saulsbery
   
 * Reading Now Regions Bank partners with credit-building fintech By: Anna
   Hrushka
   
 * Reading Now Cannabis-friendly banks face pressure to differentiate By: Anna
   Hrushka
   




CAN JPMORGAN CHASE FILL THE STARTUP BANKING VOID?

The New York City-based firm added close to 200 bankers to its division that
serves startups and VC-backed businesses this year as it looks to fill a space
vacated by Silicon Valley Bank.

By: Anna Hrushka • Published Oct. 17, 2023

JPMorgan Chase is bolstering the unit of the bank that serves startup clients as
it looks to fill a void left by several regional lenders that collapsed in March
and May.

The New York City-based bank this year added close to 200 bankers to its
innovation economy division, an area of the firm that caters to technology
startups and venture capital backed-businesses, the bank said. The hiring spree
comes as JPMorgan claims the unit’s U.S. client portfolio nearly doubled in
2023.

But as the firm invests in the division’s growth, Ashraf Hebela, head of startup
banking at JPMorgan’s commercial banking division, emphasized that the bank has
always had a mission to serve startups, even before this year’s banking
turmoil. 

“This is not a new phenomenon,” said Hebela, who joined JPMorgan from Silicon
Valley Bank, which collapsed in March. “JPMorgan has always been in the
innovation economy business and not just domestically, but globally. I think the
March event put it in more of a focus.” 

When Silicon Valley Bank collapsed, the startup community lost their favorite
bank. The 40-year-old Santa Clara, California-based lender fostered close
relationships with the emerging tech sector and was known as the go-to bank for
venture capital-backed firms. 

But SVB’s implosion, and the subsequent demise of two other startup-friendly
regional lenders, meant entrepreneurs were on the hunt for a new bank, and many
saw JPMorgan as a safe place to park their funds.

“We have seen an influx of companies come to us in the last two months that are
looking for a more stable environment,” Melissa Smith, JPMorgan’s co-head of
innovation economy and head of specialized industries, told Reuters in May.

During JPMorgan’s investor day in May, Doug Petno, the bank’s CEO of commercial
banking, said the market disruption and the “shift in our competitive landscape”
substantially heightened the firm’s new client acquisition. 

“[T]o accommodate this growth and rebalance the business and to accelerate our
innovation economy banking efforts, we’re adding incrementally higher front and
middle office support than we have in prior years,” he said.

To help it serve a clientele that was the bread and butter of SVB, JPMorgan has
brought on some of the firm’s former executives, including John China, who spent
27 years at the regional bank, most recently as president of SVB Capital. 

JPMorgan installed China as co-head of innovation economy for commercial banking
in July, where he serves alongside Smith.


‘FINTECH 1.0’ 

As JPMorgan looks to capitalize on a gap left over from a string of bank
failures, the firm will need to convince startups it has the culture and
customer service that endeared so many entrepreneurs to SVB.

Beta Boom Capital Managing Partner Kimmy Paluch, whose firm became a JPMorgan
customer after the bank took over failed First Republic Bank in May, said the
transition has so far been positive. 

“Ultimately, the test as to whether JPMorgan can step in to serve this space
will be measured by their actions. As of today, it appears the answer is
unequivocally, ‘yes,’” she said. “The legacy First Republic Bank platform has
been able to leverage these expanded resources to continue to serve its VC
partners, and we’ve been able to take advantage of these as a firm.”

Hebela said startups and VCs can look at JPMorgan’s 224-year history for
examples of the bank’s early commitment to emerging tech.

“You could almost argue JPMorgan has been in the business of banking the
innovation economy from what I would consider fintech 1.0, which was Alexander
Hamilton,” he said, referencing the treasury secretary who co-founded The
Manhattan Company, JPMorgan Chase’s earliest predecessor.

The Manhattan Company was chartered by the New York state legislature in 1799 to
provide drinking water to the city’s population. A provision in the charter
allowed the company to use its excess capital for banking operations. 

“We’ve been banking entrepreneurs for the last two centuries,” Hebela said. “I
think it’s a little bit of an interesting narrative that’s out there, that after
March, we’re all in. When you peel the onion back, you can see the history of
what JPMorgan has been doing in the innovation economy. The story starts way
before March.”


STRATEGIC ADVANTAGE

While JPMorgan Chase CEO Jamie Dimon has touted the bank’s investments in
serving the venture ecosystem, he has also acknowledged the $3.87 trillion-asset
firm has room for improvement.

“We always were there, we always did OK, but I always wanted to do better,”
Dimon told Bloomberg TV this month. “We have unbelievable products and services
to bring to them — digital, consumer, subscription lines, financing, globality,
research — you name it. But we have to deliver it to them in a way they actually
like it and they want it, which is what Silicon Valley Bank did.”

JPMorgan faces competition from incumbents and fintechs that are looking to
court the startup sector in the wake of this year’s banking crisis.

Fintechs Mercury and Brex, which cater to startups, each reported deposit
windfalls as SVB clients moved funds out of the troubled bank.

Meanwhile, Raleigh, North Carolina-based First Citizens Bank, which acquired
$110 billion of SVB’s assets at the end of March, is rallying in an effort to
fill the lender’s shoes. 

“[SVB] was the number-one bank in tech and life sciences for over 30 years and
suddenly that went away, so we’ve spent a lot of time trying to give people
confidence that we’re in the bank and plan to continue to run the model they
were running,” First Citizens President Peter Bristow told the Financial Times
in April.

But a key advantage for JPMorgan, Hebela says, is the bank’s ability to serve
startups throughout their life cycle. 

“It’s really dangerous to think about a company as just an archetype of a
segment. The job for us is to be active listeners and solution-oriented
professionals that are providing what they need at the right time, in the way
that they need it. That’s what we’re building,” he said. “When I look at what we
have, it is the full gamut, end-to-end of what an entrepreneur would ever need,
from idea generation all the way to post IPO.”

JPMorgan’s capital position also puts it at a strategic advantage, especially in
light of federal regulators’ proposals for more stringent capital requirements
for banks, said Don Butler, a managing director at Thomvest Ventures, which is
not a JPMorgan Chase client. 

“I believe that if these [proposals] move forward, then you’ll see an increase
in the regulatory capital needed for banks that invest in and, to a lesser
extent, lend money to startups,” he said. “I believe the outcome of this will be
that banks’ commitment to the sector will be tested and that those with both a
larger deposit base and a strategic focus on the venture sector will emerge as
the larger players here. JPMorgan Chase has both, and so I think in that regard
it is well-positioned in the sector.”

Article top image credit: JPMorgan Chase



CITI MOVES DEEPER INTO E-COMMERCE THROUGH DIGITAL COUPONING

The bank recently launched a browser extension that searches for coupons on
merchant checkout pages, suggests applicable codes and can activate cash-back
offers.

By: Suman Bhattacharyya • Published Feb. 12, 2024

Consumers looking for deals often use coupon finders in their browsers to find
promotional offers to apply at checkout. Now, Citi wants to be the preferred
intermediary through which its cardholders find online discounts and other
rewards through a tool it rolled out in late January called Citi Shop.

The Citi Shop browser extension, which can only be used by Citi credit card
holders, searches for coupons on eligible merchant checkout pages and suggests
applicable codes to apply at checkout. The program can potentially reduce the
amount a customer pays and can also activate cash-back offers that are delivered
as credits on credit card statements. It includes roughly 5,000 merchants across
30 product categories. 

“We’re not only making it easier for card members to find savings while shopping
online but we’re also addressing that finding time is one of the top barriers
for consumers looking for a deal,” Anthony Merola, head of proprietary products
at Citi branded cards, told Banking Dive.

Citi partnered with fintech Wildfire Systems, a white-label loyalty platform
that works with “dozens” of banks and fintech firms, including Royal Bank of
Canada, LendingClub and Acorns, to develop Citi Shop, said Shawn Conahan, the
company’s chief revenue officer. Citi Ventures, one of Citi’s three venture
investing vehicles, invested an undisclosed amount in Wildfire in 2022.

The goal of Citi Shop, according to the bank, is to enhance card members’
relationships and trust with the institution and help them save money. These
types of programs also boost revenue when bank fees are under pressure,
including efforts to limit late fees and credit card interchange, Conahan said.

Citi did not comment on its monetization model, including whether it earns a
percentage of each successful Citi Shop transaction that has a cash-back
benefit. However, while not referring to Citi specifically, Conahan said banks
and fintechs it works with typically take a cut of merchant-funded
cash-back-offer pie, which can be 10% of the price of an item, or higher. 

Offers vary by merchant and are not a fixed amount, he clarified, and the
company’s merchant development team works with merchants and negotiates offer
rates. A portion of the merchant offer is shared with the consumer.

“We take a little off the top and we get to make a business out of that. We give
the rest — the lion’s share of it —  [to the partner], and then they share that
with the consumer, so everyone wins,” he said. 


AN ECOSYSTEM OF BROWSER EXTENSIONS

Getting into the retail checkout through browser extensions is a natural fit for
banks and financial firms that want to learn more about how consumers shop, said
Suzy Davidkhanian, a retail analyst at Insider Intelligence. 

In recent years, banks and fintechs have rolled out browser extensions that
offer coupon codes and cash-back offers for e-commerce shoppers. 

These include PayPal, which operates PayPal Honey, a digital coupon and
price-tracking platform that the payments company acquired for $4 billion in
2020, and Capital One Shopping, a coupon and cash-back platform that stemmed
from the bank’s 2018 acquisition of the fintech Wikibuy for an undisclosed
amount. (Wikibuy was later rebranded as Capital One Shopping, which finds
coupons and cash-back offers for consumers, including those who aren’t Capital
One customers.)

“There’s all this data that’s sitting in credit card behaviors, and monetizing
that ... from a financial institution’s perspective, is important for
everybody,” Davidkhanian said. “The brands want to know what their customers and
potential customers are doing so that they can target them.”

Trends the bank sees from shopping habits, surveys or direct customer feedback
“help us elevate the card member experience and bring more impactful solutions,”
Merola said.

Wildfire said its toolset does not allow its partners to monetize the data, and
Citi confirmed that it’s not monetizing consumer shopping data insights from
Citi Shop.

“We decided that we were not going to be a data company,” Conahan said. “We are
a fintech [and] we monetize the transaction. We do not sell data.” 


THE DATA PLAY

Some companies in the digital couponing field might be interested in using
consumer shopping data — likely aggregated insights — to help partner retailers
pitch offers to consumers.

“Institutions have so much data about people’s behaviors. I don’t think they’re
going to ever share [individual transaction data], but I think they’re going to
be able to say things like ‘People who live in New York go out on Tuesday or
Wednesday, and so, if you need them to come to your local restaurant, maybe this
is when you target them with an ad or with a coupon or a gift certificate,’”
Davidkhanian said.

John Kim, executive vice president and chief product officer at PayPal,
suggested financial companies may use aggregated, anonymized insights garnered
from shopping tools to help merchants suggest offers to consumers who may be
interested in a particular product or service. Network rules and regulation, he
said, prevent banks and financial companies from sharing individual-level
transaction data with partners.

For Wildfire’s clients, a key motivation is to keep the customer loyal over
time, Conahan said.

“It’s 10 times more expensive to acquire a new customer than to keep an existing
one, and nothing says I love you like free money,” he said. “What they have
realized is that consumers expect these kinds of rewards in exchange for their
loyalty.”

Article top image credit: Mario Tama via Getty Images
Sponsored


A CONTACT CENTER “CHANNEL STRATEGY” WAS YOUR ONLY OPTION. UNTIL NOW.


Sponsored content
By Glia
By: Rick DeLisi, Lead Research Analyst at Glia • Published Feb. 16, 2024

Virtually every company that interacts with customers has been operating over
the past few years with what’s been called a “channel strategy.” Until recently,
a channel-focused strategy was the only strategy a company could operate under,
since digital technology and capabilities each evolved separately. But now, with
the emergence of Unified Interaction Management (UIM) there is an
alternative–one that is much better for both companies AND customers.

Channel Strategy

Question: How can we manage each of the various channels customers use to
contact us—including phone, digital, chat, email, social media, etc.?

Most companies first developed their service model based around a nucleus of
telephony, because just about all non-brick and mortar interactions were
conducted by phone. However, as newer technologies emerged, and as customer
preference for digital interactions increased, most companies then began
expanding their call centers into “contact centers.” 

That meant staffing different teams of people managing each of the new
channels–all of which were piled on top of the volume of incoming telephone
calls–hence, a channel strategy.

However, this is now another alternative: One that’s more evolved, one that
gives companies a chance to keep up with, or even stay ahead of digital
transformation at competitive organizations. With the advent of ChannelLess™
architecture, it is now possible to operate with an “interaction strategy.”

INTERACTION STRATEGY


Question: How can we create the best interaction (most efficient, most
effective, best experience) for each customer, regardless of which channel they
use and which channel they move to during the interaction?

The demand to “meet the customer where they are” has traditionally meant, “to
meet them in the channel they chose.”  But here’s the thing: All too often, a
customer chooses a channel that isn’t the best fit for their exact need. And who
can blame them? How would they know?  

Here are four of the most common examples of bad interactions that are likely
happening hour after hour, day after day with your customers:

 1. The % of customers who start in digital, but end up having to abandon their
    digital journey and start again on the phone, creating a high-effort
    experience.
     
 2. The % of customers who call on the phone, but didn’t need to because they
    could have easily resolved their specific issue without live
    assistance–resulting in a waste of resources and customer effort.
     
 3. The % of customers who interact with a bot that can’t handle their specific
    issue or need, leading to friction and failure.
     
 4. The % of customers who initiate a chat session for an issue or need that
    can’t be fully resolved in chat, which creates unnecessary customer effort
    and frustration.

By adopting a Unified Interaction Management (UIM) model–where all elements of
the contact center, digital customer service and AI/automation are all unified
within a single ChannelLess™  platform–each of the above percentages can be
quickly driven down to a level of “practical zero.” In UIM, it doesn’t matter
which channel a customer chooses to contact your company, they can be seamlessly
transitioned to the “best-fit” interaction type. For some issues, that means
virtual assistance. In other cases, live assistance–sometimes through messaging
and sometimes through OnScreen Voice interactions. The trick is to match the
right interaction type to a customer’s specific need at that moment. 

Bottom line: Until recently, your company had no choice but to operate with a
channel-driven strategy. That was the only choice, but evolving to an
interaction strategy is now within your grasp. The channel is not the issue, the
customer’s issue is the issue. The only thing that matters to each customer who
is contacting you, is the interaction they are having right now.

And now…there’s a strategy that can greatly increase the measurable value of
getting interactions “right.”  

You can’t be blamed for operating with a channel strategy in the past. There was
no other alternative. But now there is–an interaction strategy–and it is your
responsibility as a leader to understand the differences, and move your
organization in the right direction

Article top image credit: Permission granted by Glia



CITIZENS BANK OF EDMOND LAUNCHES DIGITAL BANK FOR MILITARY RECRUITS

The new platform, called Roger, aims to reach entry-level recruits, many of
whom enter basic training without bank accounts, CEO Jill Castilla said.

By: Anna Hrushka • Published Aug. 15, 2023

Citizens Bank of Edmond CEO Jill Castilla’s latest venture combines two key
elements of her professional life: financial services and the military.

For the past several years, the bank executive and military veteran has been
building a national digital bank that aims to address some of the banking pain
points that Castilla herself encountered when she enlisted in the Army at 19. 

“There’s still this deficiency in the market where there’s not a focus on that
new servicemember coming in,” Castilla said. “They’re very targeted from a
predatory lending standpoint.”

Through Roger, a digital bank which officially launched on Tuesday, Castilla is
hoping to reach entry-level recruits who all too often start basic training
without bank accounts.

“They are coming to basic training, 50% or more across every service, without
having a banking relationship,” she said. 

The lack of early access to a bank account can delay a new recruit’s first
paycheck, or even push back their training start date, Castilla said.

Castilla said Roger aims to work with military recruiters to provide new
servicemembers with an instantly available direct deposit form that is compliant
with the Department of Defense regulations. The form populates all of the
prospective service member’s information, as well as a signature by Castilla as
the bank’s CEO.

“All they have to do is either text that, email, or print it out and provide it
to either the recruiter or to reception at basic training,” she said.

Roger also allows 17-year-olds that have signed enlistment papers to be able to
open an account without a cosigner.

“That’s another big hurdle that we’re excited to be able to remove for young
people that are serving but may not be 18,” Castilla said.


‘CRACKS IN THE SYSTEM’

According to the Consumer Financial Protection Bureau, U.S. servicemembers are
increasingly becoming targets of predatory lending and falling victim to
payments app scams. 

The Department of Defense has identified predatory lending and poor financial
literacy as serious threats to military readiness, Castilla said.

“It’s recognized, from a mental health standpoint, as well as deployment
readiness by the Department of Defense, that financial stability and financial
literacy is critical to ensure both the servicemembers and their families are
well educated and protected when it comes to their finances,” she said. “We have
laws in place to protect service members from exposure to potentially predatory
lenders, unfortunately, cracks still exist in the system, that don’t fully allow
that barrier from someone taking advantage of a service member being deployed.”

One of Roger’s fraud protection features includes “deployment mode” where a
servicemember can lock down some of the access to their debit card or enable
increased fraud monitoring during a tour.


A COMMON CAUSE

Castilla said a couple hundred users, made up of both military veterans and
National Guard members, have been testing the platform ahead of its official
launch.

Existing staff at Edmond, Oklahoma-based Citizens Bank of Edmond have been
tapped to work on Roger, Castilla said. The firm also added retired Brigadier
General Andy Preston as Roger’s director of military banking.

Castilla said “several $100,000 of hard expenses” as well as the equivalent of
$1 million in staff time has gone into the launch of Roger.

Roger has a standalone core powered by banking technology firm Nymbus.

Castilla said Nymbus has offered to work with Citizens to make its technology
more accessible “all for this common cause to help the servicemembers that
typically have been underserved.”

Article top image credit: iStock / Getty Images Plus via Getty Images


PLENTY AIMS TO HELP COUPLES BUILD WEALTH TOGETHER

Emily Luk and Channing Allen fell in love while working together at a fintech
startup. Now, they want to help other couples manage and grow their money.

By: Gabrielle Saulsbery • Published Jan. 31, 2024

Emily Luk and Channing Allen, two fintech pros who fell in love at a company
eventually acquired by Walmart, were on sabbatical. They were traveling the
world, and going back and forth on an idea born out of their own shared
experience — how do we financially plan for a future together, and can we create
an app that answers that question for fellow millennials?

“In moments where we’d think, ‘Let’s explore other ideas,’ we’d meet another
couple and they’d proactively bring up how complicated it was to manage money
together or to figure out how much they needed to plan for a house or kids. We
kept getting these signals that there were so many people running into the same
problem,” Luk said.

The duo heeded those signals and sketched out different drawings of what the
product would look or feel like, if they took a crack at developing it.

Now, parts of those sketches are live in Plenty, a wealth-building app geared to
help couples manage and invest their money together.

“The other [couple-focused] products we’ve seen typically focus on expense
splitting, which tends to be a much earlier chapter of someone’s relationship,”
Luk said. “When people start to use our product, they’re like, ‘We actually are
in a place where we [share expenses]. We don’t care about one-off transactions,
we’re really rounding things at this point.’”

Plenty users connect their financial accounts to the app and choose which
accounts to share with their partner.

From there, they’re able to transfer money into Plenty’s cash management
product, a managed portfolio of money market funds custodied by BNY Mellon |
Pershing that currently offers a 5.1% annual percentage yield, and earmark
certain stashes of money to specific shared goals; or into its investment
product, which aims to make investing “as simple as possible” for the end user.

“Ultimately, we want to make it as simple as you pressing [a button] and you can
immediately deposit $100 and we will manage everything for you,” Luk said.

Millennials, she said, are still at the point in life where investing or saving
just 1% more annually can have a huge payoff when retirement rolls around.

Plenty, which is a Securities and Exchange Commission-registered investment
adviser, asks its users a few simple questions: What are your goals? Do you want
to buy a house in five years, or are you focused on saving for retirement?
Additionally, what are your values?

Most people don’t realize where their current 401(k) is being invested in, Luk
said.

“Your retirement account could actually be invested in a payday lender. You
would never invest in a payday lender, but [investment management firms] are
some of the biggest investors in the payday lending space in America. They’re
also some of the largest investors in for-profit prisons,” she said.

Plenty users declare their values — for example, saying ‘yes’ to investing in
tobacco companies, but ‘no’ to investing in companies that engage in animal
testing — and the program creates a customized portfolio to align with those
values.

Currently, Plenty is invite-only, and Luk wouldn’t divulge how many users it
had. But it will be available to the public in the first half of this year, for
at $200 per year per couple or $150 per year for a single user.


BUCKING THE TREND

According to The Future of Fintech, a report released earlier this month by
Forrester, the current landscape for business-to-consumer fintechs like Plenty
is a challenging one.

“The days of neobanks’ splashy launches, massive hype, and blitzscaling are
over. In fact, B2C fintech firms as a whole face more adversity than they have
since the dawn of fintech: As one fintech founder quipped, ‘Friends don’t let
friends make B2C startups,’” Forrester wrote.

Luk — whose product is, of course, B2C — doesn’t disagree.

“Both Channing and I have always been pretty strong first principles thinkers,
and if someone’s like, ‘I’m going to start a B2C fintech’, the first thing I
would tell them is, ‘No one needs another debit card. No one needs another
checking account. And if the product isn’t different, I wouldn’t do it,’” she
said.

“We’ve made really key decisions from the very beginning [that have made] our
product different,” she said. “It serves unique functionality you can’t get
elsewhere for a demographic that, largely, people have missed – people have
missed the fact that there are so many people managing money with another
individual,” she said.

She noted that many of the original joint-investment products on the market and
even some popular joint credit cards weren’t built for both partners to have
equal access to managing those investments.

”We came in from the very beginning knowing that there were a set of key
architectural decisions that would be really important to build a multiplayer
functionality. That’s really different than if you had not planned to build it
and now you’re trying to build it after the fact,” she said.

Article top image credit: Permission granted by Plenty



A YEAR AFTER CHATGPT’S LAUNCH, HOW DO BANKS STACK UP?

JPMorgan is showing its controls to regulators but is reluctant to label
anything a “product.” Goldman, meanwhile, is working on a dozen projects
incorporating generative AI.

By: Dan Ennis • Published Nov. 10, 2023

November marks a year since OpenAI released ChatGPT into the market, and several
large banks are charging ahead to take primacy in harnessing the burgeoning
technology.

JPMorgan Chase is walking U.S. regulators through the bank’s first set of
generative AI pilot projects to let them see the controls in process, Lori Beer,
JPMorgan’s global chief information officer, told Bloomberg.

“It’s about helping regulators understand how we build the generative AI models,
how we control them, what are the new vectors of risk,” she told the wire
service. “It’s not only what we need to think about, but what they should think
about.”

The AI applications JPMorgan is testing include ones that can generate earnings
summaries for companies the bank follows, Beer said. The bank is also working on
a help-desk service that arms users with problem-solving steps rather than links
to related articles, Beer added.

Meanwhile, JPMorgan’s rival, Goldman Sachs, is working on a dozen projects meant
to incorporate generative AI into its business practices, George Lee, co-head of
the bank’s Office of Applied Innovation, told Reuters.

The projects include writing code in English-language commands, and the ability
to generate documentation, Lee said, adding that none of the projects are
client-facing, out of regulatory concerns.

“We’re moving very deliberately, very carefully, very thoughtfully,” Lee told
Reuters.

Not to be outdone, Morgan Stanley has spent months testing a generative AI bot
meant to serve as a virtual assistant for financial advisers who must quickly
navigate troves of data. 

While Morgan Stanley chose to develop its tool with OpenAI, JPMorgan Chase went
its own way — applying in May to trademark technology it calls IndexGPT, which
would use artificial intelligence to select investments for customers.

JPMorgan’s Beer was cautious to note that IndexGPT was just in the application
stage and not a product in development. 

“It’s not a tomorrow thing, it’s one of the spaces in which we’ve been working,
and we want to protect our [intellectual property],” she told Bloomberg.

Beer added she expects it will be at least the first half of 2024 “before we’re
ready to say anything is in production.”

Goldman’s Lee, meanwhile, said generative AI’s ability to offer responses to
financial questions means human financial advisers will need to up their game to
earn the fees they charge customers.

“It’s a fascinating forcing function for businesses to recognize they need to
raise the bar for the services they deliver to clients,” Lee told Reuters.

Foteini Agrafioti, chief science officer at the Royal Bank of Canada, told
American Banker the technology’s possibilities are “endless in servicing and
potentially in advice,” but added it’s “not ready for prime time as much as it
would be potentially in other sectors because of the sensitivity of the domain.”

RBC is developing applications with large language models to enable bankers to
advise clients while sifting through mountains of policies and procedures. While
a proof of concept at this point, the bank plans to deploy the technology later
this year, Agrafioti told American Banker, calling it a “good, solid first step
toward client servicing because it allows us to have human oversight.”

Regardless of what stage of development various banks label their AI-related
projects, one aspect that appears to remain constant is enthusiasm.

In his annual letter to shareholders, JPMorgan CEO Jamie Dimon said AI could be
integrated into “every single process” of the bank’s operations, calling the
technology “extraordinary and groundbreaking.”

McKinsey projects that generative AI could deliver up to $340 billion in annual
value in the banking industry, including through increased productivity.

But Beer again warned that though it may be easy to “build things quickly” with
the technology, “the harder part is the validation and the controls.”

“On this one, you have to see guardrails from regulators to drive the right
outcomes,” she told Bloomberg.

Article top image credit: da-kuk via Getty Images


NEOBANK DAVE’S NEW CHATBOT ACHIEVES 89% RESOLUTION RATE, CEO SAYS

The neobank and personal finance app this month launched DaveGPT, a gen
AI-driven chatbot that can respond to customer inquiries in real-time.

By: Anna Hrushka • Published Dec. 13, 2023

While Dave, a neobank and personal finance app, has been using artificial
intelligence to underwrite its products since the company’s inception in 2017,
the fintech’s latest use of generative AI is producing promising results on the
platform’s customer service side, said CEO Jason Wilk.

The fintech in December launched DaveGPT, a gen AI-driven chatbot that can
respond to customer inquiries in real-time. 

The tool, which replaces its DaveBot, is generating an 89% resolution rate, said
Wilk.

“It’s pretty impressive, based on what we used to have with our DaveBot, which
was significantly lower,” said Wilk.

DaveBot’s “rules-based model” would generate canned responses, Wilk said,
compared to DaveGPT’s “more human, large language model approach.” 

“People really are getting much more to the bottom of what they’re looking for,”
he said. “On the consumer side, we know that people want real-time responses
these days, especially millennials and Gen Z, which is the majority of our
audience at this point. They’re not wanting to talk to somebody on the phone,
they want real-time chat responses if they can get it. And AI is certainly the
best way to get a most human-like response with the best accuracy.”

Wilk said Dave used an existing partnership with Aisera, which leverages
OpenAI’s capabilities, to access large language models, adjust the content and
then come back with the relevant responses. 

Wilk said he envisions a future iteration of the product that involves
integrating customers’ financial data in order to offer personalized advice.

“The AI can recommend solutions to your problems, such as, ‘How do I save more
money this month?’” he said.

With the rollout of DaveGPT, Dave becomes the latest neobank to fold AI into its
offerings. 

Neobank MoneyLion, in May, detailed plans to launch a search feature powered by
ChatGPT in order to allow consumers to search for transactions, offers and
products on the platform’s finance marketplace.

AI, Wilk said, helps fintechs like Dave serve more customers without staffing
up. The technology allows Dave to serve its 9 million customers with only 300
employees, Wilk said.

“We have a lot of operating leverage compared to incumbent banks,” he said. “AI
is another lever we have to be able to do more while not growing our headcount
in any kind of major way. So that’s a really important way that we can scale. We
don’t need 1,000 more people for customer support. If anything, we can keep our
support team the way it is and this allows us to 10x our capabilities.”

Beyond using AI in its customer support, Wilk said the technology has become a
critical part of the firm’s operations. 

“DaveGPT is just our customer facing support program, but we’re using AI all the
way across the company,” he said, adding the fintech uses AI to help underwrite
its cash advance product.

“It’s really been a critical way for us to improve credit access by giving
people access to higher limits, while also keeping our loss rates at a record
low,” he said. “The AI can look at thousands of pieces of data from our cash
flow-based underwriting that enables us to make better decisions, which again,
helps us provide a better experience for credit access with better limits and
reduces our loss rates.”

Wilk said he expects gen AI will continue to grow in popularity in the banking
and fintech space, both as an underwriting tool and as a means to improve
customer satisfaction.

“I think that first and foremost, AI is going to be a game changer for credit,”
he said. “And then the customer support stuff will be sort of table stakes which
everyone’s going to need to keep costs low.”

Article top image credit: Supatman via Getty Images



NOVO ROLLS OUT AN EMBEDDED PAYROLL TOOL FOR SMALL BUSINESSES

Powered by Check, the new tool, Novo Payroll, aims to help small businesses
manage their finances from a single platform.

By: Rajashree Chakravarty • Published Jan. 24, 2024

Novo, a financial solutions platform for small businesses, launched Novo
Payroll, which allows any of its customers to run payroll directly from a
checking account.

The new solution that rolled out in January is powered by Check, a payroll
infrastructure company that developed the product using its payroll application
programming interface. Novo Payroll is fully integrated into the fintech’s small
business banking platform, streamlining the payroll process in an effort to both
save time and ensure regulatory compliance.

“Traditional small business payroll solutions consist of standalone applications
characterized by high fees, burdensome cash-on-hand requirements, and either
clunky or non-existent integrations between payroll and business bank accounts,”
Michael Rangel, founder and CEO of Novo, said in a statement. “In collaboration
with Check, we built a payroll solution that simplifies and speeds up the
process of paying small business employees.”

Novo Payroll is a brand new product that complements and expands the fintech’s
platform, Brad Paterson, EVP of marketing and partnership at Novo, told Banking
Dive.

He added that Novo received feedback from its customers, primarily small
business owners, that they were worried about complying with several payroll
taxes and laws, which vary across the 50 states. They were also paying high fees
for the services to process their workers’ payroll.

“There’s a number of payroll options in the market today. Very few are built for
small business owners; most are built for more medium-sized businesses and
above, which means that they’re charging exorbitant prices,” Paterson said.
“We’ve managed to build a product that is streamlined in partnership with Check
that does everything a customer needs, allows him to be 100% compliant, but at a
fraction of the cost.”

Novo will offer all the essential features of the new product, including tax
filing and end of year reports, at $35 per month with an additional fee per
worker, the company said.

Through Novo Payroll, small businesses that need additional funds to run a
payroll cycle can apply for Novo Funding and, once approved, use the capital
immediately.

In August, the Miami-based company received a $125 million facility from Victory
Park Capital to provide its customers with working capital through Novo Funding,
which gives small businesses a fast and flexible way to access the capital.

Customers using Novo Payroll can contact the support team to get answers to any
questions they have about payroll. According to the company, recipients can also
receive their paychecks the next day after their payroll is processed at no
extra cost.

Novo Payroll, available across 50 states, automates tax filings for small
businesses with employees in a single state and multiple states.

“You do still have to file your own business taxes later on; that’s separate,
but we do all of the initial withholding and reporting, and that’s what you
expect of a payroll company,” Andrew Brown, co-founder and CEO of Check, told
Banking Dive. “With Novo [Payroll] powered by Check, you just get the forms
directly in the application. You download them, and it’s super simple to then
pass those to your business tax filing solution.”

Novo has conducted a beta of the new tool and will make the product available to
its customers in the coming weeks. But for now, customers can join the waitlist,
which is a way for the company to ensure they get what they need, Paterson
clarified.

The launch is also well-timed, he noted, since many small business owners are
reassessing their payroll options at the beginning of the year.

“We realized that launching just after peak season was important. There are a
number of small business owners making payroll decisions in January and
February,” he said. “We have now well over 200,000 small business customers on
our platform. Being able to offer it to the right customers at the right time
was important, and we needed to move fast as well, [which] we were able to do
with Check.”

Article top image credit: Permission granted by Novo


KEEPING TRACK OF MULTIPLE BNPL LOANS? THERE’S AN APP FOR THAT.

Cushion CEO Paul Kesserwani felt overwhelmed when he tried to keep track of
several BNPL loans at once, so he shifted his fintech’s focus to help others in
the same boat.

By: Gabrielle Saulsbery • Published Sept. 27, 2023

The year was 2020. Paul Kesserwani’s then-girlfriend (now wife) left their home
in San Francisco to be near her family in San Diego. Kesserwani wanted to help
her furnish her apartment, but was strapped for cash — he was saving for a ring
— so he, for the first time, turned to buy now, pay later.

He financed a mattress through Klarna, a Ring doorbell through Affirm, and a
slew of household items through other BNPL providers.

“After three purchases, I was like, ‘I have a computer engineering degree and I
have a team of Ph.D.s and I can’t for the life of me stay on top of these
freaking payments,’” he said. “This is so confusing.”

At the time, Kesserwani was running Cushion, a fintech that had offered
automated overdraft fee negotiation since 2016. The venture was successful,
refunding millions in overdraft fees up until that point.

Following his first foray into BNPL customership, Kesserwani and his team dove
into Cushion’s customer data and found out that customers were leaning heavily
on BNPL, not just for large one-time purchases but to finance DoorDash meals,
Uber rides and grocery lists.

“[We] realized this was about to get so urgent, and no one was paying
attention,” he said of customers’ short-sighted BNPL habits. “So we dropped our
thriving first business ... and decided to go all-in on bill pay for the BNPL
era.”

The average BNPL customer has four concurrent BNPL loans, according to Bankrate.
And, according to data released by the Federal Reserve Bank of New York in
September, many BNPL customers are “financially fragile” — meaning if they had
to come up with $2,000 in the next month, they couldn’t do it.

BNPL is a tool used across financial profiles, at least to a point: 14.6% of
those surveyed by the Fed with an annual income above $150,000 used BNPL; and
11.6% of people with a credit score above 760 used it.

BNPL take-up rates, however, are notably higher with those whose credit scores
are 620 or lower, for those who have been 30 or more days delinquent on a loan
in the past year, and for those who have been recently rejected for a credit
card. BNPL use goes down, too, when looking at higher income brackets; and when
looking at higher levels of education, Fed data shows.

According to Bankrate, more than half of BNPL customers surveyed report having
fallen behind on payments.


SWITCHING FOCUS

When Kesserwani and his team had their revelation about BNPL, what Cushion had
been focusing on was fighting with banks, rather than addressing the root cause
of why their customers were overdrafting in the first place.

By digging through “hundreds of millions of customer transactions,” it became
clear what the root cause was: cash flow, or lack thereof. And it became clear
that, in the last 20 years, the landscape of consumer bill pay had completely
changed.

“Twenty years ago, you had your car payment, your rent, your credit card, and
your phone bill, and it was straightforward. Then in the 2010s, subscriptions
became a big thing, so now you had to factor in your Netflix, Hulu, Tinder … and
that’s another five to eight payments you need to make each month,” Kesserwani
said.

And in the last three to four years, he noted, the shift was in BNPL: adoptions
of the tool completely exploded.

“BNPL is unique in the sense that it’s not just a payment you make. It’s a loan
with a bunch of characteristics: paying four versus paying six versus paying 12
[installments]; this one has interest, that one doesn’t; this is due weekly,
that’s due monthly. Stacking just two or three BNPL loans by themselves is
unmanageable, let alone putting that on top of the tower of subscriptions and
other bills,” he said.

“As [bill pay] is getting more complicated, consumers are making more mistakes,”
he said. “[We decided to] focus on consumer bill pay — and in that, let’s really
focus on a solution for this BNPL era.”

Shifting focus when Cushion was in its prime may have seemed counterintuitive.
Kesserwani said it wasn’t easy to let it die and start from scratch, but
creating a tool that would help customers get on top of their BNPL loans, along
with other monthly account draws, was “urgent,” he thought.

To aggregate a consumer’s bill and subscription payments into Cushion’s feed was
easy with Plaid, a popular fintech that gets real-time consumer financial data
through contracts with banks and the use of screen scraping.

But aggregating BNPL payments into a feed required engineering on Cushion’s own
part.

“These BNPL operators have no [application programming interfaces], and they’re
very hard to scrape because they don’t use username and passwords. They use
phone-based authentication,” Kesserwani said. “All of us became BNPL customers
to better understand the landscape, and we learned that they email you — they
email you, ‘Hey, your order’s confirmed;’ they send you another email, ‘Here’s
your loan ID;’ then they send you another email and another email. ... So we
hired a team of Ph.D.s in machine learning. They figured out a way to
reconstruct all of your loans based on just looking at your email inbox.”

Challenges there included a rigorous multi-month audit by Google, to gain access
to customer Gmail inboxes; and further, navigating the “sloppiness” of some
smaller BNPL operators who might not even send a loan ID via email.

“It turned into a full-time job for a whole team for two years to finally build
out the system the way we needed to,” he said.

A revamped Cushion was launched earlier this year.


CREDIT ASSISTANCE

Kesserwani explained, with emphasis, that he’s “not anti-BNPL by any means.”

“I use it all the time,” he said. “But consumers do not have enough guardrails
around it.”

Most BNPL providers don’t report to the credit bureaus. That means when BNPL
providers lend to a consumer, they’re doing so without a complete credit
profile.

“Say I get a loan from Affirm for $800. If Affirm doesn’t tell the credit
bureaus about that, then Klarna goes to underwrite me, and I appear creditworthy
to them, but they don’t know about my $800 Affirm loan. Then Klarna gives me a
$500 loan, [which] they also don’t report to the credit bureaus; and before I
know it, I’ve now signed up with seven different BNPL companies, all of which
have a limit to how much they’re willing to lend [me] … and all of which
underwrote me incorrectly,” he noted.

In addition to its BNPL and bill aggregator, Cushion offers a credit-building
virtual payment card. For between $4.99 and $12.99, customers get a virtual
payment card number that they can provide to billers and BNPL providers. Cushion
reports their payments to the credit bureaus monthly, thus helping customers
build credit.

Customers simply must change their preferred payment card within a biller’s
system. On the back end, the Cushion card pulls directly from a customer’s bank
account or debit card.

When consumers find out their BNPL payments aren’t being reported to the credit
bureaus, they think, so-says Kesserwani, “’Well wait a second, I’m taking a
loan, and I’m paying it back on time. Why am I not getting credit for doing my
end of the bargain here, which is to pay back my loan?’”

“We have a system now set up where we’re able to report those payments to
Experian, and we’re in talks right now with TransUnion and Equifax,” he said.

Article top image credit: Permission granted by Cushion



REGIONS BANK PARTNERS WITH CREDIT-BUILDING FINTECH

Through a new partnership with Self Financial, Regions customers can have their
rent, cell phone and utility payments reported to the three major credit
bureaus.

By: Anna Hrushka • Published Nov. 7, 2023

Regions Bank customers can now have their rent, cell phone and utility payments
reported to the three major credit bureaus through a new partnership with
credit-building platform Self Financial, the lender announced in November.

The partnership is meant to give consumers a more comprehensive view of their
financial health, and allows them to build credit without having to take on new
debt, the Birmingham, Alabama-based bank said.

“We were drawn to work with Regions because of our shared commitment to working
toward financial inclusion,” Chris LaConte, chief strategy officer at Self
Financial, said in a statement. “Working with Regions enables us to support more
consumers who either are new to establishing credit, or they’re in need of
solutions that reflect how they’re already responsibly managing bills and other
payments.”

The fintech’s rent and utility payment reporting service is available to
Region’s customers for $6.95 a month.

While millions of Americans rent homes, many are not recognized by the credit
bureaus for successfully making those payments, LaConte said.

“Self addresses this problem by enabling consumers to have their payment
histories taken into account so they can get the credit they deserve,” he said.

More than 45 million consumers in the U.S. lack sufficient credit history to
either generate a credit report or a credit score, according to the Federal
Reserve Bank of Kansas City. 

This demographic is more likely to face limited employment options and rely more
heavily on high-cost alternative financial products, the Kansas City Fed found.

Acknowledging the gap, bank regulators have encouraged lenders to consider using
alternative data to determine creditworthiness.

In a joint statement in 2019, the Consumer Financial Protection Bureau, Federal
Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance
Corp. and the National Credit Union Administration noted that using alternative
data could help consumers obtain additional products and more favorable pricing
and terms.

“The agencies recognize that use of alternative data in a manner consistent with
applicable consumer protection laws may improve the speed and accuracy of credit
decisions and may help firms evaluate the creditworthiness of consumers who
currently may not obtain credit in the mainstream credit system,” the regulators
said. 

Meanwhile, lawmakers are pushing legislation that would expand the type of data
credit bureaus use in factoring consumers’ credit scores. 

The Credit Access and Inclusion Act, introduced by Sens. Joe Manchin, D-WV, and
Tim Scott, R-SC, would permit property owners and utility and telecom providers
to report payments data to credit reporting agencies.

Article top image credit: Permission granted by Regions Bank


CANNABIS-FRIENDLY BANKS FACE PRESSURE TO DIFFERENTIATE

Banks have used risk-based pricing to justify the cost and labor associated with
banking the sector. But as more players enter the game, firms are feeling the
pressure to rethink their strategies.

By: Anna Hrushka • Published Sept. 26, 2023

For some banks, the decision to operate an expensive and compliance-heavy
cannabis banking program has been rewarded with access to cheap deposits. 

With many banks still wary of the risks and compliance burdens associated with
serving the sector, firms that choose to bank the industry have been able to
justify the high cost and labor by implementing risk-based pricing and
non-interest-bearing accounts.

But as more banks and financial institutions are getting into the game, some
banks are feeling the pressure to rethink their strategies.

“Risk-based pricing doesn’t always work when you’re trying to compete with the
bank down the road,” said Chris Call, CEO of Santa Rosa, California-based North
Bay Credit Union.

Faced with growing competition, the credit union decided to launch
interest-bearing cannabis accounts to differentiate itself from competitors,
Call said at the PBC Conference in Washington in September.

“Our credit union is probably one of the few institutions that actually pays
interest on cannabis deposits,” Call said. “We sort of have a competitive
situation where we need to have that extra edge to offer to our customers out in
California.”

North Bay, an early entrant into the cannabis banking space, has been offering
accounts for marijuana-related firms since 2017, shortly after the drug was
legalized for recreational use in the state in 2016.

The credit union has been offering interest on cannabis accounts for over a year
now, Call told Banking Dive. North Bay has about 300 cannabis accounts and pays
2.75% interest on those accounts, Call said.

The credit union’s portfolio of cannabis accounts has grown steadily over the
past couple of years, with interest on accounts being one of several factors
contributing to the growth, Call said.

“It is certainly much appreciated by our customers and contributes to their
loyalty in staying with us in the face of growing competition,” he said.  

In some cases, the interest earnings on the accounts offsets the credit union’s
monthly account fee, Call said.

“Our philosophy has always been to treat our [marijuana-related business]
accounts as much like any other business account as possible,” he said.
“Greenbax Marketplace is our cannabis banking subsidiary, and I think our range
of services and the level of customer support we provide are also significant
factors in our growth.”


MORE COMPETITION

With the majority of banks’ unwillingness to serve the cannabis sector, the
industry’s financial services options have historically been limited. 

But a growing public acceptance of marijuana and lawmakers’ increasing support
for legislation that aims to make it easier for banks to serve the sector, have
made the space more palatable for institutions looking for new ways to grow
deposits. 

According to data from the Financial Crimes Enforcement Network, 812 banks and
credit unions are actively serving cannabis business clients, based on cannabis
business-related suspicious activity reports filed in the second quarter of
2023.

FinCEN reports an increase from 807 firms in the first quarter and 773 in the
fourth quarter of 2022.

Meanwhile, legislation that would make it easier for banks to serve state-legal
cannabis firms is set for a historic vote in front of the Senate Banking
Committee. Proponents say the Secure And Fair Enforcement Regulation Banking
Act is the solution to the largely cash-based nature of the cannabis industry,
as it would encourage more banks to serve the sector.

As more banks become comfortable banking cannabis clients, firms will need to
find ways to differentiate their cannabis programs to stay competitive, whether
it be offering interest on cannabis accounts, or lowering monthly fees, said
Tony Repanich, president and chief operating officer of Shield Compliance.

“We’re already seeing that banks are doing a trade-off between service charges
and getting deposit accounts. We’re seeing softening of fees as the bankers are
willing to do that trade-off,” said Repanich, whose Seattle-based firm provides
financial institutions with cannabis banking compliance software. 

Repanich said he’s also seeing banks use account analysis on marijuana-related
accounts. 

Instead of paying interest, firms are giving their cannabis clients credit
toward their service charges, and encouraging them to keep higher balances at
the bank to cover monthly fees.

“Bankers have to look at their total deposit strategy,” Repanich said. “If I’m
running CD specials at 5% for nine months, but I could instead get that next
cannabis company and additional balances, and I only have to pay them 2% – that
3% is a lot.”

As more banks choose to serve cannabis clients, lenders will have to consider
strategies for high-balance cannabis accounts if they want to retain those
deposits, he said.

“If I’m the owner of a [cannabis] business and I have hundreds of thousands of
dollars sitting in the bank, at some point, my board is gonna say, ‘Why aren’t
we at least earning some interest?’”


DIFFERENTIATED SERVICES

But not all bankers are on board with paying interest on cannabis deposits,
arguing the cost of operating a cannabis banking program makes the prospect
unfeasible.  

Bank Michigan Senior Vice President Brenda Brandom said she doesn’t foresee her
bank offering interest on cannabis deposits unless the entire market adopts the
strategy.

“There is too much work involved,” said Brandom, who heads the Brooklyn,
Michigan-based bank’s cannabis banking and treasury management programs. “It’s
too time consuming and takes too many people doing manual work to get these
customers onboarded.” 

Nicole Perry, vice president and senior treasury management officer at Mason,
Michigan-based Dart Bank said her institution also does not offer interest on
cannabis accounts, a decision the firm made when it first launched the program
in 2018.

The bank’s cannabis customers, however, ask for it all the time, she said.

“They want to be treated like a traditional business, but it’s not traditional,”
said Perry.

As competition increases in their market, Brandom and Perry said they are
leaning on old-fashioned customer service to both attract and retain cannabis
clients.

When a prospective client noted that a competitor was offering interest-bearing
cannabis deposits and asked if Bank Michigan could do the same, Brandom said she
persuaded the client to join her firm after making the argument her bank could
provide a better service. 

Perry said her bank is facing competition from new entrants who are undercutting
Dart Bank’s cannabis account fees. 

“There are tons of banks coming in the state of Michigan that are direct
competitors, and they’ll try and charge $50 a month. There’s no way that you can
manage a [cannabis] account for $50 a month,” she said. “You’re not covering
your costs. You’re losing money in that aspect.”

Despite Dart’s higher fees, Perry said she has had several cannabis clients
return to her firm after trying to save money at a competing institution that
ultimately didn’t meet their expectations. 

“It’s not only based on fees. It’s based on the experience that you give your
customer and your reputation,” she said. “While fees are an issue, it’s about
selling yourself and being confident in your program.”

Article top image credit: Kendall Davis/HR Dive





CREATING WINNING CUSTOMER SERVICE IN THE BANKING INDUSTRY

Banks and fintechs have a choice when looking to grow: Identify a new customer
segment and expand services, or drill down and better serve the clients they
have. Explore the successes and challenges financial institutions have found in
solidifying their relationships with customers.

INCLUDED IN THIS TRENDLINE

 * Citi moves deeper into e-commerce through digital couponing
 * Plenty aims to help couples build wealth together
 * Novo rolls out an embedded payroll tool for small businesses

Our Trendlines go deep on the biggest trends. These special reports, produced by
our team of award-winning journalists, help business leaders understand how
their industries are changing.
Davide Savenije Editor-in-Chief at Industry Dive.