Banking New York Magazine

The below article was originally published January 31, 2020 in Banking New York by George Yacik.

‘Bank-in-a-Box’ Service Speeds Going Digital

Banks are always hungry for more deposits, more loan volume, more customers. Often that search involves expanding into different markets, but the cost of opening a new brick-and-mortar branch can run upwards of $1 million, not including the land and employee salaries, a major investment for a small bank – and with no guarantee it will succeed. Acquiring another bank is an even more expensive option, plus it brings with it an 18-month or more integration project.

So, growing digitally might make a lot of sense. Banks just need to ensure digital solutions are done well across a variety of platforms.

That’s the goal of NYMBUS SmartLaunch. The company’s “bank-in-a-box” solution enables financial institutions with either federal or state charters to create a turnkey digital bank under their existing charter in as little as 90 days. The company’s website says this eliminates the need to undergo a conversion or hire additional staff. NYMBUS provides the required operational and technical resources required, including 24/7 support and targeted digital marketing and website services, “so that financial institutions can quickly generate sustainable new deposits and revenue.

Not only that, but it promises to do so without the bank putting up any money upfront, says Drew Dizon, NYMBUS’s senior vice president for strategic solutions. There are also no setup, integration or implementation fees. The bank doesn’t pay anything until its digital offspring is ready to go live, when it pays a monthly platform fee – which Dizon says is “significantly less than what they would pay to start a traditional brick-and-mortar branch” – and transaction fees based on the products and services that customers use, such as bill pay, debit card usage and the like.

Multi-Year Commitment

Banks make a three- to seven-year commitment to SmartLaunch. The length varies depending on the product set purchased, the number of states a bank wants to enter and/or the desired demographic or affinity they want to target.

Dizon says the platform fee typically is less than an average fully loaded branch depending on location. Typical branches take upwards of three years to break-even with less and less people utilizing the branch network. “Depending again on the target states, demographics or affinity groups, our clients can break even in year one especially with the ability to collect a significant amount of interchange income from digital customers who utilize their debit cards much more frequently instead of using a branch for making transactions,” he says.

“I haven’t seen anyone in the banking business doing what we’re doing,” Dizon says. “We package holistically the entire front-office and back-office operation – including marketing, office operations, infrastructure, fraud management, security, everything you would do to run a digital bank – and launch it faster than anybody else in the market. From soup to nuts, NYMBUS can run the entire digital bank for our clients.”

While other companies can handle the back-office technology part of creating and running a digital bank, what sets NYMBUS apart, Dizon says, is its ability to help bank clients target new customers on the web. Essentially, Dizon says, the bank tells NYMBUS the demographic group it’s trying to attract and NYMBUS does the rest.

“Our secret sauce is the marketing piece,” he says. “We started as a platform for the media industry. The big media companies use our platform for digital marketing. We use that same platform for our banking platform for digital advertising.”

“One of the nice things about our database and our platform coming from the media space is that we have all that data already built into our platform,” Dizon says. “Once we identify the customer or client profile that the bank is looking to attract, our marketing platform can really drill down and find the exact customers they want and advertise on the sites where they go. We are using a variety of tools to market but also to follow those users online.”

Ten Branches ‘Built’

NYMBUS’s marketing job doesn’t end once a prospect becomes a customer. Its platform sends out email notifications to cross-sell customers on other bank products or to get them to utilize services that they haven’t been using.

So far NYMBUS has created 10 digital banks that are up and running, such as BankMD, a digital brand for medical professionals started by TransPecos Banks in Texas. Another 10 are in the implementation process, seven of which are expected to go live in the next few months. In addition, the Miami Beach-based company is doing traditional core technology replacements for banks that are migrating to the NYMBUS platform. It is also working with three de novo banks that are working on getting a banking charter.

“Customer expectation is rapidly moving towards demanding a digital option,” so only a handful of banks can get by long-term without one, says Rutger van Faassen, vice president of consumer lending at Informa Financial Intelligence. But he warns, “like with many things, doing something badly could be more harmful than not doing it at all. So, if not done correctly, a bad digital experience can create increased customer frustration.”

“It is very important for a traditional brick-and-mortar bank to create a true digital experience and not simply a digitized experience,” he advises. “A digitized experience is taking an offline process and creating the online version of it, such as taking a loan application form and putting it online without adjusting it for an online experience. A true digital experience is designed to reduce friction as much as possible.”

Building Without A Charter

The company is also looking to help financial technology companies, retailers and others to launch digital banks. If they don’t have a banking charter of their own, they can partner with one of NYMBUS’s banks.

“There are a lot of well-known brands out there that are looking to leverage that brand by partnering with banks,” Dizon says. “They can target their employees or customers and offer rewards and incentives and the bank can serve as a revenue generator.”

NYMBUS recently helped Surety Bank in Florida launch booyah!, a digital bank that targets young professionals.

“We wanted to have a brand that is separate from Surety Bank, something that could be at a more national level,” says Ryan James, president and CEO of the four-branch bank.

“The greatest thing about digital banking is you can finely target advertisements and learn and evolve and if things don’t work in an area you can change on a dime,” he says. “You’re not committed to a physical location. But if something is working you can add more ad dollars to that specific group that you’re targeting. You can brand many different ways. It’s a way to test the waters.”

“What’s great about this is you reduce your advertising costs and you don’t have the hard fixed-asset cost of traditional banking,” he adds. Getting a new customer in a traditional retail banking environment might cost about $500 once all the costs are considered. “At booyah! we are already seeing that cut in half,” James says.

Surety has plans to open two more digital banks in the near future, including one targeting former professional athletes and their fans.

Clear Definitions

“When creating a digital experience, it is also important to define it differently for each channel, such as desktop, mobile, mobile app, chat and the like,” advises van Faassen. “Each channel has unique characteristics, so replicating a desktop website to a mobile browser does not create the best experience for a mobile customer.

“This also brings up the need for an omni-channel approach, where customers can choose their preferred channel at each step of the process and resume in another channel without having to restart the process. This can be a key point of frustration. If banks create a digital experience that does not allow a customer to move between different channels without losing information, the experience can be worse than being forced to do everything in a branch.” ■