BM Technologies CEO Luvleen Sidhu on the rebundling of FinTech

How can fintechs build a thriving customer base in an increasingly competitive market? According to Luvleen Sidhu, CEO and founder of BM Technologies, forming partnerships and offering consumers more services, all in one place, is central to future success.

BM Technologies is already winning high volumes of customers at low cost through this very formula. Previously known as BankMobile, the company is among the largest digital banking platforms in the US, working with a network of partners – including college campuses and workplaces – to reach first-time digital bank consumers.

Following the listing of BM Technologies on the New York Stock Exchange earlier this year, Sidhu became one of the first female minority founders of a publicly traded company – and one of the youngest. She founded the company when she was 28. 

Here, she explains why challenger brands in the financial services space must focus on a sustainable customer acquisition strategy, conduct financial market research and shouldn’t ignore the trend of ‘rebundling’. 

As a digital-only proposition, what change have you seen in your existing customers and in the uptake of your services within the last 12 months? 

The pandemic really accelerated digitization across the board and digital banking is no different in that acceleration. Last year in our white-label and new business portfolio, we saw over 600% year-over-year growth in our deposits, over 250% year-over-year growth in spend and we opened close to half a million new accounts.

And so it’s very clear to us that consumers are becoming more comfortable with digital. They were forced to take on digital means, which they’ve now adopted and it’s become much more seamless and much more of a norm. We’ve seen that our consumers are really resonating with the features and functionalities of our interest-bearing accounts, so we’ve definitely been able to benefit from the acceleration of digitization. 

How have you adjusted your business model in light of changing consumer trends? 

It’s business as usual for us. We are a digital strategy and so it’s really about people finally appreciating in a much greater way what we already did. That being said, I think as a digital bank, it’s becoming more and more expensive for new challenger banks to acquire customers.

Anecdotally, I’ve heard one of the largest neo banking challenger banks out there is spending $500 million to a billion dollars in the coming year for customer acquisition. And so I think for those that are doing direct-to-consumer strategies, to some degree, there’s a lift for all parties involved because of the growing awareness of that category. But at the same time, the stakes are going to get absurdly high and it’s going to be hard to compete. 

I’m very grateful for the business model that we’ve adapted, which is a B2B to C approach. We leverage existing brands that have entrenched customer bases to be able to roll out fully branded digital banking products and services to their customers or employees. 

Today, we have a customer acquisition cost for the bank accounts that we service of less than $10.

We’re able to acquire bank customers at much higher volumes and exponentially lower cost by doing this. And at the same time, we provide great value to our partners, especially companies that are really commoditized and are looking for differentiation; a more emotional connection. If a transactional relationship exists between the consumer and the company already interjecting, a bank account might make that payment and transactional relationship more seamless. And so we enable brands to do this. 

Today, we have a customer acquisition cost for the bank accounts that we service of less than $10. With some of these challenger banks that are VC funded, the customer acquisition for a bank account is typically $500 to $1,500. I think a lot of these challenger banks need to continue to think about how to create a sustainable cost structure to acquire customers – we found a way to do it.

In the increasingly crowded space of digital banking, how are you continuing to stand out against the competition?

One thing is that you need to continuously be innovative and the product needs to be equal to, if not better than, what exists in the marketplace. So I think it’s really important for us, as well as others in this space, to continuously think about what consumer pain points are not being met today, and how can we enhance the product and the feature experience to react to that need.

Not only are we doing that, but we’re also thinking about how we can create a full digital banking platform. When we first started out five, six years ago, there was quite a bit of unbundling happening. Fintechs were coming in and they were learning how to do one niche of the financial services experience really well and utilizing technology to create the most seamless experience, whether that was in wealth management or investing in digital banking etc.

It’s important to create a rebundling of services to stand out against the competition. 

And now we’re really seeing that rebundling and bringing it back together – fintechs are asking, how can we create one digital banking platform rather than our consumers having to go to various different players to meet those needs? 

As a company, we’re really focusing on how to create a digital banking platform where customers can come in and get access to digital banking, lending, advice, investing, and be involved in cryptocurrencies as well. That is something that we’re committed to and we’re considering if we want to build it or if we want to partner. 

With an API-based ecosystem, we can partner with the best-in-breed fintechs to create this cohesive visual banking platform. I think it’s really important to create much more of a rebundling of these services to stand out against the competition. 

What are some of the developments upcoming in your student banking proposition? 

We’re planning to do a bigger push to credit products in the latter half of this year, rolled out to students once they graduate. We have personal loans, student refinance and credit cards and, as we’re beginning to offer this to our student base, there is a strong push towards education. We really want to help them understand what their credit score is today and understand the components that lead to good credit and build good credit over time.

We’re also looking at how we do great partnerships with others to help support our students. So we’re not only offering great financial services products to them and solving a lot of their financial pain points but are also providing value added services above and beyond that. For example, we have a partnership with Udemy for discounted classes, and a partnership with Billshark that helps people significantly reduce the cost of their bills.

The Google brand is helpful as many of our students are part of the Google ecosystem already.

Lastly, we look at partnerships, like what we’ve done with Google. We partnered with Google in the summer of 2020, and we’re working on launching a co-branded BankMobile Google Plex account by January of next year. We think this may really resonate with our students. Number one, because we’ve been working together to get an awesome front-end experience for our students, that’s really focused on financial insights and money management, even deeper and more robust than what we have today. 

Number two, the Google brand is helpful. Many of our students are part of the Google ecosystem already and the account will be part of the broader Google pay ecosystem. It’s that super-app concept where you don’t just have financial services products; you’re within a broader ecosystem that’s allowing you to get cashback, discounts with merchants, pay-on-the-go and do things like order food ahead. 

BankMobile just became BM technologies. So could you tell us about your rebrand and the future of the business? 

We changed from BankMobile to BM Technologies when we went public at the beginning of this year. And we are now a fintech company that offers digital banking platforms to our partners. We’re no longer a bank with a bank charter, so we rebranded to really reflect that we’re a technology company first. 

As BM Technologies, we’re continuing to grow and expand on our existing strategy of B2B to C banking, or banking as a service, where we work with brands to help them offer completely branded banking services to their customers, to their employees or to their students. 

We found a way to acquire customers at low cost and at high volume.

And at the same time, we found a way to acquire customers at low cost and at high volume. We’re committed to continuing to build our student business in the ways that we’ve talked about. We’re also really excited about continuing to expand our relationship with T-Mobile, where we’ve launched the T-Mobile money checking account, which has seen exponential growth over the last year. 

We’ve also recently launched our workplace banking initiative. Now that we have our proprietary digital banking platform, we’re creating new ways to roll out banking products and services to HR departments across the country. It’s a great way to offer financial wellness products like financial education and financial coaching. We’re really looking forward to building out that vertical. 

What advice would you give other fintech or digital banking brands looking to do more in financial wellness?

I think it always comes back to understanding what the consumer needs are. So really looking at identifying the target market that you’re going after, understanding the pain point that you’re trying to resolve, and then making sure that your products and services reflect that need. And then, lastly, finding a distribution channel to really acquire those customers because, quite frankly, you can have the best product, but if you don’t have a customer acquisition strategy to get people to use those products, it really doesn’t matter. 

With a B2B to C model, how do you find the right partners to work with? 

We look at companies that have strong brands so there’s an emotional connection already in place between the customers that they serve and that brand. We look for brands that have access to millions of customers, whether that’s the 725 college campuses that we do business with today, or T-Mobile that has access to about 120 million customers. And then, obviously, with Google, you get billions of potential eyes and ears through a partnership like that. 

We ask, do these brands already have some sort of transactional relationship that’s taking place, whether that’s a retailer, a wireless company or a video gaming company? Anywhere you can interject a bank account to create a more seamless payment mechanism is an example of a great partner opportunity for white-label banking.