What Witchcraft Is This?

#1: Roger

What happened?

Roger, a digital bank for military service members, is officially launching tomorrow.

Roger was built by Citizens Bank of Edmond after they were approached by Nymbus with the idea to start a standalone digital bank. Here’s an excerpt from a podcast that Citizens Bank CEO Jill Castilla did with Penny Crosman at American Banker:

We were approached last year [2021] with a potential partnership to launch a digital bank. We’re a small community bank in one location, and we’re trying to be mindful on our growth. We’re not looking to be a $5 billion bank in five years. We just want to be an organically growing bank. But whenever this idea of a potential way to help our service members, especially those are entry level service members, it just felt so right with our team that it just became part of our DNA that this is a yes for us. And so when we found the partner of Nymbus, and that was really interesting in how that came to be, I think the universe conspires for a project to come to fruition even when it looks like you’re getting stop signs. And that’s certainly what happened when Nymbus, they are equally passionate about this project and want to find a way to make it work. And so with this digital bank, we’re able to have a standalone core, state of the art digital banking experience with the highest level and most robust support system that we could ever imagine as a small community bank for our service members. 

So what?

The first question I always ask about niche digital banks is, what are you doing to serve your niche better than the average digital bank? 

Roger has good answers:

• Roger allows 17-year-old military recruits to open accounts in their names, rather than requiring a co-signer (as almost all other banks do). All that is needed is either a prior relationship with Citizens Bank of Edmund or an enlistment form for the U.S. military. This is a big deal as it is sadly not uncommon for new recruits to have their money stolen or misused by a friend or family member from a joint account.
• Immediately after a new account is opened, Roger creates a direct deposit form with financial institution info prepopulated. This addresses the problem of new recruits not getting their paychecks right away because of delays in getting the direct deposit form from a recruiter and taking it to the bank to be completed.
• Roger places a very strong emphasis on customer service and digital controls – 24-hour secure messaging to change account info and addresses, call center open 7 days a week, remote debit card lockdown – in order to ensure that customers are able to manage their money and keep it safe, regardless of where they are.

Perhaps most interestingly, Citizens Bank of Edmund doesn’t appear to be trying to compete head-on with existing military banks, but rather to create a new set of digital experiences that can both serve Citizens Bank’s existing customers as well as augment the capabilities of other banks:

Penny Crosman: So this would be sort of like a digital face to some of these [military] banks and that will help make them more accessible, more understandable to new recruits and help them understand what’s available?

Jill Castilla: That’s right. So you can think about it like a Chime that has several partner banks, but we would actually be the fintech rather than the bank. Of course, we can be the bank with it, but really this is an opportunity we think to be able to provide great service to the military community, consistency of service where after they PCs overseas or stay locally, that the community bank then is able to maintain that account and that relationship by offering the highest level of technology available, and be able to really compete to wherever that soldier goes in their career to be able to keep them throughout their career.  

This is like the community bank/BaaS equivalent of Bugs Bunny playing baseball. Impressive.

#2: What Witchcraft Is This?

What happened?

Rightfoot, which started off trying to facilitate automated debt repayment, has pivoted (and raised a $15 million Series A):

San Francisco-based Rightfoot’s product — called Connect Magic — can verify a user’s identity and ownership of accounts at other banks and lenders.

Connect Magic lets consumers give banks, lenders and fintechs permission to access their data using customer data financial service providers already have on file — such as name, date of birth and address.

Then with the consent of the consumer, “we’re essentially then acting on behalf of that customer and they’re authorizing us to go to the financial institution and retrieve [their] data,” Rightfoot CEO Danielle Pensack says. 

So what?

Connect Magic is appropriately named, as it has left much of fintech (and healthtech) Twitter mystified. How do you access a consumer’s banking data using just their name, address, and date of birth? What witchcraft is this? 

I remember asking a similar question about Method, another debt repayment API provider that has been broadening its product offering.

I’m guessing that the answer is similar for both – they are going through the core banking systems.

One of the things that is nice about building out a service to facilitate debt repayment is that you need to build integrations that allow for read/write access to all of the systems that keep track of consumers’ loan accounts.

Apparently, once you’ve built those integrations, you can pivot into offering a password-less alternative to Plaid. Method offers a Liabilities Data API (access your users’ complete debt portfolio using just their phone number – no login credentials required). Rightfoot offers Connect Magic (secure connectivity to millions of business and personal accounts, without requiring a log-in). 

#3: Striking a Good Balance on Credit Building

What happened?

Greenlight added a credit card:

Greenlight Financial Technology has long provided financial education and debit cards to its child and teen customers since 2014; however, today the company launched the Greenlight Family Cash Mastercard to help those same customers build their credit before they reach adulthood.

Parents add their teens as authorized users of the Greenlight Family Cash Card, which is available with all Greenlight subscription plans, starting at $4.99 per month. Families can then earn up to 3% cash back on all purchases. The card is issued by First National Bank of Omaha.

Teens can track their credit card balances on the Greenlight app while parents can set up flexible spending limits and get real-time purchase alerts. In addition, the company’s in-app financial literacy game Level Up now includes credit lessons to aid teens as they use the card. 

So what?

Greenlight is basically a family finances super app, available at a variety of subscription tiers. Regardless of the tier that families sign up for, they get a debit card and savings account for kids, joint kid-parent investing, and a credit card for parents.

The credit card is the new piece, and it’s fascinating that it comes with all Greenlight accounts as a default, with the option to add kids as authorized users (which will establish and start building a credit history for the kid).

I like this.

I can’t think of any other credit products in the market that are designed with as many built-in safeguards and kid-focused educational content. Compared to standard credit cards (not safe) and most fintech credit builder cards (not legitimate tools for building a credit history), this product strikes a good balance.    

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2 FINTECH CONTENT RECOMMENDATIONS

#1: As CFPB Rulemaking Proceeds, Trustly Regulatory Chief Says Open Banking Primed to ‘Empower’ Consumers (by PYMNTS)

A good overview of where we are and what we should expect from the CFPB’s rulemaking on open banking, from my guy Matt Janiga.

#2: PayPal’s Stablecoin is just the beginning (by Simon Taylor, Fintech Brainfood)

One of the things that I find challenging about crypto is that it is an industry made up of three very different groups of people, all jammed together. 

There are the thieves and amoral grifters, who see crypto as an efficient way to separate people from their money. There are the laser-eyed libertarians, who view crypto as the solution to their every conspiracy-fueled delusion. And then there are the weekend tinkerers, who are just fascinated by the technology and want to play with it out of sheer intellectual curiosity.

I despise the first two groups, but I’m actually very fond of the third. These are the same type of folks who helped build the World Wide Web and who are still fighting for it to remain open and interoperable. They’re not trying to steal anyone’s money or prepare for a Mad Max-style dystopian future. They just think it’s an interesting (and potentially useful) technology.

I can get down with these people (including, and especially, Simon).    

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1 QUESTION TO PONDER

Will PayPal’s stablecoin succeed, or will it end up being consigned to the 2020-ZIRP-bad-idea bin of business history?