For the founder of a pre-revenue startup or the owner of an early stage small business, time is often in short supply.
Digital bank Azlo is targeting this clock-conscious segment of the population with offerings that promise a streamlined banking experience that can save a customer time and money.
"Oftentimes, we talked to people and they'd have to go down to the branch and take an hour and a half or two hours to open an account," Azlo CEO Cameron Peake told Banking Dive. "If you're an entrepreneur or small-business owner, you don't have time to deal with that. And so the simplicity of opening an account and doing it from the comfort of your home office, or wherever you may be, that is central to us."
Like many emerging digital or challenger banks, Azlo says it provides services to a growing number of small businesses whose needs are not being adequately met by traditional banks.
Peake said Azlo’s various integrations with fintechs allow it to provide a "holistic approach" for freelancers or small businesses that may rely on a number of apps to collect payments.
The bank allows users to send invoices through its app and accept payments through Square and PayPal.
"That starts to give you that more holistic understanding of the state and the health of your business," Peake said. "There's a lot of work that we're doing to build on top of that basic concept that is a different frame than you often see with your banking relationship."
Azlo offers Federal Deposit Insurance Corp.-insured accounts through its relationship with BBVA, its investor and banking partner. Azlo was born out of BBVA’s incubator.
"They played a really critical role in our birth in a lot of ways," Peake said.
The company has no immediate plans to pursue its own bank charter, as other fintechs and digital banks have done, but Peake said the relationship it has with BBVA puts it in a strong position to take on the regulatory requirements that come with striking out on its own.
"We are building an institution much more in line with the regulatory and compliance guidelines than you would see from any random startup out there. And that's part of the calculus any time a regulated bank owns a controlling stake in a company," she said. "Because of that, we've been required to build to the existing regulations that most startups or other companies wouldn't need to do until much later point in time."
Azlo’s primary focus is to continue to expand its products and acquire users, Peake said, adding that the company is "set up in an incredibly helpful way if we do choose to pursue [a charter] in the future."
Azlo is not the only digital bank targeting entrepreneurs and small-business owners. Grasshopper Bank, which received a national banking charter from the Office of the Comptroller of the Currency in April, markets itself as an entrepreneur- and venture capitalist-focused financial institution.
The bank’s CEO, Judith Erwin, told Banking Dive last month that Grasshopper aims to serve a market that traditional banks have largely neglected in favor of consumer banking.
Online lender BlueVine recently announced it would be offering a checking account for small businesses, starting in early 2020.
The company plans to launch the FDIC-insured checking account through a partnership with The Bancorp Bank.
"The typical small-business owner pays over $480 a year for their business checking account services," BlueVine CEO Eyal Lifshitz told Banking Dive in October. "We are giving that for free, because we don't believe that small businesses should pay money for standard services."
As more players enter the digital banking field, Peake said her focus for Azlo is to provide services beyond standard banking features.
"When we initially launched [in 2017], we were pretty much competing head to head with a brick-and-mortar banking institutions, and for the most part we’ll continue to do so," she said. "But there is more digital competition. And so I think that's why it's more important than ever that we choose to focus on not just building the standard banking features with a nicer [user interface]. It's about how do we provide real intelligence and real insight beyond those tools."
Peake declined to provide specifics but said the company plans to diversify the platform’s revenue beyond deposits.
"Most of our revenue today comes from holding deposits and debit card interchange," she said. "And so in a world where we know the [Federal Reserve]’s fund rate is declining, we want to make sure we're being smart about what that revenue mix looks like. … We're expecting in later Q1 or early Q2 to start some beta work on some things."