- Banking-as-a-service provider BM Technologies is cutting 25% of its workforce, part of an effort to lower expenses by $15 million in 2023, the company announced Monday.
- The fintech’s new “profit enhancement plan” also includes lowering costs associated with third-party service providers, the company said.
- BM Technologies’ effort to reduce expenses follows the dissolution of the fintech’s planned acquisition of First Sound Bank, a $23 million deal the two parties called off last month. The tie-up, which encountered regulatory delays, was initially touted as a move that would allow the fintech to combine its technology and BaaS expertise with a bank charter.
Like a large swath of its fintech peers in recent months, BM Technologies is reducing its headcount in an effort to rein in expenses.
The company did not say how many jobs would be affected. BM Technologies has 275 employees, according to Bloomberg, which would put the number of cuts close to 70.
Luvleen Sidhu, CEO of BM Technologies, said the high interest rate environment and inflation led to the firm’s decision to implement cost-cutting measures.
"The Fintech Industry is still in its early stages and continues to grow, but market dynamics are substantially different than they were a year ago," Sidhu said in a statement Monday. “BMTX's imperative is to remain an agile company that can continue to innovate, serve its customers better than its competitors, and produce new products and services while facing uncertain headwinds. In this environment, our objective is to position BMTX for the next level of growth for our customers and shareholders as we accelerate expansion opportunities while strengthening our financial position."
The bank expects to incur $1.5 million to $3 million in charges related to its cost reduction plan, the majority of which will occur in the first quarter, it said.
The cuts come as the scrapped deal with Seattle-based First Sound has led BM Technologies to refocus its strategy away from one that centered on it becoming a bank, to one where it continues to offer banking services in partnership with its sponsor bank.
“Interest rates and their outlook are materially higher today than last year, when the merger was announced,” Sidhu said in a statement last month. “In this environment, we believe BMTX is better situated as a FinTech with a sponsor bank without the capital needs and credit risk that an on-balance sheet strategy would entail.”
The fintech’s profit enhancement plan announced Monday is connected to that shift in strategy, the company said in a statement.
In addition to the job cuts, the company also announced several leadership changes Monday.
The company promoted Jamie Donahue, its executive vice president and chief technology officer, to president and named James Dullinger chief financial officer, a position he will hold in addition to his role as chief accounting officer.
Robert Ramsey, who previously held the CFO role, has transitioned from that position to a new corporate development role, the company said.
BM Technologies also named investment banking veteran Raj Singh to its board. Singh worked in the investment banking practice of Raymond James for more than 20 years, including most recently as vice chairman of investment banking, the company said.