Florida de novo Climate First Bank is on track to open next month with more than $30 million in investor funding, almost doubling the $17 million capital goal CEO Ken LaRoe set out to achieve last fall.
The St. Petersburg, Florida-based community bank, which is focused on promoting sustainable business practices, also has a banking-as-a-service (BaaS) partnership with neobank Atmos Financial in the works.
While at opposite ends of the financial services spectrum, the two entities share the same goal: using banking to promote sustainable business practices and climate-positive lending.
"Our focus is on shifting capital away from funding of fossil fuels and toward an equitable clean energy transition," said Ravi Mikkelsen, a co-founder at Atmos, which launched in January with a savings product. "Primarily, we want to fund climate-positive infrastructure like renewable energy, electrification of our homes and our vehicles and regenerative agriculture."
The neobank also allows customers to donate to 41 climate, clean energy and sustainability nonprofits directly from their accounts. Users can give a monthly recurring donation as part of their savings rate, or they can donate a fixed amount, Mikkelsen said.
Atmos, which doesn’t have a bank charter, is partnering with Evolve Bank & Trust to offer its customers Federal Deposit Insurance Corp. (FDIC)-insured accounts, but Mikkelsen said Evolve isn’t a 100% perfect fit for Atmos.
"They're a really good partner, but they don't have the mission alignment of what the capital does once it goes into either their balance sheet or into their sweep network," Mikkelsen said.
Atmos plans to partner with Climate First Bank shortly after the bank’s June 1 launch. Climate First Bank, LaRoe’s third de novo venture, first needs to complete the implementation of its core provider technology and its application programming interfaces (APIs), the CEO said.
"We don't want to pull the trigger with Atmos until we know that it'll be seamless," he said.
Atmos will likely continue its partnership with Evolve in addition to Climate First, Mikkelsen said, emphasizing the importance of partnering with multiple financial institutions as it looks to grow.
"Our plan is to be really big. We want to work with as many banks as possible so that we can move as much money as possible," he said.
For Climate First, partnering with a fintech like Atmos provides an early source of deposits for the de novo, as well as the opportunity to exchange data and feedback with a company that shares a similar mission, LaRoe said.
Both entities have plans to launch rooftop solar lending programs. Climate First plans to launch with retail and commercial banking services, while Atmos plans to add direct lending and commercial accounts to its platform this summer.
"We're going to hopefully hit the ground running on our solar program and can provide data and feedback to Ravi and [Atmos co-founder Peter Hellwig] pretty quickly," LaRoe said.
Collaboration over competition
LaRoe is a veteran of the community banking space, having launched Florida Choice Bank in 1999, and his first climate-focused venture, First Green Bank, in 2009. He sold the former in 2006 and the latter 12 years later.
With the increasing number of fintechs and neobanks entering the financial services space, community bankers shouldn’t view the new players as competition but as unique opportunities for partnerships, LaRoe said.
"These aren't competitors. They can be collaborators," he said. "If we community bankers don't progress as an industry, we're going to get left in the dust, whether it’s by Atmos or whether it's by Chase, who’s got a floor of coders in some office tower somewhere, writing proprietary code. We can't sit back and think we're insulated."
Mikkelsen said he thinks there will be more opportunities for causal alignment between banks and fintechs, similar to Atmos’s forthcoming tie-up with Climate First.
"I think we’ll start seeing more community banks being able to serve and allocate their capital toward these society-beneficial causes in a much more efficient manner through fintech partnerships, and I'm really excited and grateful that Ken and the [Climate First] team have accepted us," he said.