Since shifting to invite-only mode 16 months ago, HMBradley said it has secured two new partnerships that enable the neobank to eliminate its waitlist and open its platform up to new users.
The fintech tapped New York Community Bank, a division of Flagstar Bank, as its new sponsor bank, replacing Hatch Bank, a San Marcos, California-based digital bank that had to limit HMBradley’s growth in July 2021 after struggling to keep up with user deposits.
HMBradley also announced a new partnership with U.K.-based Thought Machine, a cloud-native core banking platform that has been tapped to overhaul JPMorgan Chase’s retail network.
HMBradley said its partnership with the British fintech, which allows it to transition from overnight batch transaction processing to real-time ledger capabilities, will help it roll out new products quicker.
“We're excited to be able to open the doors again and not be worried about being limited,” HMBradley co-founder and CEO Zach Bruhnke said.
The Santa Monica, California-based fintech’s new partnerships mean it can finally allow more than 25,000 waitlisted customers to open accounts, joining the platform's 10,000 existing members, he said.
“One of the biggest reasons that we ended up with a bank as large as NYCB, is that they are an $87 billion institution. They're not a small potato,” Bruhnke said.
Finding a new sponsor bank that could keep up with the fintech’s growth was crucial, Bruhnke said.
“We did not want to be surprised again,” said Bruhnke, referring to the fintech’s former sponsor bank’s request that it slow the pace of its deposit gathering.
Since HMBradley’s perks are tied to user deposits, the average account holder has more than $40,000 in their account, Bruhnke said, a figure that sets it apart from other neobanks that target the paycheck-to-paycheck demographic.
The fintech incentivizes savings by offering 4.2% annual percentage yield to account holders who have positive monthly cash flow, have a $500 monthly deposit, and spend $500 on an HMBradley credit card each month.
When the fintech began to look for a new sponsor bank, Bruhnke said it was clear early on that the firm would need a bank with a large appetite for deposits.
NYCB, a large mortgage bank, fit that bill, Bruhnke said.
“They said, ‘We will give you billions in capacity,’ which gives us room to grow,” he said.
Since its launch in 2019, HMBradley has garnered nearly $600 million in deposits, said Bruhnke, who added he hopes to reach $1 billion this year.
Emphasis on automation
Following the new partnerships with NYCB and Thought Machine, HMBradley said it is raising the ceiling for which customers can earn interest on balances, from $100,000 to $250,000.
The fintech is also exploring ways to add automation to the platform, Bruhnke said.
“One of the things that we learned from customers was that they're craving automation,” he said. HMBradley is beta testing a feature that allows users to automatically move funds into a savings plan whenever a specific transaction occurs.
“We’re giving the consumer the ability to build whatever they want,” Bruhnke said.
The platform is also exploring ways to implement shared savings plans that would allow friends and family members to add funds to a user's account.
“Automation and the sharing of that automation — that's really where everything that we're focused on is heading towards,” Bruhnke said.