When Jenius Bank launches its consumer-focused banking platform nationwide this year, the digital firm will be throwing its hat into a crowded ring.
But Jenius Bank CEO John Rosenfeld said the new venture has ambitious plans to launch not just core banking products, but services that differentiate the platform from neobanks and incumbents alike.
“We want to create a more compelling and better value proposition for the consumer. We want to be the first bank really focused on helping customers live a richer life and better manage their financial life,” said Rosenfeld, who joined Jenius after heading Citizens Bank’s digital bank, Citizens Access.
Jenius Bank is a new division of Los Angeles-based Manufacturers Bank, and represents the commercial-focused firm’s expansion into digital consumer banking.
Jenius will offer personal loans, savings and checking accounts — core banking products that will roll out within the next 12 to 18 months, Rosenfeld said.
But the bank’s differentiator will lie in the financial insights it plans to eventually provide its consumers, Rosenfeld said.
Jenius customers will be able to track cash flow, as well as link data from credit cards, other banks, loans and potentially investment accounts. The goal, Rosenfeld said, is to create a platform where users can view all of their financial data in one place.
“Though some banks do offer aggregation today, they do it fairly similarly, which is they make it a service you can add on or you can enroll in. Once you enroll, you can add an account and so forth. They don't make it part of every single customer's experience,” he said.
Rosenfeld said he hopes to offer financial data aggregation to Jenius users from Day One.
The digital bank’s target demographic is 25 to 44 years old with six-figure incomes — “customers that have complex financial needs,” Rosenfeld said.
Jenius has hired close to 250 employees in the past year and a half, said Rosenfeld, who added the bank’s staff is nearly 100% remote.
The company has an office in Charlotte, North Carolina, and plans to open another in Phoenix in the coming months. The bank also operates out of Manufacturers’ offices in Los Angeles and New York, he said.
“We're relatively unique. I don't think there are any banks in the country that have 95% of their workforce remote and plan to stay that way,” he said.
The $4.9 billion-asset Manufacturers Bank serves middle-market businesses, and was purchased by Tokyo-based Mitsui Bank in 1981.
The firm came under the umbrella of Japan-based Sumitomo Mitsui Banking Corp. following the 2001 merger of The Sumitomo Bank and Sakura Bank, a descendent of Mitsui.
The Japanese banking giant has invested $150 million in the U.S. digital banking venture, according to Nikkei Asia.
“We have the luxury of having an incredibly strong parent,” Rosenfeld said. “They believed in the vision. A lot of fintechs or startups don't have the luxury of that level of investment and a stable parent. Most of them want a quick win and they want to see somebody grow a million customers to prove the concept has value, regardless of whether or not it's making money.”
Jenius, by contrast, has a measured approach to growth, Rosenfeld said.
When it comes to launching personal loans, for instance, Jenius will start slowly, he said.
“We have a very long-term view, and we are going to be very calibrated in that growth,” Rosenfeld said. “We're going to grow loans that we believe are truly profitable to us, and we're only going to raise deposits to fund those loans.”
Jenius will partner with loan aggregators, such as Credit Karma, which will connect the bank with borrowers who meet a certain credit profile.
“We hope to be a very competitive offering for those customers. For the customer that comes to Credit Karma and doesn't meet that criteria, they're not even going to see us,” Rosenfeld said.
As firms brace for a possible recession, some of the nation’s largest banks have boosted credit-loss reserves over the last quarter. But Jenius won’t need to do the same, Rosenfeld said.
“We intend to start with a much smaller, more calibrated and probably a little slower trajectory of growth,” he said.
A competitive edge
Launching a digital-only banking platform with the backing of a chartered institution will give Jenius an advantage over other neobanks and fintechs targeting the consumer market, Rosenfeld said.
“A lot of startup digital banks struggle to figure out how they're going to get a charter,” he said. “For the most part, charters are not easy to come by, so the fact that we have one provided us an enormous head start.”
But Rosenfeld doesn’t believe the platform will compete head-to-head with customers of popular digital players like Chime or Varo Bank.
Instead, he sees an opportunity to tap customers who are migrating out of traditional banks.
“I think what we're seeing is a massive shift from traditional banks to the new digital bank value proposition,” he said. “I'm building on a core that's only a few years old, whereas most of the banks in America are running on 30- to 40-year-old cores, which can't possibly do some of the things that I'm going to be able to do.”