Charlie, a neobank for the 62-plus demographic, is looking to solve pain points facing retirees and soon-to-be-retirees.

The fintech, which launched in May, allows account holders to withdraw their Social Security benefits up to four weeks early. The free service is available to account holders who link their Social Security direct deposit to their Charlie deposit account, said Kevin Nazemi, the fintech’s co-founder and CEO.

Many neobanks offer customers early access to their paychecks, a feature that has become popular with those who live paycheck to paycheck. Offering retirees advanced access to their Social Security checks is simply a streamlined version of what many other fintechs are doing with earned wages, Nazemi said.

“It's a nice instrument for a company like ours. We can provide early access to a payment that's made by the United States government,” he said.

“We're not dealing with 50 payroll systems and thousands of employers. We're dealing with the Social Security Administration as the entity that needs to meet their obligation of providing that money.”

With Charlie, Nazemi’s goal is to build a platform that addresses the unique financial needs of retirees.

“The posture of existing financial services companies are all tilted toward income generators and accumulators,” said Nazemi, who has worked in the technology and healthcare sectors for over 15 years.

The average retiree has about $50,000 in liquid savings and receives $1,800 in Social Security each month, said Nazemi.

“Most financial services offerings aren’t built for them, unless they have a ton of money,” he said. “The industry could do a lot better.”

While some may argue the particular demographic Charlie is targeting may favor traditional institutions over neobanks, Nazemi said the fintech refuses to paint the segment with a broad brush, especially in light of the COVID-19 pandemic, which accelerated digital adoption.

“A growing number of people in this population are either becoming, or will soon become, tech-comfortable enough to want a solution that comes to them, that meets their needs, and is available to them 24/7 versus defaulting to going and standing in line in a box,” he said.

He said his idea for Charlie came about after a family health issue involving his father, a senior, opened his eyes to the unique healthcare, finance and housing needs facing the 62-plus demographic.

Charlie account holders receive a 3% annual percentage yield on average balances, and have access to a network of 55,000 ATMs, including retailers CVS and Walgreens, the company said. Attica, Ohio-based Sutton Bank provides the underlying banking services for the fintech.

The company worked with a group of 20 seniors who provided input on the app’s design, including font size, color contrast and interface, Nazemi said.

“If you go on our site, you'll see a tile-based interface. The idea there is that we can contextualize what we want to draw your attention to without just adding more menu items,” he said. “Contrast that to the typical bank website. For me, it kind of feels like walking into Times Square.”

Nazemi said Charlie also plans to launch a set of optional fraud tools that would notify account holders’ loved ones of any unusual patterns or charges on an account.

Additional revenue streams

Charlie’s business model is similar to most neobanks, generating revenue from interchange fees. But Nazemi said the company plans to parallel the revenue models of a typical bank over time.

Charlie plans to launch a home pension product in the future, giving customers the ability to turn a percentage of their home’s value into an annuity and a source of income, he said.

“Most of the 80% of seniors who own their homes, 100% of their home's value is set to go to their legacy, and yet they're living in an environment where over half of them live Social Security check to Social Security check. And over half of them don't feel prepared for their retirement,” he said.

The product, for example, would allow a customer to designate 90% of their home to their legacy, and sell 10% of it today, Nazemi said, adding Charlie would charge a fee to facilitate the transaction.

“It’s not as if the broader ecosystem is blind to the needs of this audience,” Nazemi said. “What you see with the bigger banks is, the way they try to serve their needs is by adding feature after feature, but it's really hard to make these features accessible amidst the 15 hundred other offerings for the 15 constituencies that the bank is serving. When you get down to the community banks, I do think that they bring the service ethos to this audience that's needed, but they're not resourced to utilize the latest technologies to bring a simple transparent solution to the table.”

Charlie has raised $7.5 million from investors, including Better Tomorrow Ventures and Expa.

Bank of America in May launched an accelerator program for early-stage fintech startups, the Charlotte, North Carolina-based lender announced.

The six-month program provides mentorship, networking opportunities and access to potential investors to Black, Hispanic-Latino, Native American and other entrepreneurs from underrepresented communities, the bank said. 

The bank is offering the program, called Breakthrough Lab, at no cost. Participants are not expected or required to exchange equity with the bank, the firm said.

The launch comes after Bank of America tested smaller versions of Breakthrough Lab in 2021 and 2022.

Bank of America launched a pilot program with five startups from the New York City area in 2021. The bank said it expanded the pilot in 2022 with 17 companies from the U.S., Mexico, U.K. and France.

“The bank’s long-standing commitment to supporting economic opportunity for people and communities we serve is at the core of Bank of America Breakthrough Lab,” Rina Arline, Breakthrough Lab program director in global transaction services at Bank of America, said in a statement. “We’re excited to play a role in giving emerging entrepreneurs from a range of backgrounds access to the bank’s vast resources and industry networks.”

Bank of America said it plans to host a new cohort each year, and is looking for pre-seed stage fintech companies or firms with tech-enabled ideas promoting inclusion such as healthtech, wealthtech, edtech and housing. 

“While the aspirational goal of the program is to increase access for underrepresented groups, all eligible entrepreneurs regardless of background are encouraged to apply,” the company said in a statement.

The six-month part-time program runs from September to March, and includes 94 hours of live instruction. The bank is accepting applications for the first cohort until early June.

Each cohort will be assigned mentors at Bank of America’s managing director or executive level, the firm said. Participants will receive technology support, a branding package covering website and logo design and guidance on partnering or selling to a large company.

At the end of the program, each cohort will be able to pitch to potential investors, the bank said.

Atlanta-based Greenlight is making its kid-focused banking services available to traditional financial institutions, the fintech announced in March.

The new partnership program, called Greenlight for Banks, allows banks and credit unions to offer the fintech’s suite of banking and education products to their customers through a co-branded landing page and app.

Over half a dozen firms, including Morgan Stanley, WaFd Bank and Community Financial Credit Union have partnered with Greenlight to offer the fintech’s services to their customers, said Matt Wolf, Greenlight’s senior vice president of business development.

Greenlight is actively involved in discussions with more than 100 financial institutions, he added.

“In those conversations with financial institutions, we found that many don't have the expertise or resources to create a compelling digital banking experience for the next generation,” Wolf said. “We've designed something that really helps financial institutions, seamlessly integrate family banking into their own ecosystems.”

Greenlight, which was co-founded by Tim Sheehan and Johnson Cook, launched a debit card for kids in 2017.

The fintech has since expanded its offerings to include savings and investing for children, while allowing parents to automate allowances and supervise their dependents’ money management.  

In January, Greenlight launched a financial literacy game called Level Up, which banks and credit unions will also be able to make available to their own customers through Greenlight for Banks.

Lenders who partner with Greenlight have the option to hold the deposits gathered by the fintech, or allow them to be held by Greenlight’s partner bank, Community Federal Savings Bank, which issues the Greenlight debit card.

While banks are eager to launch products that reach the next generation of customers, bank accounts geared toward children typically don’t have high balances, meaning they won’t be large deposit generators for banks, Wolf said.

“A couple transactions a month is probably not going to really rise to the top of their technology roadmap and prioritization,” Wolf said.

But offering services targeted toward kids and their parents allows a bank or credit union to create deep and potentially long-lasting relationships, Wolf added.

“As it pertains to the child, they're getting exposed to the financial institution’s brand very early on. And for the parent, they're recognizing that this is a great service they're getting for free because they have that banking relationship with their credit union or bank,” he said.

The service is free for customers, Wolf said. Institutions that partner with Greenlight pay the fintech a monthly fee, based on the size of the firm, he added.

“Neobanks are coming after Gen Z really aggressively. This gives banks and credit unions of all sizes the ability to have relationships with that next generation before they start getting bombarded by neobanks and others that have a young adult banking relationship,” he said.

Greenlight’s effort to offer its youth and family tailored services to traditional firms follows a tie-up it launched with JPMorgan Chase in 2020. 

The New York City-based bank partnered with the fintech in October 2020 to offer an account designed for kids called Chase First Banking.

The account reached 1 million users by April 2022, the bank said during its May 2022 investor day.

Amid Greenlight’s new business-to-business focus, it still plans to grow its direct-to-consumer model, where users pay the fintech a monthly subscription to use its services directly.

But the fintech recognizes the reach traditional banks have to offer, Wolf said. 

“We think that can really help us reach the most families,” said Wolf, on partnering with traditional institutions. “It's too big an opportunity to ignore.”

Greenlight, which is not yet profitable, has raised over $556 million in funding, according to Crunchbase. The fintech’s most recent investors include venture capital firms Andreessen Horowitz and Canapi Ventures.

The fintech said Greenlight for Banks is expected aid its efforts to reach profitability. 

“Our multiple paths to market, across our direct-to-consumer and partner programs, represent a distinct advantage and allow us to meet the evolving needs of our families where they are through a combination of new products and diverse distribution channels,” Greenlight said in a statement.

Since the turn of the century, America’s Black-owned banks have taken a tumble. Black-owned banks insured by the Federal Deposit Insurance Corp. numbered 47 in 2002, but by 2022, that figure fell to 16, accounting for less than 0.03% of assets at all FDIC-insured financial institutions.

A group of Black investors, led by a former White House adviser and the daughter of Dr. Martin Luther King Jr., is creating a new one — through acquisition.

Redemption Holding Co. announced its plan in late February to purchase Holladay Bank and Trust, a one-branch community bank that has served the Salt Lake City area for 48 years.

Pending federal regulatory approval, RHC would become the only Black-owned bank serving the Mountain West, and it would mark the first time an existing U.S. commercial bank would become a Black-owned minority depository institution through acquisition.

"Black banks make the American dream possible for all Americans by deploying resources that uniquely address the financial realities of communities that have been systematically excluded, overcharged and undercapitalized for hundreds of years," said Ashley D. Bell, a former White House policy adviser for entrepreneurship and Small Business Administration regional administrator who will serve as RHC's CEO.

"Redemption will serve as a lifeline to the next wave of Black and Brown first-time home buyers and small business entrepreneurs across the country," Bell said.

Dr. Bernice A. King will be RHC’s senior vice president of corporate strategy and alliances, and serve on the bank’s board alongside Dhani Jones, a former NFL linebacker and the bank’s director and co-founder.

Bell and King founded the National Black Bank Foundation three years ago, and it has since driven $600 million of deal flow into Black-owned banks. Historically, Black-owned banks have served small businesses, nonprofits and homebuyers, with a focus on predominantly Black communities, the Urban Institute said in a report.

Between 2007 and 2013, for example, the number of mortgages originated by Black-owned banks for Black borrowers increased 57%, bucking a national trend that found a 69% drop in mortgage lending to Black borrowers.

Michael Neal, senior research associate at the Urban Institute, told CNBC last year that the dwindling of Black-owned banks in part aligns with a broader trend in the banking sector.

“We’re seeing the number of banks overall declining and assets being concentrated, particularly in your larger global and more complex financial institutions,” Neal said.

Mehrsa Baradaran, a banking law professor at the University of California at Irvine, expanded on the challenges of Black-owned banks.

“Whatever the struggles are of the community, the banks have the same struggle because they’re enmeshed in that community,” Baradaran told CNBC. “They cannot change it unless the community itself has more wealth and has more access, and we have less discrimination as a society.”

Holladay Bank and Trust counted $68 million in assets and $56 million in deposits as of Dec. 31. RHC plans to increase the products offered at Holladay with a planned launch of a full-service digital banking platform, SBA loans, and mortgage origination offered in partnership with other national banks.

Current management and staff will remain once the deal is closed, according to RHC.

In his final public address on April 3, 1968, Bernice King’s father implored Black Americans to move their money to Black-owned banks in advocacy of what he called “a bank-in movement.”

"More than half a century of struggle and incremental progress later, we're making good on daddy's call to bank-in by creating new centers of opportunity for people of color, starting with this Black-led bank acquisition,” she said. “Redemption is just that: delivering families from the cycle of unjust financial exclusion and intergenerational poverty."

Neobank MoneyLion plans to launch a search feature powered by ChatGPT that allows consumers to search for transactions, offers and products on the platform’s finance marketplace, CEO Dee Choubey said. 

The move, Choubey said, aligns with the neobank’s mission to bring personal financial management to the masses. And using artificial intelligence to achieve that goal has been embedded in the firm’s strategy since its launch, he said.

“AI was in our DNA in 2013,” said Choubey. “Our first models were predictive models on when consumers will have money and when they'll run out of money. We built a whole digital banking strategy around that.”

While ChatGPT has generated widespread interest around its potential implications on the workforce and possible use cases across industries, Choubey said tools like the popular text generator will eventually become table stakes in the finance sector.

“But what’s not table stakes is the proprietary data set, and that's what we have,” said Choubey, who did not give a launch date for the ChatGPT integration.

MoneyLion’s insight into consumers’ balance sheets and investing decisions helps the neobank pair them with third-party products through its marketplace, Engine by MoneyLion, he said. 

“It creates a really rich, permissible data set to be able to offer them the best product,” he added.

MoneyLion, which launched as a personal finance and lending platform, has since expanded its services to include digital banking and investing. 

The neobank’s 2022 acquisition of finance marketplace Even Financial, which it rebranded as Engine in March, helped the neobank evolve into a financial matchmaker of sorts, allowing it to pair borrowers with lenders.

“Our growth is going to come by taking those internal tools and democratizing them and providing it to everybody on the enterprise network,” Choubey said. “That makes us part neobank, part data company. I think that's the future.”

MoneyLion has expanded the platform’s network to include more than 1,000 enterprise partners. The platform provides a source of commission revenue to the neobank.

“The neobank strategy is an important strategy for us, but it's not the only game in town,” Choubey said of the fintech’s decision to broaden its offerings.

Another deal has helped the firm trim advertising expenses. MoneyLion’s purchase of content platform Malka Media in 2021 has enabled the fintech to migrate its marketing operations in house.

“We have a studio that allows us to produce any number of financial and money adjacent content,” Choubey said.

MoneyLion reported its customer acquisition costs were under $15 million in the first quarter of 2023. 

The company added 1.3 million customers during the quarter ending March 31, growing its total user numbers to 34 million, MoneyLion reported. 

Choubey said he is confident the neobank will hit positive cash flow by the end of the year.

“Despite the challenging market, those are oftentimes the best times to build,” he said. “We’ll have our first profitable year this year, while delivering growth to our stakeholders.”

Managing a small to medium-size business can be a time-consuming job, said Lilac Bar David, a banking and payments industry veteran and co-founder of Lili, a neobank for entrepreneurs and SMBs.

That’s why she launched Lili in 2019. For a monthly fee, small-business owners and entrepreneurs can access a Lili checking account that combines banking services with accounting and tax preparation software.

“There are half a million new businesses that open every month, and those new businesses are really struggling to get up and running to reach their customer base,” David said. “[Business owners] don't want to spend 100 hours a year on taxes and accounting. If you look at the different services out there, they are just too complicated. You actually have to work for the software instead of the software working for you or automating your processes.” 

The fintech recently launched Lili Smart, accounting software that helps small-business owners manage their own bookkeeping by categorizing transactions in real time.

The New York City-based fintech claims the software — which can generate profit and loss statements, cash flow statements, expense reports and send invoices — eliminates the need for a small business to hire an outside accountant.

“Banking and accounting are inseparable, but historically, they’ve been managed separately,” David said. “Legacy banks have the resources to provide these tools to their customers, yet they haven’t.” 

Lili's accounts, which are insured up to $250,000 by the Federal Deposit Insurance Corp., are provided by Choice Financial Group.

David spoke to Banking Dive about automation, Lili’s path to profitability and the role of trust in financial services.

This interview has been edited for clarity and brevity.

BANKING DIVE: How does automation play a role in your services?

LILAC BAR DAVID: The fact that we have the banking relationship, in addition to the accounting and taxes relationship, means that we can leverage data in one place to create different experiences in other places. 

If you think about it, expenses are mainly connected to one account, whether it's by card, actual money flowing in or out of the account, or [Automated Clearing House] or other platforms. And most of the transactions actually have an impact on taxes, on invoicing and financial statements. We leverage the data from all of those different services to create automation so you don't have to go through the transactions one by one. We pre-automate all of the different categories from an IRS point of view. You don't have to track your invoices manually because we know, if money hits the account, how to make that a transaction to a specific invoice. And you don't have to generate your tax report by the end of the year because we have all of the information and can pre-populate all of your taxes.

It’s one thing to attract users, but what’s the strategy to make them stay?

DAVID: We are offering them banking services, but on top of that, we are also offering them software. That means that we have much more engagement and much more retention, as opposed to other neobanks in the space. Switching banks can be easy — opening an account with Lili takes up to a few minutes. But once you have the different bookkeeping software, and invoices and taxes are embedded within it, it means that you're more committed to the product and you're using it on a daily basis. Then switching gets more complicated.

Are you profitable yet?

DAVID: We are not profitable yet. We are building our path to profitability in the next few years. I think overall, our move toward subscription and our development in regards to the product means that we are able to accommodate all of the different needs of the business. We invest a lot in growth. The small-business community is a big community. We have a lot of word-of-mouth success in that specific community, but we are building a lot of things and new features as we go.

The collapse of Silicon Valley Bank and Signature Bank in March have shaken the financial services industry. How are you approaching your interactions with customers in light of these events?

DAVID: Trust is a big issue in the banking space, and in order for a product to be successful, small-business owners need to trust that specific product. The fact that all our funds are FDIC-insured up to $250,000 per account means that the majority of our small-business owners keep a balance below $250,000 per account. I think the trust is there, and it's embedded within every single interaction that we have within the product and within our services.

But we are doing more to make sure that the trust is sustainable from a long-term point of view. We invest a lot in education. When it comes to accounting and taxes, there is a big gap in education in regard to small-business owners. We send them a free newsletter with articles and tips. We generate a lot of guides. We have a handbook. We have specific sessions that we have every month that you can join online and just learn and grow your knowledge in regards to what it means to manage your business. 

We're trying to look at trust in different ways, and our move toward education is a big piece in innovating and enhancing the trust between us and our users.

On the heels of enhanced digital adoption during the COVID-19 pandemic, Bank of America is working to expand artificial intelligence-powered digital assistant Erica’s capabilities to include personalized banking, investing, credit and retirement-planning advice.

“This idea of reaching out to you proactively and telling you what your financial state is, almost like an adviser in your pocket,” Hari Gopalkrishnan, Bank of America’s CIO of retail, preferred, small business and wealth technology, said at a December conference held by Tearsheet.

The bank is working to expand Erica’s capability to offer proactive insights based on its understanding of a client’s typical transaction patterns. It may alert a customer of spending anomalies and suggest solutions, including, for example, if spending on a particular category was unusually high, Gopalkrishnan said.

Erica, which was launched in 2018, garnered 1 billion client interactions and has helped 32 million users. Bank of America expects Erica, in early 2023, to connect clients to banking agents regarding new products and services, such as mortgages, credit cards and deposit accounts.

The pandemic saw a growing number of older customers use digital banking tools, including Erica, Gopalkrishnan said. The bank now wants to build on enhanced adoption by improving the flow of transactions, including the seamless handoff from Erica to human agents and vice versa.

“We realized, at some point, people go, ‘I'm done with that chat, I need to talk to a human,’” Gopalkrishnan said. “What if we could just introduce the human agent right along with a chatbot, pick up from where you left the chat … and then step back and let the chatbot take over again.”

The bank is using natural-language processing tools to help draw insights from transactions and conversations, he said.

The use of predictive insights also extends to cases where customers dial the call center. Based on what the bank knows about the customer, Erica is sometimes able to guess why a customer is calling and suggest actions to resolve problems that arise, the bank said.

“We can, [for example], detect with the [interactive voice response] predictively that you're calling about a declined card,” Gopalkrishnan said. “We can then say … ‘Can I send you back a deep link that takes you to the part of Erica to take care of it yourself?’”

The pairing of Erica with human assistance can also help smooth the account opening process for wealth management products, he said.

Bank of America isn’t alone among large financial institutions launching or upgrading digital banking assistants. Wells Fargo announced in October that it would soon launch digital assistant Fargo, which is built on Dialogflow, Google Cloud's conversational AI platform. Wells Fargo’s digital platform leader, Michelle Moore, was previously head of digital banking at Bank of America and led the development of Erica.

In September, Truist launched Truist Assist, a digital assistant that taps natural-language processing and natural-language understanding to offer insights and advice.

Bank of America has invested more than $10 billion in technology annually in the past decade, with more than $3 billion of it allocated toward new technology development aimed at improving user experience and personalization for clients banking online or on their mobile devices, Aditya Bhasin, the bank’s chief technology and information officer, said in 2022.

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.

Parental support

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.”

Common banking tasks like depositing a check and using an ATM to withdraw money have been made more accessible to folks with autism, thanks to a new partnership between Huntington Bank and app Magnusmode.

Huntington in December became the second U.S. bank after M&T to partner with Magnusmode, a free app offering step-by-step guides for everyday tasks for neurodiverse people and their families. Outside of banking, some of these tasks include ordering food at a local restaurant or checking out a book from the library. 

"Putting people first — our customers, colleagues, and communities — is at the very core of everything we do,” Huntington CEO Steve Steinour said in a prepared statement.

The relationship with Magnusmode helps Huntington “achieve our vision to be the leading 'people-first, digitally powered' bank for all customers,” Steinour added.

Magnusmode was founded by Nadia Hamilton, who was driven to make everyday tasks easier for her autistic brother, Troy.

Steinour learned about Magnusmode from M&T CEO René Jones and was intrigued by the concept. He signed on as a partner after a series of conversations with Hamilton.

Donald Dennis, Huntington’s chief diversity officer, told Banking Dive the bank is working with Magnusmode “because we believe that everyone deserves a shot at financial success.”

Huntington’s deck of cards includes guides on how to buy things with a debit card, use a phone to deposit a check, create an emergency fund, create and track a budget, dispute a transaction at a bank, open a checking account online and set up bill pay.

The guides feature two Huntington employees who joined the bank through its Autism2Work program, which has provided workforce training and employment opportunities for neurodivergent adults, including those with an autism spectrum disorder.

Autism2Work has onboarded 13 people across nine IT disciplines into the program since 2020. 

The world, as it is, can be challenging to navigate for neurodiverse folks, Hamilton said.

“Community spaces, including banks, can be confusing, overwhelming and difficult for these individuals to navigate without assistance," she said. "As a society, we have the wonderful opportunity to welcome, engage and support people who are different and move through the world differently."

Inclusion “allows our business partners to grow in the marketplace,” Dennis told Banking Dive.

“It also creates and strengthens our communities,” he said. “Huntington is committed to looking out for people and helping ensure that everyone has the opportunity to succeed financially.”

When Cogent Bank set out to serve Florida’s legal cannabis industry, its mission was to serve cannabis-related businesses the same way it does its other commercial clients. 

“We saw that other financial institutions in this space weren’t doing that,” said Chris Hartman, chief deposit officer at Orlando-based Cogent Bank. “They were basically taking deposits and offering accounts without all the other features and benefits that customers want. So we felt really strongly that we needed to do that and not make this industry pariahs.”

Because of marijuana’s status as a Schedule 1 drug at the federal level, most cannabis-related businesses have had to operate on the sidelines of the financial system. With major payment processors and large banks reluctant to work with the industry, most dispensaries are cash-only.

The cash-heavy nature of the industry, in addition to the strict compliance and regulatory hurdles associated with banking it, make the space a challenge for banks to navigate.

Cogent Bank did its due diligence before rolling out its cannabis banking program, and kept regulators in the loop throughout the process, Hartman said.

“We were completely transparent with our regulators, and we got complete board endorsement. And once we got up and running, we felt pretty confident that our program was sound,” she said.

To help broaden the program’s cannabis banking program, Cogent Bank partnered with Green Check Verified, a fintech that works with banks to provide compliant cannabis banking services.

“We knew we needed to be [cannabis-related businesses’] go-to bank for everything, and when we didn't have something they needed, we looked to partners that could provide that,” Hartman said.

Green Check’s flexibility in working with businesses that use a wide variety of point-of-sale systems allows the bank to monitor transactions and feel comfortable in its clients’ compliance with state regulations, Hartman said.

The ability to use a third-party vendor to broaden the bank’s cannabis banking services is critical, she said.

“For a bank of our size, a billion-dollar bank, we can't go develop these things on our own,” Hartman said. “So, given our robust onboarding process and due diligence process, and Green Check being a part of that — we also have a really knowledgeable compliance officer that is the go-to in this arena — once they're onboarded, we don’t want to treat them any differently than any other client.”

Cogent Bank offers treasury services, mobile deposit, online banking, online wires, access to the Automated Clearing House network and cash processing services to its cannabis-related clients.

Cash processing is an important service, Hartman said, since the bank doesn’t take cannabis cash in its banking centers, due to the liability of accepting large amounts of cash.

“And quite frankly,” Hartman added, “sometimes you can smell the cannabis on the cash and we don't want our banking centers to smell like marijuana.”

As part of its mission to approach cannabis banking the same way it does its other business lines, Cogent Bank has “dipped its toes” into real estate lending in the marijuana space, she said.

Lending in the cannabis space, however, still comes with its limits.

“We're doing primarily real estate loans for commercial real estate owners that are leasing space to dispensaries,” Hartman said. “We found that other banks were even unwilling to do that because they were concerned that if a developer developed a property and leased to marijuana, and then they got shut down, they would lose their revenue source to repay the loan.”

Cogent has been making loans to commercial real estate owners leasing to cannabis-related businesses for several years now, but is aware of a growing need outside of that realm, Hartman said.

“The biggest asset that a cannabis company has is their license, and we're still struggling on that side because we don't believe we can encumber the license or force a sale,” she said.

Identifying what the bank could take as collateral is a challenge, Hartman said.

“Clearly, we don't want to be in the marijuana growing business, so land or the facilities that process marijuana are not necessarily something we would want as collateral,” she said. “We might take a building. We're in the process of building that out, but we're not 100% there yet.”

‘A growing community’

With its cannabis banking program, Cogent Bank sees the opportunities beyond providing services to cannabis-touching businesses, such as servicing the industry’s vendors and ancillary businesses that are also often locked out of the banking space, Hartman said.

“Based on the data that we've seen, the cannabis industry is very lucrative and growing rapidly. We feel that it's a great opportunity not only to bank the licensees, but also the vendors that support them,” she said.

Cogent’s willingness to bank the industry comes with additional opportunities to serve accountants, attorneys and manufacturers that work with cannabis clients, Hartman said.

“It’s a growing community and we feel that it provides deposits as well as lending opportunities for us,” she said.

Cogent has branches in north, central and southwest Florida, where the cannabis is legal for medical purposes.