In this special episode, Sean and Gina welcome back Luvleen Sidhu, Founder and CEO of BM Technologies, one of the largest digital banking platforms in the U.S. Luvleen talks about strategies for community institutions to accelerate their digital offering and acquire and serve diverse customers. She discusses growing BankMobile’s banking-as-a-service (BaaS) model and how partnerships and commitment are empowering banks and credit unions to scale their organizations and get more retail banking customers. Sean and Gina ask Luvleen being a woman in the male-dominated banking industry and serving underserved and underbanked communities.
For more information about their Banking-as-a-Service model, contact BM Technologies.
Intro: This is Believe in Banking, a podcast series for decision makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.
Sean: Welcome. This is our podcast for Believe in Banking. I am Sean Keathley, president and CEO of Adrenaline.
Gina: And I’m Gina Bleedorn, chief experience officer at Adrenaline.
Sean: Gina. Wow. What an amazing episode with Luvleen. Just such an inspiring story to hear how successful they’ve been. Thinking about digital first banking, the creation of the digital communities around the different life stages. She discussed how banking is a service, seeks to not only solve the consumer pain points, but can help address those inefficiencies of banking all at the same time.
Gina: I think Luvleen brings to the table, the perspective that a lot of community bankers need right now, which is the perspective of a world they’re not necessarily super familiar with in digital non branch banking. It is one that many bankers need to hear right now and more importantly need help with. And in this part two discussion, one of the things we’ll talk about as well in the spirit of an alternate perspective is her perspective of being a female CEO in a completely male dominated industry, both traditional banking and FinTech banking Luvleen is the youngest female CEO of a publicly traded FinTech company.
Gina: In that role, she is certainly juxtaposed to the norm also as a female in the banking industry or adjacent to the banking industry. I have experienced the same, and I think that I’ve always looked at it as being an advantage. And I think Luvleen does too. So Luvleen, as a young millennial, as a female, as a minority brings a lot of differing views to the table. She will discuss how she’s felt it is a privilege to serve everything from underserved communities to being a role model. We will discuss that in more in part two of this Believe in Banking episode with Luvleen Sidhu of BM Technology.
Sean: Well, Luvleen, what about in terms of the kind of characteristics of a good banking partner? We have clients and listeners that really span the full spectrum. We have a handful of banks that are the largest banks in the country and have most of the assets and certainly have the technology budgets and make big technology spins, but they do not represent the average size bank or credit union. And so is there a moment in their kind of journey, a sophistication? Is there a specific type of bank you see as your typical client, or is it really more about the individual organization and where they are on their own journey?
Luvleen: It’s a great question, and for us, Sean, we’re opening up into the financial institution space this year. We’ve historically worked with non-banks and really the impetus of it is the fact that we are working with our first financial institution. And that’s really what has attracted us to the fact that, “Hey, we’re well positioned to solve a pain point for potentially thousands of community banks around the country.” And you know, who is the best partner for us? It’s a partner that is dedicated to a path forward of really enhancing and accelerating their digital strategy. And they have a commitment to it and they want to put their resources towards this strategy and working with us to implement it. The more partners that we work with, the faster we’re able to incrementally sort of roll these out with partners, but we have a very flexible technology that, instead of taking years to roll out, you’re talking about weeks to potentially two to three months max to roll this out.
Luvleen: And for us, it’s really to be able to help identify what is the strategy? What is the objective that we’re trying to achieve for this financial institution and through our technology and through our turnkey sort of banking as a service solution, are we meeting those needs to make sure that it’s win-win and it’s really hitting the pain points for that individual bank? And so I think what’s also important is there’s an integration layer that’s sort of needed with the various different cores that exist out there. And so for us, the most common cores that we come across are Fiserv, FIS, sort of Jack Henry. And so those that are on those most traditional cores, we’re better equipped to serve in the early days before we sort of expand out to less popular cores that may require additional sort of integration work.
Gina: Love that explanation Luvleen, and especially the example you talked about about a commercial oriented bank or institution, likely a bank, wanting to get more retail. We’ve got a lot of banks we’re talking to that are wanting to do that very thing. Can you talk, and it’s a great use case, can you talk a little bit about acquisition? You mentioned earlier, you’ve got an incredible $10’s a customer acquisition cost. That’s like a 30th, or like a 50th, or 100th, I don’t even know, of what typical acquisition costs are of traditional banks. How does or how could partnering with Bank Mobile help a traditional institution on the acquisition side, especially in that use case of a commercial oriented institution wanting to grab retail opportunity?
Luvleen: Yeah, let’s differentiate between the two opportunities that banks have. So one is that they are really looking inwards and they’re like, “Hey, it is time to be able to accelerate our digital strategy. And that the way that we’re operating today has worked in the past, but for us to sort of survive and thrive in the future, there needs to be an upgrade in terms of our technology and we want to work with a partner like Bank Mobile to really up our game here, accelerate that digital strategy, create the best banking experience on a digital front for our customers today.” And that maybe even have their backend infrastructure and support to service these deposits. If we are sort of building scale and can save and create efficiencies by using their sort of back office services to help support the strategy. And that’s kind of what we’ve talked about today.
Luvleen: Another way that a bank could work with us is that BM Technologies today has its own digital banking business, right? We’re acquiring bank customers through the various different partners that we work with, whether that’s T-Mobile, whether that’s the 725 campuses that we have relationships with, whether that’s HR departments across the country, our third vertical, which we haven’t talked about yet, which is workplace banking. And through those distribution channels, we’re able to acquire bank customers at less than $10 today. And we focus on creating a customer for life strategy, where we also have a very strong CLV over time where we cross sell other products and services and really create that customer for life.
Luvleen: And in that situation, we also look for bank partners to be able to hold our deposits. And so in that case a bank partner, we’re looking for one that’s under 10 billion in assets where we get to benefit from German exempt interchange rates as a very strong revenue driver for us. And we get to help that bank because we provide them access to low cost deposits that are also very sticky because we have a customer for life strategy and we’re able to bring them the benefits of working with a technology company like us and a FinTech and being able to, in a way, get into their own banking as a service strategy because they’re enabling technology firms like Bank Mobile to be in business and holding their deposits and providing the FDIC insurance so that we can run things like Bank Mobile Vibe in our student segment and T-Mobile money in the T-Mobile segment. And as we continue to grow into more white label partners, they will be able to affiliate their banking institution with those partners and brands.
Gina: I would ask on behalf of our listeners, are you looking for bank partners right now in both areas?
Luvleen: We are very open to looking for bank partners, ones that are technology forward that have strong compliance and regulatory regimes, and that are looking and would benefit from working with a FinTech partner that can bring them low cost deposits. And we are very open. We want to create a network of banking partners over time to really hold our deposits as we expect it to continue to grow. I think at the middle of March, we were at 1.3 billion in deposits, and we hope to be growing exponentially over the next three to five years. So a network of diversified bank partners is something that we’re definitely open to it and looking for.
Sean: Luvleen, as you know, we believe that there’s a relationship with the digital banking and especially for the community organizations, the physical banking, but I couldn’t agree with you more in that kind of moment of truth when people are serious about thinking about the experience. One of the things we often see as a trigger when people are even coming to us for help is when they are upgrading their core system, because not only does it prepare them to work for a partner like you as well, but it helps them transform their network of branches from a transaction-based universe, which is now clearly headed towards more of what you were doing to one that’s more of a consultative nature. And often the legacy platforms don’t even allow them to do that. So, very exciting to think about the alignment of when even our two organizations that are very complimentary of different the same kind of signals within an organization would tell them that you don’t have to choose between either and the work they’re doing for one prepares them for the other. And I think that’s what’s really on the mind of a lot of people.
Sean: Gina and I, we’re speaking a lot, we’re doing conferences, we’re talking to bankers and almost every single time they’re looking for some type of balance between this digital relationship and then using their big asset of the people and the deep roots in the community to have a more consultative environment where they can do those other services. So it just is exciting discussion here. And I know our listeners are excited to hear there’s an answer to balance all these different touch points.
Luvleen: Yes, absolutely. Things are changing and, and definitely moving in an exciting direction for, I think all parties in the financial services space.
Gina: A question I’d love to ask you Luvleen, being in a similar boat, not being a banking provider, but being a female in a male dominated industry. What is your perspective on that? Advantages and disadvantages and what advice would you give other females in banking?
Luvleen: It’s a really good question. And just looking at the under-representation of women across the board and especially in financial services is quite astounding. And I feel privileged to be in the position that we are in because number one, our customer base in terms of just the customers that we service today, two thirds of our customers are women. And about two thirds of our customers are also minorities. And so we are very proud that the products, the service that we have in place today is attracting a demographic that has historically been underserved in financial services, and that we are solving for the pain points that we set out to solve around affordability, around transparency, providing consumer friendly products, and that we’re attracting that base that’s really looking for and needing that support.
Luvleen: Secondly, within our organization itself there’s room to improve, but I’m also really happy to report that our company today has about 48% of our employees are women. We also, at the C-level, have strong women represented as well as on our board. And then me as well to be the first co-founder, CEO, female, youngest to ever take a company public at the time of our listing in January and also being a minority woman, I think it’s definitely a special place to be because I think one of the agents for change is to just see examples, right? To see an example sort of paved in front of you.
Luvleen: I don’t want to put myself on a pedestal by using the word inspire, but I hope that there could be a point of inspiration because we want more diversity, both in gender and race and age. To have the younger … when I started the company, I was in my twenties, but now to get young blood in, in their early twenties, it just brings a diversity of perspective that we would not be the same without. And so I think really just bringing in diversity in all aspects of the business and being an example today in some of those ways, but lots of room for improvement for us as well to continue to blaze down that path.
Sean: It’s such an incredible step forward, Luvleen. This has been an amazing discussion. So refreshing, you’re such a delight. This is such an amazing business idea. We wish you continued success. There’s no doubt that you’ve got a blue ocean concept that the market needs. One more question. It is very clear to us that you believe in banking, this community, this experience, but just tell us why.
Luvleen: Well, I think one of the beauty of banking, so I actually grew up in a banking family. My father was the CEO of Sovereign Bank, which he grew from a really, really small bank to the 17th largest bank in the country. And I remember him always saying sort of growing up, “The beauty of banking is that every single person on this planet is a potential customer.” And so what a beautiful business to be in where not only is the market so wide and so large, but also, I really believe in the concept of doing good and doing well and to be able to provide a service or product that actually empowers people to reach their dreams, to set them on a solid foundation for their life, for their families, for whatever aspirations that they have, is really so meaningful. And I feel privileged to be a part of an industry like banking.
Sean: I don’t know how we’ll ever get back to this level that you’ve taken the discussion, Luvleen. We cannot thank you enough. This was amazing.
Luvleen: Thank you, Sean. Thanks, Gina.
Gina: Thank you, Luvleen. We wish you all the continued success in the world, and thank you for supporting the Believe in Banking mission of using banking to make the world a better place. We wish you well.
Luvleen: Thank you so much.
Outro: You’ve been listening to Believe in Banking. A podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.