BankMobile looks to stand out in a field of digital banking giants

Aaron Elstein

Growing up in Reading, Pa., Luvleen Sidhu wasn’t interested in banking, even though her father owned the local bank—or, perhaps, because he did.

“It was dad’s job,” she said.
Her father, Jay Sidhu, an immigrant from New Delhi, turned around the nearly bust Penn Savings Bank and built Sovereign Bancorp. Sovereign had branches from Maryland to Massachusetts, including more than 100 in New York after swallowing up Brooklyn’s Independence Community Bank. Then, during the last decade, it was acquired by Spain’s Banco Santander for a cool $5 billion.

Eventually the industry began to appeal to the banker’s daughter. “I learned in business school that it’s important to find a problem that consumers need help solving,” Sidhu said. “I saw one in banking.”

Now 33, Sidhu is updating her dad’s playbook by building a bank for the modern age. She is co-founder, president and chief strategy officer of BankMobile, an online bank that’s catching on when digital competitors have become as common as dandelions.

Since launching in 2015, Manhattan-based BankMobile has grown to 1.2 million active customers and is poised to gain a lot more as the bank behind T-Mobile Money, a service that went national in April offering millions of phone customers a low-fee bank account and interest rates of up to 4% on their cash balances.

Digital has been banking’s future for years, but now it’s finally starting to reshape the brick-and-mortar world in tangible ways. The ubiquity of cashless transactions and the rise of mobile apps for depositing checks have changed the dynamics for the next generation of customers. Last week consulting firm RBR determined that the number of ATMs in service worldwide fell by 1% last year to 3.2 million, the first decline since Chemical Bank introduced the machine in 1969. (“On Sept. 2, our branch will open at 9:00 and never close again!” the bank advertised.) As for branches, 5% have disappeared since 2012; 80,000 remain.ADVERTISING

To stand out in a crowded field of venture-backed startups and supersize banks, Sidhu frequently appears on TV, speaks at conferences and keeps active Twitter and Instagram accounts. On her website, she describes herself as not just a banker but a “health and wellness coach, traveler and lover of life!” The “Luvnotes” section offers advice including “Live an infinite life” and “Namaste your money.”

“We’re a customer-centric company that happens to be in banking,” she said. “Putting our face out there so people can connect is really important.”

As marketing approaches go, it couldn’t be more different from that of her father, a behind-the-scenes player who between 1990 and 2005 bought more than 20 rival banks and squeezed out costs. Profits expected

Sidhu said her parents hoped she would become a doctor, but midway through Harvard, she decided to pursue finance. “I said to them, ‘Please support this,’ ” she recalled.

She landed at Lehman Brothers in September 2008 and lost more than $2,000 by neglecting to promptly deposit her paycheck after the firm filed for bankruptcy her first day on the job. After a few years of number crunching at Neuberger Berman, she became a business-development executive at Customers Bank, an ailing institution that her father took over in 2009 after selling Sovereign.

Sidhu began examining the online banks that were starting to take hold and noticed they all had great technology but nary a clue of how to win over customers. After she got her MBA from Wharton, she suggested to her father and his management team that they invest in digital banking by targeting college students who weren’t yet tethered to a bank through a direct deposit or a mortgage. “This wasn’t my dad’s idea,” she said. “I pitched it.”

Her father said he was apprehensive about putting his daughter in such a high-profile role. “I worried she’d have to work three times harder to prove herself,” Jay Sidhu said. “But she had clear ideas about what she wanted to do.”

Customers Bank invested $100 million in the project. Today students at 800 colleges across the country use a BankMobile debit card for their financial-aid account. BankMobile takes a small cut every time its cards are swiped, which generated most of its $60 million in revenue. It isn’t profitable but is expected to cross that threshold this year. Sidhu said the bank serves about one-third of colleges, so there is more opportunity to grow. A study last year by the Consumer Financial Protection Bureau found that BankMobile’s student-account fees were less than half as much as U.S. Bank’s and barely a quarter of what Wells Fargo charged.

Sidhu might have scored a breakthrough when BankMobile became the backbone of T-Mobile’s bank offering. BankMobile brings its own technology to the table and a history of dealing with federal and state regulators that tech outfits generally lack. A handful of institutions are fighting to provide tech companies with banking services, and because the market is so new and potentially large, it’s a fruitful place for an upstart like Sidhu’s.

“The jury is still out on whether a bank can be a success without face-to-face contact with customers,” said Michael Perito, an analyst at KBW. “But BankMobile is off to a productive start.”

Customers Bank is likely to nurture BankMobile for a few years, then spin it off or take it public.

Last week Sidhu flew to Los Angeles to pitch a potential partner as she hunts for her next T-Mobile–size deal. She is to speak at a fintech conference in Miami this week, at a digital banking conference in Austin next month and at a Finovate conference here in September.

“I love being a mover and shaker,” Sidhu said.

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Millennial Businesswoman Empowering the Underbanked Through Digital Banking Experience

Millennial businesswoman Luvleen Sidhu is the Co-Founder, President and Chief Strategy Officer at BankMobile, America’s largest and fastest growing mobile-first bank. BankMobile empowers low-to-middle- income Americans, the underbanked, and millennials with a digital, effortless and financially empowering banking experience. Luvleen launched BankMobile in January 2015 – when she was only 28-years-old – with the understanding that everyone needs financial services, yet it is one of the least customer-centric industries that exists today.  We had a chance to interview Luvleen and asked about her story, how she started her financial business and the future of BankMobile.

Tell us your story. Why did you start your business?

Shortly after I graduated from Harvard in 2008, I started my career at Lehman Brothers. My career was off to a memorable start since my first day coincided with the day that Lehman filed for Bankruptcy. I went on to work in investment management until joining Customers Bank, which is my businesses’ parent company today, to lead its business development unit. That’s when I began to examine how banks could benefit from going digital. I then decided – prior to founding BankMobile – to study strategic management at Wharton Business School.

In January 2015, I founded BankMobile, to give consumers an affordable, efficient and enjoyable banking experience. Banking was outdated and one of the least customer-centric industries that existed. Banks had been slow to adapt to changing consumer behavior and preferences and had been neglecting a large portion of the population that was struggling financially. I saw an opportunity to disrupt and exponentially improve the established banking business model based on branch-based customer acquisition, which was both inefficient and costly. BankMobile is now America’s largest and fastest-growing mobile-first bank.

How did you come up with your business name?

Sometimes the best business names are those that tell the consumer exactly what the business is aiming to accomplish. After I learned that Americans on average are walking into a bank branch only one time a year, as opposed to interacting with a bank on a mobile device 20 to 30 times a month, I knew there was a void to fill with our business. We wanted to combine the trust and credibility that “bank” evokes with the accessibility and high tech that “mobile” infers. BankMobile very simply exemplifies what we stand for and what we wanted to provide to our customers.

Tell us about your products and services. How do you help clients?

BankMobile is a mobile-first bank offering no to low-fee checking and savings accounts and personal loans to our target customers—low/middle income Americans, the underbanked, and millennials. We give our clients an alternative banking experience to the traditional model that is focused on technology, innovation, easy-to-use products and financial education. We are uniquely positioned to provide low-cost banking services and to date have saved our customers $100 million in banking fees.

What makes you unique? What is your unique selling proposition (USP)?

BankMobile created a disruptive low-cost operating model that allows us to provide low-cost banking services to those who have been left behind by the high-fee model of traditional banking. With this multi-partner distribution model, which we refer to as “Bank-as-a-Service,” we can acquire significantly more customers at significantly less costs than traditional banks then transfer that savings onto our customers.

Where do you see your business in the next 3-5 years?

Our goal is to become the top acquirer of checking accounts and one of the top five banks in the country. We will do this by leveraging the customer base of our partners to open one million accounts a year and continue to give consumers an affordable, efficient and enjoyable banking experience. We are already an industry leader in technological strategy and will continue to be, with increasing access to so many exponentially-growing technologies such as artificial intelligence, biometrics and blockchain.

Any advice you would give to entrepreneurs?

Don’t just be customer-centric, be customer-obsessed. It is not enough to just focus on why a customer would be attracted to your business but always look to find solutions to better serve their needs and improve their lives. Continuously focus on why a customer would stay with your business and what you can do to improve the customer experience. Entrepreneurs should remain customer-obsessed long after launch, remembering that the customer’s need is at the core of their purpose. As your business grows and evolves, the customer should always come first.

What is your favorite business quote and why? 

“Very few people or companies can clearly articulate WHY they do WHAT they do. By WHY I mean your purpose, cause or belief – WHY does your company exist? WHY do you get out of bed every morning? And WHY should anyone care?” -Simon Sinek

In my experience launching the largest and fastest-growing mobile first bank, I’ve learned how important it is to have a clear vision and purpose. Knowing your WHY is vital to your success that’s why this quote resonates with me so much. In short, I’ve learned that a bold, compelling vision and massively transformative purpose are needed to create disruptive businesses.

What have been some of your achievements that you are most proud of? Why?

I am extremely proud of the work BankMobile has done to help students save money, at a time when millions of Americans are faced with rising tuition and student loan debt. Today, one out of every three students in the U.S. is using BankMobile. On top of offering students an easy-to-use banking alternative, we are here to help them save money and create a financially-sound future. As I stated earlier, we have saved our customers, mainly college and university students over $100 million in banking fees.

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Every week the show host John Siracusa talks with amazing fintech leaders and entrepreneurs, through conversation uncovers the amazing stories behind them, their creations and the most important topics in fintech.

In this episode the host John Siracusa chats with Luvleen Sidhu,  Co-Founder and President of BankMobile.  She started her banking career at Lehman Brothers and on her first day after 6 weeks of training was the beginning of it’s collapse.  Now she’s a co-founder at BankMobile, a company that provides a mobile first banking experience which has 1.6 million accounts and is the offspring of Customers Bank in Pennsylvania.

About the host:

John is the host of the 2x weekly “Bank On It” podcast recorded onsite at the Carpenter Group offices, which is a strategic branding and positioning firm in the financial services industry. He’s a highly sought after fintech, VC and financial services industry enthusiast and connector. He’s in the center of the fintech ecosystem keeping current with the ever – innovating industry.

From Vision to Execution: Luvleen Sidhu on Changing the World of Banking

In 2007, she saw millions of Americans lose everything because of the faulty American Financial System. Immediately, she knew she needed to do something.

Join Luvleen Sidhu, Co-Founder, President and Chief Strategy Officer – BankMobile, USA​ in the 4th ASEAN Exec-IT event to gain more insights on the Disruption for Digital Differentiation.

In an era where consumer demands are rising and technologies are rapidly disrupting, the secret to survive is hardwork – to some people, at least. For Luvleen Sidhu, Co-Founder, President and Chief Strategy Officer at BankMobile, surviving is not enough, and hardwork is a mere understatement. Her secret to success is her “obsession towards solving customer pain points.” Having that extra mile beyond hardwork is key to not just survive, but to thrive in an age where disrupting technologies are the horses, and customers are kings. For Sidhu, leveraging technologies to create new and more efficient business models should be one’s genuine purpose to thrive. Passion comes a long way.

“Values Are Immutable; However, Culture Can Adapt”

An Interview With Co-Founder of BankMobile, Luvleen Sidhu

“Values are immutable; however, culture can adapt.” This was a really helpful piece of advice for me given that I’ve struggled with balancing BankMobile’s high growth with having a strong company culture. By understanding that core values are the most important foundation of an organization and recognizing that the culture can adapt over time helped me feel liberated. I now understand that our core values as a company which are based on respect, trust and constant innovation will keep us unified and focused on our objectives and with this solid foundation, the strength of our culture develops over time.

I had the pleasure of interviewing Luvleen Sidhu, Co-Founder, President and Chief Strategy Officer of BankMobile, the largest and fastest-growing mobile-first bank in the country. BankMobile, a completely digital bank, has a mission to help the underbanked, millennials and middle-income Americans have an affordable, effortless and financially empowering banking experience. Luvleen has been recognized for her accomplishments as one of CEO Connection’s Most Influential Women of the Mid-Market in 2018 and 2017, CEO Connection’s Mid-Market Young Leader in 2017, one of Bank Innovation’s top innovators worldwide in 2017, 2016 and 2015, and ‘Most Innovative Woman in Banking — Greater New York’ and ‘Best Women Owned Financial Services Company — New York’ in Corporate America’s 2016 American Businesswoman Elite Awards — just to name a few!

Thank you so much for doing this with us! What is your “backstory”?

I graduated from Harvard in 2008 when the financial crisis hit. The first day of my career was the day of the Lehman Brothers bankruptcy… and I was joining Lehman Brothers! That was definitely a very interesting start to my career. It impacted my professional trajectory and influenced why I founded BankMobile.

After my time at Lehman in their fund of hedge funds group on the investing side (later renamed Neuberger Berman), I joined Customers Bank, which is our parent company today. At Customers Bank, I led business development and specifically looked at how the bank could take advantage of a new digital model that was more in alignment with the future of banking. After that, I attended Wharton Business School, where I majored in strategic management, and spent my summer at Booz & Company, where I consulted for a well-known financial services company to help them develop a strategy to launch a digital bank. After I graduated from business school, I deferred my fulltime offer with Booz, and in that time started working at BankMobile.

Why did you found your company?

Banking is one of the least customer-centric industries that exists today. I founded BankMobile to focus on solving consumer pain points and providing the best customer experience through technology and innovation. The reality is that banking is typically a frustrating experience that lacks transparency and most banks make money by having their customers mis-manage their money! In the U.S. 1/3 of Americans are living paycheck to paycheck and almost 50% of Americans cannot afford a $400 emergency, yet banks charge these same Americans $32 billion a year in overdraft fees alone. BankMobile is focused on utilizing technology to make banking accessible, affordable, and seamless.

What is it about the work you’re doing that’s disruptive?

We recognize that consumer needs and behaviors are rapidly changing and banks have been remarkably slow to adapt to these changing needs. For example, Americans on average are walking into a bank branch only one time a year, as opposed to interacting with a bank on a mobile device 20 to 30 times a month. Still, traditional banks are using their branch networks as their primary customer acquisition channel even though, on average, a bank branch opens only 1 net new checking account per branch per week or 52 net checking accounts per branch annually. This is a very inefficient customer acquisition model and is subsidized by charging Americans exorbitant fees. BankMobile instead has no branches and, through its digital presence, is able to attract over 300,000 new customers each year. Additionally, traditional banks spend on average about $300-$1000 to acquire new customers while BankMobile — through its digital platform and B2B2C strategy — is acquiring new customers at about $10. By addressing consumer pain points and acquiring customers in high volume and at low cost, BankMobile is disrupting the banking space.

We all need a little help along the journey — who have been some of your mentors?

My dad, who has been a veteran banker his whole life, has been a great mentor to me as I embark on disrupting the traditional banking space. Although most of his career was in “old school” banking, his experience in the industry has helped me gain the knowledge I need to be innovative in the space while respecting the fundamentals of the business. Another mentor for me, whom I view as confident and a great visionary, is Sheryl Sandberg. She is not only building a company that has significantly impacted and connected the world, but also serves as an ambassador for women, encouraging them to lean in and live their fullest potential professionally and personally.

How are you going to shake things up next?

This is just the beginning for BankMobile. We have so many exponentially growing technologies now at our fingertips. This includes artificial intelligence, biometrics, IoTs, and blockchain, to name a few. All of these can have a dramatic impact on how banking is delivered and experienced by consumers. For example, we are moving towards a world where things all around you can become your wallet. Maybe your fridge serves as a payment vehicle to buy more milk when it runs out which it can detect with sensors. Or maybe, it becomes the norm to pay your bills through voice banking using your Alexa. These use cases are likely to become pervasive in the very near term.

Can you share some of the best words of advice you’ve gotten along your journey?

“Tough times don’t last but tough people do.” My dad echoed this piece of advice to me throughout our BankMobile journey. We’re in a business that is experiencing rapid growth and change, which leads to obstacles that continuously appear. He helped me see that challenges can also be opportunities, depending on how we look at them. Really, those who continue to push forward will always find a way to accomplish what they have set out to do. We first launched BankMobile as a direct to consumer strategy, and we did experience growth using this strategy but not at an exponential rate. We realized we needed to grow exponentially to truly be a disruptive force in the industry. At that moment in time, we could have either continued down a path of low profitably and low growth or viewed this challenge as an opportunity to think more creatively on how to boost our growth. It was through this creative thinking that we entered into the B2B2C space and became the first digital bank to become a major player in “banking as a service.” that allows us to grow exponentially.

“Values are immutable; however, culture can adapt.” This was a really helpful piece of advice for me given that I’ve struggled with balancing BankMobile’s high growth with having a strong company culture. By understanding that core values are the most important foundation of an organization and recognizing that the culture can adapt over time helped me feel liberated. I now understand that our core values as a company which are based on respect, trust and constant innovation will keep us unified and focused on our objectives and with this solid foundation, the strength of our culture develops over time.

What’s a book/podcast/talk that’s had a deep impact on your thinking? Share a story with us.

“How I Built This” podcast, where they interview CEOs of leading companies that are truly disrupting their industries. The podcast has been a great way for me to be able to hear directly from successful entrepreneurs how they think about disruption and how they navigate the challenges of growing a business with capital needs, regulatory scrutiny, business model challenges etc. and in the end, find a way to make it work. There’s a lot to learn from and I benefit from hearing their experiences as I lead and grow BankMobile.

Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this.

I think it’d have to be Jack Ma from Alibaba. He’s done an exceptional job of combining e-commerce, payments, financial services and many other verticals under one company and growing massive market share while, most importantly, being a customer-centric company that really differentiates itself in terms of experience. I would love to hear his thoughts on how he’s been able to build — over a relatively short period of time — an empire, essentially, that addresses consumers’ needs across the spectrum while also experiencing high growth and profitability.

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Beyond honored to have been selected as the 2018 33 under 33 winner! Thank you, @StrtupBoost! http://www.33under33.com/past-winners

I interned at Lehman after my sophomore and junior years at Harvard. I graduated in 2008 and started six weeks of training, and the first day on the job was the bankruptcy. I remember contacting HR and I asked, should I come in? I’ve locked the response in my head because it was so unusual. The response was, ‘please come in, it’s business as usual.’

My first day was kind of crazy, in an eerie way that we were ignoring reality. No one was acting panicked. No one was acting out of line, though maybe they were behind closed doors.

For it to happen the first day of my career, it really showed the fragility of things. I was gung-ho Lehman. I still have our Lehman bag. Lehman squishy ball. Lehman training binder. I thought I was going to a top investment bank.

I think it was for the best in hindsight. We had this clear trajectory: Go to a top undergrad school, do banking or consulting, then go to business school. All those things still happened, but what changed I think is entrepreneurship really blossomed. You realized that’s not the only path in life to make you feel you accomplished something. There’s impact that you can make in different ways.

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