Category: Press

BM Technologies’ Luvleen Sidhu bets on BaaS, bank charter

“For those that can combine the charter with the technology, that is the most competitive way to play in the banking-as-a-service space,” said Luvleen Sidhu, BM Technologies’ chair, CEO and founder.

This interview has been edited for clarity and brevity.
BANKING DIVE: You started BankMobile as a direct-to-consumer bank but eventually pivoted to BaaS. How has the BaaS space changed over the years?
LUVLEEN SIDHU: When we did T-Mobile and we were trying to pitch to other brands, everyone was kind of scratching their head, like, what is this? … Now all of a sudden, everyone has heard of embedded finance and banking-as-a-service.
A shift is taking place, and there is an awareness of how helpful this strategy is — both from the position of a digital banking platform, but also for enhancing loyalty and differentiation, and increasing [customer lifetime value] for brands. And with the acknowledgment that it’s happening, you’re seeing businesses emerge from everywhere trying to compete in this space.
For those that can combine the charter with the technology, that is the most competitive way to play in the banking-as-a-service space, where you can work with fintechs and nonbank brands that want to enter into this space and can come to them with a full package: one platform, one partner, one experience on the technology and the banking charter and banking program management all in one player.

Your planned deal with First Sound Bank is under regulatory review. What made you choose First Sound Bank as an acquisition target?
SIDHU: One of the reasons was Marty [Steele], the CEO. It was very important to find a partner that I could partner with that had a similar vision of what we’re trying to create here, the combination of a fintech with a charter, because you need that buy-in. You can’t have a traditional community bank CEO mindset.
We were also looking for a bank that was under $10 billion in assets. That was the sweet spot. It was big enough for us to have the infrastructure to have a well-functioning, profitable bank that has a strong asset generation strategy, that had strong regulatory standing, but not too big where it was too difficult for us to acquire. And lastly, it’s in the Seattle area, where our biggest customer [T-Mobile] currently is, and that is just icing on the cake.

We’ve seen other fintechs submit applications for a bank charter. Why didn’t BM Technologies go this route?
SIDHU: That didn’t make sense for us because we came from a bank and our whole team is a mix of banking and technology. Fifty percent of our company is bankers, from banking operations to [anti-money laundering], compliance, risk management, audit, fraud management, all the things you would require in a bank.
We weren’t trying to build this from the ground up. We have a team that’s functioned under a bank umbrella for seven years. … For us, it was just getting back to the charter model and continuing to run our current infrastructure.
Marty, on the asset generation side, already has a really strong asset strategy, and we have a really strong deposit acquisition strategy, and you meld those two together, and it’s definitely not a de novo bank but a well-running bank on day one.

Several other firms have purchased community banks in an effort to gain a charter. What does a community bank get out of these kinds of deals?
SIDHU: In general, banks that are in that sort of midsize space are being forced to innovate. There’s going to be a lot of consolidation and it’s difficult to rely on what they’ve relied on in the past to survive.
I think we’re gonna see a lot more of either banks dying or they’re going to innovate, one or the other. This was a way to accelerate innovation by combining the best of what [Marty] has today, which is an awesome community banking institution with a strong asset generation strategy and strong regulatory standing, with our technology and banking infrastructure.

You said you have a signed term-sheet to offer BaaS to another yet-to-be-announced corporate brand. How do you find corporations that are interested in embedded banking?
SIDHU: I think, in an ideal world, we would go about having a sales team really proactively go win these deals, and we’ve been so fortunate that I think our reputation has been strong enough where these deals come to us. People know that we’re in this space. Usually someone knocks on our door to let us know, or it’s the formal [request for proposal] process that’s conducted by an outside third party and they reach out to us. But we are really thinking about creating a more sustainable sales pipeline in the future, thinking about what is growing our sales strategy instead of relying on our reputation. But so far, that’s been helpful.

Do you think we’ll see bank regulators taking a closer look at the BaaS model?
SIDHU: Yeah, probably. But I think that the players that are going to survive and grow into banking-as-a-service leaders are ones that understand the regulatory environment, respect it and learn to innovate and work within it. My hope and goal is that it’s not just us. I hope that we can grow the banking-as-a-service industry in a healthy, consumer friendly and regulatory-friendly way.

The full article can be found at: https://www.bankingdive.com/news/fintech-bankmobile-bm-technologies-luvleen-sidhu-baas-bank/629324/

“Tough times don’t last, tough people do”: A day in the life of Luvleen Sidhu, CEO and founder of BMTX

• Luvleen Sidhu is the youngest female founder to take a company public as the chair, CEO, and founder of BMTX, formerly known as BankMobile.
• The life of a banking executive comes with challenges, and Luvleen discusses her professional journey, love for spirituality, and empowering more women to thrive in male-dominated industries.

The full article can be found at: https://tearsheet.co/day-in-the-life/tough-times-dont-last-tough-people-do-a-day-in-the-life-of-luvleen-sidhu-ceo-and-founder-of-bmtx/

FinTech Magazine caught up with Luvleen to find out which areas of the financial services industry are ripe for reform and how fintech is redressing the balance.

Q: What are the biggest challenges facing women when it comes to wealth management today – and how is fintech addressing these things?

There are three main challenges that need to be overcome. In my opinion, they are:

1. Women underestimate their ability and knowledge to make financial decisions.
2. Products and services in the market fall short in catering to the unique needs of women.
3. COVID and other variables/unknowns (like unemployment)

Fintech trends to make things simpler, easier to access, and provides a better customer experience, all with no to lower fees—especially for complex (or stereotypically complex) realms like wealth management. In the aforementioned ways and others, such as providing advice to meet a customer where they are in their usage journey and helping them build trust in their own literacy around building wealth, fintech is addressing these challenges and helping more consumers, like women, take advantage of products/services in the wealth management space.

Q: Why are there such huge discrepancies between the way men build their wealth, and the way women build theirs?

Women and men want money just the same. However, it’s no surprise that women’s priorities, needs, preferences, and behaviors related to building wealth, as well as their feelings towards money in general, differ in various ways from men. Women are more likely to seek professional advice and tend to underestimate their own knowledge of financial decision-making. They tend to be less risk tolerant and more focused on life goals, like retirement and health-related matters, which lends well to long-term wealth-building strategies.

They also care more about the details around how and where their money is being invested. Additionally, when women have money, more of it tends to go back to their families and communities, which in turn helps build generational wealth and enriches society. The way women feel about money is also different from the male perspective. In general, women tend to have more feelings in the stress and anxiety category related to money. Also, the way in which they feel good about wealth can be satisfied by their ability to align the way they build wealth with their values in life (think: ESG investing, other types of impact investing, and giving back to their communities through donating).

Q: Are these issues exacerbated by the fact that fintech is still a very male-dominated space?

Fintech has the power to help make a real impact in reinventing the way women take ownership of building their wealth, and there are players out there—doing just that as we speak—like Ellevest and BM Technologies (BMTX). Rather, these issues are deep-rooted and have long been a part of the history of the wealth management space, which has carried over to the more specific ‘fintech’ wealth management space. While it has taken some time to begin resolving those issues and creating a full-blown shift, strides have been made with fintech at the forefront of driving the launch of more women-centric offerings out there.

Q: What changes would you like to see happening as soon as possible, to redress the balance?

I’d like to see changes in three key areas. They are:

1. More women advisors and women-centric advice provided by companies to meet women’s distinct needs and more encouragement directed at women to take advantage of opportunities no matter where they are in their wealth-building journey.
2. More women-focused, wealth-building product and service offerings in the fintech space that prioritize ease of use (in the customer experience, for example), leading with personalized financial advice and decision empowerment, and understanding a woman’s financial life journey. Also, better tailoring of marketing messaging and value propositions around those products and services (without pushing them) to attract and empower women to take steps to build the wealth they deserve. 
3. More women founders and members of the C-Suite at companies in the market that have a focus on helping people, especially women, build wealth.

Q: Women are the market spenders when it comes to household budgets – they have massive purchasing power. Will fintech companies suffer in the future if they don’t acknowledge this huge section of the marketplace?

Yes! Acknowledging women as a huge market opportunity and—this is key—building products and services specifically for women, and marketing them properly to women, based on their unique needs/wants, etc., will be a game-changer for fintechs. Those that don’t focus on this all-important segment will fall behind and miss out on capturing attention in this corner of the market as the rise of the SHEconomy continues. According to McKinsey & Company, “an unprecedented amount of assets will shift into the hands of US women over the next three to five years, representing a $30 trillion opportunity by the end of the decade.” At BMTX, women made up 50% of account holders in our student business vertical in 2021, compared to ~34% of men.

We understand how important it is to have a laser focus on this section of the market and strive to provide wealth-building digital banking through multiple product/service offerings and features, specifically keeping women in mind.

The original article can be found at: https://fintechmagazine.com/financial-services-finserv/luvleen-sidhu-ceo-bm-technologies-on-diversity-in-fntech

Luvleen shares her views on the status of digital finance and how it can be made more fair, secure, safe, and inclusive for the consumers. Luvleen’s interview can be found on pages 34-36.

The Aware Consumer magazine can be found here:

Luvleen Sidhu was just 28 when she founded BankMobile with a lofty mission: to reinvent banking for millions of Americans through the power of tech. The 2015 launch presciently anticipated the coming rise in mobile banking, and six years later the Radnor, Pennsylvania-based business merged with a special purpose acquisition company (SPAC) in a transaction worth $150 million. That made Sidhu the youngest female founder and CEO ever to take a company public at the time, and led her to even grander goals: Still at the helm of the company–now called BM Technologies–she says she wants to “create ripple effects and inspire other women.” Here’s why you should put your money on her to do just that.

Full article: Inc. Magazine Winter 2021/2022 Issue