OnJuno, a challenger bank based in India, is catering to Indian and Asian immigrants to the U.S. with a high-interest checking account that rewards their propensity for saving. It's also using some novel outreach efforts involving cricket and chess.
In targeting immigrants to the U.S., OnJuno, which has an office in San Francisco, joins a community of challenger banks that includes
The OnJuno bank account, which launched to the public on Dec. 9, has two tiers. “Basic” has no monthly fees and pays a bonus rate of 2.15% on balances up to $5,000 as well as 5% cash back for spending up to $500 per year at eligible merchants. “Metal” charges users $9.99 per month, but yields the same amount on balances of up to $30,000 per year and pays the same rate of cash back for up to $3,000 in annual spending. A low-cost remittance feature is expected to roll out in January.
The 2.15% bonus rate is fixed until the end of April. OnJuno can afford to pay this rate because of interchange fees, its monthly fee and lower human resource costs in Asia. Customers’ deposits are held with the $646.9 million-asset Evolve Bank & Trust in West Memphis, Ark.
Varun Deshpande, OnJuno's CEO, said account features reflect the tendencies of this demographic to value long-term savings and the ability to send remittances over credit and risky investments. These customers are also much likelier to use a debit card over a credit card. The bank account’s virtual or physical debit cards (only Metal users get a physical card) earn 5% cash back from a number of major brands, including retailers Amazon, Target and Walmart, subscription services such as Netflix, grocery stores, food delivery services and ride-sharing companies Uber and Lyft.
Though charging a monthly fee is unusual for most challenger banks, Deshpande said OnJuno is targeting a premium clientele. Beta testers averaged $8,000 to $10,000 in deposits. The overall U.S. Asian population enjoys a high degree of economic well-being, according to a 2017 article by Pew Research, with a median annual household income of households headed by Asian Americans of $73,060, compared with $53,600 among all U.S. households. Indian Americans have an even higher median income, at $100,000.
A high interest rate is also important for these customers because in India, customers don’t get separate checking and savings accounts, Deshpande explained. Instead, they operate mainly from savings accounts that generally yield 3.5 to 4%.
“There is a global trend of users moving towards more subscription services, and this is likely going to happen with fintech and banking,” Deshpande said. By charging a subscription-style fee, as OnJuno does with its Metal tier, "we are saying to the customer that if you pay a monthly fee we provide a high interest rate and cash back, but we won’t charge [or will reduce] fees for other financial services.”
Through interviews with its target audience, OnJuno founders learned that Indian and Asian immigrants tend to bank with Bank of America or JPMorgan Chase, especially when they arrive in the U.S. as students. New arrivals typically chose banks with nearby branches.
The founders of OnJuno are getting the word out in several unique ways. The company is placing ads during cricket matches streamed through Hotstar, an online video streaming platform that focuses on Indian content, as well as in newspapers popular with expats, such as The Economic Times and The Times of India.
The company is also using
OnJuno is also relying on influence of a different sort. Because word of mouth is strong in these immigrant communities, OnJuno has a referral program where users can invite a friend or family member to sign up for OnJuno and each will get a free three-month Metal subscription.
