California digital bank reaches $1 billion deposit mark in six months

Online-only Jenius Bank, which recently announced hitting $1 billion in deposits, is a division of Los Angeles-based SMBC MANUBANK.

Jenius Bank is starting to pay dividends for its parent, Tokyo-based Sumitomo Mitsui Banking Corp. Six months after introducing its high-yield savings account, Jenius has reached $1 billion of deposits. 

Jenius operates as the digital division of SMBC's 62-year-old Los Angeles-based subsidiary, SMBC MANUBANK. It began operations in June 2023 with personal loans as the inaugural product. Since then, Jenius has originated more than $700 million. The savings account, with its 5.25% yield, has caught on equally quickly, President John Rosenfeld said.  

"With both products, we kind of rolled them out slowly, to make sure that everything worked as intended," Rosenfeld said in an interview. "We listened to our customers. We watched, we waited and when we saw things were going well … we kind of turned up the volume by opening the marketing doors, making ourselves more prominent in various places."

While Jenius' new customers are, no doubt, attracted by the rate it offers, the company is working to develop stronger bonds. Consumers increasingly are decentralizing their financial lives, Rosenfeld said. They're open to a long-term relationship with a digital bank, even as they leave their primary checking account parked at another institution. Going forward, they'll have the option of tapping Jenius for personal loans and — soon — credit cards. 

"We're working on other products as we speak," Rosenfeld said. "Don't be surprised when you see your first credit card from Jenius Bank, or your checking account from Jenius Bank or other types of loans from Jenius Bank. … The long-term vision is to create a bank [offering] a full suite of products that does things a little better than most."

Beyond its suite of financial products, Rosenfeld said Jenius expects to roll out a service utilizing aggregation and data analytics to offer customized financial insights. 

"We are on kind of a little bit of a higher calling, focusing on trying to give people more confidence and comfort in knowing what they need to know" about their finances, Rosenfeld said. "What's coming with our evolved experience is the idea of actually looking at your financial performance, your transactions, your other accounts, how much you're earning, how much you're paying and trying to give you insights."

John Rosenfeld, Jenius
Jenius Bank President John Rosenfeld

Considered relatively rare and cutting-edge a decade-and-a-half ago, digital banks have evolved into a mainstream part of the nation's banking system, with new ones still entering the marketplace on a regular basis. In April 2023, two months before Jenius' launch, the $7.7 billion-asset Liberty Bank in Middletown, Connecticut, unveiled Owners Bank, a digital-only unit aimed at small-business owners. 

Santander plans to expand its digital-only player, Openbank, in the U.S. and Mexico in the second half of 2024. The Spanish banking giant recently hired Swati Bhatia, former head of Goldman Sachs' digital brand Marcus, to oversee U.S. consumer and business banking, as well as its digital transformation efforts. 

For SMBC, Jenius is a major undertaking. Hirofumi Otsuka, CEO of the company's Americas division, described it in a press release as "a cornerstone of our strategic vision for SMBC's long-term roadmap."

To date, Jenius' growth — though rapid — hasn't generated nearly enough revenue to cover costs. The $5.1 billion-asset SMBC MANUBANK reported a $38.3 million first-quarter loss, attributable largely to Jenius Bank, which has added hundreds of employees and tens of millions of dollars in operating costs to the balance sheet. According to Rosenfeld, the $1.6 trillion-asset SMBC has taken a patient approach to the build-out, fronting the expense of robust product development and a 24/7 call center few other digital players could afford. 

"They're allowing us to do things right, and do things a little more strategically, with the recognition that it'll take us longer to get to long-term profitability," Rosenfeld said. "But when we get there, we're going to be so far ahead of the others. I think it'll be a key advantage."

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