John Rosenfeld signed on to oversee the launch of
"I have a Jenius T-shirt that I love wearing around because people will say, 'Hey, John. You spelled it wrong. You must be a real genius,' '' Rosenfeld, president of Jenius Bank, said in an interview.
Rosenfeld, who joined Jenius from Citizens Financial Corp., where he managed the $226.7 billion-asset company's online-only Citizens Access unit, said the misspelling is all part of the pitch. Once he acknowledges it, he can say, "Let me tell you about our new bank."
And it is indeed very new. When Jenius launches in the coming months, its parents — Tokyo-based SMBC and its U.S. subsidiary, the $4.9 billion-asset Manufacturers Bank in Los Angeles — will have little to teach it.
Manufacturers is a relatively small commercial bank with nine branches spread across three Southern California counties and no consumer business to speak of.
Manufacturers' mortgages, home equity lines of credit and personal loans amounted to $19 million on June 30, according to Federal Deposit Insurance Corp. statistics.
"It's a very different endeavor," Rosenfeld said. "At Citizens, they had a very strong traditional [consumer banking] business. Citizens Access was a means to expand their deposit-taking [and] we were able to rely on a lot of infrastructure" that already existed.
"Here, we've had to build all the infrastructure from the ground up," Rosenfeld said. Manufacturers "really wasn't designed to have thousands of consumer customers."
The plan for Jenius is to be a lean, branchless provider that caters to younger, upwardly mobile consumers —Rosenfeld calls them "high-performing digital optimizers." These are people with fairly good credit, $100,000 or more of income, in search of products such as personal loans.
These consumers would also be ready and willing to go without bank branches. In the wake of COVID-19, "that population is growing incredibly rapidly," Rosenfeld said.
SMBC has a lot riding on the accuracy of Rosenfeld's assessment. And Jenius enters a crowded field; consumers have downloaded apps offered by digital challenger banks Chime, Dave and Varo Bank more than 1.3 million times in 2022, according to 42matters, a market intelligence service based in Zurich.
Though "app performance may not tell the complete story, it's a good way to gauge market demand," Alexander Braelow, a 42matters spokesman, said in an email.
Over the past two years, a number of traditional banks have also
The digital commercial bank has been fleshing out its business lines and technology over the past year. Its new capital raise will help further those efforts.
The $32.3 billion-asset Texas Capital Bancshares in Dallas opened Bask Bank in January 2020, featuring a savings account that pays in airline travel miles instead of interest. The $5.7 billion-asset Cambridge Savings Bank in Cambridge, Massachusetts,
Perhaps the biggest recent digital-only push came from Cleveland-based KeyCorp., which
At Providence, Rhode Island-based Citizens — where Rosenfeld worked eight years before joining Jenius — the digital Citizens Access subsidiary is also proving its strategic worth. It held about $3.5 billion of savings deposits on June 30. Citizens, which migrated Citizens Access to a cloud-based platform earlier this year, also unveiled a "national storefront," offering mortgage and student debt refinance products. It introduced a Citizens Access app last month.
In a similar vein, Matthew Quale, Texas Capital's head of consumer banking, sales enablement and marketing and president of the Bask Bank unit, said its performance has been strong enough that the company plans an expanded lineup of products and services, including CDs, payments and wealth. "We think there's an opportunity to be a relatively full-service bank for our customers," Quale said.
Texas Capital and other companies that invested in digital bank subsidiaries are benefiting from a "broad demographic shift" in favor of mobile banking, according to Quale.
"You end up attracting a large group of customers who have deep relationships who are happy with the experience. They ask for more," Quale said.
Rosenfeld was able to replicate portions of the Citizens Access model at Jenius, most notably in that it will have virtually no user fees, he says. "Our intent is to try to avoid all of those punitive fees entirely," Rosenfeld said. "We'll focus on net interest margin as our way to grow revenue."
Citizens Access, which opened in 2018, also markets itself as a no-fee provider.
Jenius expects to start by offering personal loans, followed by savings and then checking, with all three product sets to be rolled out within the first year of operation. Given the intent to rely on spread income rather than fees, Rosenfeld is working to keep a tight rein on expenses, but cost control is being built into the operating blueprint, he added.
"We're projecting and targeting an efficiency ratio well below 50%," Rosenfeld said. "A lot of banks today have old technology, they have branches, they have paper, they even have offices. Ninety-five percent of my employees work remote. … My cost base is going to be dramatically lower. I can pass that [savings] back to the consumer."
In place of a physical presence, Jenius will have a 24/7 call center and a suite of personal financial products that it expects to be core to the customer experience.
The market segment Jenius plans to pursue is already motivated "to improve their financial well-being," Rosenfeld said. "We want to give them tools that other banks aren't. We think they'll be compelling."
While Rosenfeld hasn't yet announced a start date for Jenius, plans for the new division are far along. He's hired 170 people over the past 12 months.
"This is being driven by the top, all the way back to Tokyo," Rosenfeld said. SMBC, he added, sees Jenius "as an opportunity to enter one of the fastest-growing markets in the world. … Personal loans are growing very rapidly. It's also an opportunity to raise U.S. dollar deposits, which is more difficult to do in the commercial space."
