Work – Fintech
May 25, 2021
Luvleen Sidhu, the Chair, CEO and Founder of BM Technologies, Inc., joined us for a fascinating conversation about digital banking, taking her company public, and the practices that keep her grounded. She inspired us to start over with both our understanding of banking itself and how to reframe daily challenges as opportunities.
What is Fintech?
Fintech transforms the traditional financial services industry by embedding it with technology, particularly in customer facing areas, to address pain points and make banking a better customer experience — so banking services are easy to understand, easy to access, easy to use and low cost.
Fintech as an Act of Service
Service is inherent in all fintech business models. Luvleen’s firm, BankMobile is specifically creating access for underbanked as well as affluent people, helping them to have a strong financial foundation on which they can build for the rest of their lives. The company offers its services to non-banks as well as banks to be able to reach more customers.
BankMobile is aiming to build a consumer brand in banking. Luvleen wants customers to love their bank. The first year, over 100,000 accounts were opened because she offers easy, convenient, and low cost products and services. Bank Mobile has been able to build more loyalty than traditional banks because of its ease and convenience and is building a brand people like and trust.
Traditional retail banking relies on branches that are high cost to maintain. The traditional banking industry has covered this cost by charging penalty fees for overdrawn accounts, fees for money transfers, etc. Digital banking does not have this high cost branch structure, so their cost base is substantially lower – a benefit they can pass along to their customers.
Turning Challenges Into Opportunities in Banking
Incubation: It’s very difficult to get a bank chartered and get the capital required to start a bank. Luvleen believed in her mission and the business model and benefited from the opportunity to get incubated by Customers Bank.
Regulations: In this highly-regulated industry, if you make a mistake, you’re on the regulators’ blacklist. BankMobile has learned to navigate the regulatory maze and built the infrastructure and DNA for how to run the company within a regulated industry. She keeps the regulators abreast of the business model. It’s essential to constantly be thinking through risks, mitigants, and the policies in place.
Customer Acquisition: Her company pivoted models to get a high volume of bank customers at low cost. They can acquire a customer for less than $10. Banking is a field in which everyone is potentially a customer, and there is an opportunity for many to compete for that customer. Banks may have trust and credibility but most lack agility. Fintech challengers try to make customers feel special and approach business as a service.
Bank Mobile has adopted a B2B2C (business to business to consumer) model to reduce the cost of new client acquisition. The company’s offering is differentiated by enabling non-banks with good tech to enter the banking space.
Taking the Company Public: It’s very difficult to be a public company, compared to being a division of a larger bank. It’s a new function and role to talk to investors, prepare filings, prepare for earnings calls, etc. Equity analysts are not operators and their questions are asked with the intention to poke holes. BankMobile does not approach their work quarter to quarter but rather is focused on building a long-term sustainable business. Luvleen feels pride in where she is today as well as immense gratitude for the opportunity. She considers it the opportunity of a lifetime.
Advice to Aspiring Entrepreneurs and Leaders
It’s important to cultivate a mindset of openness. Do not create limitations or barriers. The worst thing you can do is limit your potential or have limiting beliefs. Try to be open to all creative possibilities, and allow yourself to just dream. It cannot become a reality if you do not allow yourself to dream it.
Take the time to reframe challenges. Every single day is an uphill battle, but you will eventually become immune to it because it will be part of the day-to-day rhythm. Approach each challenge as a moment in which you can create another opportunity.
Do not give up on balance. It is possible. You can have everything you want, just not at the same time. Accept that there will be moments in which you feel out of balance, but you do not have to give up on anything over the course of your lifetime.
Develop a morning ritual that fulfills your needs. A strong practice that keeps you grounded and sets you up for the day makes a huge difference in your mindset and daily preparedness. Luvleen shared her own morning practice – a Buddhist chant, a type of sound meditation that helps to elicit her most expansive self, start the day with a strong armor, and approach life fully.
During challenging moments, she remembers her father’s valuable advice – never give up.