BaaS Company Spotlight 6/8: Cross River — A Regional Bank Providing Specialized BaaS Services

This spotlight of a leading banking as a service provider is part of Tearsheet’s coverage of BaaS. Please see our BaaS Buyers Guide for more information.

• Who we spoke to: Gilles Gade (Founder and CEO) and Phil Goldfeder (SVP and Communications)
• Establishment year: 2008
• Bank license: Yes
• API documentation: https://www.crossriver.com/api

History

Right in the midst of the credit crisis in 2008, Cross River entered the market with a clean balance sheet and fresh capital to deploy. Although the bank was profitable right away, it recognized that it would only be a matter of time until the system stabilized and other community banks caught up. So very early on, management understood that they needed to innovate if they wanted to grow. One of Cross River’s first hires was its CTO, exemplifying its unique innovation strategy and enabling the search for potential technology partners. 

Cross River’s first partnership was with GreenSky originating point of sale loans at Home Depot. Through this relationship, Cross River gained expertise on originating loans via a partnership while complying with consumer protection laws. Although it does not work with GreenSky today, Cross River has over 15 partnerships with other online lenders, originating around $850 million/month  in unsecured consumer marketplace loans.

Services Provided

Cross River’s main service is originating loans for online lenders and providing payment and transaction services for tech companies. As Cross River is a traditional bank, everything it offers is under one roof, enabling quick connectivity within a regulated entity. 

Differentiator

Cross River is able to offer some unique benefits associated with being both a traditional bank and technology company. As an innovative traditional bank, Cross River enables startups with new and unique compliance cases, such as Coinbase. Cross River also specializes in underwriting non-traditional lenders, like Affirm, Rocket Loans, and Bread.

Chief Competitor

Cross River doesn’t believe it has a true competitor since it’s doing things so differently in the traditional and BaaS bank space that it would be difficult to pigeonhole them. Similar to Cambr, competition would most likely vary based on specific customer requirements.

Target Customer

Cross River focuses on technology companies with some infrastructure since Cross River ‘will put you through the [compliance] ringer’.  To work with Cross River, customers need to have some established compliance standards. The firm also works with clients to help them build out a compliance program. For example, with GreenSky and Coinbase, Cross River helped build compliance programs that allowed their clients to focus on their core businesses and not get bogged down. In Coinbase’s case, it had the desire and motivation to understand what it means to work with a bank. Some companies don’t have the stomach or resources to deal with it.