With a new savings account, Manufacturers Bank’s digital-only Jenius Bank has big plans

While Goldman Sachs is scaling back Marcus, its venture into digital banking, not everyone is following suit. Manufacturers Bank, a wholly-owned subsidiary of SMBC Americas Holdings., a member of SMBC Group, launched its digital banking division Jenius Bank earlier this year. And now the digital bank is building out its product offerings by launching a Savings Account that comes with no minimum balance requirements and no fees.

Multiple banks have tried to launch digital-only brands as a way to engage niche consumer bases and test out digital strategies without upsetting the mothership. For example, JPMC’s Finn was released nationwide in 2017 only to be shut down in 2019, and Marcus by Goldman Sachs is heading into the same direction. 

But there are still some sidecar brands by banks that are going strong. First National Bank of Omaha’s FNBO Direct is currently in the ring. KeyBank acquired Laurel Road. River Valley Bank's IncredibleBank is the leading motorcoach lender in the U.S. And now Manufacturers Banks wants its own horse in the race, as well.

Betting on Jenius

For Manufacturers Bank, Jenius Bank is a way to expand its reach. 

“Manufacturers Bank’s customer base has traditionally been localized to California. Launching a digital division allows Manufacturers Bank to expand its reach to a national base and serve different consumer segments,” said John Rosenfeld, President at Jenius Bank. 

It is also an opportunity for the bank, which has both commercial and consumer products, to drill down on D2C banking products, he added.  

For most digital banks and neobanks, the target consumer is young and digitally savvy, because this segment is more comfortable with new names and the digital world. However, unlike Chime, which focuses both on low-balance customers as well as more affluent ones, Jenius Bank is focusing on consumers that are in accumulation mode.

“Jenius Bank’s target customer is digitally native, doesn’t see value in visiting physical bank branches, and is underwhelmed by existing digital bank options. Many have bustling lives with growing careers and are navigating major life events like buying or renovating a home, getting married, expanding their families. In addition, our target customer is motivated to improve their financial life and welcome advice from their bank,” said Rosenfeld. 

Currently, most of Jenius Bank’s workforce is remote but the firm has collaboration offices in Phoenix, Los Angeles, New York, and Charlotte. 

“The benefits of a predominately remote workforce are many: If we had physical branches, much of our recruiting would be constrained geographically. Instead, we can tap a national talent pool, giving us access to a much broader talent base than we would have otherwise,” he said. 

The digital bank also plans to pad its core offerings with tools that make financial management a little easier. For one, the bank wants to pull all of a customer’s financial data into one source and allow users to glean insights from their cash flow. “Customers will be able to see how their money comes and goes, plus insights into what they might be missing, like budgeting and saving opportunities,” he added. 

This type of integration is a central focus for the digital bank. “If you look at almost anyone that’s done aggregation to date, they’ve done it as a side venture. Jenius will have account integration embedded into every single page of the customer experience,” he said. 

Unlike traditional banks for whom switching and updating technology cores is difficult, digital banks come with none of the legacy baggage and all of the efficiency of new technology. 

“For example, we’re using the newest core platform offered by FIS for the bank. We’re also working with third-party solution providers on the aggregation and some other services. We have probably about 85 key providers that are all part of our ecosystem that we’re building in three cloud environments. The best part is that we can piece together things so much easier than before, and part of that is the new technology around APIs and microservices-based technology,” he added. 

A separate brand allows traditional banks to grow their deposits and counter the outflow of money to larger brands. Jenius Bank will serve a similar purpose for Manufacturers Bank, but it may be an uphill battle. Digital account openings have started to tilt in the favor of traditional banks as opposed to digital ones, with larger banks taking the biggest share.

 “Banks need to work on the question of, what is going to make this compelling to a customer that already has access to full banking services in their community or full-scale digital offerings?" said Alexis Krivkovich, a senior partner at McKinsey and managing partner of the company’s Bay Area Office.