A resurgence of de novo banks
De novo bank charter applications all but stalled after the 2007 – 2009 financial crisis. In addition to the shying away of investors, the crisis caused regulators to focus on reforms which made it an almost impossible feat to charter a de novo bank. Today, despite pandemic driven slow-downs, we’re witnessing a resurgence of applications, and new banks are beginning to form at a heightened pace.
This formation cycle brings upon an interesting opportunity. Conditions are ripe for technology-oriented banks to enter the arena. Post-crisis regulations, 83+ million millennials and the COVID-19 pandemic are creating demand for new kinds of financial products. Technology-forward business leaders recognize the opportunity to differentiate financial services with technology.
De novo banks’ competitive edge
Many of the more established banks these de novos will compete with are saddled with legacy technology infrastructure, forcing limited IT resources to ‘keep up’ with add-on components, complex integrations, and cumbersome vendor management. This gives the young institutions even more opportunity to differentiate. By starting fresh with a stable, secure and easy-to-manage technology foundation, de novo banks are left with resources to aggressively pursue new digitally-forward ways to serve their customers.
Watermark Bank – A tech forward vision
Watermark Bank of Oklahoma opened its doors in 2018 and has grown to $250M+ in assets while keeping their employee size to that of boutique bank. “We set out to launch a bank built on a foundation of innovative technology and products delivered with a concierge touch,” says Watermark President and CEO, Matt Pollock. Pollock adds “Our vision is coming to fruition. Making the right technology decisions out of the gate allowed us to better serve our clients through technology, and has positioned us for future growth.”
Beach Cities – A focused approach to community banking
Beach Cities Commercial Bank is the vision of a group of experienced commercial bankers with proven success delivering financial services to their California market. Beach Cities Commercial Bank’s leadership is leaning into a ‘high touch / high tech’ approach to banking businesses in their community. H. Kent Falk, Beach Cities Commercial Bank CEO (Proposed) said “BankOnIT is the type of partner that we, as a de novo, were looking for. They are a partner in our success, and they bring us innovative strategies that will help us achieve our vision and serve our community."
BankOnIT supports de novos
BankOnIT brought on three De Novos in the past three months, and will finalize partnerships with several more by the end of this quarter. Established institutions across the country are also joining the BankOnIT community, renewing their own technology foundation as a first step in executing strategic plans. “Partnering with BankOnIT allows the de novo institutions we work with to open their doors with technology as a source of strength and gives existing banks the ability to restore their foundation to achieve additional growth and other goals,” says Robert Mendez at BankOnIT.