Within a year of its launch, online-only Jenius Bank has already made more than $1 billion in consumer loans and gathered more than $1 billion in deposits.
Jenius Bank is the digital consumer banking unit of Los Angeles-based SMBC MANUBANK, which has $5.1 billion in assets and is part of the U.S. subsidiary Sumitomo Mitsui Banking Corp., a Japanese bank that is one of the largest institutions in the world. The U.S. subsidiary operates a commercial bank but wanted to establish a consumer presence and debated building a de novo business or acquiring an existing bank. Ultimately, they elected the online route and brought in someone with experience: John Rosenfeld, who had previously built an online high-yield savings account for Providence, Rhode Island-based Citizens Financial Group.
Rosenfeld, now president of Jenius Bank, joins Reinventing Banking to discuss what goes into standing up an entirely new digital consumer bank. He shares how Jenius approached assembling its cloud-based technology stack and why it launched with a high-yield savings account and unsecured consumer loans. SMBC MANUBANK has made substantial investments in building the platform and hired 350 employees, leading to a first-quarter loss. Rosenfeld says those investments ensured Jenius could scale safely as it grew.
“A lot of [this first year has been] about proving that we had a stable platform,” he says.
Building a consumer bank online, from scratch, has freed Rosenfeld and his team from the trappings of legacy technology and infrastructure, such as branches. They also don’t have to worry about cannibalizing an existing deposit base with higher-paying accounts. But it comes with its own challenges too: Jenius juggles making digital account opening and loan applications convenient and fast, while ensuring identity and income verification processes are robust.
“We didn’t have legacy systems, we didn’t have legacy customers that we would have to migrate over to a new platform, we didn’t have 1,000 different variants of different products that we had to recreate on a new platform,” he says. “It’s amazing how much easier it is to start from scratch than to overhaul something.”
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