This week we talked to Chris Tremont, EVP of Virtual Banking at Radius Bank. Chris talked to us about what it’s like to be part of a relatively young bank, how digital has changed banking forever, and what makes for a good fintech partnership.Radius Bank was founded in 1987, making it an anomaly in an industry dominated by older companies. What advantages has “youth” brought to Radius?
That’s a great question. One of the things that youth allows us to do is not be encumbered by the past. It allows us to be nimble in terms of how we come up with new ideas and, more importantly, bring these ideas to market. Execution is key for us.
We’re also able to attract talent who think differently about the future. Our CEO, Mike Butler, talks about how in a lot of ways we’re like a startup. He joined the organization in 2008 and brought a cultural transformation.
While we do embrace youth and innovation, Radius has an equally healthy respect for executives with years of banking experience. For instance, Butler is a CEO with a long track record and an understanding of the industry that only comes with time. He and other seasoned team members act as mentors and give a solid foundation to the younger ones. Our culture is therefore truly diverse in terms of age, skill sets, and backgrounds. This blend of old and new gives us a big competitive advantage in my opinion.
What advantages have you seen since that time?
I came from a larger institution to Radius seven and a half years ago. At the large institution, people would tell you why an idea wouldn’t work or how it had already been tried in the past. When I joined Radius and threw out some ideas, I was pleasantly surprised to find people who said, “That sounds like a good idea, now go execute.”
So it’s a different world. We’re eager to try new things and roll up our sleeves and lead these projects.
For example, six years ago I was overseeing our marketing department and we had some folks in our retail branch in Boston say customers were having a hard time banking with us because it wasn’t easy to get money in and out with so few branches.
I took a step back. I knew our strategic plan was not to build a physical branch on a corner. But what if we provided easier access to funds? We did that by rebating ATM fees that other banks charge.
That’s the cornerstone of how we build out our virtual products from a product development standpoint. We ask what the customer wants, how we build it, and how we bring it to market.
So the ATM project would be classified under virtual banking?
Yes, we think of our virtual banking platform as truly our go-to-market retail banking strategy. Everything that funnels up under that, from product development to the digital banking offerings, is wrapped up under virtual banking.
Interesting. So we've talked about the advantages that you see as a young bank. What struggles come with being relatively new?
We’re competing against a lot of banks that have been in the market for much longer than us. Some of them also have deeper pockets for advertising, so branding can become an issue.
However, we’ve found that brand recognition tends to matter less today than it used to.
What do you mean by that?
We’ve transitioned how we handle our advertising. Years ago it was more of a traditional model, with television, radio, and print campaigns that tried to get people in the physical branch. But at the end of the day it didn’t produce the results we were looking for. That kind of marketing isn’t really data-driven, and it’s mostly about branding, which requires deep pockets.
So we’ve made the shift over the last two years from brand-centered campaigns in a local market to data-driven campaigns in a digital market.
We’ve found that you don’t have to have a big bank name to acquire clients. People are really looking for a good product — one that’s transparent and usable and comes with excellent customer service. That’s how digital banking has leveled the playing field for smaller organizations like ourselves to compete against larger banks.
What’s happened at Radius in the past three years when it comes to retail?
We focus in five key areas.
First, we make sure we’re tracking consumers’ preferences so we can exceed their expectations. For us it’s about creating products that people want to use. Last year, for instance, we launched what we call a hybrid product that offers a high yield rate and also gives consumers all the functionality of a checking account, from no minimum balance to free ATMs to free bill pay and online and mobile access. For us it’s about making sure we develop products that people want to use.
Second, we develop the technology to support those products. In 2014 we redesigned our website to be fully responsive. At the same time we partnered with a company called Q2 to upgrade our digital banking suite. They’ve been a great partner as we’ve enhanced the user experience on that front. We’ve also partnered with a company called Bottomline to bring clients through the deposit and loan application process as smoothly as possible. I’ve seen people get through in 6-7 minutes from start to finish with a fully funded checking account.
Third, we believe in strategic partnerships with fintech. Over the last three years we’ve launched partnerships with a number of innovative companies: one in digital payments, another that’s helping consumers pay down student loan debt faster, a marketplace lender, and a digital investment firm created for the middle class. For us, when it comes to retail, it’s not about building a physical location on the corner of “Main Street and 1st,” it’s about building a virtual branch at the corner of “Radius and a fintech partner.”
Fourth, we make sure we have the right customer service model built out. That’s what we’ve spent a lot of time thinking about as we’ve acquired more and more clients and grown quite substantially over the last 18 months. It’s about having the right people in place. We’ve expanded our call center hours and recently added over 40 hours of customer support each week.
Fifth, we’ve expanded digital advertising to reach the target market we’re going after and to better serve them, as I mentioned before.
In addition to the partnerships you mentioned, what are you working on right now at Radius bank?
Financial inclusion is an important topic and we’re developing a new checking product to meet a broader range of consumers’ need. For example, we’re offering some other checking account products for people who maybe don’t qualify for a traditional checking account. That’s an issue we’ve seen out in the digital space quite a bit — people not qualifying for a standard checking account. We’re working on a product that will meet their needs.
We’re also working on something that will help small businesses and entrepreneurs, as well as something new in the student loan market. I can’t say too much about either yet but stay tuned!
You’ve mentioned a lot of fintech partnerships here. What do you think makes for a good fintech partnership?
I think it needs to start with cultural alignment between the bank and the fintech company. We’ve launched four strategic partnerships with fintech companies since the middle of 2013 and each one always started with alignment between us and the company. What’s their mission, what are their goals and objectives, do they align with ours? It’s got to start there.
Then we look at the business plan for the fintech company and how it feeds into the bank. Some of these companies can be pre-revenue startups so you have to think about burn rates and longevity and their plan over the short or medium term, even into an endgame solution. What are they looking to accomplish over the next 3 to 5 years?
Once you get past that component and everyone’s comfortable with the business plan and economics, it’s important that both the bank and the fintech are on the same page when it comes to properly managing risk, cybersecurity and staying in compliance with regulations. A fintech company’s agreement to put a high priority on security and compliance are two of our criteria and are deal-breakers for Radius if they do not. We would rather have fewer, more solid partnerships than partner with whatever fintech company is in the headlines at the moment.
From there it’s about execution — the technology and legal and compliance that go into the execution. You need a nimble team on both sides. You need open communication.
What excites you most about the future of banking?
Well, a lot of things. I’m excited about the mentality that banking is now no longer somewhere you have to go, it’s something you do. I’m also excited about the shift toward user experience. That’s what banks like Radius are helping to bring to the forefront. Consumers won’t stay with you for very long if you’re not delivering on their needs.
I’m also excited about how we play a part in the lives of consumers and small business owners. Money is an important part of life, and we get to play a big part in that. So I’m certainly excited about where the technology is taking us and how we can use that to make our banking products and services better. Finally, I’m excited about where partnerships are going between banks and fintech. That’s what’s really exciting to me, to see where this will evolve to the next two to three years.