Citizens CEO: Fintech partnerships will keep bank competitive

Citizens CEO: Fintech partnerships will keep bank competitive

Philadelphia Business Journal

By Jeff Blumenthal

22 April 2019

When announcing their $28 billion merger of equals in February, BB&T Corp. and SunTrust Banks said the deal was partly designed to allow the banks to become more competitive with larger rivals in technology.

At more than $220 billion in assets, both are larger than $160 billion-asset Citizens Financial Group, one of the Philadelphia region’s largest banks. But like BB&T and SunTrust, it is significantly smaller than the nation’s Big 4 banks— JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup, each of which have assets near or exceeding $2 trillion and have invested heavily in developing consumer-facing technology such as artificial intelligence-powered chatbots and digital investing apps.

Citizens Financial CEO Bruce Van Saun acknowledges the challenge but believes his bank has made a significant push to keep pace with its larger competitors by partnering with more than a dozen fintech companies in recent years.

“I think we have sufficient scale to stay competitive,” Van Saun said in an interview after Citizens Financial announced a 13 percent increase in net income during the first quarter. “But it will be worth watching to see which banks will continue competing in five years and which ones won’t be.”

Since taking the reins and spinning the bank off from former owner Royal Bank of Scotland via an IPO five years ago, enhancing technology has been a prime focus for Van Saun.

In the first quarter alone, Citizens entered into partnerships with four different fintechs, adding to the 10 existing relationships it established in recent years: Transactis (payments technology for treasury solutions), mortgage platforms Blend and Vast and corporate liquidity investment platform Cachematrix.

The partnerships stretch across the bank’s business lines, such as SigFig, an investing platform for its wealth management clients and Fundation, which makes it easier for small-business customers to apply for loans.

At the same time as it’s struck fintech deals, Providence, R.I.-based Citizens, the Philadelphia region’s fourth-largest deposit taker, has increased its in-house capabilities, such as building a new digital and online platform based in large part on the work of its own digital technology employees. It also launched Citizens Access, a nationwide online banking service focused on the collection of deposits that has reeled in $4.6 billion in deposits in its first year. Citizens has about 30 analysts and programmers working on its consumer digital platform, and it plans to hire 45 more this year.

Brian Klock, an analyst from Keefee Bruyette & Woods, said tech platforms can most helps banks is on the consumer side.

“Most consumers largely bank online, so technology on scale and having the most up to date technology is impactful with consumer banking,” Klock said. “But no two companies are the same so there is no algorithm that is going to be a solution for every business customer. So you still need personal relationships for business banking.”

Van Saun said the advancement of AI had not led to a reduction in the number of employees. Citizens Financial employs roughly the same number of people it did five years ago — about 18,000 — but has changed about 3,000 positions from old roles that no longer fit to new ones that are largely customer facing.

While the newer, tech-centric employees are largely paid more than those who departed, Van Saun said the math still works in Citizens’ favor because of improvements in productivity.

“AI has an incredible presence but you have to be selective in how you deploy it because sometimes the cost does not equal the benefits,” Van Saun said. “But it can save hours or research.”

Online Loans You Can Take To The Bank

OnDeck, the reigning king of small business lending among U.S. financial technology companies, is sharpening its business strategies. Among its new initiatives: the company is launching an equipment-finance product this year, targeting loans of $5,000 to $100,000 with two-to-five year maturities secured by “essential-use equipment.”

In touting the program to Wall Street analysts in February, OnDeck’s chief executive, Noah Breslow, declared that the $35 billion, equipment-finance market is “cumbersome” and he pronounced the sector “ripe for disruption.”

While those performance expectations may prove true – the first results of OnDeck’s product launch won’t be seen until 2020 – Breslow’s message seemed to conflict with OnDeck’s image as a public company. Rather than casting itself as a disruptor these days, OnDeck emphasizes the ways that its business is melding with mainstream commerce and finance.

OnDeckConsider that the New York-based company, which saw its year-over-year revenues rise 14% to $398.4 million in 2018, is collaborating with Visa and Ingo Money to launch an “Instant Funding” line-of-credit that funnels cash “in seconds” to business customers via their debit cards. With the acquisition of Evolocity Financial Group, it is also expanding its commercial lending business in Canada, a move that follows its foray into Australia where, the company reports, loan-origination grew by 80% in 2018.

Perhaps most significant was the 2018 deal that OnDeck inked with PNC Bank, the sixth-largest financial institution in the U.S. with $370.5 billion in assets. Under the agreement, the Pittsburgh-based bank will utilize OnDeck’s digital platform for its small business lending programs. Coming on top of a similar arrangement with megabank J.P. Morgan Chase, the country’s largest with $2.2 trillion in assets, the PNC deal “suggests a further validation of OnDeck’s underlying technology and innovation,” asserts Wall Street analyst Eric Wasserstrom, who follows specialty finance for investment bank UBS.



“It also reflects the fact that doing a partnership is a better business model for the big banks than building out their own platforms,” he says. “Both banks (PNC and J.P. Morgan) have chosen the middle ground: instead of building out their own technology or buying a fintech company, they’ll rent.

jpmorgan building“J.P. Morgan has a loan portfolio of $1 trillion,” Wasserstrom explains. “It can’t earn any money making loans of $15,000 or $20,000. Even if it charged 1,000 percent interest for those loans,” he went on, “do you know how much that will influence their balance sheet? How many dollars do think they are going to earn? A giant zero!”

Similarly, Wasserstrom says, spending the tens of millions of dollars required to develop the state-of-the art technology and expertise that would enable a behemoth like J.P. Morgan or a super-regional like PNC to match a fintech’s capability “would still not be a big needle-mover. You’d never earn that money back. But by partnering with a fintech like OnDeck,” he adds, “banks like J.P Morgan and PNC get incremental dollars they wouldn’t otherwise have.”

The alliance between OnDeck and old-line financial institutions is one more sign, if one more sign were needed, that commercial fintech lenders are increasingly blending into the established financial ecosystem.

Not so long ago companies like OnDeck, Kabbage, PayPal, Square, Fundation, Lending Club, and Credibly were viewed by traditional commercial banks and Wall Street as upstart arrivistes. Some may still bear the reputation as disruptors as they continue using their technological prowess to carve out niche funding areas that banks often neglect or disdain.

Yet many fintechs are forming alliances with the same financial institutions they once challenged, helping revitalize them with new product offerings. Other financial technology companies have bulked up in size and are becoming indistinguishable from any major corporation.

Big Fintechs are securitizing their loans with global investment banks, accessing capital from mainline financial institutions like J.P. Morgan, Goldman Sachs and Wells Fargo, and finding additional ways — including becoming publicly listed on the stock exchanges – to tap into the equity and debt markets.

kabbageOne example of the maturation process: through mid-2018, Atlanta-based Kabbage has securitized $1.5 billion in two bond issuances, 30% of its $5 billion in small business loan originations since 2008.

In addition, fintechs have been raising their industry’s profile with legislators and regulators in both state and federal government, as well as with customers and the public through such trade associations as the Internet Lending Platform Association and the U.S. Chamber of Commerce. Both individually and through the trade groups, these companies are building goodwill by supporting truth-in-lending laws in California and elsewhere, promoting best practices and codes of conduct, and engaging in corporate philanthropy.

Rather than challenging the established order, S&P Global Market Intelligence recently noted in a 2018 report, this cohort of Big Fintech is increasingly burrowing into it. This can especially be seen in the alliances between fintech commercial lenders and banks.

“Bank channel lenders arguably have the best of both worlds,” Nimayi Dixit, a research analyst at S&P Global Market Intelligence wrote approvingly in a 2018 report. “They can export credit risk to bank partners while avoiding the liquidity risks of most marketplace lending platforms. Instead of disrupting banks, bank channel lenders help (existing banks) compete with other digital lenders by providing a similar customer experience.”

It’s a trend that will only accelerate. “We expect more digital lenders to incorporate this funding model into their businesses via white-label or branded services to banking institutions,” the S&P report adds.

Forming partnerships with banks and diversifying into new product areas is not a luxury but a necessity for Fundation, says Sam Graziano, chief executive at the Reston (Va.)-based platform. “You can’t be a one-trick pony,” he says, promising more product launches this year.

Fundation has been steadily making a name for itself by collaborating with independent and regional banks that utilize its platform to make small business loans under $150,000. In January, the company announced formation of a partnership with Bank of California in which the West Coast bank will use Fundation’s platform to offer a digital line of credit for small businesses on its website.

provident bankFundation lists as many as 20 banks as partners, including most prominently a pair of tech-savvy financial institutions — Citizens Bank in Providence, R.I. and Provident Bank in Iselin, N.J. — which have been featured in the trade press for their enthusiastic embrace of Fundation.

John Kamin, executive vice president at $9.8 billion Provident reports that the bank’s “competency” is making commercial loans in the “millions of dollars” and that it had generally shunned making loans as meager as $150,000, never mind smaller ones. But using Fundation’s platform, which automates and streamlines the loan-approval process, the bank can lend cheaply and quickly to entrepreneurs. “We’re able to do it in a matter of days, not weeks,” he marvels.

Not only can a prospective commercial borrower upload tax returns, bank statements and other paperwork, Kamin says, “but with the advanced technology that’s built in, customers can provide a link to their bank account and we can look at cash flows and do other innovative things so you don’t have to wait around for the mail.”

Provident reserves the right to be selective about which loans it wants to maintain on its books. “We can take the cream of the crop” and leave the remainder with Fundation, the banker explains. “We have the ability to turn that dial.”



The partnership offers additional side benefits. “A lot of folks who have signed up (for loans) are non-customers and now we have the ability to market to them,” he says. “After we get a small business to take out a loan, we hope that we can get deposits and even personal accounts. It gives us someone else to market to.”

As a digital lender, Provident can now contend mano a mano with another well-known competitor: J.P. Morgan Chase. “This is the perfect model for us,” says Kamin, “it gives us scale. You can’t build a program like this from scratch. Now we can compete with the big guys. We can compete with J.P. Morgan.”

For Fundation, which booked a half-billion dollars in small business loans last year, doing business with heavily regulated banks puts its stamp on the company. It means, for example, that Fundation must take pains to conform to the industry’s rigid norms governing compliance and information security. But that also builds trust and can result in client referrals for loans that don’t fit a bank’s profile. “For a bank to outsource operations to us,” Graziano says, “we have to operate like a bank.”

Bankrolled with a $100 million line of credit from Goldman Sachs, Fundation’s interest rate charges are not as steep as many competitors’. “The average cost of our loans is in the mid-to-high teens and that’s one reason why banks are willing to work with us,” Graziano says. “Our loans,” he adds, “are attractively structured with low fees and coupon rates that are not too dramatically different from where banks are. We also don’t take as much risk as many in the (alternative funding) industry.”

Despite its establishment ties, Graziano says, Fundation will not become a public company anytime soon. “Going public is not in our near-term plans,” he told deBanked. Doing business as a public company “provides liquidity to shareholders and the ability to use stock as an acquisition tool and for employees’ compensation,” he concedes. “But you’re subject to the relentlessly short-term focus of the market and you’re in the public eye, which can hurt long-term value creation.”

Graziano reports, however, that Fundation will be securitizing portions of its loan portfolio by yearend 2020.

paypal buildingPayPal Working Capital, a division of PayPal Holdings based in San Jose, and Square Inc. of San Francisco, are two Big Fintechs that branched into commercial lending from the payments side of fintech. PayPal began making small business loans in 2013 while Square got into the game in 2014. In just the last half-decade, both companies have leveraged their technological expertise, massive data collections, data-mining skills, and catbird-seat positions in the marketplace to burst on the scene as powerhouse small business lenders.

With somewhat similar business models, the pair have also surfaced as head-to-head competitors, their stock prices and rivalry drawing regular commentary from investors, analysts and journalists. Both have direct access to millions of potential customers. Both have the ability to use “machine learning” to reckon the creditworthiness of business borrowers. Both use algorithms to decide the size and terms of a loan.

Loan approval — or denials — are largely based on a customer’s sales and payments history. Money can appear, sometimes almost magically in minutes, in a borrower’s bank account, debit card or e-wallet. PayPal and Square Capital also deduct repayments directly from a borrower’s credit or debit card sales in “financing structures similar to merchant cash advances,” notes S&P.

At its website, here is how PayPal explains its loan-making process. “The lender reviews your PayPal account history to determine your loan amount. If approved, your maximum loan amount can be up to 35% of the sales your business processed through PayPal in the past 12 months, and no more than $125,000 for your first two loans. After you’ve completed your first two loans, the maximum loan amount increases to $200,000.”

PayPal, which reports having 267 million global accounts, was adroitly positioned when it commenced making small business loans in 2013. But what has really given the Big Fintech a boost, notes Levi King, chief executive and co-founder at Utah-based Nav — an online, credit-data aggregator and financial matchmaker for small businesses – was PayPal’s 2017 acquisition of Swift Financial. The deal not only added 20,000 new business borrowers to its 120,000, reported TechCrunch, but provided PayPal with more sophisticated tools to evaluate borrowers and refine the size and terms of its loans.

“PayPal had already been incredibly successful using transactional data obtained through PayPal accounts,” King told deBanked, “but they were limited by not having a broad view of risk.” It was upon the acquisition of Swift, however, that PayPal gained access to a “bigger financial envelope including personal credit, business credit, and checking account information,” King says, adding: “The additional data makes it way easier for PayPal to assess risk and offer not just bigger loans, but multiple types of loans with various payback terms.”

While PayPal used the Swift acquisition to spur growth and build market share, its rival Square — which is best known for its point-of-sale terminals, its smartphone “Cash App,” and its Square Card — has employed a different strategy.



By selling off loans to third-party institutional investors, who snap them up on what Square calls a “forward-flow basis,” the Big Fintech barged into small business lending with the subtlety of a freight train. In just four years, Square originated 650,000 loans worth $4.0 billion, a stunning rise from the modest base of $13.6 million in 2014.

Square’s third-party funding model, moreover, demonstrates the benefits afforded from being deeply immersed in the financial ecosystem. Off-loading the loans “significantly increases the speed with which we can scale services and allows us to mitigate our balance sheet and liquidity risk,” the company reported in its most recent 10K filing.

Square does not publicly disclose the entire roster of its third-party investors. But Kim Sampson, a media relations manager at Square, told deBanked that the Canada Pension Plan Investment Board — “a global investment manager with more than CA$300 billion in assets under management and a focus on sustained, long term returns” – is one important loan-purchaser.

Square also offers loans on its “partnership platform” to businesses for whom it does not process payments. And late last year the company introduced an updated version of an old-fashioned department store loan. Known as “Square Installments,” the program allows a merchant to offer customers a monthly payment plan for big-ticket purchases costing between $250 and $10,000.

Which model is superior? PayPal’s — which retains small business loans on its balance sheet — or Square’s third-party investor program? “The short answer,” says UBS analyst Wasserstrom, “is that PayPal retains small business loans on its balance sheet, and therefore benefits from the interest income, but takes the associated credit and funding risk.”

Meanwhile, as PayPal and Square stake out territory in the marketplace, their rivalry poses a formidable challenge to other competitors.

Both are well capitalized and risk-averse. PayPal, which reported $4.23 billion in revenues in 2018, a 13% increase over the previous year, reports sitting on $3.8 billion in retained earnings. Square, whose 2018 revenues were up 51 percent to $3.3 billion, reported that — despite losses — it held cash and liquid investments of $1.638 billion at the end of December.

King, the Nav executive, observes that Able, Dealstruck, and Bond Street – three once-promising and innovative fintechs that focused on small business lending – were derailed when they could not overcome the double-whammy of high acquisition costs and pricey capital.

“None of them were able to scale up fast enough in the marketplace,” notes King. “The process of institutionalization is pushing out smaller players.”

About 10 Minutes is All it Takes: Bank of the West's FinTech Solution Delivers Small Business Express Lending - Fast, Easy Access to Capital

SAN FRANCISCOApril 4, 2019 /PRNewswire/ — Bank of the West announced today the launch of Small Business Express Lending– an online platform designed for small businesses seeking business capital. Through a 10 minute application online at, upon approval, small businesses can receive up to $100,000 in as little as two business days. Small Business Express Lending is also available in branches, providing full digital capabilities and bankers with expertise to help when needed.

“Small businesses are the bedrock of the U.S. economy,” said Michelle Di Gangi, Executive Vice President and Head of Small and Medium Enterprise at Bank of the West. “I come from a family of small business owners and learned early on the critical need for this type of financing coupled with access to business banking experts when you need them. We want to be the financial advocate that helps small businesses grow and thrive in the communities we serve.”

Small Business Express Lending was built in collaboration with fintech firm, Fundation, to deliver fast, simple applications for small business owners. “Customer expectations when consuming financial services products have and will continue to change,” said Sam Graziano, CEO of Fundation Group LLC. “We’re excited to collaborate with Bank of the West, a leader in innovation, to offer a market leading borrowing experience for small business owners.”

The Small Business Express Lending Platform:

  • Uses a simple, online application that can be completed at home or in a Bank of the West branch with the help of a small business banking expert.
  • Provides rapid approval and funding in as little as two business days for up to $100,000.
  • Includes Business Lines of Credit, Business Credit Cards, and Non-Real Estate Term Loan products.
  • Saves time through its convenient start-to-finish digital application with closing via electronic signature.

About Bank of the West

We are driven by our fundamental belief in redefining banking for a better future. At a time when people demand more from companies, we are taking action to ensure our activities help protect the planet, improve people’s lives, and strengthen communities. That’s why we are focusing on areas where we can have a real impact: supporting energy transition, helping enable women entrepreneurs and financing innovative start-ups. As the bank for a changing world, Bank of the West is committed to sustainable finance along with our parent company BNP Paribas. Through Digital Channels and offices across the U.S., Bank of the West provides financial tools and resources to more than 2 million individuals, families and businesses.

About Fundation

Fundation Group LLC is a credit solutions provider focused on the small business market nationally. Fundation is a leader in providing technology and application processing services to support more than 25 super regional, regional and community banks. Fundation’s solutions enable its financial services clients to develop a digital lending capability, provide a great customer experience, drive cost efficiency into their small business lending program, and maximize the number of customers they can serve. Fundation’s services range from simple referral partnerships to customized, integrated private labeled lending programs. The Company also partners with a wide array of organizations that serve the small business market in various capacities to deliver credit products to the business community nationwide. For more information, please visit

Deposit and loan products offered by Bank of the West, Member FDIC and Equal Housing Lender. © 2019 Bank of the West. Doing business in South Dakota as Bank of the West California.

Provident Bank to expand small business loans with Fundation

Provident Bank and Fundation announced Tuesday the launch of a program to expand small business loan approvals for customers of the Jersey City-based bank.

With the new feature, small businesses can apply for term loans ranging from $15,000 to $250,000 and lines of credit from $20,000 to $150,000 and receive funds in as soon as one business day.

Fundation Chief Executive Officer Sam Graziano said the company’s platform was developed to serve the small business community with speed and convenience.

“This will enable us to effectively serve the growing small business market by providing the capital many small businesses need to grow and reach their full potential,” Josephine Moran, Provident Bank executive vice president, director of retail banking, said in a prepared statement. “In turn, this will assist these businesses to flourish and create new jobs in our communities.”

Virginia-based Fundation provides credit solutions through technology and application processing services.

Provident Bank is celebrating its 180th birthday this week by offering customers the chance to win prizes and enter a giveaway. On Wednesday, refreshments will be served at all branches to commemorate the occasion.

Provident Bank Launches Digital Lending Capability for Small Business Customers Powered by Fundation

Program will expedite and expand small business loan approvals for Provident Bank customers

ISELIN, N.J. & NEW YORK–(BUSINESS WIRE)–Provident Bank and Fundation today announced a new digital lending solution that will enable the New Jersey-based bank to offer a new, streamlined, end-to-end, lending program for small businesses seeking a business loan or line of credit. The solution enables small businesses to apply for term loans from $15,000 to $250,000 and lines of credit from $20,000 to $150,000, through a simple application and receive funds in as little as one business day.

“Very few small or large banks accept small business loan applications online”

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According to the FDIC Small Business Lending Survey in 2018, “Very few small or large banks accept small business loan applications online”. According to the Federal Reserve, awareness of online lenders has grown, and business owners increasingly turn to these companies for funding. In 2014, less than one-in-five credit applicants (18 percent) sought financing at an online lender, rising to nearly one-in-four (24 percent) in 2017.

“We’re proud to extend our commitment to small businesses through this strategic alliance with Fundation,” said Josephine Moran, Executive Vice President, Director of Retail Banking. “This will enable us to effectively serve the growing small business market by providing the capital many small businesses need to grow and reach their full potential. In turn, this will assist these businesses to flourish and create new jobs in our communities,” concluded Moran.

Sam Graziano, CEO of Fundation, added, “Our platform was developed to deliver credit with speed and convenience to small businesses, without asking them to compromise the quality of product and pricing they expect from their bank partner. Aided with this new capability, Provident Bank will be able to offer their local small business customers a market leading lending program.”

Small business owners can apply online at Provident Bank or visit their local Provident branch to apply in-person, where they will be able to work with a Banking Center Manager to assist them with their application.

About Provident Bank

Provident Bank, a community-oriented bank offering “Commitment you can count on” since 1839, is the wholly owned subsidiary of Provident Financial Services, Inc. (NYSE:PFS), which reported assets of $9.73 billion as of December 31, 2018. With $6.83 billion in deposits, Provident Bank provides a comprehensive suite of financial products and services through its network of branches throughout northern and central New Jersey and eastern Pennsylvania. The Bank also provides fiduciary and wealth management services through its wholly owned subsidiary, Beacon Trust Company. For more information about Provident Bank, please visit or join the conversations on Facebook (ProvidentBank) and Twitter (@ProvidentBank).

About Fundation

Fundation Group LLC is a credit solutions provider focused on the small business market nationally. Fundation is a leader in providing technology and application processing services to support more than 25 super regional, regional and community banks. Fundation’s solutions enable its financial services clients to develop a digital lending capability, provide a great customer experience, drive cost efficiency into their small business lending program, and maximize the number of customers they can serve. Fundation’s services range from simple referral partnerships to customized, integrated private labeled lending programs. The Company also partners with a wide array of organizations that serve the small business market in various capacities to deliver credit products to the business community nationwide. For more information, please visit



Provident Bank
Keith Buscio, 732-590-9407

Barry Feierstein, 571-418-6387

Bridget Nagle
Sard Verbinnen & Co (SIVIC)
630 Third Avenue, New York NY 10017 | 212.687.8080 |

Case study: Citizens Bank – fintech friendly

US heavyweight pivots for digital era

Citizens Bank, headquartered in Providence Rhode Island, 50 miles south of Boston, is the 13th largest bank in the US with $158.6 billion in assets. Beyond its physical locations in 11 states, it is using digital platforms to reach customers across the nation loans and savings products.

Since undertaking an IPO spinout from RBS in 2014, Citizens Bank has moved quickly to develop digital capability across the bank including peer-to-peer (P2P), trade finance, robo investment advisory, digital small business lending and an entirely digital savings bank, Citizens Access. In its drive to digital, Citizens is working with fintech partners, developing its own solutions and sponsoring hackathons.

“We’re doing quite a bit in digital,” says Charles Beyrouthy, assistant vice-president at Citizens. “We have quite a few different programs including partnerships with fintechs and fintech initiatives.”

The bank wants to be part of customers’ lives in a way they don’t have to think about, he added. It is working on artificial intelligence to understand customers’ spending habits so it can suggest ways to save for a specific objective, like a vacation, by setting aside a reasonable amount toward that goal on each payday.

The emphasis is on making it easy for customers by presenting information they can act on rather than leaving them to research to see what is available.

“Providing capabilities is not enough; we have to provide them in a way that is intuitive.”

To understand their customers better, bank staff get beyond data to spend time with clients.

“That is often under-done by tech companies and banks,” says Beyrouthy.

In his strategy role, Beyrouthy works between fintechs and the line of business (LOB) organisations in the bank.

“We do quite a bit of due diligence and work with folks in different verticals,” he explains. “We think about how the technology could work — the LOBs are the ones who are dealing with the customers, they understand who the customers are and how the customers could use the technology. Our job is to empower the LOBs in terms of seeing the value of the technology.”

To get out on the cutting edge, the bank is reaching out to local universities, meeting with startups and sponsoring hackathons.

In July 2018, Citizens hosted a hackathon and brought in 150 innovators in different technologies and tech enthusiasts to innovate around four themes:

  • 360-degree engagement with customers by consolidating all the customer information the bank has.
  • Liquidity crystal ball — what tools can Citizens provide to help customers understand their cashflow challenges.
  • Artificial intelligence (AI) and digital engagement — how can Citizens leverage AI platforms to increase its response rate and support capabilities to its customers.
  • Social banking — how can Citizens better deliver more personalised products to its customers.

“The idea was for us to get insight into initiatives at MIT, Harvard and U Mass and see how, or if, they could be applied to the bank, how they could help us innovate and think differently about the future of banking. From that point we started talking about proofs of concept and we have had some great collaborations.”

Working with fintechs, especially new fintechs, presents some challenges for a bank in due diligence – especially around security and compliance but also the financial stability of the fintech.

“We have a cybersecurity team that looks into the risk,” Beyrouthy says, “and we are launching a broader initiative to work with fintechs that aren’t product-ready but might be in the future.”

Fintechs can offer a bank some new approaches to customer experience, he adds, including AI, chat bots, analytics and personalisation.

Charles Beyrouthy, Citizens: “We are fintech friendly and very interested in helping them grow”

“In the past six months we have talked to 200-plus start-ups; we are committed to really aggressively pursue this market. We are fintech friendly and very interested not only in partnership with them but also in helping them grow. A lot of fintechs are looking for a partner willing to coach them in how to approach the market.”

Fintechs are often focused on the front end of finance — customers and customer experience — things they understand as customers themselves.

“Customers want to interact with the bank more than most people realise,” Beyrouthy notes. “We are already involved quite a bit with our customers and I anticipate that as our technology capabilities grow we are going to be much more involved. We are very focused on being able to bring the product the customer needs at the right time, being able to personalise the experience, understand where they want to spend, how they can better spend it and develop a payment that is personalised to that experience.

“A lot of banks are not able to clearly comprehend the extent to how customers are engaged in a digital space.”

The bank’s new credit card has been very successful, although it went through a few iterations to arrive at what it offers today. When it launched, the Citizens card offered 1.5% cash back, plus another 10%, or 1.65%, if you used it once a month for six months, plus another 10% if you deposited the cash back in a Citizens account. It all got a bit too complex, and in 2017 the bank decided to simplify the card and just set the cash back at 1.8%.Nerdwallet, a financial rating site, approved.

“Power to the people!” wrote Robin Saks Frankel on the site. “If you’re carrying the Citizens Bank Cash Back Plus World Mastercard, that is. This card’s flat cash-back rate of 1.8% on all purchases puts it ahead of a slew of cards from bigger banks offering 1.5%. But the lack of a sign-up bonus or the opportunity to earn bonus rewards might cast a bit of a pall over some in the crowd… If you like the idea of simple straightforward rewards, this might be the right card for you.”

But it is in digital capabilities that Citizens is doing really well. It has a partnership with Fundation, a digitally-based lending provider to process applications for small business loans. It lets small businesses apply for a loan or line of credit through a simple online application and receive a decision the same day in most cases. For some businesses that who do not meet Citizens’ credit requirements, Fundation will provide loans itself, expanding the number of businesses that can obtain credit through their Citizens Bank application.

Peter Wannamacher, principal analyst at Forrester, approves of the joint approach.

Banks dislike turning down small business loans, since it often has other relationships with the business owner — such as business and personal checking accounts, credit cards, student loans for the business owner’s children and perhaps a mortgage. Rejecting a loan application might be very harsh for the business owner, but being able to say the bank can help her get a loan from another source can be very powerful. And if the business is growing, it may qualify for a bank loan soon.

“Banks want good relationships with SME owners and operators, whether or not that operator is someone they can lend to,” Wannamacher adds.

Sam Graziano, CEO of Fundation, says the partnership has created a model for a bank and fintech to work together.

“The results are already showing that the bank will be able to reward a broad array of small businesses with the type of borrowing experience they are coming to expect from best-in-class financial services companies.”

In 2017, Citizens launched SpeciFi, which offers consumers a unified view of their banking and investment accounts from their online banking homepage through the SigFig platform.

“We think SpeciFi is a game-changing service that will make investing more accessible to a larger set of customers, while providing an entirely personalised and integrated banking and investing experience,” states the bank’s spokesperson.

The bank charges clients 0.5% for assets under management, about half what brokers typically charge, but more than some pure robo firms, including the 0.25% SigFig charges as a standalone platform, with no charge on the first $10,000.

The spokesperson explains: “SpeciFi from Citizens Investment Services offers customers an integrated view of their bank accounts and investment accounts all in one place, with the ability to move money among accounts simply. One fee covers both the investment management service and the cost of trades.

“SpeciFi customers also have the opportunity to consult with a financial advisor by phone for no additional charge, and/or set up an in-person consultation with one of our branch-based financial advisors who can offer advice on a range of investment products and services.”

For its commercial banking platform, the bank has turned to Bottomline Technologies to offer an integrated suite of cash management and payment services that can be tailored by market or industry segment. Citizens says it selected Bottomline after extensive industry research for its intuitive navigation; simplified transactions; integrated payment workflows and user self-service capabilities.

Digital tools like Bottomline help reduce paper and friction. Beyrouthy said the bank is continually working to increase digitalisation of processes to provide better customer services and faster processing.

In April 2018 the bank announced it would work with Indian system integrator and technology provider Infosys to implement Finastra’s flagship trade finance solution, Fusion Trade Innovation. The bank says the new solution this will “enable Citizens’ corporate clients to digitise traditionally paper-based trade processes, leading to increased efficiencies and reduced costs”.

Michael Cummins, head of treasury solutions at Citizens, says the bank was also looking at other corporate banking solutions, such as syndicated lending and supply chain finance, that Finastra could provide.

The bank’s technology received some detailed coverage in the annual report where the banks said it had a focus on open architecture to adapt to a rapidly changing business environment and harness innovation. Citizens also said it would place a greater emphasis on cloud computing to drive efficiencies and re-engineer its development away from waterfall to more agile development.

By Tom Groenfeldt, editorial contributor to FinTech Futures

Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers

Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers

Program will expedite and expand small business loan approvals for Banc of California customers

NEW YORK–(BUSINESS WIRE)–Fundation announced that it has recently launched a digital lending solution in partnership with Banc of California, enabling the California-based bank to offer a new, streamlined end-to-end solution for small businesses seeking a business loan or line of credit. The solution enables small businesses to apply for loans and lines of credit through a simple online application at and receive funds in a little as one business day.

“Very few small or large banks accept small business loan applications online”

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According to the FDIC Small Business Lending Survey in 2018, “Very few small or large banks accept small business loan applications online”. According to the Federal Reserve, awareness of online lenders has grown, and business owners increasingly turn to these companies for funding. In 2016, some one-in-five credit applicants (21 percent) sought financing at an online lender, rising to nearly one-in-four (24 percent) in 2017.

Sam Graziano, CEO of Fundation, added, “Our platform was developed to deliver credit with speed and convenience to small businesses, without asking them to compromise the quality of product and pricing they expect from their banking partner. Aided with this new capability, Banc of California will be able to offer their local small business customers a market leading lending program.”

About Fundation

Fundation Group LLC is a credit solutions provider focused on the small business market nationally. Fundation is a leader in providing technology and application processing services to support more than 25 super regional, regional and community banks. Fundation’s solutions enable its financial services clients to develop a digital lending capability, provide a great customer experience, drive cost efficiency into their small business lending program, and maximize the number of customers they can serve. Fundation’s services range from simple referral partnerships to customized, integrated private labeled lending programs. The Company also partners with a wide array of organizations that serve the small business market in various capacities to deliver credit products to the business community nationwide. For more information, please visit

About Banc of California, Inc. (NYSE: BANC)

With over $10 billion in assets, and 32 offices throughout California, Banc of California is the only full-service, midsize bank focused exclusively on California. They provide innovative banking and lending products to diverse businesses, entrepreneurs and communities throughout California.


Barry Feierstein, 571-418-6387

Fundation Secures $120 Million Credit Facility from SunTrust Bank

Fundation Secures $120 Million Credit Facility from SunTrust Bank

Additional Credit Facility Provides Funding to Support Acceleration of Company’s Growth

NEW YORK–(BUSINESS WIRE)–Fundation, a leading digitally-enabled lender and credit solutions provider, today announced that it has secured a $120 million asset backed credit facility from SunTrust Bank. Waterfall Asset Management was included in the facility as a Class B lender. This additional credit facility further enhances Fundation’s capacity to extend credit to small businesses across the United States.

Sam Graziano, CEO of Fundation said, “Garnering the support of one of the leading super regional banks engaged in asset backed finance is another milestone for our Company. As we continue to bolster the size and quality of our capital base, we can become an even stronger ally to our strategic partners and their small business clientele.”

Fundation focuses on delivering credit to small businesses through various forms of strategic partnerships, including banks, other financial institutions, and various service providers to the small business market. Fundation currently has strategic partnerships with Regions Bank, Citizens Bank, the BancAlliance network of community banks, the Minority Business Development Agency and a host of other partners.

Fundation, majority-owned by New York based private equity firm Garrison Investment Group, performs origination services for regional and community banks as well as originates small business loans and lines of credit for its balance sheet. Fundation maintains a separate $120 million asset backed credit facility with Goldman Sachs Bank USA which was secured in August of 2016, and a $35 million facility with MidCap Financial which was secured in March of 2017.

About Fundation

Fundation Group LLC is a digitally-enabled lender and credit solutions provider. The Company develops integrated small business lending solutions with banks, enabling them to optimize their credit delivery process on an omni-channel basis and maximize customer retention. The Company also partners with a variety of organizations that serve the small business market in various capacities to deliver small balance commercial credit products. For more information, please visit

About SunTrust Bank

SunTrust Banks, Inc. (NYSE: STI) is a purpose-driven company dedicated to Lighting the Way to Financial Well-Being for the people, businesses, and communities it serves. SunTrust leads onUp, a national movement inspiring Americans to build financial confidence. Headquartered in Atlanta, the Company has two business segments: Consumer and Wholesale. Its flagship subsidiary, SunTrust Bank, operates an extensive branch and ATM network throughout the high-growth Southeast and Mid-Atlantic states, along with 24-hour digital access. Certain business lines serve consumer, commercial, corporate, and institutional clients nationally. As of March 31, 2018, SunTrust had total assets of $205 billion and total deposits of $162 billion. The Company provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage, and capital market services. Learn more at


Barry Feierstein, 571-418-6387

Citizens Bank and Fundation Mobilize Credit Delivery

Citizens Bank and Fundation Mobilize Credit Delivery

MAY 16TH, 2018

While Citizens Bank and Fundation are certainly not the first bank and fintech company to work collaboratively together, theirs is unlike any other, both parties say, because of the relationship that exists between the two organizations.

Providence, Rhode Island-based Citizens, a top-20 U.S. bank at $152 billion in assets, partnered with Fundation, a fintech firm in Reston, Virginia that focuses on credit delivery to improve the efficiency and turnaround time for small business loans under $150,000.

Fundation’s technology serves as the entire front end, essentially a white-labeled online application, for Citizens’ commercial lending line of products, providing a technology platform that includes underwriting, closing and engagement tools, and features a decision engine that, based on certain criteria, determines “up front” which loan goes to Citizens and which to Fundation, according to Jack Murphy, president of the business banking division at Citizens.

“What makes the partnership unique is there’s a fair amount of folks in this space who outsource this type of lending to the partner,” Murphy said. Instead, the application process is integrated into Citizens’ own digital platform, a top priority for the bank, Murphy said.

“We wanted to integrate (it) into our technology.”

Citizens and Fundation won Bank Director’s Best of FinXTech Partnership award, presented May 10 at the FinXTech Annual Summit, held at The Phoenician resort in Scottsdale, Arizona.

The platform allows for an entirely electronic application process, and enables Citizens’ lending team to physically go to and visit its small business customers to start or complete that application. Customers can also begin the application process in a branch, and finish at home, “or in their car,” Murphy joked, though he doesn’t advocate driving and applying for a commercial loan at the same time.

“It’s really become the front-end to our core underwriting system,” Murphy said.

Fundation has multiple bank clients, but its credit delivery platform uses data and a decision engine to automate much of the decision-making framework that many banks have and still use when reviewing applications. It also simplifies the compliance assessment, including the Customer Due Diligence (CDD) final rule that was developed just two years ago and became effective in May 2018.

There is automated scoring in approving small loans, allowing Citizens to focus its human capital on other strategies, like bigger, more intensive applications and projects that need more careful review while also reducing paperwork that can be cumbersome. It also has in some ways upended the entire underwriting process—they use bank statements instead of financial statements as part of the application process, and the technology determines which loan goes to the bank and which goes to the partner automatically up front.

The technology has only been available to all customers since the end of March 2018, but getting to that point involved months of due diligence, whittling down a list of nearly two dozen other firms before ultimately selecting Fundation.
“We took about a year to research who might be the best partner for us,” Murphy said, noting that it all began with the goal of improving the customer experience through a digital platform.

The board considered whether to buy, build or partner with a fintech, but ultimately there was only one choice.
“The fintechs have not had the balance sheets or cost of funds or the customer bases that the banks have, so partnership is really the best way for the two companies to business,” Murphy said.

Culture and cohesion between the two companies was half the driving force behind the decision to choose Fundation, Murphy said, in a crowded and competitive fintech market. Murphy said they wanted to partner with somebody who was “not just a tech company,” but a “partner that has a similar vision.”

Like other banks, Citizens has several relationships with fintech companies which provide other services, like SigFig, for instance, a tech-based personal investment platform. But Fundation offered something that was new to the bank, and has in just a short time already proven its worth.

It’s shortened the time from application to credit delivery to as little as three days, which in previous generations could have taken weeks, and generated “many multiples” of increased demand since a series of pilots with the software last fall.

The transformation of this credit delivery, he said, is far more than what some banks have done, which Murphy described rudimentarily as simply taking a paper-based loan application and converting it to an online webform.
“That’s not digital,” Murphy said. “Digital is literally the entire experience being electronic.”

Citizens wanted to make its application process fully digital, Murphy said, which has reduced costs and improved efficiency for the bank. And that result has not only transformed the bank’s commercial lending process, but how it strategizes its future.

“This is for us, I would say step one in a journey of multiple products and multiple ways of making it easier to do business with the bank, not vice versa,” Murphy said.

2018 Best of FinXTech Awards Finalists Announced

2018 Best of FinXTech Awards Finalists Announced

Bank Director and Promontory Interfinancial Network Announce Finalists In Three Categories

WASHINGTON, March 27, 2018 /PRNewswire/ — Bank Director and Promontory Interfinancial Network have announced the finalists for the 2018 Best of FinXTech Awards, which recognize institutions that exemplify how collaborative efforts can lead to innovative solutions and growth in the banking industry. This year’s Award categories included Startup Innovation, Innovative Solution of the Year and Best of FinXTech Partnership.

Startup Innovation Finalists

  • Seacoast Banking Corp. + SmartBiz Loans: Stuart, Florida-based Seacoast partnered with online lending marketplace and platform SmartBiz, of San Francisco, to take the bank’s Small Business Administration loan business nationwide.
  • Radius Bank + Alloy: Radius Bank partnered with FinTech Alloy to help transform into a digital first bank. By using Alloy’s smart identity platform and API, Radius can deliver a superior experience to their new customers signing up online – offering an instant decision in 98% of the cases, whilst reducing onboarding fraud by 50%.
  • ChoiceOne Financial Services + AutoBooks: ChoiceOne Financial Services of Sparta, Michigan, expanded its services to small business clients by partnering with Detroit-based business banking platform AutoBooks to offer treasury services.
  • Pinnacle Financial Partners + Built: Pinnacle partnered with Built, a fintech firm focused on construction lending, to streamline the bank’s construction loan management process. Both companies are based in Nashville, Tennessee.

Innovative Solution of the Year

  • U.S. Bancorp + SpringFour: Seeking to help mortgage customers that were falling behind on their loan payments, U.S. Bancorp integrated Chicago-based SpringFour into the bank’s mortgage servicing operations and website.
  • CBW Bank + Yantra Financial Technologies: CBW Bank became the first bank in the U.S. to publish its APIs by working with Yantra Financial Technologies to launch the Y-Labs Marketplace. The Y-Labs Marketplace is an initiative that enables banks to rapidly introduce new payments, products and services with industry specific benefits.
  • USAA + Clinc: USAA partnered with the artificial intelligence platform Clinc, based in Ann Arbor, Michigan, to pilot an Amazon Alexa skill that helps USAA members access information about account balances, transactions and spending patterns.

Best of FinXTech Partnership

  • MVB Financial Corp. + BillGO: MVB and BillGO, based in Fairmont, West Virginia, and Fort Collins, Colorado, respectively, partnered to develop a real-time bill payment solution that improves the financial lives of more than 5 million Americans.
  • TCF Financial Corp. + D3 Banking Technology: As part of TCF’s digital transformation, the Wayzata, Minnesota-based bank leveraged D3’s digital banking platform to improve the customer experience, including a re-designed and intuitive mobile banking app; easier ways to deposit checks, pay bills and transfer money; and advanced budgeting and savings tools.
  • Citizens Financial Group + Fundation Group: Citizens Financial, of Providence, Rhode Island, partnered with Fundation, of Reston, Virginia, to digitize the credit delivery process across all channels for small business loans and lines of credit.

The winners of the 2018 Best of FinXTech Awards will be announced at the FinXTech Annual Summit, brought to you by Bank Director and Promontory Interfinancial Network, in Scottsdale, Arizona on May 10, 2018. This event brings together senior executives from across the financial space to focus on new growth strategies and opportunities available to banks today.

About Bank Director
Since 1991, Bank Director has served as a leading information resource for the directors and officers of financial institutions. Through its monthly Bank Director magazine, executive-level research, annual conferences, and its website,, Bank Director reaches the leaders of the institutions that comprise America’s banking industry. Bank Director is headquartered in Brentwood, Tennessee. More information can be found at

About Promontory Interfinancial Network, LLC
Chosen by more than 3,000 financial institutions nationwide, Promontory Interfinancial Network is the leading provider of FDIC-insured deposit placement services. Banks of all sizes can use the company’s balance-sheet management solutions to build multi-million-dollar relationships, reduce collateral requirements, purchase funding, manage liquidity, and buy or sell loans.