26 April 2017
Visit EBAday.com

Customers Bank sells digital unit BankMobile for $175m

08 March 2017  |  3929 views  |  0 Couple buying smartphone

BankMobile, a digital banking startup for millennials and the underbanked, is being sold by parent Customers Bank to Florida-based Flagship Community Bank for $175 million in cash.

The deal includes all of BankMobile's 1.7 million student checking accounts, around $500 million of non-interest bearing deposits and technology and intellectual property. After expenses, Customers is expected to book a pre-tax gain of around $100 million.

The brainchild of Customers Bank CEO Jay Sidhu and his daughter Luvleen Sidhu, BankMobile launched in beta at the end of 2014, following a path first trod by Simple by offering traditional services through a mobile platform.

However, unlike Simple and other neo-banks, BankMobile had the advantage of Customers Bank's relationship with Higher One, a firm that distributes college students’ financial aid reimbursements via debit card accounts. Customers Bank sits behind Higher One, servicing millions of students who then move on once they have graduated.

This relationship helped BankMobile build up an impressively large customer base in just a couple of years.

But the success has made its sale necessary. Sidhu previously revealed that because the firm's revenues are mostly drawn from debit card interchange fees, Durbin Amendment restrictions meant that Customers would not be able to profitably run BankMobile once the consolidated assets of both exceeded $10 billion.

Therefore, Customers has been talking to various potential buyers, before settling on Flagship, a small Florida outfit with just 26 employees, compared to BankMobile's 220.

Says Sidhu: "Customers is pleased to execute the sale of the BankMobile division to Flagship so that BankMobile can continue to serve its target markets -- college students, middle income Americans and underbanked Americans."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Money20/20: BankMobile asks millennials to help build a bank for young people

Money20/20: BankMobile asks millennials to help build a bank for young people

04 November 2014  |  12255 views  |  1 comments | 12 tweets | 13 linkedin

Related blogs

Create a blog about this story (membership required)
visit dh.comFind out moreVisit capgemini.com

Top topics

Most viewed Most shared
hands typing furiouslyDoes the Buck Stop with GameStop?
17772 views 0 | 3 tweets | 14 linkedin
hands typing furiouslyBitcoin ETF Bites the Dust, Needs More Sec...
12787 views 0 | 7 tweets | 7 linkedin
BBVA runs live funds transfers over RippleBBVA runs live funds transfers over Ripple
11809 views comments | 31 tweets | 20 linkedin
Alipay and WeChat near $3 trillion payments milestoneAlipay and WeChat near $3 trillion payment...
9932 views comments | 35 tweets | 38 linkedin
Coinbase plans Ethereum messaging appCoinbase plans Ethereum messaging app
9040 views comments | 14 tweets | 15 linkedin

Featured job

to 120K base, £300K ote, stock options
London, UK

Find your next job