Ivy Bank, the digital-only subsidiary of Cambridge Savings Bank, recently surpassed $1 billion in deposits. CEO Ryan Bailey said growth is accelerating as Ivy works to raise its $2 billion mark.
Ivy Bank, the national digital banking subsidiary of Cambridge Savings Bank, has reached $1 billion in deposits in just over three years, despite increasing competition in the market.
“This is more than our team expected, so we’re pleasantly surprised,” CEO Ryan Bailey said in an interview. “I’m really proud of the team.”
As for Ivy’s $2 billion, Bailey believes it will happen sooner. “We’re seeing growth accelerate,” he said. “Competition is increasing. Many (institutions) want to launch digital banks and enter this space… (but) we have a great team and we are achieving great results.”
Ivy Bank reached the $1 billion threshold about four months after Genius Bank, the digital arm of Los Angeles-based $5.5 billion SMBC ManuBank, surpassed the deposit threshold. About half of Ivy’s deposit growth occurred in the past 12 months. In August 2023, Ivy reported having $530 million in deposits.
Cambridge, a $7.1 billion-asset depositor-owned mutual bank founded in April 1834 in Cambridge, Massachusetts, has announced its overriding mission in 2021 to attract deposits from across the country that can be loaned in the highly competitive Boston area. Ivy was launched in June. “We have this ability that really helps us lend locally,” Bailey said.
ryan bailey
More than 100 banks operate in the Boston metropolitan area, according to Federal Deposit Insurance Corporation statistics, but Cambridge Bank appears to hold its own. As of June 30, total loans totaled $5.8 billion, an increase of 41% since Ivy’s launch.
“We’re very strong in lending,” said Mr. Bailey, who joined Cambridge as CEO in March. “These dollars are being put to good use.”
Ivey serves more than 14,000 depositors in 49 states, including a growing number of younger customers, Cambridge said. “We are extremely proud of the exceptional digital experience and supportive financial tools we have built for Ivy Bank customers,” Kim Strout, Cambridge First Vice President, said in a press release. “We aim to further enhance our customers’ financial journey by enhancing their toolkit of resources.”
Cambridge may also be looking for physical growth. Mr. Bailey said the bank is “ready for any type of opportunistic acquisition in the market.” “Cambridge Savings Bank continues to explore opportunities as the banking industry consolidates.”
Ivy’s growth comes at a time when the industry as a whole is struggling to maintain deposit balances. Indeed, since summer 2021, efforts to attract deposits have stalled due to a combination of outflows of pandemic-era stimulus funds, rising interest rates, and a series of bank runs last spring. Thanks to Ivy, Cambridge has increased deposits by 26% to $5.6 billion over the past three years. According to the FDIC, industry-wide deposit growth reached 0.4% over the same period.
A tight deposit market may help explain the recent increase in banks launching domestic digital subsidiaries. In June, Kansas City, Missouri-based $1.4 billion Bank Midwest announced OnePlace.bank, which provides medical, dental and veterinary services. In April 2023, the $7.8 billion-asset Liberty Bank, located in Middletown, Conn., launched a digital-only owners bank for small business entrepreneurs. Genus began operations shortly thereafter, in June 2023.
“Digital brands are able to align their brands with the core values and needs of specific audiences,” Nathaniel Hurley, co-founder and CEO of financial technology provider MANTL, said in an email. , can be a great way to reach new markets and attract new demographics,” he wrote in an email. . “This desire for customization and personalization is why some digital-only banks are serving niche market segments such as technology founders, nurses, and women entrepreneurs.”
Nathaniel Hurley
The technology we need is becoming more accessible. For banks equipped with the latest online account opening capabilities, the next step in establishing a digital brand is establishing their own branch in the core, Hurley wrote. A “healthy marketing budget and strong digital marketing resources, whether internal or external,” can help attract quality traffic.
Bailey credited Ivy’s success with a “dedicated in-house digital marketing team that collects data on a daily basis and is able to adapt strategies to maximize performance and results.”
MANTL is a leader in many community banks, including the $9 billion-asset Flushing Financial in Uniondale, New York, the $1.5 billion-asset Horicon Bank in Horicon, Wisconsin, and the $2.8 billion-asset Midwest Bank Center in LeMay. has been working on the national digital brand initiative. , Missouri.
While national digital brands represent a mature strategy dating back to the early 2000s, “there is still a significant market opportunity for digital banks,” Hurley wrote. “This reflects consumer preference for digital, on-demand experiences. Consumers want services that fit their digital lives, and banks are no exception.”
To date, Ivy’s products consist of certificate and savings accounts, as well as money management tools that allow customers to aggregate their accounts, track spending, create budgets, and check their credit scores. . Bailey said Ivy is considering “the possibility of adding other products and services” to its menu, but did not provide details.
“When switching banks or opening a new account, customers are typically attracted to the most basic products, but once you lock in that new customer, an expanded product set can increase share of wallet. Hurley wrote.
