Ally Financial’s Ally Bank, one of the oldest digital-only banks in the US, may be branchless, but it’s not a neobank. In addition to credit and savings accounts, Ally offers mortgages and trading accounts.
We spoke to Dinesh Chopra, Ally’s head of strategy, about his outlook on M&A, partnering with other fintechs, and the Ally’s venture investing.
In April, Ally announced it had teamed up with mortgage startup Better.com. Ally’s venture arm also invested in Better’s Series C fundraising round.
A bank can expand its product lineup in a few ways. It can build in-house, buy a company that has already built that product, or partner with a fintech. “We as a company wrestle with that decision on a day-to-day basis,” Chopra said.
“We also look at what our exit strategy is. Because when you enter into a partnership, you always have to plan for the worst,” Chopra said.
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Ally Financial’s online bank is one of the oldest digital banks in the US. But it’s not a neobank.
It may be branchless, but Ally has a banking charter, so it’s regulated like any other retail bank. Most neobanks don’t have bank charters, instead partnering with banks like Bancorp or GreenDot, which provide the core banking processing and FDIC insurance.
Ten-year-old Ally Bank is nevertheless part of the cohort of digital-only banks that includes startups like Chime — which are attracting VC backing and gaining users and deposits.
Ally is leaning on adding new products for growth, as startup neobanks lure customers with high-yield savings accounts and banking giants build out their own digital capabilities — and how exactly it goes about doing that is a critical question.
“We believe that there is a structural tailwind behind digital banking,” Dinesh Chopra, chief strategy and corporate development officer at Ally Financial, told Business Insider.
“Digital banking overall is only 8% of the market,” he said. Legacy players like Chase, Bank of America, Wells Fargo, and Citi account for most of the country’s consumer deposits.
Chopra heads up Ally’s corporate strategy team, which includes oversight of mergers and acquisitions, strategic partnerships with fintechs, and Ally’s venture capital arm.
He’s responsible for Ally’s strategic roadmap, deciding when to build new products and when to partner with or acquire fintechs. Prior to joining Ally in 2017, Chopra was head of strategy for Citigroup’s retail bank as well as its mortgage and payments businesses.
As of the first quarter last year, Ally was the 15th largest bank in the US in terms of total assets, according to the Federal Reserve.
Chopra said consumers want more than high-yield savings — they want to borrow, save, invest, and protect their money.
“We’re trying to get into other verticals like wealth management,” said Chopra. “I think to have a sustainable banking practice, you have to have a more holistic value proposition than just one product.”
Deciding when to build, partner, or buy
A bank can expand its product lineup in a few ways. It can build in-house, buy a company that …read more
Source:: Business Insider – Tech