As she designed and built a new bank that will launch Monday, Lauren Sparks was careful not to overly rely on any one provider.
“We didn’t buy a whole Jack Henry system and turn on a switch,” said Sparks, the founder and CEO of Agility Bank, in an interview. “We put pieces together that were meaningful to us.”
Agility Bank will open in Houston under a national charter from the Office of the Comptroller of Currency, after pandemic-related delays pushed its start date back from 2020. The organizers of Agility Bank applied with the FDIC in April 2020 and received conditional approval six months later.
Its launch is notable for a couple of reasons.
For one, it is the first minority depository institution to be women-owned and -led by design, Sparks has determined through extensive research and conversations. Other women leaders of MDIs, she says, have inherited their role. First Women’s Bank, a de novo in Chicago targeting women-owned businesses, is owned and led by women but has a state charter and is not an MDI. Agility’s mission is to serve female entrepreneurs but will be inclusive to all small-business owners.
For another, it represents one approach MDIs, or business-oriented banks more broadly, can take to serving their customers by emphasizing technology and limiting the physical footprint.
“MDIs can’t afford not to focus on digitizing the customer experience,” said Nicole Elam, president and CEO of the National Bankers Association, in a statement. “Adopting technology solutions and platforms that will help acquire and retain younger generations is critical to Agility’s success and the ability of all MDIs to survive and thrive in an era of digital disruption.”
There will be one branch to start, in the The Heights neighborhood in Houston, and future branch growth will be modest. Digital lockers that open by scanning a QR code, provided by a company called Package Center, are installed in the vestibule of that branch, so clients can pick up documents from their banker at all hours. Sparks and her team chose digital lending platform Numerated to underwrite loans between $5,000 and $500,000, which the bank calls its A2B Loan Express, for “Agility to Business.” They selected DCI, or Data Center Inc., to be the bank’s core processor; and they’re using customer service technology provider Glia for communication, including live chat, video conferencing and cobrowse. Virtual safe deposit boxes, from a company called Virtual StrongBox, let customers store important documents online.
“You don’t have the same limitations if you are working around a legacy core,” said Sparks. “We started from scratch because we wanted to build our own tech stack and culture and didn’t want to acquire either from someone else.”
She was drawn to core provider DCI because of its collaborative approach, and the idea of video conferencing because it extended the bank’s hours of availability. She points out that virtual safe deposit boxes are important in Texas, where hurricanes threaten physical storage.
“We haven’t programmed anything from the ground up,” said Sparks. “We’ve taken existing technology and tried to use it in different ways or more progressive combinations. That’s our innovation.”
This strategy is particularly suited to de novos.
“In many respects, any new bank has a natural advantage today because they can begin with a much more modern technology stack and team in how they think about their approach to technology, and the operational and customer experience advantages that can give them,” said Carey Ransom, the managing director of BankTech Ventures, a venture capital fund with banks as limited partners.
Corey LeBlanc, co-founder and CEO of Locality Bank, a de novo in Fort Lauderdale, Florida, echoed this sentiment in a March email.
“When you start to tear down the walls of the traditional bank operating system, and you actually have control of how to rebuild it, the financial institution gains a significant advantage,” he said. “This advantage allows you to control cost, product and technology selection, ROI, and a long list of other things that typically stifle innovation and modernization at most banks.”
The digital-first approach may be particularly welcome in a large city.
“If you live in a city like Houston and have to travel an hour each way to sign a piece of paper, you say wow, this doesn’t make sense, and the banker side of me goes, I know there is technology that means we don’t have to do this,” said Sparks.
“I think the fact that they’re launching in Houston is smart,” said Ransom. “It’s a city on the rise in a state that is attracting more people and business than most others.”
Sparks has firsthand experience in the small-business side as the founder of 3PR, a Houston risk management firm whose clients include banks and fintechs. She was also a community banker for nine years.
“I’ve been in the middle of watching what is happening on the bank side,” she said. “I have a unique perspective around what business owners want and need and what bankers ought to be able to deliver to them.”