Cross River Bank secures $100M funding for fintech platform

Cross River Bank completed a funding round Thursday for $100 million the institution said would help continue improving the banking platform it offers fintechs to stay compliant with consumer protection regulations.

“This gives us the opportunity to continue to grow and invest in our future, and that includes continuing to update our technology, continuing to build robust compliance infrastructure, and continuing to enable us to invest in our ability to serve our clients from a technology standpoint, an infrastructure standpoint, and a talent-acquisition standpoint,” Gilles Gade, Cross River founder, CEO and chairman, said in an interview.

The global investment firm KKR led the round as a first-time Cross River investor with $75 million.

Gilles Gade, founder, CEO and chairman of Cross River Bank

The Fort Lee, N.J., bank also received funding from new investors such as CreditEase and Lion Tree Partners, and returning investors Battery Ventures, Andreessen Horowitz and Ribbit Capital.

Ryan Gilbert, a partner at Propel Venture Partners, said Cross River is “one of a handful of institutions that understand the role of the bank is to be a service provider” to fintechs, and a custodian.

"They are doing those very well,” he said. “My understanding is that they’ve invested significant resources in technology to make it easier for fintechs to partner with them and at the same time, they’re taking their compliance role very seriously.”

The $1.18 billion-asset Cross River counts as clients Affirm, Best Egg, Coinbase, Rocket Loans, Transferwise and Upstart. Gade said fintechs started approaching the bank a decade ago.

“We saw that the large banks were retreating from providing services,” he said. “Having a bank service these fintechs is the best way for the consumer to continue to be protected.

“We’re big proponents of innovation, but at the same time, we’re big proponents of the regulatory environment and the ability to preserve the integrity of the compliance around consumer protections. That can only be done, we feel, under the auspices of a bank infrastructure.”

Gade said Cross River's currently employs 40 people as part of its compliance team and expects that to grow with the recent investment round. Cross River’s efforts won’t stop with compliance, he added.

“If we’re just providing compliance, that’s not going to be enough,” he said. “We need to be able to develop technology to be able to cater to those fintechs. We’re providing them the ability to connect via APIs to the payments rails, providing virtual accounts and a slew of different services.”

While Cross River counts itself among the few banks that work directly with fintechs, Gade said it’s important to differentiate what it does compared with others. Some banks have sought to partner with fintechs as a way to access new customers. Cross River shies away from that approach.

“We’re not competing with our clients,” Gade said. “That is something we’re trying to stay as far away as possible. We just want to deliver them the best products possible to enable them in turn to present the best service possible to their customers.”

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