Small-bank rarity: A digital launch that happened on time

Citizens Bank of Edmond isn't looking for fast growth or a swell of deposits. But the bank hopes that a recently — and rapidly — completed technology project will improve its digital customer experience and draw customers from around the country.

The $350 million-asset bank announced Aug. 1 that it had launched online account opening for consumers in conjunction with the digital-banking platform Narmi. The bank plans to start opening business accounts online in September.

The project took 72 days, finishing right on schedule. Such a swift turnaround "was a surprise to us," said Jill Castilla, president and CEO of Citizens Bank of Edmond, which is located in a suburb of Oklahoma City.

Castilla can't recall any project involving a vendor wrapping up on time in her 20-plus years in the industry. "Small banks are dependent on third-party vendors to deliver great customer experience," she said.

This heavy reliance on outsiders can lead to headaches for smaller institutions that lack clout.

"I have frequently heard [smaller banks] talk about their frustrations being at the end of the line with no control," said Mark Schwanhausser, director of digital banking at Javelin Strategy & Research. "We hear frequent gripes about vendors saying, 'It's on the road map.'"

Quick implementation is important with account-opening technology, as executives at smaller institutions may wear many hats and are eager to move on to other priorities, Schwanhausser said. But he said that there are more important considerations for banks when evaluating an account-opening vendor. They include resources that help applicants choose suitable products, transparency about pricing and fast onboarding to follow fast account-opening.  

"Speed-to-market when launching an online account-opening capability does matter in the midst of today's war for deposits, but not at the sacrifice of compliance, profitability or long-term growth considerations," said David Schiff, head of retail and consumer banking at consulting firm West Monroe.

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Castilla and Narmi co-founder Nikhil Lakhanpal met at the beginning of the pandemic when speaking on a panel together. Lakhanpal reached out after the collapse of Silicon Valley Bank in March to pitch his services.

"He said, 'This is the perfect opportunity for you to let people bank with you from around the country. I know you have difficulty doing that because of your size and sophistication of your processes, but Narmi can help you do this,'" Castilla said. "He helped open my mind. Narmi and Nikhil are not condescending when it comes to a one-location, $350 million bank in the middle of Oklahoma."

Narmi serves regional and community financial institutions, typically with up to $50 billion of assets.

Online account-opening at Citizens had been a predominantly manual process, according to Castilla. The bank had to exchange paperwork with customers in person or over email. The new process is automated, from know-your-customer verification to decisions on whether to approve accounts.

The goal is to broaden accessibility to Citizens Bank. "We're not out there striving to be a national bank," Castilla said, "but we want to provide access to those nationally to bank with us."

Lakhanpal credits the bank's openness to new technology as one factor in what proved to be a smooth product launch.

"A direct quote from my implementation team is, 'The Citizens Bank of Edmond team runs like a well-oiled machine. They were open-minded, unafraid to learn something new and adjust to today's status quo. Everyone owned each of their tasks and clearly communicated within our project management tool,'" he said.

The bank chose Narmi for a number of reasons. It evaluated Narmi's user experience, core integration and compliance with Bank Secrecy Act and anti-money-laundering regulations when making its choice. The promise of product updates every month was also appealing. 

Online business-account opening may be a differentiator for Citizens when the service rolls out next month. Javelin research found that of the 25 largest financial institutions serving the small-business market, 15 offer digital account opening for business checking accounts. In 2021, that number was six.

"We're seeing a lot of interest on this front," said Schwanhausser.

Meanwhile, Citizens is expanding its reach in other ways. On Aug. 15 it is scheduled to debut Roger, a digital-only bank for members of the military — an audience that Castilla herself is familiar with, having served in the Army. One feature that the bank believes will set Roger apart is an instant direct deposit form, signed by Castilla, that recruits can give to their recruiters or military entrance processing station to receive their salaries right away. For now, Citizens will hold the funds deposited into Roger, but the eventual plan is to partner with other financial institutions serving the military and have them put their customers' deposits on their own books.