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Betterment-nbkc joins rush of robo-bank partnerships

Nbkc Bank, which has carved out a niche for itself with its multiple partnerships with fintechs, announced Tuesday it has signed a partnership to provide checking to Betterment, the leading independent robo-adviser.

The Kansas City, Mo., community bank already provides federally insured checking and savings accounts to Joust, Truebill, and Tip Yourself. With its latest foray, nbkc is dipping into the wealth management industry, where leading firms such as Wealthfront and the Ron Carson Group have launched banking services to help customers manage their assets in one place.

Brian Unruh, the president and CEO of the $719-million-asset nbkc, said in an interview that he views the lender’s fintech partnerships as more than just the “bank of record” for those startups.

“We don't think of ourselves like that, per se, because we like to talk about building a deeper relationship because of the way we operate our bank,” Unruh said. “With most, if not all, of the existing partnerships we have, we do have something deeper. We're working on either a deeper integration into their technology or vice versa, and where we can help bolster each other's businesses in different ways.”

Unruh acknowledged “it’s yet to be seen” how deep nbkc’s relationship will be with Betterment, which has $18 billion under management, but said that both companies are working to solve customer pain points with traditional banking accounts, mostly with fees.

“That's what's exciting,” he said. “When we get a whole bunch of smart people in the room and start talking about future plans and what could be, we love to ask the question, ‘Wouldn't it be cool if ... ?’ and then try to go solve that.”

Nbkc's fintech deposit relationships

For now, the Betterment checking account will be available later this year to nearly 500,000 customers through the robo-adviser’s mobile app. Customers today can sign up to be placed on a waiting list for the account, which has no account fees, no overdraft fees, no minimum balances nor any monthly maintenance fees. Betterment said it will reimburse all ATM fees.

Customers also receive a Visa-branded debit card issued by nkbc.

Mike Reust, chief technology officer at Betterment, said customer feedback drove the creation of the checking account, along with a new high-yield savings account with an 2.69% APY and no minimum balance.

“We actually started this process late last year when we launched Smart Saver, which was our initial foray into low-risk investing,” he said. “We got to see how people were using it and learned what was working for them and what wasn’t working for them and that feedback led us to developing these new products.”

Betterment joins the likes of Wealthfront, Marcus by Goldman Sachs, Personal Capital and Ron Carson Wealth as wealth management firms that have launched banking products to complement their investment services.

Marcus offers a savings account with a 2.15% APY. Wealthfront markets a savings account with a 2.57% rate, which has reportedly brought in more than a $1 billion in assets since its launch in February. The firm works with Green Dot for its checking product. Ron Carson in May launched traditional checking and savings accounts with Galileo Processing, a manager of prepaid card programs.

For each firm, part of the idea behind the banking products is to give customers the ability to bring all their assets to one place and more easily move earnings income into investments.

While consumer surveys have consistently shown the difficulty of switching banks, Reust argues its customers will sever relationships with their current providers if Betterment’s product is “done right.” That’s a reason the checking account is not immediately available, he said.

“It’s not just about giving people a debit card to spend funds anywhere in the world,” Reust said. “The checking account is just a little bit more complex to build out.”

As for the high-yield savings account, Betterment is working with several banks because it wanted to offer more than the standard FDIC insurance of up to $250,000, Reust said. The savings account is insured on accounts of up to $1 million.

Betterment is working with Citigroup, Barclays, Valley National Bank, Seaside National Bank & Trust and the Georgia Banking Co. to hold those deposits.

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