HMBradley ends the waiting list after getting a new sponsor bank

Since switches to invite-only mode 16 months ago HMBradley said it has secured two new partnerships that will enable the neobank to eliminate the waiting list and open the platform to new users.

The fintech tapped New York Community Bank, a division of Flagstar Bank, as its new sponsor bank, replacing Hatch Bank, a San Marcos, Calif.-based digital bank that had to curtail HMBradley’s growth in July 2021 after struggling to keep up with user deposits.

HMBradley also announced a new partnership with UK-based Thought Machine, a cloud-based core banking platform that has become tapped to overtake JPMorgan Chase’s retail network.

HMBradley said the partnership with the UK fintech, which enables the move from overnight batch transaction processing to real-time ledger capabilities, will help it roll out new products faster.

“We’re excited to be able to open our doors again and not worry about being limited,” said HMBradley co-founder and CEO Zach Bruhnke.

The Santa Monica, Calif.-based fintech’s new partnership means it can finally allow more than 25,000 waitlisted customers to open accounts, joining the platform’s 10,000 existing members, he said.

“One of the biggest reasons we ended up with a bank as big as NYCB is that they’re an $87 billion institution. They’re not small potatoes,” Bruhnke said.

Finding a new sponsor bank that could keep pace with fintech growth was crucial, said Bruhnke.

“We didn’t want to be surprised again,” Bruhnke said, referring to the fintech’s previous sponsor bank’s request that it slow the pace of fundraising.

Since HMBradley’s benefits are tied to user deposits, the average account holder has more than $40,000 in their account, Bruhnke said, a number that sets it apart from other neobanks that target the paycheck-to-paycheck demographic.

Fintech incentivizes savings by offering a 3% annual return for account holders who save at least 20% of their direct deposit in addition to opening an HMBradley credit card.

When the fintech started looking for a new sponsor bank, Bruhnke said it was clear early on that the firm would need a bank with a big appetite for deposits.

NYCB, a major mortgage bank, fit that bill, Bruhnke said.

“They said, ‘We’ll give you billions in capacity,’ which gives us room to grow,” he said.

Since launching in 2019, HMBradley has raised nearly $600 million in deposits, said Bruhnke, who added that he hopes to reach $1 billion this year.

Emphasis on automation

Following the new partnerships with NYCB and Thought Machine, HMBradley said it is raising the cap on which customers can earn interest on balances, from $100,000 to $250,000.

Fintech is also exploring ways to add automation to the platform, Bruhnke said.

“One of the things we learned from customers was that they want automation,” he said. HMBradley is beta testing a feature that allows users to automatically move funds into a savings plan whenever a specific transaction occurs.

“We give the consumer the ability to build whatever they want,” Bruhnke said.

The platform is also exploring ways to implement shared savings plans that would allow friends and family members to add money to a user’s account.

“Automation and sharing that automation — that’s really where everything we’re focused on is headed,” Bruhnke said.