Luvleen Sidhu on founding and managing BM Technologies

Describe your role and your journey into fintech – is there a story there?

I started the first day of my career in 2008 at Lehman Brothers. Witnessing the fragility of the traditional financial landscape instilled in me a passion for using digital means to create a strong economic foundation for millions of Americans. Before founding BM Technologies (BMTX), I was a management consultant at Booz & Co. in their financial services and also worked as director of corporate development at Customers Bank.

I founded BMTX in 2015 with a mission to empower millions of Americans financially by providing a more affordable, transparent and consumer-friendly banking experience. Even more, I want to help Americans achieve financial stability by engaging the millions of unbanked and underbanked individuals in the United States. Many of these people are locked out of the system by monthly fee requirements, and have an inherent skepticism about traditional banks. By offering a low-to-no-fee digital banking platform focused on technology and financial empowerment, we aim to provide an alternative. I believe in breaking the traditional mold and partnering with global brands and universities to deploy financial products that promote inclusion and build wealth that enables real people to live better lives.

What is it about your chosen sector that attracted you?

The inspiration for BMTX came when I walked into a bank branch for the first time to open a checking account. I was surprised to find that this process took me 25 minutes. I couldn’t understand why it was so difficult. Just the day before, I had booked an online ticket to Australia, halfway across the world, and it had taken less than five minutes. I was shocked that this bank was so out of touch with technology that I took for granted. In an age where we can watch almost any movie the moment we want to watch it instead of going down to the video rental store, or booking flights and hotel stays right from our phones, why should banking be as difficult and inconvenient as it is ? I decided to do something about it.

In addition to making banking more accessible, that was the opportunity I saw in 2016 when I shifted BMTX’s direction to a B2B2C approach, and began implementing BMTX’s award-winning Banking-as-a-Service (BaaS) model. BMTX was a first mover before BaaS became the industry buzzword it is today. BMTX’s BaaS model is a proprietary, API-driven platform and white label interface that empowers brands and FinTechs to expand access to digital banking products and launch fully-branded financial services at a fraction of the cost. This leads to attracting new customers, adding new revenue streams and giving customers a more personalized experience.

In terms of diversity, do you think the fintech space is a more inclusive environment than it was when you first entered?

There are many opportunities for women interested in finance and technology, but companies must also provide an inclusive environment for employees to flourish. According to PwC research, 85% of female millennials prefer to work for companies with strong employer policies on diversity and workforce inclusion. However, 71% of them report that even though companies talk about diversity, the opportunities in the workplace are not equal. Opportunities for women have come a long way in the FinTech industry, but there is still much to do for full equality and financial parity.

What can the industry as a whole do to attract more women into finance?

When it comes to attracting more women to finance, it’s important to understand the needs of the modern woman. Offering flexibility in the form of hybrid working models is essential to allow women to balance work and personal responsibilities. According to Deloitte’s report on promoting more female leaders in financial services, there is no “one-size-fits-all” path to achieving greater gender equality. However, organizations that prioritize and promote equality internally can position themselves to influence public policy, shape or reshape cultural norms, and differentiate themselves across their spheres of influence: their workforces, the marketplace, and society as a whole.

What advice would you give to your younger self if you had the chance?

I would ask her to embrace challenges and turn them into opportunities instead of letting them be a source of discouragement. Challenges have helped me grow, and as a result made me stronger and more prepared to face new opportunities.

In terms of your recent performance, BMTX’s Q2 earnings have been quite significant. Can you tell us about it?

We had a record revenue quarter in Q2 2022, with $15.1 million in EBITDA, up from 8% last year despite the absence of last year’s stimulus tailwind and this year’s macro environment.

In 2022, BMTX moved from executing a term sheet to a signed contract to deliver technology to a significant new BaaS partner. This partner has global operations and tens of millions of US customers. BMTX was awarded this relationship through a competitive RFP process, which underlines the competitiveness of their BaaS offering in the market. With the addition of this partner, BMTX has expanded its list of major well-known brand name partners. This relationship could become even more valuable if BMTX can vertically integrate this new partnership with the addition of a bank charter as it is in the process of doing with its pending acquisition of First Sound Bank.

The current economic climate is affecting the industry – what do you think are the biggest challenges facing banks?

Brick-and-mortar banks face increased competition with many disruptors and demands for more personalization using technology. With increased skepticism in banking systems as a whole in a challenging economic climate, the need for banks to embrace technology that meets consumer demand right where they are is critical for the industry to stay ahead of these challenges.

BaaS has so much to offer – what can we expect from future trends?

BaaS continues to evolve at a rapid pace. I believe that we will continue to see more use of AI, blockchain and machine learning in BaaS and embedded finance. In addition, according to a survey by Business Insider Intelligence, nearly 80% of respondents who have used mobile banking say it is the primary way they access their accounts. This provides more opportunities for BaaS providers to be first movers when it comes to innovative services that will enhance the experience of bank customers.

What does the future hold for Luvleen Sidhu?

I look forward to continuing to drive strategic growth and innovation at BMTX. In November 2021, we announced the signing of a definitive agreement to merge with First Sound Bank, a community bank based in Seattle, Washington. This is an exciting milestone for us and is a big step forward in realizing our vision of creating a disruptive FinTech bank. BMTX joins a few other innovative fintechs that have taken a similar step of combining a FinTech with a charter such as Square, LendingClub, Varo and SoFi. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the second half of 2022. As a public company, we continue to be customer-centric while focusing on creating new, innovative digital banking products and functions within the following pillars: banking, lending, financial consulting, investment and insurance, and crypto.