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Inside BancVue's Audacious Plan to Upgrade Community Banks

BancVue revs up its audacious behind-the-scenes upgrade of community banks.

Inside BancVue's Audacious Plan to Upgrade Community Banks
Take it to the Bank: BancVue CEO Gabriel Kracijek and strategy chief susan Sierota | Photograph by Randal Ford
Take it to the Bank: BancVue CEO Gabriel Kracijek and strategy chief susan Sierota | Photograph by Randal Ford

There's a Chase down the block, a Huntington Fifth Third within walking distance, and a PNC across town. So why would anyone in Columbus, Ohio, frequent a little bank called Farmers Citizens? "We used to joke about planting corn out front," says CEO Coleman Clougherty. To compete, he says, "we had to get more sophisticated services."

Farmers Citizens has emerged from the maze of banking options with help from BancVue, an Austin-based startup that arms indie financials with better-than-the-big-guys perks. "It's time for [our clients] to take competition just as seriously as how nice Nancy is at the front desk," says BancVue CEO Gabriel Krajicek. BancVue empowers Farmers Citizens and 1,300 other local financial institutions to offer customers rewards checking, ATM-fee reimbursements, and up to 4.5% APY savings accounts. Its clients, if rolled up into one firm, would be the nation's largest banking network.

Two bold new products are due in January. "Many community institutions are 10 years behind" in terms of online money management, says Susan Sierota, BancVue's chief strategy officer, citing dumpy site design and limited functionality. Kasasa 360°, BancVue's new online banking platform, adds data visualization and budgeting tools, a dashboard to let users manage perks such as donating debit-card rewards to charity, and a smartphone application. (Partner banks can market their perks under BancVue's Kasasa brand.) After the platform's debut, BancVue will introduce a credit card that its partners can emblazon with their specific logos. "We don't have the resources to develop this stuff on our own," says Jay Chapin of the Maine credit union Ocean Communities.

Beyond attracting new customers, both products are designed to make their host banks increasingly virtual, which cuts down on overhead. Banc-Vue's services have already upped debit-card usage at Ocean Communities by roughly 75%, which allows Chapin's team to pay for high-interest accounts and checking rewards. On average, BancVue's rewards-checking partners increase new-account openings by 30% — meaning that business is booming for the banks and for BancVue, which charges a monthly fee and a small amount for each fresh customer.

BancVue, with annual revenue of some $80 million, isn't going to topple Big Money anytime soon. Online bill pay and money transfers to third parties are perhaps a year away, and even with the perks, "customers will be reluctant to switch," says Jacob Jegher, a senior analyst with financial-services research firm Celent.

Still, BancVue's holistic approach gives it a significant advantage with clients. "We've really gotten to know and trust the staff at BancVue," says Chapin. "So long as they keep us on the cutting edge — and they do — we're fine."

Farmers Citizens' Clougherty agrees. Before partnering with BancVue, his five-branch operation had an aging client base and minimal web presence. Almost two years later, Farmers Citizens is attracting a record number of young adults (thanks, iTunes checking rewards); opening one-fourth of its new accounts online; and touting two new Columbus branches, which have increased its assets by 33%. "I'm not sure what BancVue will offer next," Clougherty says, "but we've already signed up."

A version of this article appeared in the December 2010/January 2010 issue of Fast Company magazine.