Promises made, promises kept: challenger Jiko buys a bank BANKING

Almost three years ago Jiko Co-founder and CEO Stephane Lintner said TechCrunch that his company would “someday” have its current banking partner.

At the end of last week, Lintner made good on that prediction. The former CEO of Goldman Sachs announced that the challenger bank he founded in 2019 has completed the acquisition Mid-Central National Bank, a Minnesota-based retail bank that has served its community for 63 years.

“The past decade of innovation in fintech and online banking has won new customers for our industry and has shown that innovation is required in the financial sector,” said Lintner. “The relationship between people and money must be fundamentally improved for everyone. One of Jiko’s main goals is to give people what they deserve: more organic and direct returns with no middlemen and unnecessary friction. “

The three branches of Mid-Central National Bank in Minnesota will continue to operate after the acquisition.

What sets Jiko apart from other challengers is that it invests customer deposits in, rather than holding, cash, US government-backed Treasury bills (T-bills). To this end, the company has developed a core infrastructure that combines payment rails with real-time main trading functions in T-bills around the clock. Add the required bank and broker-dealer licenses and you have a banking platform that offers customers an investment that is also a liquid, spendable alternative to cash.

However, the lack of FDIC insurance can give some potential investors a break. In addition, interest rates on T-bills have decreased in recent months (the three-month T-bill is 0.11% today, compared to 1.93% a year ago). Fintech futures Reports The Jiko account holders posted an annualized return of 3.3% last year while the service was in beta. FintechLabs’ coverage of Jiko’s bank purchase Remarks that the company may be less concerned with these issues as it focuses on B2B and BaaS customers and partnerships.

Lintner has positioned his Oakland, California-based company near the top of fintechs turning into banks (witnessed Varo Money securing a national banking charter this summer). Courtesy of the Federal Reserve Bank of San Francisco and the Office of the Comptroller of the Currency (OCC), Jiko becomes the first to acquire a nationally regulated bank. The company plans to add a cashback debit card and token bank account numbers by the end of the year.

Photo of Magda Ehlers from Pexels

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