HMBradley Shifts Strategy in Neobank Evolution
In a strategic move, neobank HMBradley is set to wind down its consumer operations, marking a pivotal shift towards a business-to-business (B2B) focus. The decision comes in the wake of the fintech’s reassessment of its growth trajectory, prompting a move away from consumer-centric services.
CEO Zach Bruhnke revealed that, over the next 30 days, HMBradley will phase out its consumer deposit and credit card programs. This shift reflects the neobank’s endeavor to sell its advanced technology to traditional banks, a move fueled by expressed interest from multiple banking institutions.
HMBradley, based in Santa Monica, California, initially targeted a unique market segment, catering to savers with a focus on more affluent consumers. Despite experiencing rapid growth in 2021, challenges arose as the neobank struggled to scale due to limitations imposed by its original partner, Hatch Bank.
The inability to accept new users during an 18-month period hindered HMBradley’s momentum, and a subsequent partnership with New York Community Bank was only a partial remedy. The neobank faced fierce competition as the market dynamics shifted, with traditional banks offering higher yields on deposits.
CEO Bruhnke acknowledged the challenges faced by HMBradley, citing the changing landscape and increased competition as significant factors. The decision to wind down consumer operations was made strategically, with the aim of focusing on the core strength of the company—its technology.
The neobank has been actively developing a B2B offering, securing $13 million in funding to support this transition. While the recent funding round represented a down round compared to previous valuations, Bruhnke emphasized the importance of aligning with shareholders possessing specific insights into banking technology.
The shift towards a B2B model was catalyzed by repeated interest from banks impressed with HMBradley’s core banking technology. This transition positions the fintech to potentially secure licensing deals with banks looking to leverage its advanced technology for their financial products.
As HMBradley realigns its focus, Bruhnke indicated potential downsizing in certain areas, such as customer service and operations. The move underscores the evolving dynamics within the neobank sector, highlighting the importance of adaptability and strategic decision-making to thrive in the competitive fintech landscape.