If you build it, the optimizers will come.

Citizens Access, the digital-only arm of Rhode Island-based Citizens Financial Group, has grown to about $4 billion in deposits, mostly from new customers outside the bank’s traditional footprint, since its launch in July 2018.

John Rosenfeld, President of Citizens Access, said the bank’s intent from the start was to build a no-fee, all-digital option that was simple, straightforward and efficient in every aspect.

“We were targeting a group that we called the optimizers, and these are very web savvy customers and they’re pretty affluent,” he told Bank Innovation, adding the average balance with Citizens Access is over $70,000.

“We knew that we didn’t want to go out and create something for a $2,000 savings account,” he said. “We even put a $5,000 minimum on it to steer towards that optimizer group. But these customers have historically shopped online for the best deal.”

Rosenfeld said the people who walk into a branch and say, “Hey, what’s the best rate you can give me on a CD?” are not the same people who check sites like Bankrate and NerdWallet for the best rates.

About 5,000, or 10%, of the 50,000 current customers of Citizens Access have relationships with both the digital bank and the traditional bank. Rosenfeld said only about 3,000 of those customers actually kept money at Citizens Bank. While they did pull out money from Citizens Bank, he said the balances they now have with the digital bank are twice what they had with the traditional bank.

“What we’ve seen is that they’re augmenting their relationship with the bank,” Rosenfeld said. “And what I’ve argued is, had we not launched Citizens Access, that money would probably be sitting at a digital bank competitor today.”

Prior to the digital bank’s launch, Citizens had a presence in about a dozen states in the New England, Mid-Atlantic and Midwest regions for deposits. Now, it’s nationwide.

About 75% of the balances the digital bank is raising are coming from states where Citizens has little to no physical presence. The number one and number two states are California, where Citizens has no branches, and New York, where it has just a few branches upstate.

“Seven of our top 10 states for Citizens Access are seven of the top 10 largest states, from a deposit standpoint, in the country,” Rosenfeld said. “The other factor is, we do see some preference from states where we have a footprint because there’s name recognition. These aren’t necessarily the same customers that would be walking into our branches, but they do recognize the name.”

Citizens Bank isn’t the only sizable U.S. bank with a digital-only arm. There’s also JPMorgan Chase‘s Finn, Wells Fargo‘s Greenhouse and Goldman Sachs‘ Marcus, to say nothing of challengers like Chime, which today announced a $200 million funding round that brings the online-only bank’s valuation to $1.5 billion. But Rosenfeld said all digital banks are really their own animal.

He said Finn and Greenhouse are very millennial-focused, offering a checking account in an app, but lacking competitive rates. He said Marcus and others are much more about deposits-raising and do offer competitive rates, but target a range of customers. Challengers like Chime, he said, are “internet pure plays” that are often checking-only and lacking in range of services.

“You really have to distinguish between them,” Rosenfeld said. “The no-fees aspect of what we offer, I think, is a competitive differentiator. While many of them don’t charge a lot of fees, almost every one of them has some fees and we went out and said we have zero fees. We do not charge a fee for anything, ever.”

It’s worth noting that Chime, with about 3 million account holders, has no fees except for a $2.50 out-of-network ATM fee. There’s also an accompanying debit card, which is something Access does not provide, on which Chime earns interchange revenue, and an auto-savings account. Additionally, the company said part of its latest funding will be used to build out new products related to short-term lending and credit building.

Chime does not have a bank license but protects its accounts through a deal with The Bancorp Bank.

Also see: Citizens Financial Group Launches Neobank, ‘Citizens Access’

Rosenfeld said there are other differentiators attracting customers to Citizens Access from all over. For one thing, the platform was built mobile-first, to make the design as simple as possible and free from unnecessary steps.

“We knew by doing that, it would force us to create the simplest possible experience,” he said. “I think just taking that “don’t make me think” approach, was innovative.”

Rosenfeld said they also tackled old paradigms, however small.

“You’ve seen this a million times where you have to fill out your street, your city, your state, your zip code,” he said. “You fill it out in that order. Well, we changed the paradigm. We ask for your street and then we ask for your zip code because once you give us your zip code, we already know your city and state. We autofill that for you.”

He said the online account opening process, for any bank, is still somewhat cumbersome due to the regulations and disclosures that are required.

“We try to streamline all of that as much as possible, and wherever we didn’t, we did things like, instead of putting ‘Enter name below’, we just wrote ‘Name’, and then you fill it in,” Rosenfeld said. “We thought through every word on every page and how we could make it easier than our predecessors.”

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