Cambr, a cloud-based platform powered by investment firm StoneCastle and digital banking software provider Q2 Holdings, is helping neo-banks and fintechs launch and scale up through a network of 850 community banks.

Joshua Siegel, managing director and CEO of StoneCastle, told Bank Innovation that Cambr essentially allows any company to offer banking products and services with full FDIC insurance on all deposits, at scale, while routing those deposits to the community banks.

He said about 53% of all small business loans made in the U.S. are made by community banks, even though those banks in aggregate only represent about 17% of the banking industry.

“If you want job growth in the country, you need small and medium-sized companies growing,” Siegel said. “It’s the community banks that fund that and we’re bringing billions of dollars of deposits from our clients.”

Those clients, he said, include 1,600 corporations, nonprofits, endowments and public entities like school districts, as well as broker-dealers. There are also fintechs like Square, Acorns, Qapital and MoneyLion, which use the platform to provide banking services to their customers without having to become a bank.

In a phone interview with Bank Innovation, Siegel discussed how Cambr works, what true innovation is (and who’s driving it), and whether fintechs will be disruptors or collaborators. This conversation has been edited for brevity and clarity.

Bank Innovation: What’s the advantage for your clients to go through StoneCastle’s network rather than use a large bank?

Joshua Siegel: If you look at most large banks, they don’t pay very high rates on corporate deposits. A few years ago, there were multiple articles that Bank of New York Mellon was charging institutional customers to leave cash in the bank. Not only were they not paying rate, but the customers also had to pay. We pay 2.38% per annum, accrued daily. It’s just day and night. The rate they get is significantly higher. I think the highest government money funds right now, that are treasury money funds, might be in the 2.20%-ish range. So rate, safety and liquidity, and there’s a social good component, an impact investment innate in it, as well, because it’s mostly going to smaller and rural community banks all around the country.

BI: What is Cambr? Who is it for?

JS: Cambr is for non-banks. It’s easy to say fintechs, but it’s not just fintechs. It’s regular world lenders, retailers, food service companies, auto parts companies, and anyone who wants to be able to offer banking services to either their customers or employees at almost no cost, without becoming a bank and getting a banking charter. So, if you want to provide a debit card, bill pay, mobile remote deposit capture, checking, savings, goal-based savings, anything you can generally imagine as a cutting edge deposit-type account or payment account, other than credit cards, you can do that via our API.

Take Starbucks, for example, the biggest mobile payments app out there. They are not one of our customers for Cambr, yet, but if they wanted to turn those 30 million accounts into full bank accounts, they can very easily do that. I don’t know if somebody wants to bank with Starbucks, that’s sort of not my job, but maybe someone really loves Starbucks and they’re in there every day anyway, and that’s the brand they associate with their lives. Or, maybe it’s Google, Apple, Acorns or Betterment, or Walmart. Regardless, if you could offer your customers the ability to have a no-fee account, able to earn a good interest rate, and have a debit card branded with whatever that brand is, this is the first time that you can do that in a completely turnkey manner.

BI: Do neo-banks and fintechs need to spread into as many lines of business as possible to stand alone, or is it better to focus on a niche?

JS: You can find things that position you differently, but you have to decide what you to accomplish. Just offering, ‘Well, we’re the forward-thinking bank and we have web and mobile access’ or ‘We’re going to be open seven days a week and provide free coin counting machines and put out water bowls and snacks for your dog,’ won’t cut it. These are marketing hooks, but the product they’re delivering isn’t really any different. It’s a savings account, checking account, a loan. I know I didn’t really answer your question but that’s the challenge everyone’s trying to figure out.

All we’ve done is we’ve said, ‘Rather than relying on a bank to give you some services for you to resell to your employees or your customers, we’re going to let you play the bank.’ It’s like playing a doctor on TV. You’re not a doctor, but you look like one and you sound like one. That’s what Cambr does that no one else does, is let the brand, MoneyLion, for example, have access to the core so they can do level-one customer service. It can act as the bank with the customer, rather than sending them to the bank. It’s a subtle difference, but it’s very different when it’s your company. If you could use the wire system or the ACH system, or if you could issue debit cards, or store people’s money — if you could add those capabilities to what you do every day, what would you do with that? That’s a pretty neat toolkit. And we’re seeing clients use it in very different ways, depending on what they’re trying to accomplish.

BI: Will fintechs ultimately be disrupters or collaborators in the banking industry?

JS: I don’t think they have to be mutually exclusive. Each can find a place to be because banks are very unique beasts. Their function is to extend people’s safe dollars against predictable cash flows and hard assets. That’s it. Banks aren’t venture-capital firms. They don’t do junk credit. They don’t play the equity markets. They lend against hard assets, real estate, equipment, and they lend to businesses that have predictable cash flows and the long track record. They can afford to charge 4.5%-6% because they’re not taking much risk. But there are people who need lenders to take risks, and that’s where hedge funds come in and venture capital and private equity or specialty lenders. That is the magic of the system. Now it’s easier for more people to say, ‘I can curate a combination of these things for you, and I can bring your investments, banking and insurance all into one, nice package, and give you updates on your budget.’ And, so, it’s this constant bundling and unbundling of the system and we’re kind of in an unbundling moment.

Join us at Bank Innovation Ignite 2019, March 11-12 at the Hyatt Olive 8 in Seattle. Register here.