When a cutting-edge fintech startup needed a partner … it found one in a community bank that first opened its doors in 1902, the same year the country’s first-ever movie theater did.
In what could be considered a useful indicator of where things are going for legacy businesses doing money management, the storied OceanFirst Bank jumped at the opportunity to work with the less-than-2-year-old startup, Nest Egg, on implementing a digital investing platform.
In doing so, it became the latest bank to take the robo-adviser model seriously, given that the platform it adopted with the startup’s help automates components of the investment process, everything from portfolio selection to risk analysis.
Christopher Maher, who serves as chairman, CEO and president of the Toms River-based OceanFirst and its holding company, said the high-tech solution fits right in.
“It’s something we’re really excited about,” he said. “It’s a hybrid investment product that incorporates the sort of personal advice people trust with low-cost robo-advising.”
Maher characterized it as a way of simplifying investing. The patented system has users answer questions that determine risk tolerance and investment goals, metrics that enable the platform to generate a tailored portfolio that is then automatically monitored and rebalanced.
The platform allows clients to invest as little as $1,000 or as much as $500,000. Associated asset management fees are being split between Nest Egg and the bank. The startup is also supplying the bank with software, training materials and branch kiosks.
The bank is functioning as the first local test of Philadelphia-based Nest Egg’s system. It’s not intended to be the last. The fintech firm has reportedly set of goal of bringing it to upwards of 5,000 community and regional banks nationwide, those with $25 billion or less in assets.
The nearly-$8 billion-asset OceanFirst, which has made its own investments in the startup and has executives serving on its board of directors, debuted the platform late last month.
This is only one example of the sort of digital products with automated elements that are quickly becoming the norm in the money management business.
OceanFirst started down the path of adopting more of these technologies several years ago, when the bank’s leaders picked up on the fact that consumer preferences were changing — and that such tools would be critical to customer retention.
“Customers have the ability to do most of what they want to do on a daily basis digitally,” Maher said. “People, especially millennials, have a strong desire to do things quickly, easily and effectively — and that’s translated into more use of digital products.”
The bank considers these tools a way of reaching beyond its traditional physical footprint, a swath of Central and South Jersey branches that the institution started to consolidate upon completing a merger with Sun National Bank earlier this year.
Cognizant as he is of the digital craze in money management, Maher doesn’t expect the bank’s digital tools to completely override the traditional features that have brought the bank to where it is today.
“We’ve tried hard to make sure our investments are following customer preferences,” he said. “But, at the same time, that for us is more of a balancing act than just a way of eliminating other ways of doing business.”
Breadth of knowledge
What moves money today is a constellation of different fintech platforms and technologies.
It’s no easy task, but OceanFirst Bank’s leader, Christopher Maher, anticipates that banks and their employees will have to be knowledgeable enough to help clients navigate all of them.
“So we’re making sure employees are trained and equipped to help today’s customers,” Maher said. “Because, whether it’s regarding a mobile app, perhaps something like PayPal, these are the kinds are questions that we’re more likely to get today than something relating to writing or depositing a check.”
Reach OceanFirst Bank at: oceanfirstonline.com or 888-623-2633.