Few would expect it was a good idea to start a bank right as the recession raged a decade ago.
Fewer still would say any bankers eager to do that, as Cross River Bank did, would go on to become one of the state’s most impressive growth stories.
And, if that weren’t enough, no one — maybe not even the bank itself — would also expect it to become the harbinger of how the industry as a whole would have to change going forward.
This relatively new addition to the industry blurs the line between banks and fintech firms. And, hot off of attracting top-dollar investor attention, the institution is proving that, after several decades of industry competition widened the gulf between fintech and the banking sector, the chasm is better closed.
“In fact, I think what we call fintech today, in another five years, will just be called traditional banking,” said Phil Goldfeder, leader of public affairs for the bank.
With it being founded directly after the sector’s 2008 meltdown, Cross River was born with a clean balance sheet and a fresh perspective on post-financial crisis banking: institutions were eliminating any and all risk, but in doing so were missing out on what Goldfeder called responsible risks.
The bank had the advantage of being able to build itself around new regulations as they were first being introduced, Goldfeder explained. So, while century-old institutions were busy retooling for the different compliance landscape, Cross River was able to put some extra emphasis on fintech-style innovation.
“It was a time when banks put the blinders on and didn’t want to push boundaries,” Goldfeder said. “We looked for opportunities to push boundaries in a compliant way, taking what we knew about the new regulations coming out … and building our DNA around it.”
As early as 2010, the bank was building partnerships with online lender GreenSky Inc. to offer loans outside of where it could physically reach in North Jersey. The partnership allowed Cross River to originate loans at Home Depot stores across the country. It would eventually forge about 15 similar partnerships with fintech firms, including the big names in online lending such as Rocket Loans, Upstart and Affirm Inc.
The average loan size the bank originates through these fintech platforms ranges from $3,000 to $4,000, Goldfeder said. That smaller loan size is reflective of what he described as a void in the community banking market for people looking for access to supplemental cash.
Goldfeder said people today are also looking for easier ways to get their funds — namely, through digital channels.
“And that’s not just true for younger people,” he said. “If you look at something like Amazon, it’s not as if it’s just youth ordering off of it today — my grandmother does it.”
“We looked for opportunities to push boundaries in a compliant way, taking what we knew about the new regulations coming out … and building our DNA around it.”
Phil Goldfeder, Cross River Bank
But, he added, a lot of community banks are still hesitating to find new ways of transacting business online. Cross River sees itself as part of the fintech continuum that is finding success doing what most banks aren’t.
“And here’s the best part for us: We’re still a community bank in New Jersey,” he said, alluding to the institution’s state-chartered status, therefore binding it to all the same regulations as other banks. “The beauty is that we don’t go around the regulatory structure, we work within it.”
Heirs of newfound national attention after piquing investor interest, the bank’s leaders seem keen to stress they’ve got a strict concentration on consumer protections and compliance matters.
Cross River’s new relevance was on full display back in September, when the bank picked up $100 million during a funding round. According to Goldfeder, the capital is going to fundamentals: bolstering compliance infrastructure as well as its employee pool.
The bank, which grew from eight staffers at its founding to more than 220 today, still has an appetite for more of the region’s fintech talent.
Its goal is to hire another 50 to 70 employees before the year is done.
“We hire new people now every single day, literally,” Goldfeder said. “We’re also constantly building our back-end technology to enable our products to work smoother and faster with that same focus on regulatory compliance and consumer protection.”
But even with how fast Cross River is moving — and the rest of the industry trailing just behind — Goldfeder said the company’s Garden State presence will be a constant.
“We’ve weaved ourselves in every aspect of this community: Whether it’s engaging with the local chamber of commerce, the New Jersey Tech Council or a local family in Fort Lee whose house burned down six months ago that we came together to collect supplies for,” he said. “We were born and raised here, and we’re committed to ensuring continued growth right here.”
Recovering politician, aspiring banker; that’s what Phil Goldfeder, leader of the public affairs division at Cross River Bank, half-jokingly refers to himself as.
You might not have heard of Cross River’s Goldfeder in the Garden State, but the name would ring a few bells across the Hudson River.
He was an assemblyman in New York for six years, a stint that followed Goldfeder working in several other prominent roles. In 2005, he assisted New York City Mayor Michael Bloomberg’s re-election campaign before serving as Bloomberg’s Queens liaison. Afterward, he spent three years doing governmental affairs work for Sen. Chuck Schumer.
He gave up public office and decided not to seek re-election in New York’s 23rd District in 2016.
“I left to take on a new challenge and chart a new path in financial service technology and innovation — from a policy perspective and regulatory perspective, but also from the perspective of providing consumers access to services they otherwise wouldn’t have,” he said.
He’s just as new to the industry as he is to New Jersey.
“But Fort Lee has welcomed me like a son,” he said. “I’m excited to be here.”
Reach Cross River Bank at: crossriver.com or 201-808-7000.