Targeted Expansion: With eye on small business growth, Liberty Bank readies debut of national ‘digital bank’

HBJ PHOTO | STEVE LASCHEVER Liberty Bank Chief Digital Officer David Mitchell said the goal of launching a digital bank is to expand in other states without opening new branches.

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By Michael Puffer

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After more than a year of delay, Middletown-based Liberty Bank anticipates opening a digital bank in the first quarter of 2023.

A target niche has been identified, the bank has taken on two new executives to facilitate the new endeavor and a national marketing campaign is slated to launch in January.

Operating as a separate brand but under Liberty’s charter, the digital bank will offer online banking services tailored to small businesses across the country.

“So, the goal is for us to expand into other states without opening up physical branches,” said David Mitchell, Liberty’s executive vice president, general manager and chief digital officer. “Less and less people are walking in and using physical branches. They are using their iPhones, right? Or their iPad, right? Or they are using their desktop or whatever it may be. This is an opportunity for us to expand our existing footprint into a very specific niche.”

The target market is businesses with less than $1 million in annual revenue and 10 or fewer employees, Mitchell said.

As Liberty sized up potential niches, it decided against the already saturated personal banking sphere.

“The gap we saw, the white space, is the small business market,” Mitchell said.

Other companies offer digital banking services targeted at small businesses, Mitchell acknowledged, but none with the suite of loans, credit lines and business management applications that will be available through Liberty’s online platform.

Marketing blitz

Liberty is holding back the name for its digital bank until the marketing launch, but the moniker will make it clear the focus is on small business.

Liberty has hired Philadelphia-based Brownstein Group for its marketing push, Mitchell said. The company has produced campaigns for brands including Inspira Health and TruGreen.

It is also the company behind the “no mascot” marketing of NJM Insurance. Mitchell said radio, television and online commercials have been completed and are ready to run. Small business “influencers” have been recruited to push out the offering on social media.

Liberty hired Mitchell two years ago to lead innovation efforts at the nearly 200-year-old bank with 53 branches and $7.5 billion in assets. He came with deep experience as a fintech executive with a successful track record in digital banking.

On Aug. 10, Liberty announced the hiring of Harry Gunsallus as senior vice president, digital strategy officer and chief operating officer of digital banking. Gunsallus will oversee digital strategy, build and maintain fintech partnerships and develop a suite of products to support the new digital bank.

Gunsallus comes from BankSouth in Georgia, where he served as chief innovation officer. Gunsallus had also led a couple of credit unions. That is where he first met Mitchell, who worked for a company that sold banking technology to Gunsallus-led credit unions. Mitchell said he hand-picked Gunsallus for his team.

Liberty also announced the hire of Amy Apuzzo as vice president and digital marketing manager. Apuzzo spent 12 years with digital banking service BM Technologies.

The two are among 10 hires for the new digital bank. That staff will grow with business volume, Mitchell said.

Unique offerings, careful planning

Without the costs of brick-and-mortar branches, the digital bank will be able to offer better rates and tools and be able to deploy new products and services more swiftly, Mitchell said.

In addition to deposits and loans, the new bank will offer a suite of integrated, easily-used business management applications, including digital expense recording, electronic invoicing, and payment and project management, among others, Mitchell said.

“They started their business because they love to do the job they do,” Mitchell said. “They hate to do banking. … We can automate all of that banking stuff so in the end they get their cash faster. In the end it is all about cash flow for these guys.”

Mitchell said Liberty has signed an agreement with a network of ATMS that will allow its digital banking customers access to 55,000 machines across all 50 states. It hasn’t yet been decided if there will be fees for access.

HBJ PHOTO | STEVE LASCHEVER

Liberty Bank Chief Digital Officer David Mitchell said the goal of launching a digital bank is to expand in other states without opening new branches.

Liberty originally planned to open its digital bank in 2021, but there were COVID-related delays and the bank wanted more time for research and development, Mitchell said.

Research included surveys of more than 3,000 small businesses nationally and interviews with more than 300 companies, all aimed at determining their needs.

Mitchell said the digital bank launch will be a multimillion-dollar annual investment over five years, with projections of breaking even in year three.

“We have 12,000 small business customers at Liberty,” Mitchell said. “We will surpass that quickly with the digital bank.”

By The Numbers: Liberty Bank

Total assets: $7.5 billion

First quarter net income: $1.9 million

2021 net income: $81.2 million

Customer households, including business and personal banking: 173,335

Operating offices: 53

Source: Federal Deposit Insurance Corp., Liberty Bank

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