Late last week, Lintner made good on that prediction. The former Goldman Sachs managing director announced that the challenger bank he founded in 2019 had completed its acquisition of $100 million asset, Mid-Central National Bank, a Minnesota-based retail bank that’s served its community for 63 years.
“The past decade of fintech and online banking innovations has exposed new customers to our industry and demonstrated that innovation in the financial sector is needed,” Lintner said. “People’s relationship to money must be fundamentally improved for everyone. One of Jiko’s primary goals is to give people what they deserve: more organic and direct returns, without intermediaries and unnecessary friction.”
Mid-Central National Bank’s three branches in Minnesota will continue to operate, post-acquisition.
What makes Jiko different from other challengers is that it invests customer deposits in liquid U.S.-government backed Treasury bills (T-bills) instead of holding them. To do this the company has developed a core infrastructure which combines payment rails with real-time, 24/7 principal trading capabilities in T-bills. Add to this the requisite banking and broker-dealer licenses, and you have a banking platform that provides customers with an investment that is also a liquid, spendable alternative to cash.
That said, the lack of FDIC insurance may give some potential investors pause. Additionally, interest rates on T-bills have plunged in recent months (the three-month T-bill is at 0.11% today compared to 1.93% just a year ago). Fintech Futures reports that Jiko accountholders earned an annualized 3.3% return last year while the service was in beta. FintechLabs’ coverage of the Jiko’s bank purchase notes that the company may be less concerned with these issues as it focuses on B2B and BaaS customers and partnerships.
Lintner has positioned his Oakland, California-based company near the front of fintechs becoming banks (witness Varo Money’s securing of a national bank charter over the summer). And courtesy of approvals from both the Federal Reserve Bank of San Francisco and the Office of the Comptroller of the Currency (OCC), Jiko is the first to do so by acquiring a nationally regulated bank. The company plans to add a cash-back debit card and tokenized bank account numbers by year’s end.