Request for Bankers

Update (01–01–2020): we received a great amount of interest and feedback after publishing this- thank you! We’ve ultimately decided that the most effective way to get started is build Unit as a layer on top of partner banks. In Nov 2019, we closed a $3.6m seed round from our favorite fintech VCs / angels and switched to full building mode. Unit is launching in 2020 and several great teams are already building on it. Contact us at team@unit.co to join them.

Hi! We are Doron Somech and Itai Damti, co-founders at Unit. We’ve both spent a decade at Leverate, a fintech B2B we co-founded in Israel (today 100+ employees, 100b+ in monthly trading volume).

After a few months of ideation at the intersection of fintech and dev tools, we believe we have landed on a complex problem we’d like to work on: building a US bank that helps technology companies launch rich, branded banking experiences.

As we make progress, we’re looking to add a special type of person to our team (a unicorn in a suit, if you will). We’re writing this to maximize our reach searching for this person.

Why now

We believe that in the next 20 years, tens or hundreds of new banking brands will emerge in the US and capture an enormous market opportunity across consumer and business banking. These winners will be both general population banks and vertical banks (think landlord bank by Airbnb or agriculture bank by Climate.com).

While we don’t know who the winners will be, we’re placing our bets on established tech firms. It’s common to distill all consumer fintech to the trillion dollar question “will startups get distribution before incumbents get innovation?”. Tech firms are positioned to win because they have the best of both worlds: the distribution and data of an incumbent + a startup’s obsession with product, user experience and growth. Notable first movers into financial services are Apple, Amazon, Stash, SoFi and Wealthfront- but they won’t be the last. We’re at the first inning of a massive shift in how financial services are offered and consumed- a shift that will put many tech companies at the wheel… and many banks at the back seat.

Running and owning an actual bank is not going to be an option for the majority of US tech companies that venture into financial services, for two reasons: (1) the costs and complexity in running a bank (2) limits imposed by the US Bank Holding Company Act. They need a partner bank to rely on. Banks like Bancorp (market cap ~$527m, $3.5b in deposits, $365m in shareholder equity*) and Green Dot (market cap ~$2.6b, $1b in deposits, $909m in shareholder equity*) have positioned themselves as such partners, calling these businesses “affinity banking” and “Banking as a Service”.

We believe tech companies will prefer a specialized, tech-first bank as infrastructure. We think the time is right to build this new type of bank.

Why Unit

Unit will be designed from the ground up to deliver white-labeled financial services to end-users through tech companies (“brand partners”), over world-class APIs, in a highly compliant way. It will stand out in a few ways:

• Tech- we’d like to design Unit to serve tens of millions of happy end-users with a radically efficient human organization, assisted by the best tech we can build. We’d like to launch Stripe-level APIs and dashboards that provide unmatched control, context and actions to our brand partners. This will help them meet the highest expectations of their end-users and build truly unique banking experiences
• Financial products- existing partner banks have an incomplete product offering (cards, brokerage accounts, lending, payments) that limits their brand partners. We believe that Unit’s partners should be able to look at a variety of products, choose the right ones for their audiences and build digital experiences around them
• Business model- Unit won’t make money from a state-specific mortgage book like most banks, and won’t run an independent banking brand that competes with its brand partners. This may sound elementary, but these aren’t guarantees that incumbent partner banks can make. Ideally we’d like to prioritize non-interest income (SaaS, card and transaction fees) over interest income, and make lending activities contextual (i.e. serving the relationships of our brand partners with their end users, at the right time, based on relevant data)

We developed this vision after discussions with several knowledgeable people, both operators and investors. That includes people who have a vast experience running partner banks.

How you can help

We’re looking to connect with exceptional bank founders / executives / CEO’s that we can develop this idea with. There are different routes we’re ready to explore: the most ambitious one is expanding our team, raising big funds, acquiring a bank and developing it into such a platform. Another is partnering with a small / medium bank and initially building Unit as its middleware. We can even join an existing bank on a mission to transform itself towards the vision. We’d like to meet people to explore all these options.

We know there are many good reasons to think the ambitious route is not going to work. Finding these rare banking executives, raising a seed round in the 8–9 digits, capturing a market opportunity in an incredibly complex environment against well-capitalized, well-positioned competitors. We don’t discount those things at all, but at this stage we’re choosing to focus on the opportunity with a beginner’s mind. At the very least, we’d like to spend more time building the ambitious case with the right people. We love the idea of navigating complexity while building a new kind of business. We’re talking to potential clients, studying the economics of existing partner banks and shipping a small slice of tech every day at docs.unit.co.

Do you know a bank founder / executive / CEO that may share this vision and want to contribute? We’d love to talk to them. Drop us a line at team@unit.co

About us

We are Doron Somech and Itai Damti. We’ve both spent a decade at Leverate, a fintech B2B we co-founded in Israel (today 100+ employees, 100b+ in monthly trading volume). We’re engineers and product people at heart. Over the last 10 years, we’ve built and led teams together to launch a suite of 10+ fintech products: liquidity and risk management tools, trading front-ends and back-ends, web APIs, compliance tools and more. We’ve also gained experience running the company’s sales, marketing and operations teams in different parts of the world.

* Market cap for Bancorp and Green Dot is up-to-date, while deposits and shareholder equity are based on their 2018 financial reports.