Cambridge Savings Bank chose to brand its rapidly-growing digital bank with a new name as part of a strategy to avoid confusing customers about how they could access their money. iStock photo illustration

Ivy Bank, a division of Cambridge Savings Bank, last week surpassed $1 billion deposits after only three years, a major milestone many new banks take years to reach.

“Consumers today want a frictionless banking experience that prioritizes convenience, security, and the opportunity to optimize their financial well-being,” said Ryan Bailey, president and CEO. “Ivy Bank offers our customers the convenience of our mobile-first digital experience with security and human-backed service excellence.”

Banks have historically approached digital banking in two ways: keep it under the umbrella of the original brand or, as Cambridge Savings Bank did, create an entirely different brand.

Kevin McGuire, the bank’s executive vice president and COO, said that Ivy has served as a testing ground for products that it can roll out to traditional CSB customers while also increasing deposits.

“It started off largely as ‘Hey, we’re an innovative bank. We have an innovative culture. How can we establish a digital presence from that, learn from that?’ The success we’ve had from that has probably accelerated faster than we may have originally expected to a really solid business line in and of itself, but we still keep it tightly connected,” he said. “Our learnings from Ivy Bank digital come right back to CSB digital.”

Still, there’s at least one wall between the two bank divisions:  Ivy customers are not able to withdraw funds from their accounts in a CSB branch. Bailey said that having two separate brands helps eliminate any confusion among Ivy customers about how they can access their funds.

“I think that the decision was right, and I think if we made it again, we would keep it as a separate brand again,” Bailey, who wasn’t with CSB when Ivy was created, said. “I think it comes down to understanding the customer, understanding they are separate entities, and there’s no confusion. I think when you have them under same brand, you don’t create that separation enough and people have animosity around ‘Why shouldn’t I be able to remove my money’ and things like that.”

Branding Decisions Rooted in Strategy

Hudson-based Avidia Bank took the other route of utilizing its digital banking under the Avidia name. Janel Maysonet, chief marketing officer for the bank, indicated that the brand awareness of the Avidia name led the bank to keep its digital tools under its own name instead of creating a unique brand.

Part of that comes down to the bank’s strategy of staying local.

“We’re not chasing rate shoppers,” Maysonet said. “We’re really looking for core deposit customers in our area. I think a lot of banks will create an outside brand, but then they’ll like expand to different areas of the country. We’re based in MetroWest. We’ll, serve anyone in the New England region but we’re not looking to go across the United States right now.”

Salem Five chief marketing officer Joe Bartolotta said his bank also thought it best to lean on the strength of its existing brand, even though the bank’s digital arm takes deposits from across the country.

“Ultimately, we decided that it was best to capitalize on the value of the Salem Five brand, and changed it to Salem Five Direct, and that’s what we have today. It has nearly $700 million in deposits for serving customers across the nation and we have this as a method of bringing in new customers who do not require a physical location and just want the advantages of digital banking without the branch. And of course, if they’re nearby branch, they can use it.”

While digital banking can allow for institutions based in primarily one part of the country to receive deposits across the nation, the money can end up making an impact on a local scale.

CSB’s Bailey said that Ivy’s depositors in 49 states gives it access to more money that CSB can then lend out that money to local small businesses and clients based in Massachusetts and the surrounding region that it serves.

Sam Minton

Not Just Competition from Banks

The advent of digital banking has increased competition in the banking industry. Now CSB and other Massachusetts institutions are going up against national players in the digital world, ones with far more resources to apply to their tech stack.

“Now you’re competing against national players so we can’t just have nice people in a branch and in the community and be successful,” Bailey said. “We actually have to make sure you’re simplifying your transactions, because [potential customers] are not just looking at banks. Consumers – especially our consumers – they’re used to dealing with Amazon and how fast it is to make a purchase. They expect banking to be just as fast and just as easy as a retailer.”

That kind of competition means Ivy will have to continue to grow and innovate.  But, Bailey said, the bank believes it’s got a crucial advantage over other lenders.

“I think the thing that helps make Ivy successful is Cambridge Savings Bank. I think it’s important that we have that brick and mortar, we’ve been around 190 years, so we still have the trust of the consumer with Ivy, where a lot of startups and national digital players might not have that history. So, it’s comforting to be with the 190-year-old institution that you know will be around another 190 years,” he said.