BankMobile's planned $140 million acquisition by investment firm Megalith Financial Acquisition Corp. (MFAC) will transition the digital startup into a full-fledged technology company and better position it to pursue new bank partnerships, BankMobile CEO Luvleen Sidhu said. 

"We can really operate as an independent entity with our own management, our own board, and really as a full service technology company with various different bank partners," Sidhu said on the spinoff of BankMobile from Customers Bancorp. "It really sets us up to be a technology company first, rather than a bank."

Merger talks with MFAC, which will become BM Technologies upon completion of the deal, began at the end of last year, MFAC CEO A.J. Dunklau said.

"We were able to meet face-to-face for many of those meetings, before COVID impacted the world, so that was really helpful," Dunklau said. "All investors are having to navigate the new challenges of raising capital when you're not able to introduce management face-to-face to the market."

Raymond James participated as the adviser to Customers and BankMobile in the selection process. About 150 investment firms were contacted before narrowing the selection down to MFAC, Sidhu said.

"Out of those last three to four [firms] that we had very intense discussions with in the final rounds, they came out the strongest in terms of strategic angle, as well as the price and the certainty," Sidhu said. "Being able to partner with someone that helps accelerate our ability to be a public company with access to public currency, gives the opportunity for us to think strategically about growth opportunities that we wouldn't have otherwise."

The plan to divest from Customers Bancorp, which has incubated the fintech since 2015, has been a shared goal between the two entities for some time. 

Wyomissing, Pennsylvania-based Customers tried to spin off BankMobile in 2018, but that planned transaction with Flagship Community Bank in Clearwater, Florida, fell through because of regulatory complications, S&P Global reported.

With the MFAC deal, the two entities won't entirely part ways. Customers Bank will become BM Technologies' largest investor with a 46.7% stake, according to American Banker. Customers Bank will also continue to hold BM Technologies' customer deposits going forward, the companies said. 

Sidhu said Customers will continue to partner with BM Technologies "on a balance sheet front" offering support wherever needed, even as BankMobile looks to diversify its partner base. 

"It gives us the runway, while we still have the stability of Customers partnership, especially on the deposit side, to look for other bank partners, and that is definitely an important part of our strategy," she said.

BankMobile's banking-as-a-service platform is already prolific among colleges and universities, serving more than 2 million account-holders at 722 campuses, the bank said. 

BankMobile's additional verticals include white-label banking, where it works with nonbanks to provide financial services to their customers, as well as workplace banking, where businesses use its white-label banking model to provide financial services as a human-resources benefit.

"Financial wellness has become very important to HR departments, and to be able to provide benefits around that for their employees," Sidhu said of the company’s workplace banking vertical. "It also helps with attracting, engaging, retaining them and helping with productivity, etc."

In addition to last week's merger news, BankMobile was announced as one of six additional financial services companies to partner with Google in the launch of co-branded bank accounts through Google Pay.

BankMobile, along with BBVA USA, BMO Harris, Coastal Community Bank, First Independence Bank, SEFCU, Citi and Stanford Federal Credit Union (SFCU) are expected to launch the accounts sometime next year. 

BankMobile is also the technology backbone for T-Mobile’s banking app, a product that launched in 2019.

"We think that the tailwind behind growth and digital banking platforms are really substantial," Dunklau said. "And given the existing partnerships and collaborations in place with this business, Megalith is very excited about the future of BankMobile and excited about this transaction."

The deal, which is subject to stockholder and regulatory approval, is expected to close in the fourth quarter.