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Cambridge Savings gets a lesson in agility from robo-advisor SigFig By Bill Streeter, editor & publisher


he notion exists that digital startups are, in general, more agile than traditional companies. It’s often true. Yet, over time, partnerships between the two camps have emerged as viable options. O ne e x a mple i s t he pa r t ner sh ip between San Francisco-based robo-advisor SigFig and Cambridge (Mass.) Savings Bank to offer retail investment services, which the bank named Connect Invest. Connect Invest is available through a dashboard on the bank’s website, a dedicated mobile app, and the existing CSB banking app. Customers can easily open, fund, and manage automated investment accounts tailored to their goals. The arrangement and service was the subject of a presentation at the Beacon event put on by the Bank Administration Institute in October. One speaker, David Kerstein, president of Peak Performance Consulting Group, observed that there is no need for community banks to sit on the digital sidelines. “Partnership is a nobrainer,” he said. “Fintechs are happy to work with small banks.” Located just west of Boston, $3.2 billion-assets CSB did not have a product option for small retail investors, noted



Dan Mercurio, CSB’s senior vice-president, consumer and small business banking, who also spoke. He said CSB was headed down the traditional brokerage route, but pulled up short after listening to customers complain they were paying too much for investment services at other providers. Casting about for a different way, CSB approached SigFig, whose business model embraces partnering with financial institutions. SigFig was founded in 2007. In May, it received a big capital infusion from UBS, and just before Thanksgiv ing, Wells Fargo announced that it will use SigFig. One of CSB’s requirements was to enable it s investment customers to interact with humans when necessary. Connect Invest allows free videoconferencing with SigFig advisors. Customers also can communicate via chat or email.

Embracing “agile workflow” Building the product took four months from when the deal was inked to full rollout in May 2016. During the process, the bank received a lesson in agile workflow. “They have a radically different culture from us,” said Mercurio, “but we both share a focus on the customer.”

December 2016/January 2017

The bank’s technology group learned what a “daily scrum” is. Every morning, they would be in contact with SigFig’s engineers and a specif ic set of deliverables would be outlined that had to happen that day. CSB was exposed to a whole new way of thinking about “task deliverables,” as Mercurio put it. Another key factor was that compliance was brought in from day one, he noted. Kerstein obser ved that traditional companies that partner with fintechs quickly realize they can apply agile—or lean—processes to other products. They also begin to look for “friction” in various products and processes. For Connect Invest, initial sign-up can be completed online in less than four minutes—slightly longer for people who are not bank customers, Mercurio said. One hurdle was that Digital Insight, CSB’s online banking vendor, initially couldn’t integrate the new service. SigFig felt that its engineers could get it done if they could talk directly to Digital Insight’s engineers. “Digital Insight was great in allowing this,” Mercurio said. “We didn’t have to spend big dollars.”

Initial uptake promising As of mid-November, CSB had more than 100 customers using the Connect Invest platform. Mercurio says the goal is to get 10% of its core banking retail customer base using the automated investment advisor, which would be 4,600 users. The average age of CSB’s Connect Invest customer is 47, said the banker— the same as the average age of SigFig’s overall customer base. “Interest in the service is pretty broad based,” he said, although it does drop off with customers over 65. The bank allows noncustomers to sign up for the service and does not require them to open a checking account. Although it’s not the primary reason for of fer i ng t he ser v ic e , C SB do e s earn fee income from Connect Invest. A $2 ,0 0 0 m i n i mu m i nve s t ment i s required, a nd the ba n k cha rges a n annual advisory fee of 0.5% of the average invested balance.

December 2016 January 2017 Banking Exchange  
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