Mitzvah-minded unicorn Cross River is on holy mission to foster bank-fintech harmony

“Then I took your ancestor Abraham from the other side of the Euphrates River and led him through the entire land of Canaan. I multiplied his descendants, and gave him his son Isaac.” That’s a passage from Joshua 24:3 in describing how Abraham “crossed over” the demarcation line into a spiritual awakening. It’s also the inspiration for the name of Cross River Bank (CR), led by its charismatic founder Gilles Gade.

The Hudson River may not have the holy resonance of the Euphrates; however, there’s no denying the special character of this Fort Lee, New Jersey-based bank that supports fintech companies including Affirm, Circle, Best Egg, Coinbase, Rocket Loans, Stripe, Upstart and Transferwise.

From its modest beginnings as a one-branch bank in nearby Teaneck, to its leading position within the marketplace lending industry, to its current aspiration to be a standard-bearer of bank-fintech cooperation, CR has been a model of adaptability. A constant, says Gade, is a belief that it’s possible to simultaneously protect customers and deliver more and better services to them. In CR’s latest iteration, those services involve a variety of technology-infused offerings which have defied skeptics, regulatory uncertainty created by court decisions such as Madden vs. Midland Funding and increased competition. To preserve its momentum, the bank recently closed on an eye-popping $100-million growth equity round led by a KKR division and purchased a sizable office building near the George Washington Bridge. That latter move may be unconventional for a fintech high-flier, but as anyone familiar with CR knows, the bank plays by the rules — but it doesn’t play by conventional wisdom. And so far, that’s working out divinely.

GS: Gilles, it’s good to see you. Let’s start with a quick overview on CR, which may not be familiar to everyone.

GG: Thanks, Gregg. We are deeply rooted as a community bank from our founding 11 years ago and we’re one of the last banks chartered by the FDIC before it shut down the program due to the banking debacle. As you know, now the program has reopened.

GS: CR’s foray into fintech is, of course, your claim to fame. That journey started with GreenSky. How did that come about?

GG: GreenSky was on the verge of signing a sizable contract with Home Depot. But it needed a home for the prime and super prime loans that it was going to generate across 1,600 stores. We signed an agreement with GreenSky so that it could use us as the balance sheet.

GS: Fast forward to today, and you’ve grown from that initial use-case into a key banking partner for a who’s-Who of fintech. But you still have a branch that does actual, honest-to-goodness banking, right?

GG: Absolutely. We would not be able to do all the things that we do on behalf of our clients without eating our home cooking.

GS: I know you’ve expanded your offerings quite a bit, but is the marketplace lending business still your biggest segment?

GG: Yes, but it’s rapidly changing because lines are getting blurred. For example, if a payments company wants to become a lender or a lending company wants to do payments, then they have the ability to do that on our rails.

GS: Yes, I get that fintech lines are blurring. Here’s the thing, though. You’re an FDIC-regulated New Jersey bank.

GG: Yes.

GS: Is it fair to say, then, that you’re wearing the reputation of your clients?

GG: Absolutely.

GS: So if Affirm’s Max Levchin were to break character and do something harebrained, the regulators would come knocking on your door—

GG: —And come after us, yes.

GS: As CR moves towards a broader model that embraces payments, you’re entering a vastly complicated world, with all sorts of different actors. I would imagine you’re turning down as many prospective clients as you are taking in new ones, right?

GG: Much more, actually. About two years ago, we saw a slew of new entrants into our marketplace, and we signed north of 250 non-disclosure agreements. But we only signed up 19 platforms, or less than ten percent.

GS: I’ve dug into your financials, Gilles, which shows the benefit of your selective strategy. Given your success thus far, and the zaniness in the crypto world, why get involved in crypto? Do you need it?

GG: That’s a great question. I would say we’re not going say no if we think we can do something right. When we do anything, we start with a white paper, a full-blown risk assessment of the enterprise and how the regulatory environment is evolving. If the policy and procedures pass muster with the third-party folks that we hire to provide an opinion on them, then and only then would we consider launching a program.