Swaystack lands investment from Btech Consortium Fund

Swaystack, a digital onboarding and engagement platform for community banks and credit unions, said it secured a strategic investment from Btech Consortium Fund to help more institutions turn newly opened accounts into fully funded relationships. The move comes as banks face pressure from neobanks and rising deposit competition.

Why it matters: - Community banks and credit unions are under pressure to grow deposits, not just open accounts. - Industry estimates cited in the release say the cost of acquiring a new checking account tops $400. - Nearly half of new checking accounts go dormant within a year. - More than 40% of new business accounts and more than 50% of new retail accounts are never fully funded. - Swaystack is aimed at converting those new accounts into active, primary relationships.

What happened: - Swaystack announced a strategic investment from Btech Consortium Fund, a consortium of community banks. - The company said the funding will help expand its unified account activation platform for community banks and credit unions. - Swaystack said it has signed 26 financial institutions to its platform, up 189% over the past year. - Think Bank is using Swaystack to help newly opened accounts become active and fully funded.

The details: - Swaystack combines retail account switching, business account switching and ongoing customer engagement in one platform. - The platform lets a customer fund and activate an account on their own or with help from a banker. - Swaystack integrates with digital banking systems already used by banks, including Jack Henry/Banno, Q2, Alkami, Lumin and Candescent. - Swaystack’s platform also includes pre-approvals, according to the company’s product description. - Btech Consortium Fund is a partnership between U.S. community banks, Elizabeth Park Capital Management and Strandview Capital. - The consortium’s mission is to help community banks compete with larger national banks, reduce dependence on legacy core technology and better serve customers.

Between the lines: - Banks often have separate tools for direct deposit switching, engagement and other activation tasks, but those products are frequently disconnected. - Swaystack is positioning itself as the single platform to fill that gap. - Neobanks and consumer finance platforms such as Mercury, Chime and Robinhood are increasing competition for deposits and primary financial relationships. - Har Rai Khalsa, Swaystack’s co-founder and CEO, previously founded MK Decision, which Alkami acquired in 2021. - Simran Singh, Swaystack’s co-founder and CTO, previously co-founded Zogo. - Btech Consortium said many of its bank members remain dissatisfied with what their current digital banking providers offer for account activation and engagement. - Becky Wendland, chief technology and innovation officer at Think Bank, said the bank wants to get customers set up, funded and activated quickly and build trust from day one. - Mike Sekits, managing partner at Btech Consortium Fund, said the investment reflects confidence in Swaystack’s team and product.

What's next: - Swaystack said the investment will help it bring its platform to more community banks and credit unions. - The company will continue targeting banks that want to improve funding, switching and engagement after account opening. - More information is available in the company's announcement and the consortium's website.

The bottom line: - Swaystack is betting that the next competitive edge in banking is not account opening speed, but turning new accounts into funded relationships.