Sumitomo Mitsui Banking Corp. (SMBC) has announced the closure of Jenius Bank, its digital-only consumer division in the United States, resulting in the layoff of 161 employees. This decision marks a significant shift in SMBC’s retail banking strategy in the U.S., as the company seeks to manage financial losses attributed to high operational costs.
As detailed in a regulatory disclosure issued on January 8, 2024, the layoffs will include key positions such as the unit’s president and chief information officer. The affected employees, including various engineering and marketing leads, have been notified that their employment will terminate on or around March 10, 2026, following a mandated notice period. This closure aligns with the requirements of the federal Worker Adjustment and Retraining Notification (WARN) Act, which necessitates advance notice of mass layoffs.
Jenius Bank, headquartered in Los Angeles, has operated as a division of SMBC Manubank, a California state-chartered commercial bank. The decision to shut down Jenius follows a reported $38.3 million loss in the first quarter of 2024, largely due to the costs associated with maintaining Jenius’s operations and workforce.
Strategic Shift and Employee Impact
In a letter to the State of Oregon, Robin Milberg, chief human resources officer for SMBC Americas Division, confirmed the layoffs involved all U.S. employees, not just those in Oregon. A spokesperson for SMBC later reiterated to American Banker that the shutdown entails a suspension of new account openings and loan originations, adding uncertainty about the future of existing customer accounts and the bank’s loan portfolio.
Employees expressed mixed emotions regarding the closure on LinkedIn. April Mazzola, a leader in web and digital strategy at Jenius, described her colleagues as “some of the smartest, most thoughtful, and most talented” individuals she has encountered in her career. She expressed disappointment about the decision not to pursue the retail banking product, emphasizing the team’s potential.
A marketing leader within the bank highlighted the rapid growth of Jenius’s high-yield savings product, which surged from zero to over $2 billion in deposits during her tenure. Jenius Bank distinguished itself through its cloud-native, paperless operating model, catering to users described as “digital optimizers.” The bank utilized various technological platforms, including FIS for core operations and Google Cloud for analytics, to facilitate its services.
Ambitious Goals and Financial Struggles
Initially, management envisioned Jenius as a critical component of SMBC’s long-term strategy to bolster U.S. dollar deposits and penetrate a significant market. The bank reached the milestone of $1 billion in deposits within just six months, but this swift growth came with considerable financial strain.
In June 2024, John Rosenfeld, president of Jenius, noted that SMBC was taking a patient approach towards profitability for the startup brand. He stated, “They’re allowing us to do things right, and do things a little more strategically, with the recognition that it’ll take us longer to get to long-term profitability.” Despite the ambitious goals and initial successes, the financial realities have led to the current closure decision.
The closure of Jenius Bank reflects broader challenges within the banking industry, particularly for digital-only institutions facing high operational costs and competitive pressures. As the financial landscape continues to evolve, the fate of Jenius’s customers and employees remains uncertain, highlighting the complexities and risks associated with ambitious expansion strategies.