U.S. consumers are awash in banking choices with the growing popularity of digital-first brands like Chime, Revolut, and Goldman Sachs’ Marcus. Meanwhile, fintech companies like SoFi and Venmo are offering debit cards, even as traditional banks like Chase and Citi remain ubiquitous. Do consumers need yet another option?
The founders of OnJuno believe they do. The new arrival offers consumers yet another digital bank option, one that dangles the promise of “high interest.” These days “high interest” is a relative concept, but OnJuno’s 2.15% rate is quite attractive, especially compared to the piddling 0.5% return that Marcus—which likewise touts itself as a high-yield bank—is offering. (For regulatory reasons, OnJuno prefers to describe the amount it pays out as a “savings bonus” rather than interest.)
OnJuno has two flavors of account: a basic one that caps the 2.15% interest rate to balances up to $5,000, and a premium “metal” one that offers the rate up to $30,000. The metal account comes with a $10 monthly fee that OnJuno is waiving for the first six months. Both versions offer cash-back rewards and no-fee ATM access—services that are becoming table stakes for most challenger banks.
I spoke with Varun Deshpande, one of the OnJuno cofounders, why he thinks Americans are ready for another digital bank. He acknowledged that the market is a crowded one, but he believes there is a niche for OnJuno among Asian-Americans.
He says that those in this diaspora community (including both South Asians and East Asians) number about 20 million, and that they differ from the typical U.S. consumer in several respects. First off, he says, their average income is considerably higher, at around $50,000 a year. Deshpande adds that Asian-Americans are also typically more averse to risk and credit—meaning they are likely to keep more cash on hand—and have shown a willingness to embrace technology.
OnJuno’s thesis—that they can move in on the challenger bank market by targeting a specific niche of consumers—is consistent with what Mark Goldberg, a partner at Index Ventures who specializes in fintech, recently told Fortune. According to Goldberg, the market is saturated and some banks are unlikely to survive, but those like Greenlight, whose niche is debit cards for kids, still have a chance to flourish.
Deshpande, whose experience includes building cryptocurrency projects, says OnJuno has another advantage in that he and his team are located in India, where costs are lower.
OnJuno says it expects to spend around $200 to $300 to acquire each new customer and is relying on unorthodox marketing strategies—including paying star chess players as influencers—to spread the word. The startup has raised $3 million so far, including from Sequoia’s Surge Fund and Polychain Capital.