Thrivent makes move to attract younger clients by creating online bank

Patrick Kennedy, Star TribuneStar Tribune

In years past, the first experience with Thrivent Financial might have been through the purchase of an insurance product or a mutual fund. Now the Minneapolis-based national financial giant is creating an online bank to reach more and younger people earlier in their financial journeys.

Thrivent, a financial services firm, has been affiliated with a credit union for years. It recently received Federal Deposit Insurance Corp. (FDIC) approval for an industrial bank charter that will merge with the credit union.

The creation of an online bank fits with the goals of CEO Terry Rasmussen to upgrade technology at the 121-year-old Fortune 500 organization, especially to customers who expect their financial services to be delivered over their smartphones.

Thrivent, a nonprofit fraternal benefit organization, chose an industrial bank charter for several reasons, including that it does not require the parent firm to be a holding company — for example, how U.S. Bancorp owns U.S. Bank.

Choosing an industrial bank charter was a bit of a risk, though. Thrivent officials said only three industrial bank charters have been granted in the past 15 years, and only 24 industrial banks are currently in operation in the United States. Thrivent Bank will be registered in Utah, where 15 of the other industrial banks are registered.

"These regulatory approvals are a testament to the strength and uniqueness of our application and are a critical milestone on our path to introducing Thrivent to more people through banking," said David Royal, Thrivent's chief financial and investment officer.

The Thrivent Federal Credit Union is independent and member-owned. Those members must approve the merger with the new bank for the Thrivent Bank plan to be completed. After a merger the credit union's $930 million in assets would transfer to Thrivent Bank, where deposits would then be insured up to $250,000 by the FDIC rather than the National Credit Union Administration.

Martin Gruenberg, chairman of the FDIC, is reportedly not a fan of the industrial bank charter but he endorsed Thrivent's 3,000 page application, and the Thrivent Bank plan also got the approval of the acting comptroller of the currency, Michael Hsu.

"The proposed industrial bank and combined entity would broaden Thrivent Financial's reach within the general population and attract new clients beyond the credit union's restricted field of membership and capital growth limitations," Hsu wrote.

Thrivent Bank will enter a competitive landscape, but officials say it will bring Thrivent's client-centered approach to its products and services and with the support of the wider Thrivent organization will have advantages some other young banks don't have. It also will be able to expand the offerings of the existing credit union.

"What you should expect as a client of the bank is improved products and digital functionality that are necessary just to stay relevant with today's market," said Brian Milton, proposed president of Thrivent Bank.

Thrivent has been actively planning for the new bank for the last three years. Milton was hired in March 2021 from MUFG Union in order to plan for and run the new banking operations.

The Thrivent board of directors has already approved significant capitalization of the bank, Royal said.