TransPecos Banks

$500 million

San Antonio

The story of BankMD is one of innovation, but more importantly, it’s one of partnership. It’s the story of a veteran banker taking a bold idea to a long-established community bank and creating a winning digital brand. It’s an experiment gone right.

For many years, Moses D. Luevano planned to launch a specialized banking platform. After two decades in the industry, cutting his teeth in healthcare lending at other banks, he saw an opportunity to create what he calls a “marketplace for physicians.”

Luevano envisioned it as a fully digital platform that followed physicians from graduation to retirement, connecting them with flexible financing and banking solutions for both their personal and business needs. And in 2016, he knew the timing was finally right.

He approached multiple well-established banks that wanted to create a bank from scratch and throw money at it. “Because I’ve been in banking so long,” says Luevano, founder and president of BankMD, “my experience had taught me that that was probably not the most efficient way to go to market. So, I talked to several banking institutions, some regional players and a couple of community banks.”

His idea was to partner with a bank and test the model first. And that’s where TransPecos Banks in San Antonio came in. Luevano approached chairman and principal shareholder Patrick Kennedy and his partner at Kennedy Sutherland LLP, Doug Sutherland.

“They were beyond intrigued,” he says. “We decided to go ahead and become partners and launch BankMD. And it’s been a real blessing because really that relationship was based purely on trust.”

A forward-thinking experiment

In BankMD, TransPecos saw an opportunity to develop a digital-only brand and expand its footprint in a challenging market. “We think of ourselves as a very forward-thinking, tech-savvy, strategic bank that’s willing to innovate in order to reinvent the community banking model,” says TransPecos CEO Michael Kozub.

Michael Kozub, TransPecos Banks
Michael Kozub, TransPecos Banks

To remain competitive and meet customers’ needs, community banks should invest in new technology, Kozub says. At the same time, with new banking experiences being offered on the market today, community banks should adopt ways to reinvent their customer experience, he adds.

The team started developing the idea in 2017. Luevano moved into TransPecos’ offices, describing himself as “the mad scientist sitting in a corner office, with all kinds of crazy chemistry going on.”

One partnership that was essential for getting the new brand up to speed was with technology platform Nymbus, which Kozub credits with “turbocharging” the process.

“They’re a very forward-thinking group,” he says. “They offered us a product called SmartLaunch, which is essentially able to bring a bank up to speed in 90 days, and they have a back office and business process outsourcing group. They basically built us the technology and helped build us the support staff.”

Learning to scale

BankMD launched at the beginning of 2019, starting with consumer mortgages and unsecured lines of credit. More recently, it added a commercial component, offering startup practice finance. The brand is now financing a significant number of women-owned businesses.

The initiative has been a huge success, but how huge is hard to say. Its partners have agreed that they won’t discuss their financial information publicly yet, but Luevano says it has achieved four times the growth they originally anticipated. The numbers are reflected in TransPecos’ asset size, which grew 110% from the end of 2018 to the end of 2020. Currently it’s just shy of $500 million. “I think we’re off to the races,” Luevano adds.

“Community banks have good customers, their long-term customers. They know them; they know all about their lives. That’s conceptually what we’re trying to deliver on.”
—Moses Luevano, BankMD

Luevano attributes the bank’s success to his experience in the medical lending market, knowledge of the customer base and laser focus on client needs. A working group of physicians gives BankMD constant feedback on products and process, which helps develop its business lines. He believes the digital brand has benefited from the community banking model in serving its professional community.

“Community banks have good customers, their long-term customers. They know them; they know all about their lives,” he says. “That’s conceptually what we’re trying to deliver on. We’re trying to say, ‘Great, it’s a market; great, it’s digital; great, it’s all this stuff that we’re doing that’s fancy,’ but at the end of the day, we’re bringing that community banking philosophy to a physician.”

“[BankMD] has forced a community bank that has branches in small western Texas towns to think about how you scale up a business.”
—Michael Kozub, TransPecos Banks

Today, BankMD is a bank within a bank. Its 10 employees work out of TransPecos’ corporate offices in downtown San Antonio, and it’s an entirely symbiotic partnership. “BankMD can’t be successful without TransPecos being successful,” Luevano says. “And, I think at this point, it’s probably vice versa, because we’re pretty dug in now.”

Kozub says TransPecos always knew the business opportunity with BankMD was significant, but it has exceeded his team’s expectations and accelerated its journey as a technology-centric community bank.

“It has forced a community bank that has branches in small western Texas towns to think about how you scale up a business,” he says. “It’s definitely opened up a lot of our horizons.”