Millennial-focused bank Cogni launches with fee-free checking accounts to disrupt the 'expensive' US banking market. Here's the inside look at its launch.

• Cogni is a new challenger bank backed by Barclays, Guggenheim Partners, and the CXO fund, among others.
• The New York-based startup is launching its millennial-focused digital banking product next week in an attempt to disrupt US banking.
• "Incumbents are providing digital infrastructure but it's all about customers," Archie Ravishankar CEO and founder of Cogni told Business Insider in an interview. "We're creating a digital finance product which is entirely consumer focused."
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The latest startup to take a crack at the lucrative US consumer banking market is launching in New York on March 20.

Cogni is a digital bank aimed at millennials and is backed by Barclays, Guggenheim Partners, the CXO Fund, WorldQuant Ventures, Hard Yaka, and Hanwha. Cogni's sell is that it wants to provide an intersection of banking, commerce, and lifestyle in a single place for young Americans.

The company was founded in 2016 by Ravishankar, Kam Patel, and Vincent Power and graduated from New York's Techstars startup incubator.

It offers fee-free checking accounts and free peer-to-peer payments, in a bid to lure in millennials who dislike fees and want the ease of splitting bills with their friends.

Cogni's goal is to convince young Americans to escape overdraft and checking fees by enticing them with a new, simpler offering than incumbents. It doesn't have a US banking licence but has partnered with Community Federal Savings Bank to offer deposits.

"Incumbents are providing digital infrastructure but it's all about customers," Archie Ravishankar CEO and founder of Cogni claimed in an interview. "We're creating a digital finance product that is entirely consumer-focused."

"We want to be an operating system for users in the same way social media was in the early part of the 21st century, we believe banking is the next part of that ecosystem," he added. "Lifestyles are changing and consumers want a better digital experience."

The stats bear him out. By the end of 2022, approximately 57.5 million US millennials will be using digital banking, according to eMarketer. Digital banking worldwide is estimated to reach around $9 trillion by 2024, according to a report from Global Market Insights, with the US set to account for a significant portion.

While US banking has been dominated by Wall Street giants for decades, digital challengers are seeing success by targeting pain points for US consumers. Banking startup Chime, for example, has won market share with fee-free checking accounts and now has more than two million customers. Meanwhile European challengers such as N26, Revolut, and Monzo compete fiercely on their home turf with colorful cards and neat apps, and are now eyeing the US.

Cogni has raised $5.4 million to-date - less than other challengers which have racked up hundreds of millions in a bid to acquire customers. The startup hopes its advantage will come from the fact it will operate as a single payment and commerce platform, akin to something like China's WeChat.

And within six months, Cogni plans to offer brand partnerships where users receive recommendations for products and services based on data and their behavior.

"Banking in the US is expensive and isn't in touch with our target demographic," Ravishankar adds. "Cogni's mission to provide personalized financial and lifestyle services to its members and we have a great team and investors who share this vision."

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