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How Novo, a Challenger Bank for SMBs Grew Exponentially during COVID-19

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Michael Rangel Novo

Michael Rangel, CEO, and co-founder of Novo tells us about problems with SMB banking.

First of all, how are you and your family doing in these COVID-19 times

Michael Rangel: Thanks for asking. I was based in New York for most of the last year. It was an extraordinary 2020, and I feel very lucky that my family and I were able to stay safe and healthy. 

My wife and I recently moved from New York City to Miami, where we’re opening Novo’s second office. While we were looking for our apartment, we quarantined with my parents for a few months. It was nice getting to spend so much time with them, and they were kind to put up with us for that long!

Tell us about you, your career, how you founded Novo.

Michael Rangel: I’ve been working since I was a kid and first got into finance at the age of 19. I knew that I was good with numbers, so when I got the opportunity to take the Series 7 certification later that year, I jumped on it. I had my Series 7 certification before I took my first finance class in college and was one of the youngest kids at the time to get it. 

As an undergrad, I wanted to launch a business but thought I needed more knowledge, more money, or more connections. I moved up to New York City in 2015 and started taking classes at Columbia University as I thought an MBA program was going to be my next step.

Around that same time, I talked with a longtime friend of mine about launching something to become the proverbial ‘startup bank’ as we had both experienced the problems with SMB banking in our own right. We started working on Novo in 2016 and launched in 2018. 

How does Novo innovate?

Michael Rangel: I couldn’t be more proud that Novo was named one of the best business checking accounts of 2021 by Money magazine. The award is a testament to how our team has innovated in the digital small business banking space. 

Many digital banking platforms for small businesses feature limited functionality when it comes to integrating with e-commerce platforms, difficult-to-use interfaces, or high fees for maintenance, ATM usage, add-ons like invoicing, and more. Small businesses have switched to Novo because our digital-first banking platform offers robust functionality and an intuitive interface for e-commerce payments — completely free of charge and without minimum balance requirements.

We recently announced a number of enhancements to our digital banking platform, which you can read more on our features page—

How the coronavirus pandemic affects your business, and how are you coping?

Michael Rangel: COVID-19 had a K-shaped impact on startups, causing demand to decrease for some businesses (like restaurants) and an increase for others (like telehealth companies).

In the digital banking space, COVID-19 caused a significant increase in demand. In short, we’ve been drinking from the proverbial fire hose since lockdowns started about a year ago. At Novo, we grew our portfolio by 5x and processed more than $600M in transactions in 2020. We’ve also grown exponentially in the first quarter of 2021—when our competitor, Azlo, shutdown, many of their customers switched to Novo – positioning Novo as the leader in the space targeting Mainstream American Small Businesses. As we look toward the next year, our team shares a deep commitment to doing our part in helping these small businesses recover.

Did you have to make difficult choices, and what are the lessons learned?

Michael Rangel: In the early days of the pandemic, we reduced expenses across the board to increase the financial runway as much as possible. It was a really difficult period for a lot of people as priorities got shuffled around, budgets were slashed, and some people had the wind taken out of their sails. But, everyone came together in the end and continued to push through the difficulty.

Thankfully, we didn’t have to make any layoffs because we were already operating pretty lean, but we did take a pretty hard stance on salary increases across the company. Basically, “hey we didn’t have to fire anyone, but no one is getting raises until we come out on the other side of this thing.”

What specific tools, software and management skills are you using to navigate this crisis?

Michael Rangel: Slack has been an incredibly useful tool for keeping us all connected. In terms of video meetings, I’ve been very impressed with how far along Google Meet has come. We use this software instead of Zoom for a lot of our team meetings, and it integrates very well with the Google Work suite. 

In terms of management skills, one of the biggest things I learned in 2020 was how to deal with uncertainty and radical change. As a leader, I embraced flexibility and transparency more so than ever before, which was critical during times when my team of 50 people was looking to me to guide them to an extraordinary year. When I didn’t have an answer to their question, which occurred much more often during a pandemic that put so much in flux, I was honest with them about what I knew and what I felt was the best decision based on current information. 

Who are your competitors? And how do you plan to stay in the game?

Michael Rangel: One of our biggest competitors, Azlo, announced in January that they’re shutting down operations at the end of March 2021. In their blog post announcing their closing, they recommended Novo as an alternative for small business owners. We were honoured that, in their post, they highlighted Novo’s “no monthly or hidden fees,” “no minimum balance requirements,” and “unlimited ACH and checks.” 

There are a few other FinTech startups who think they compete with us, but we don’t put a lot of focus on them. At the end of the day, the only competition we truly care about are the large financial incumbents that service the vast majority of businesses out there today. 2020 has significantly shifted the way people think about banking. And, it’s interesting to see that the often asked question, “Why do you still bank with them?” is starting to change as a result.

Your final thoughts?

Michael Rangel: I’ll leave you with two thoughts:

First, COVID-19 certainly accelerated small business adoption of digital banking platforms, and I anticipate that this speed of adoption will only increase in the years ahead. Particularly as more and more small businesses move to be e-commerce-first, they will demand digital banking solutions that are intuitive, flexible, and cost-effective. 

Second, as we look toward the future of small business banking, one area that particularly intrigues me — and an area that our company is actively working on — is how technology can help small businesses improve cash flow. For instance, if a banking platform can help a small business reduce the time it takes to receive payments from e-commerce sites like Shopify from a few days to a few seconds, that small business will have the opportunity to use that money more quickly for things like payroll or capital expenditures.

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Kossi Adzo is the editor and author of He is software engineer. Innovation, Businesses and companies are his passion. He filled several patents in IT & Communication technologies. He manages the technical operations at

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