23 minute read
FINTECH at Georgia’s Community Banks
FINTECH
at Georgia’s Community Banks
Community banks have been built on providing outstanding customer service and bankers knowing their customers. Georgia’s community banks are also known for having a competitive edge by combining technology with personal service to offer a remarkable customer experience while meeting the evolving needs of their customers.
In 2019, CBA partnered with the Advanced Technology Development Center (ATDC), the state of Georgia’s technology startup incubator to identify, develop, and refine financial technology (FinTech) solutions for community banks. The CBA ATDC FinTech Committee was formed, and Georgia’s community banks are taking the lead in finding Fintech solutions for their customers.
“Finding the most appropriate FinTech solutions to better serve their customers is at the forefront of every community banker’s mind,” said John
McNair, President & CEO, Community Bankers Association of Georgia.
An economic development offering of Georgia Tech’s Enterprise Innovation Institute, ATDC’s collaboration with CBA further advances the incubator’s mission to support the growth and development of FinTech startups in Georgia through the ATDC FinTech Program.
FINTECH HUB
• Georgia FinTech Companies generate annual revenues of more than $72 billion, placing third in the nation.
• Georgia companies employ more than 10,000 network and computer system engineers.
• Roughly 100 FinTech companies are headquartered or have a significant presence in Georgia. Six of the ten largest U.S. payment processing firms are Georgia-based.
• Georgia FinTech organizations employ more than 30,000 professionals in the state and over 130,000 globally.
• Georgia FinTech companies process over 118 billion transactions per year representing over $2 trillion of purchase volume each year, supporting nearly 4 million merchants.
“ATDC is happy to collaborate with the CBA of Georgia to celebrate the narrative of community banks and fintech companies working together to create a better financial ecosystem across the state of Georgia. In the past, fintechs and banks were positioned to be in competition with one another, but the reality is fintech technology can help enable banks to innovate and expand their services,” explained Kristin Slink, FinTech Catalyst, ATDC, Atlanta. “ATDC and CBA of Georgia is working together to abolish myths and bring both sides together to understand each other in an idea driven, collaborative environment.” “I’m really proud of the CBA’s efforts to establish relationships in the fintech community. The partnership with ATDC is a model for other state banking groups to follow. The value the bankers bring could be the difference in success or failure for these young companies. Likewise, the ATDC fintechs are bringing new ways thinking about how consumers interact with their finances,” stated Scott Mills,
APR, President, William Mills Agency, Atlanta.
“Community banks are relying on technology even more—to innovate, be nimble and efficient, and serve the highly complex needs of customers,” said ICBA Chief Innovation Officer Charles Potts. “That’s why Accelerator programs that facilitate community bank-fintech collaborations and solve for community bank pain points are so important. Ultimately, it’s about accessible, viable and effective solutions that speak directly to the needs of community banks while creating the high-tech, high-touch experiences that provide value for customers.”
COLLABORATION IS KEY
Georgia Community Bankers Share Experiences and Advice
includes a group of bankers and associate members who are passionate about how fintechs have improved the customer experience and increased efficiencies at their bank. An important piece of the banking-fintech puzzle is working closely with regulators. “The current pandemic seems to have pushed us ahead five or ten years in terms of how we conduct business through digital delivery channels, further highlighting the great opportunity for banks and fintechs to collaborate and partner,” stated Kevin Hagler, CEM,
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Matthew Mingenback
817.698.2268 mmingenback@fitech.com
Commissioner, Georgia Department of Banking & Finance. “Fintechs have the ability to provide improved delivery channels and process solutions through agile development to better meet the needs of businesses, consumers, and the banks themselves, in a rapidly evolving environment. Banks bring to the table the critical working knowledge of banking laws and regulations, and a strong, well established financial platform. As a regulator, my focus is on the safety and soundness of the industry, and my goal is to fulfill that mission in a manner that embraces innovation and helps facilitate it, not stifle it.”
CBA invited several members of the ATDC Fintech Committee to share their experiences and most importantly, their advice for getting started. As you will read, each bank has different goals and objectives and our member banks have a wealth of knowledge to share with their counterparts. Thank you to these contributors.
Keith Sebade
Chief Strategic Officer BankSouth, Greensboro
BankSouth is focused on what we believe are two sides of the same coin when it comes to technology – efficiency and customer centricity. For years we acted like a buyer of multiple software systems, each geared at a limited solution without regard as to how the program might fit into the core (which was dismissed because it always seemed difficult) but also how it should integrate with other adjacent customer oriented systems. Our goal now is to create a whole ecosystem that is interactive, easy to navigate for customers and easier to manage on the back-end to be more efficient. We believe that if our systems and processes are built around the customer experience, those systems should also be easier and more efficient to manage for us as well. With that in mind, an ounce of integration is worth a pound of additional capability in our book. When we look at new solutions, we are a little wary until we understand how it could integrate into our core, databases, adjacent systems and become part of our customer experience. For instance, a bank could purchase a brand new loan origination system with slick portals and a phone app that also alerts customers automatically on the status of the application – but the positive impression of those capabilities could be lost the second the bank sends the same customer a different portal requesting a lot of the same information in order to open their deposit account and a separate CRM sends the customer an email advertising new low rates for the same type of loan for which they’ve applied
As a bank, we should realize from the beginning that fintechs and banks are entirely differently oriented. Banks are regulated companies and responsible for a broad array of customer service issues, customer data, security, multiple compliance and best business practices – not to mention risk. Fintechs are usually formed around a single idea or problem to solve. They charge hard at the problem they’ve identified and bring innovative solutions and thinking to the issue but at the same time may not see the wider customer experience and the situations that will arise with customers or approach operations with the same level of risk management as a banking team. A bank is interested in better technology that fintechs can provide, and a good fintech partner should understands they need the knowledge that a bank brings in understanding the broader customer, regulatory and operational issues that come with banking services. Finally, it will always be up to the bank to determine how a fintech solution integrates into the bank’s technology ecosystem and core.
Kimberly Kirk
Executive Vice President, Chief Operations Officer Queensborough National Bank & Trust Co., Louisville
There are several parameters that I look at when employing any technology including fintech offerings. Does it improve the customer experience? Does it improve the teammate experience? Does it generate revenues or create efficiencies for the bank? Does it help the bank improve its security posture or meet safety and soundness goals? Ideally, the solution meets more than one of those requirements.
We have used technology heavily through the pandemic, particularly as the bank originated PPP loans using Robotic Process Automation (RPA) as much as possible to create loan packages and book and fund loans to ease the workload on our teammates as well as online document portals and electronic signature capabilities to ease the process for the customers to submit documents to the bank and execute loan agreements as many folks were quarantining, and the bank’s lobbies were closed. We have also deployed a solution from a fintech for PPP loan forgiveness to make the process for the customer easier and to manage the forgiveness process for the large number of PPP loans that the bank has originated.
The bank already had a full suite of mobile products for customers to support remote customer transactions and offers cash and check deposit functionality at all of our ATMs to allow customers to make deposits with the bank at any time. The bank launched a customer care team last fall who transitioned to a virtual environment during the pandemic to continue to support customers, and with the telephony technology the bank has deployed, calls initiated to the branches are routed to the care team as branches have closed due to the pandemic so that customers can still receive live support. In addition, the bank has just recently launched chat functionality and secure messaging in our online and mobile banking solutions so customers can receive support via live chat if they choose that delivery method as well, and can exchange documents with the bank securely.
The bank goes through an exploratory process and new vendor risk assessment when a new partnership is considered. Information Security Risk is considered depending upon the kind of information the vendor will have access to, and controls the vendor has in place to manage and secure that information. The bank looks for information security policies and procedures to be in place with the vendor, including hiring practices. The bank looks at any available audit reports from the vendor including SOC reports available on data centers that the vendor uses, business continuity plans, and results of disaster recovery testing. Other consumer compliance risk is assessed based upon the product or service being considered and documented in the new vendor risk assessment.
Advice: The bank should assess what its needs are and the problem it is trying to solve to understand if a fintech is a good fit to solve that problem, and fits in the bank’s strategy. Buying the shiny new object may not provide desired results for the bank. The bank should also consider the ways that it can engage with fintech firms, either by purchasing services through a larger vendor like the bank’s core provider or
online banking provider allowing that vendor the bank already has a relationship with to do the due diligence on the fintech and integration work that may be required, or by engaging with the fintech directly. There are pros and cons to both models.
Marisa Reynolds
SVP, Digital Transformation & Information Technology Oconee State Bank, Watkinsville
As a community bank, Oconee State Bank’s mission is to create remarkable experiences for our customers. Partnering with and fostering Fintech relationships provides the bank a definitive edge in meeting our goals for competitive, friction free, and efficient systems to meet the evolving needs of our consumer and commercial customer base.
During these unprecedented times, both consumer and commercial customers have become reliant on technology more than ever. The introduction of electronic applications and signatures to serve our customers, for processes that were previously performed solely in the financial centers, is one example of evolving with the changing environment. The bank was able to seamlessly support our customer base remotely, while remaining focused on the convenience, safety, and security of the transaction.
A Fintech can assist all areas of the bank with improved workflow, decision making, and efficient processes, which allows our team members to maximize their time building customer relationships. We want the customer to experience a friction free and fluid transaction that exceeds their expectations. Introduction of Fintech digital solutions has helped the bank attain these goals. A Fintech company should be in tune to the legal, regulatory, and compliance components that are unique to the banking industry. It is important these areas are communicated to the bank effectively in order to gain trust in their software applications and company. In addition, the Fintech must be able to provide a remarkable end user experience for our team members, one that is efficient and allows ample time to onboard the customer’s full relationship.
Advice: It is imperative for a bank to stay educated on available solutions by utilizing multiple resources for information gathering and building Fintech relationships. In addition, be willing to discuss the bank’s pain points with Fintech companies. Remember to be receptive to open concepts and new ideas to solve problems. As the bank transforms and evolves digitally, the bank will be better positioned to make more informed strategic technology decisions.
Our mortgage warehouse business unit relies heavily on technology to deal with its volume of over 3,000 transactions per month from nearly 100 mortgage originator clients. Efficiency, accuracy, and effectiveness are key, with poor execution resulting in dissatisfied clients, undue risk, and untenable cost. Competition is fierce, and we’re constantly working, often with third parties, to improve our delivery and thus provide better service, leading to higher returns. Client
STRENGTH IN FINTECH “Transaction Alley”
• 70 percent of all U.S. payments are processed through Georgia
• Payment processing companies employ nearly 40,000 workers in metro Atlanta with more than 250,000 people working in financerelated occupations, according to the American Transaction Processors Coalition. There are an additional 105,000 people around the world on the payroll of these Georgia companies, giving to the nickname “Transaction Alley.”
access to our system is key in that it improves timing and accuracy as well as allowing them better control over their own timing and priorities.
The ultimate measure of effectiveness of our pandemic response is client and employee opinion, which were and continue to be extremely positive. Early on, our bank decided that dispersing the majority of our workforce to their homes provided our best option to maximize their safety and continue to achieve our business objectives. Fortunately, we had in place a comprehensive pandemic response plan which we had regularly practiced with actual dispersions, including laptops, business phones, and other relevant gear. We were responsive to system issues and priorities with tech team action, as example sourcing and delivering second screens to the entire team in 24 hours. We also used tech solutions to facilitate communication and morale building, with Zoom becoming, and remaining, one of our best tools, and online food sourcing a new way to break bread together.
GROWING THE NEXT FINTECH COMPANIES
Georgia Tech’s ATDC FinTech Accelerator program, sponsored by Worldpay, works with early stage FinTech companies to help them with connections to coaching, capital, customers, and campus resources and talent.
Source: ATDC
Advice: Our advice for new adopters is that the quality of the preferred good or service is key, both in terms of its effectiveness and suitability for your particular needs. Fly by night vendors will have flown when difficulties arise. Verifiable successes are important, and not just from references they provide which will always be positive. Two final notes: If you don’t have capable technologists on your team, get help from someone other than the seller; and: Take a realistic approach to the numbers; the niftiest technology may or may not be a good value proposition insofar as providing ultimate return.
Frank Griffin,
President Flint Community Bank, Albany
Our primary goal for using technology is ultimately for competitive edge and efficiency. We are a one location bank and we have positioned ourselves to take the bank to the customer. Efficiency is the key for our success. Leveraging available technology to enhance the delivery of our products and services to our customers is the only way to survive in today’s market.
We have not introduced new products to our customers. However, because of COVID-19, the shelter in place orders and the subsequent fear that has gripped our nation, the use of our existing electronic delivery products and services has become the norm, rather than the exception. Technology has allowed and the pandemic has basically required us to close loans and open new accounts using electronic signatures, in greater number than ever before. In the past, electronic signatures have been used simply out of convenience. Today, its use is a necessity. For us, Fintech products or services are just more arrows in our quiver for effective, efficient delivery of product and services. It is certainly convenient in these times of necessary social distancing. However, I believe our delivery systems will forever include face to face delivery as well as the convenience of fintech products and services.
It is my belief that the greatest efficiency to be gained is in the daily interaction with customers. Using technology to interact electronically via email, text, video conference, etc., if used properly and professionally, will increase the delivery of solutions to customers so that time is saved and matters are resolved in a more efficient and effective manner, creating more bandwidth for each employee to meet the expectations of more customers on a daily basis. More efficient, effective communication and service delivery will reduce future overhead costs, while hopefully creating a better customer experience.
There is a learning curve for most customers at the onset of new products and services. However, our customers welcome new technology and adopt it rapidly. We have had no complaints concerning how we delivered our products and services during the COVID-19 crisis.
Due diligence is of utmost importance when evaluating any potential partnership, but especially those partnerships which will present opportunities to have private information sharing or potential interactions directly with our customers. Our Information Technology Steering Committee, which consists of senior management and our IT professionals, has a vetting process through which all pertinent information from the potential partner is evaluated.
Advice: If you are in my market and are one of my competitors, don’t do anything. Stay like you are! Otherwise, if you are not one of my direct competitors, just GO FOR IT! How to get started? The CBA has a listed of endorsed technology consultants and providers. I would start with John, Lindsay and CBA team. I would also recommend speaking with other community bankers around the state to learn of their experiences or best practices in implementing new technology.
Chris Stanley
Our primary goal for Atlantic Capital’s fintech banking program is to fuel prosperity for our clients by creating a true partnership, offering best of breed solutions, and providing unparalleled customer service. We pride ourselves on creating a seamless onboarding process to maximize customer experience from the 1st conversation with a prospective client. We strive to deliver the same standard of service throughout the duration of the relationship. Our fintech practice was built from the ground up with an entrepreneurial mindset and strives to help entrepreneurs exceed their goals by offering tailored solutions to fit the ever-changing needs of their business. Technology has been key in allowing our fintech clients and the bank continue to focus on serving our clients. Atlantic Capital was wellpositioned to transition to a virtual environment and we have done so exceptionally well.
Fintechs help banks acquire new technologies, such as: a streamlined banking core and more efficient sub ledger management, utilize AI and machine learning to identify/minimize fraud risk to the bank, provide data solutions to help streamline internal KYC/BSA/AML compliance processes, provide point of need lending platforms to allow the bank to reach more clients, and API’s to allow business/consumer clients to plug in to more streamlined solutions with less friction.
While you can’t replace the experience of direct human interactions, fintech’s rely solely on technology to reach complex multi-generational demographics of defined market segments and have become experts at streamlining the ease of which a consumer can manage their finances. Fintechs need to partner with a bank that is able to match their entrepreneurial mindset and provide guidance around how to achieve their goals in a compliant and efficient manner. That is where we come in. At Atlantic Capital, we are able to leverage our industry expertise to help fintechs achieve growth by providing a scalable and compliant banking infrastructure. Banks have to adhere to and are used to operating within stringent compliance requirements but that is something that fintech companies aren’t always accustomed to, especially when in startup mode.
When evaluating a new prospective fintech client we focus on what the fintech does best and we gauge where the fintech company is in their business cycle. We find ways meet them where they are and to help them expand on what they already have in place. We dig deep into the inner workings of the fintech to make sure we understand everything we can about their current processes and procedures. We look for fintech partners who have a proven pilot in the market or that have the potential to create traction in the marketplace.
CBA ATDC FINTECH COMMITTEE
Committee Chair: Chris Stanley, Atlantic Capital Bank, Atlanta
Vice Chair: Dawn Bridges, First National Bank of Coffee County, Douglas
• Brandon Baines, Atlantic Capital Bank, Atlanta • Kathryn Bunn, Atlantic Capital Bank, Atlanta • Zach Duke, Finosec, Alpharetta • Frank Griffin, Flint Community Bank, Albany • Jim Jowers, Colony Bank, Fitzgerald • Kim Kirk, Queensborough National Bank & Trust Co., Louisville • Jim Lientz, Safe Harbor Consulting, LLC, Atlanta • Elliott Miller, Georgia Banking Company, Atlanta • Scott Mills, William Mills Agency, Atlanta • Ross Mynatt, Craft Bank, I.O., Atlanta • Alisha Nasse, Hyperion Bank, Atlanta • Lincoln Parks, Heritage Bank & WebMobileFusion, McDonough • Ed Pope, F & M Bank, Washington • Marisa Reynolds, Oconee State Bank, Watkinsville • Jim Rumph, Wipfli/PKM, Atlanta • David Saylor, Genesys Technology Group, Norcross • Keith Sebade, BankSouth, Greensboro • Kristin Slink, ATDC, Atlanta • Mani Swarnam, Georgia Primary Bank, Atlanta • Kevin Thrash, American Commerce Bank, N.A., Bremen
With that being said, we currently partner with fintechs on both ends of the spectrum, some are still in startup mode, burning cash and striving to create a new market, focusing on raising their Seed Round/Series A Round. We also work with several well established fintech companies that are in the revenue generating phase, which typically means they have experienced a great deal of traction in the market, have a proven/ compliant business models and have
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gathered strong interest from VC’s, Angels and other investors. All of the circumstances mentioned play a key role in determining a partnership fit. For instance, if a fintech approaches us and needs assistance with ensuring that the business model they created is a compliant and operates within regulations (set forth by the OCC, SEC, Fincen, NACHA) not only do we have banking solutions to assist with that but we also work with outside industry experts who are able to coach fintechs around the best way to build that into their existing business model. This allows the fintech company to focus on what they do best: delivering unique solutions to help make their customers’ everyday lives better and capturing an underserved/ unidentified share of the financial services market segment.
Advice: I would say that entering into the fintech banking space has paid dividends for Atlantic capital and has been a very rewarding opportunity from a professional/organizational experience. But every opportunity comes certain challenges. If your organization is considering this as potential new stream of revenue, I would provide this advice to help you minimize the barrier to entry and quickly capture a share of the market. • “Define Your Niche and Expand on it” Make sure when vetting that it is something that currently aligns in some form or fashion with what you are already an expert at. For example, before starting our fintech practice Atlantic Capital was already a top 50 (now top 40) ACH processor in the US. This is due largely in part to the how we designed our infrastructure and the success we experienced when targeting the payroll market. These variables were taken into heavy consideration when considering the opportunity to expand our footprint and capture a portion of a new market. • “Find the Right Guide” Whether preparing to go on a hiking expedition or trying whitewater rafting for the first time, an experienced guide is something that you don’t want to leave home without. In the infancy stages of creating a new line of business it is crucial to have a guide. Don’t spin your wheels on trying to retrain existing personnel to overtake a challenge that they may or may not be comfortable with. • “Don’t be afraid to shake things up” Your existing organization probably has a certain way of doing things and that is fine as all organizations have a specific culture. See this as an opportunity to expand your personnel and get a fresh perspective from outside resources • “Identify a Keystone Client” The word “Keystone” typically means “something on which all else depends” and could not be truer in this sense. If you are building out a new line of business you will need to invest crucial man hours and hard earned company dollars but you don’t want to do this without ensuring some form of return on your investment. Find a fintech who’s “niche” aligns with yours and build the business model around the goal of integrating with their client base and offering a better solution together than you would be able to separately. The success of developing a new line of business is greatly determinate and hinges on partnering with the right client.
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