Large corporate banks have the resources to collaborate with — or even acquire — FinTech disruptors or to develop their own innovations in-house. Community banks, meanwhile, may struggle to compete, while the speed of innovation continues to accelerate.
Late last week, a group of community bankers told the Federal Deposit Insurance Corp. that they're feeling the heat from their financial technology peers.
The FDIC held a meeting of its Advisory Committee on Community Banking, where executives from several community banks explained how they're operating in a more competitive market.
"I think these nonbanks, FinTech-type opportunities, are going to be the biggest threat to, especially, community banks going forward," said David Seleski, president of Florida-based Stonegate Bank.
Seleski, whose bank was in the news last month for being the first U.S. card issuer to launch cards that work in Cuba, told the FDIC that FinTech disruptors are "looking for that opportunity where they see there's a particular aspect of a banking process that they can try to disrupt."
"There are so many services we offer our clients, but there's also a threat from nonbanks eating into our traditional profit area," he continued.
Derek Williams, president and CEO of Century Bank & Trust, based in Georgia, also weighed in, highlighting the mobile P2P money transfer service Venmo as one that is particularly competitive.
"How can my customer get money to someone that quickly who is not a customer of the bank?" the executive said, also pointing to alternative and online lenders as another threatening area. "Those are the hurdles we're trying to get by."
The commentary was given as part of the FDIC's efforts to examine the FinTech space to oversee banks, consumer protection, compliance and more.
"It's basically to gain an understanding and assess — monitor, if you will — FinTech activities, developments and trends, understand in greater detail what is occurring in the market [and] evaluate the impact to our organization and stakeholders," explained FDIC Senior Deputy Director for Risk Management James Watkins during the committee.