Community Bank And FinTech Partnerships Gaining Traction

Traditional FIs may feel pressured by the growth and inroads of nimbler tech-focused brethren in the FinTech realm.  But collaboration is key, and one subset that may see a sprouting of matchups between stalwarts and upstarts may be in community banking.

Community banking may get a boost from technology, if recent activity is any indication.

In Florida, reported American Banker – in the community banking realm – Seacoast Banking has paired with SmartBiz Loans to shorten the loan approvals process. The financial publication reported that the linking has shortened the funding application period to 10 days, roughly by half.

The relationship, which has been in place since the end of last year, has helped the bank log $700,000 in gains from selling loans, as measured in the first quarter of this year. This is triple the amount from a year ago.

Joint efforts from community banks are reportedly picking up steam. In an interview with American Banker, Robert Giltner – who chairs RCGILTNER Services, which offers small business lending products – surmised that community banks are going to win the FinTech battle. First and foremost, they already have the customers. They bank all these small businesses. They just don’t have the loans … digital [technology] puts them back in the game.”

A May survey of 440 community bankers via the American Bankers Association found that as many as 71 percent plan to debut digital small business products through the next 12 months. For smaller loans, said the financial publication, FinTech could be a useful conduit.

Separately, banking software provider Temenos said this week that traditional firms may see FinTech upstarts as threats, but those same traditional players have a place in the digital banking realm, based on trust garnered from authorities and customers.

The company said that it surveyed more than 400 banking executives, with more than half of them stating that financial services firms – such as PayPal and Alipay – are the biggest non-traditional competitors emerging over the next few years. Some forms of complementary relationships could be in the offing.

Said Lee Volante, director of the Temenos’ business solutions group for APAC, as quoted by The China Post, “the more organizations like Alipay move into traditional banking, such as deposit-taking and lending, the more they will attract the attention of the regulator, as is beginning to happen. We believe organizations like Alipay may well become the face of retail banking, but they will rely on banking organizations to do the heavy lifting as regulated institutions.”

In the United Kingdom, with reach into Asia, Schroders, the investment manager, took a minority stake in WeInvest, a Singapore-based digital firm focused on wealth services. The FinTech offers what has been reported by as an end-to-end platform for firms that span banks to independent financial advisors. The acquisition of the minority stake should be completed in June. In a statement, Schroders’ CEO Susan Soh said that “we believe this investment opens up opportunities for closer collaboration with our distributors, through a platform that enables them to tailor solutions for their clients.”