When was the first time you stepped into a bank? Did you get a Lolli Pop from the teller? Did you open your first checking account and receive a laminated temporary debit card?
FDIC Chairman, Jelena McWilliams, recalled observing both of these and other practices of a bygone era when she recently took an exploratory trip to a local community bank in rural Virginia. At one of my favorite events of #BostonFintechWeek2019,
McWilliams shared more about how her quest to make the FDIC “cool” again lead her to learn more about community banks and discover the need they have to modernize their systems while retaining their charm.
To me, her message was clear. It is critical for the success of smaller, local banks not to allow budget limitations to prevent them from providing services in the communities they will support for generations to come.
The trends across the US are showing many people would rather live in places where the cost of living is manageable compared other parts of the country, where the costs have become prohibitive. And in today’s economy, they can, as technology is allowing more and more people to work remotely.
Many such areas are serviced only by local banks. In order for community banks to continue serving these rural areas, they must develop a digital strategy. Those same customers who depend on technology for their livelihoods expect their banks to be tech-savvy. One such strategy is to recruit and leverage talent that can be sourced locally. Another is to partner with a firm that has deep knowledge in modernizing financial institutions’ legacy systems, creating workflows that utilize integrated technologies, and is mindful of budgetary constraints.
Attitudes are changing towards fintech startups and their relationship with incumbents. While the message is clear there is room for the startup community to step up their regulatory game as it pertains to data, cyber security and the basic understanding of rules large institutions must adhere to, there is a fresh openness to partnerships and the necessity to embrace change to ensure incumbents remain relevant in the future. Community banks have a great opportunity to leverage best-of-breed fintech solutions to enhance their digital strategy.
My first experience with a financial institution was at a local bank. I loved going with my mother to get my weekly piece of candy. That bank which has been acquired so many times during my lifetime is now part of the Chase family and is no longer a candy serving community bank. As I reflect on the insight I gleaned from the Boston Fintech Week and Chairman McWilliams’ talk specifically, I too am inspired that banking can be “cool” and local all at the same time.