Where the Rubber Meets the Road: Creating Mutually Beneficial Relationships with Community Banks and Fintechs

I’ve racked up a considerable amount of frequent flyer miles over the past year traveling to various community bank state association events and fintech conferences—all with the goal of keeping community banks at the forefront of innovation.

Engaging community bankers to think about innovation in new ways continues to be my driving force, but I’m not doing it alone. This year I’m bringing along ICBA ThinkTECH Accelerator alumni so they can provide input to community bankers while also learning about their challenges so they can creatively solve for top-of-mind business needs.

Community Banks Shape Fintech Offerings

For example, industry veteran and Quilo co-Founder and co-CEO Don Shafer and his partner have created a solution that enables community banks to offer short-term, installment loans. In and of itself, that’s a significant offering, but the Accelerator experience helped Quilo evolve its solution to address an unmet need for community banks: a fractional participation model.

“Hearing from community banks at the Accelerator, we found out that credit-worthy people weren’t taking the loans offered to them” Shafer said. In cases where the bank’s risk tolerance prevented fully funding the total loan amount requested, customers were forced to seek out other funding sources, Shafer explained. “So, we built a fractional participation model. Now, let’s say a person’s approved for $40,000 for a kitchen remodel, but their bank only wants to loan $20,000 in line with its underwriting. In our platform, that bank could take on the $20,000, and other participating community banks can come in for pieces of the remaining $20,000 to fully fund the loan. It’s community banks helping one another" with the end goal of helping customers achieve their financial and personal goals.

That matching process happens in real-time in the Quilo platform, and the original bank remains the customer’s bank; the fractional component happens behind the scenes. This enables community banks to compete in offering these short-term installment loans but in a way that de-risks the offering.

Or consider LemonadeLXP, a digital growth platform that helps community banks turn frontline staff into digital banking experts and support staff and customers as they migrate to that channel. The company was able to develop a new pricing model to help community banks get big bank solutions at small bank pricing.

“We knew that our platform could solve critical business problems for community banks,” said CEO John Findlay. “The ThinkTECH program forced us to figure out how to evolve our model so we could service smaller banks.”

Then there’s DocFox, an automated business account opening solution that helps banks onboard any entity they encounter regardless of risk or complexity. Participating in the Accelerator gave them line of sight into what they needed to do to expand their pipeline.

"The Accelerator affirmed the importance of integrating DocFox into other systems, especially core systems," said Angela Limoncelli, director of marketing. "We now have a running list of preferred integrations into other bank software and are adding more each quarter. We're leveraging the same underlying integration tech to also bring in third-party data services, reducing the need for as many documents up front. This feature request was one of the most common we heard from banks in the Accelerator."

This is a great example of how our ICBA ThinkTECH community bank/fintech partnerships are making tangible change happen for our industry.

Getting Engaged

As we bring this experience on the road, look for upcoming state banking association events where you can join us in person or virtually to learn more about the Accelerator and varying fintech solutions. It’s also never too early to sign up for more information on the 2023 Accelerator experience in Little Rock, Ark., which will kick off in January.

Either way, I encourage you to get involved as bringing community bankers together with fintech leaders is proving to be extraordinarily beneficial as we aim to create the best solutions for the future of community banking.

For now, I’ll leave you with this thought: Innovation is constant. No matter where you are in your innovation journey, keeping that “what’s next?” mindset will ensure you stay in front of customer expectations. And in today’s dynamic market, remaining one step ahead is the key to staying at the center of the banking experience.