It’s not too late for community banks to disrupt the future

Robert Jarosinski

The Money 20/20 conference prides itself in bringing together companies of all sizes and backgrounds, from multi-billion dollar financial institutions to fintech startups working out of their garage, and everyone in between. As a first-time attendee at the world’s largest and most well-known payments conference, I spoke with seasoned vets on what I could expect. “Wear comfortable shoes” and “get ready to be overwhelmed” were the pieces of wisdom bestowed upon me. Comfortable shoes turned out to be a hot tip as I navigated through the 11,000 attendees, 4,000 minutes of content and a 1.8 million-square-foot exhibit hall filled to the brim. By the end of the four-day conference, my pedometer logged me as having walked almost 30 miles.

While the size of the conference is staggering, the sense of being “overwhelmed” was different than what I expected. It came less from the sheer size of the conference and more from how quickly the industry is moving, the litany of cutting edge things you feel you should be doing (and are not) and wondering if it is already too late for community banks to remain competitive in payments.

The clock is ticking, but here are three reasons why it’s not too late for community banks to disrupt payments:

Fintech DNA – While community banks seemed to be underrepresented at Money 20/20, their spirit loomed large. Echoing throughout conference sessions were fintechs who passionately described their focus on underserved markets, customer experience and making a difference in individuals’ lives. Despite what may appear to be differences on the surface, fintechs and community banks share the same DNA. Because of this, you’ll find many of them more willing to partner with a community bank than a larger institution.

Agility – The adage of “the bigger they are, the harder they fall” may not necessarily apply, but larger institutions do find it more difficult to innovate quickly. While there is an obvious scale advantage to being larger, enacting change proves challenging when dealing with legacy systems and hierarchal bureaucracy. Community banks may still be reliant on legacy systems as well, but in their smaller size they have the competitive advantage to adapt faster, in more dramatic ways and tailor offerings specific to their unique customer base. With cost of technology continuing to drop, the latest products, services and features are no longer just limited to the largest institutions.

Better together – Representing 13 percent of assets, community banks together are bigger than the largest financial institution, but the gap is closing fast. That power in numbers only comes from acting as a distributed network of unique organizations with a common purpose. Unifying for shared services that allow for independence, scalable open architecture will allow community banks to remain both competitive and individualized.

The payment’s landscape may look completely different in five years, but there will be a place for community banks in the picture if they act now by partnering with organizations that share their common interests, allowing innovation to take root and transform their institutions and by investing in ways to enhance their key differentiators. When looking at the future, don’t get overwhelmed — get a pair of comfortable shoes.

Robert Jarosinski is first vice president of BankCards & Payments at Bankers’ Bank in Madison, Wis. He can be reached at [email protected] or 608-829-5860.