As smaller banks adopt new technologies to provide customers with more convenience and financial autonomy, the relationship between banks and fintechs is shifting.
In May, Hudson, Mass.-based Avidia Bank became one of the first community banks in the country to join The Clearing House’s RTP® network. With this decision, the bank’s customers will soon be able to receive and send payments “24/7.”
The relationship between banks and fintechs is changing, writes Banker & Tradesman, a news journal dedicated to financial services and real estate in Massachusetts. “Eventually, every bank in the country is going to need lots of fintech partnerships to grow and survive in the long run. … That is why community banks and credit unions need to start making it easier for fintechs to work with them and start pulling the trigger on fintech partnerships much more quickly than they have been.”
Historically, smaller regional and community banks have not worked with modern fintech firms because smaller financial institutions often rely on core banking platform providers. “This reluctance has in turn resulted in very long sale cycles, creating difficulties for fintech companies … [b]ecause many are backed by venture capital and private equity, they need to grow and generate revenue quickly in order to keep their investors happy,” writes B&T reporter Bram Berkowitz.
Fintechs are also taking notice of smaller banks that are seen as innovating and not afraid of new technology.
“Avidia Bank’s Vice President of Business Development Cliff Thompson said ever since the bank announced it was joining The Clearing House, his phone has been ringing off the hook from fintechs interested in working with and potentially developing their products within the bank,” reports Berkowitz.
“Fintech guys, come on in, develop your products, we’ll take all the mysteries out of payments and try to make it easy for them,” Avidia COO Bob Conery told B&T.
Read the entire Banker & Tradesman article.