Technology companies may call themselves partners to the banking industry, but for the bankers themselves, most of these firms are just vendors. There’s a big difference in that particular bit of nomenclature, and bankers participating in a roundtable discussion held in advance of the 2018 FinXTech Annual Summit, co-hosted by Bank Director and Promontory Interfinancial Network, had a lot to say about the true nature of partnerships. It’s all about the relationship.
“We want [a partner] that’s bringing insights and dialogue and teaching us, and we’re teaching them and working together on different things,” said Sara Rountree, senior vice president in charge of digital strategy at Union Bankshares Corp., headquartered in Richmond, Virginia, with $13 billion in assets. She also wants to know about the startup’s infrastructure and vision for its own future. “That tells [us] a lot about where they’re going to go, and how they can be agile and flexible in the future as well.”
While the banking industry buys products and services from a multitude of technology vendors to do things such as enhance their mobile banking product, create a more efficient back office or better comply with regulations, the bankers participating in the roundtable discussion said that partners are companies they can collaborate with. Both companies can learn from one another, and the bank feels it has more of a say in the development of services.
Banks have to put work in to determine which relationships will be an appropriate strategic and cultural fit. That starts with evaluating a potential provider’s capabilities compared to the bank’s own requirements and determining the risks of doing business with the company. “It’s really keeping focused on what you have the resources to handle and gathering enough information, and then getting the right bankers at the table” to determine what’s best for the bank, said Mark Christian, executive vice president, operations and systems at Beverly Hills, California-based PacWest Bancorp, with $24 billion in assets.
And it’s essential to meet with the potential provider’s team. “It’s making sure that company is aligned to how we’re thinking about things, not just this next step of the one product, but how are you going to evolve that and how does that align with what we’re focused on,” said Travis Engebretsen, vice president of strategy at Stuart, Florida-based Seacoast Bank, with $5.9 billion in assets.
Trusting a provider to provide direct support to the bank’s customers is another sign of a true partner, according Richard Greslick, the chief operating officer at Clearfield, Pennsylvania-based CNB Financial Corp., with $2.9 billion in assets. The bank evaluates a provider’s level of support during the vetting process. “We want to make sure they’re carrying the brand like we would,” he said.
Being a partner means that the technology company is more responsive to the bank’s needs, but it also requires more hand-holding on the part of the bank, especially if the partner is a young company that may not fully understand the regulatory constraints facing the banking industry. However, this does provide the bank with an opportunity to influence the company’s product.
The banking industry is highly reliant on established core providers, but the sizeable core providers—Fiserv, FIS and Jack Henry & Associates—serve too many customers for a bank to have a significant voice in the products each core offers and therefore, to be seen as a true partner to their clients.
The smaller core providers can be more of a partner, at least if the bank is a big-enough fish. CNB selected COCC as its new core provider almost three years ago and integrated its new core over a two-year period. The bank is COCC’s first client in Pennsylvania and one of its larger client banks, and its representatives discuss issues monthly over the phone with the bank’s department heads.
Whether a company is a partner or a vendor, the result is new technology for the bank, and the bankers interviewed at the FinXTech Annual Summit agreed that getting employees—and by extension, customers—to use the technology poses a significant challenge.
In response, Seacoast has shifted its focus from project management to change management. This isn’t just a shift in classification, according to Engebretsen. Instead of just focusing on launching the technology, the change management team also ensures that associates understand why the new technology was needed, how it will impact employees and how employees will be trained.
To put it simply, transformation is less about technology and more about people. “It has to be part of the company culture. People need to think differently,” said Rountree.