Community banks must help SMEs through technology

NCR - Digital First Banking: The Rise of Digital Banks to Meet the Needs of SMEs - Jan/Feb 2023 - Explore how digital banks are innovating to better meet the growing needs of SMEs

the interview charles pottschief innovation officer Independent Community Banker of America (ICBA), on the way the organization helps community banks access disruptive financial technology to better serve small and medium-sized businesses.

In her role at ICBA, Potts works closely with community banks to ensure they stay ahead of the technology curve and do everything possible to meet client needs and remain competitive. Nearly two-thirds of small business loans come from community banking, Potts said, illustrating the close symbiotic relationship they have enjoyed over the years. Together they represent a huge and important sector of our economy and it is vital that their relationship continues to be fruitful, he said.

The pandemic has highlighted and accelerated the very strong ties between community banks and SMBs — most notably around the launch of the Paycheck Protection Program — and consumers’ growing demand for digital experiences that offer convenience and speed. Potts encouraged community banks to leverage the knowledge, experience and lessons learned from the pandemic, with the aim of giving SMEs the digital tools they need to match the businesses that have been so successful on the consumer side.

Fintech companies and solution providers that have introduced winning technologies to consumers over the past few years are retooling to offer the same capabilities to SMBs. According to Potts, this digital presence should extend from marketing, prospecting and processing to origination and onboarding. SMBs need the best solution available to run their business, and they run an average of 15 applications to make it happen, he said. Banks must play a greater role in removing friction and suggesting more holistic or integrated tools.

Another key for financial institutions is to understand their customer base and how different products fit different verticals. Choosing the right technology is a crucial step in the process, but financial institutions often fail to take full advantage of its benefits — or fail entirely, he said. Community banks typically defer to their primary technology providers, but with the rapid development of technologies such as software-as-a-service, cloud-based and mobile-first solutions, digital transformation is proving difficult for many banks that rely on traditional technology providers.

With tens of thousands of fintech companies knocking on bankers’ doors, it is often impossible to know which solution is the best fit. This led Potts and ICBA to create the ICBA ThinkTECH Accelerator to help community banks gain access to disruptive financial technologies. This 12-week program assists underprivileged community banking teams with cutting-edge tools, and fintech entrepreneurs with mentorship and direct connections with ICBA members.

Financial institutions such as Rockland Trust and Agility Bank already have access to Agent IQ, a ThinkTECH alumni company that provides a digital platform powered by artificial intelligence (AI), for example to improve communication between banks and their customers. Through Agent IQ, Rockland Trust’s individual and business clients can digitally access a banker in minutes through its YourBanker product, and Agility Bank builds a technology stack to find the right provider to meet clients’ needs.

Now in its fifth year, the accelerator program is so popular and far-reaching that ICBA hired staff to run the accelerator in-house. Potts said the aim was to provide a more granular, year-round plan to address customer challenges with digital solutions, including those that could help small and medium-sized businesses remain competitive.

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