The Nebraska Independent Banker CRYPTO SCAMS AND CRYPTO FRAUD DETECTION FOR FINANCIAL INSTITUTIONS 2025 • Issue 2 7 Questions Banks Should Ask a Potential Fintech Partner
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4 ©2025 Nebraska Independent Community Bankers (NICB) | The newsLINK Group LLC. All rights reserved. The Nebraska Independent Banker is published six times per year by The newsLINK Group LLC for NICB and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of NICB, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The Nebraska Independent Banker is a collective work, and as such, some articles are submitted by authors who are independent of NICB. While a first-print policy is encouraged, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. Nebraska Independent Community Bankers 1201 Lincoln Mall, Ste. 103 Lincoln, NE 68508 (402) 474-4662 nicbonline.com The Nebraska Independent Banker is a publication of The Nebraska Independent Community Bankers Association. 2025 • Issue 2 Take a Look INSIDE 6 18 NICB Executive Committee CHAIRMAN Rick Heckenlively Points West Community Bank Sidney CHAIRMAN ELECT Dave Ochsner Commercial Bank Nelson VICE CHAIRMAN Jim Niemeier Citizens State Bank Friend PRESIDENT/CEO Dexter Schrodt SECRETARY Kelly Lenners First State Bank Nebraska Pickrell TREASURER Arnold Lowell CerescoBank Ceresco IMMEDIATE PAST CHAIRMAN Corby Schweers Elkhorn Valley Bank Wayne FLOURISH 4 Amplifying the Community Bank Difference By Rebeca Romero Rainey President and CEO, ICBA 6 Concepts and Facts ChatGPT Gets it Mostly Right on Yield Curve Shapes By Jim Reber, President and CEO, ICBA Securities 8 Crypto Scams and Crypto Fraud Detection for Financial Institutions By Terri Luttrell, CAMSAudit, CFCS, Compliance and Engagement Director, Abrigo 12 The Section 1033 Final Rule Providing Community Banks With the Perfect Innovation Opportunity By Bradley Wallace, Director of Compliance, CSI 15 Three Tips to Build Your Case for Regulatory Change Automation By Wolters Kluwer 18 7 Questions Banks Should Ask a Potential Fintech Partner By BHG Financial Institutional Network 21 How Employee Development Can Help Community Banks Grow Deposits Deposits Through Development By Connie West, Gallup Certified Strengths Coach, Regional Vice President, The James Paul Group 22 NICB Endorsed Partners 22 Associate Members 2025 23 Banker Showcase We Want to Feature You in Our Next Issue of The Nebraska Independent Banker!
FLOURISH By REBECA ROMERO RAINEY President and CEO, ICBA AMPLIFYING THE COMMUNITY BANK DIFFERENCE 4 NEBRASKA INDEPENDENT BANKER
In today’s environment, we must both acknowledge competitive headwinds and know that we have tailwinds to drive us forward when it comes to what we do at a local level. ICBA’s 2025 Community Bank CEO Outlook Survey revealed that 77% of community bank executives believe their greatest business opportunity this year will be differentiating their community bank from other financial services firms. Demonstrating our unique value proposition is a growing priority for two key reasons. The first reason is today’s competitive landscape. We are living in an environment where everyone wants to be a bank, but they aren’t operating by the same rules, which is driving a need to differentiate what we do and who we are as community bankers. It’s our job to help our customers recognize the community bank difference, both to strengthen our relationships with them and protect them from potential pitfalls with other providers. The second reason is the growing demand for community connection. There’s a rising awareness of “bank local” and what that means, but we must continue emphasizing the message that we are different from the nonbank providers that are calling themselves banks, credit unions that are tax-advantaged, and megabanks that treat their customers like numbers. We need to reiterate the positive impact we have on our customers and communities. We must acknowledge both competitive headwinds and know that we have tailwinds to drive us forward when it comes to what we do at a local level. The good we do for our communities can’t be overstated. But it’s not just our customers and potential customers we need to reach with this messaging. Rulemakers and regulation writers must understand our uniqueness. They need to know that we offer a completely different risk paradigm, keep capital in our communities (their districts), and drive the local economy — and that requires our voices to tell those stories. Storytelling, marketing, differentiation: Conceptually, they all make sense, but with each comes a question of, “Now what?” The answer falls in how we apply our stories to cut through the noise of today’s financial services landscape and resonate with our audiences. That’s why ICBA has launched our ICBA Marketing Resource Center (icba.org/mrc). From search engine optimization tips and ready-to-go segments to produced materials that can be customized for your institution, the resources we’ve provided not only offer information on marketing concepts but deliver the tools to highlight what’s unique about our industry and your bank. And the work continues: We are committed to making this center evergreen, providing new resources as opportunities arise. Our unique value proposition makes us second to none, and with our collective efforts, we will drive home that message and the community bank difference. NEBRASKA INDEPENDENT BANKER 5
Note: In this column, for the first time, I relied on ChatGPT, the generative artificial intelligence (AI) platform. For the record, I submitted this inquiry: “Write a 700-word essay on how the shape of the Treasury yield curve affects community banks.” The following was generated in, I guess, three seconds, and most of it appears to be correct. I’ve taken the liberty of adding some commentary in bold, and there really aren’t many changes. In the future, I will only use AI if I fully disclose its assistance. And you’ll be able to tell because there’s no snark in AI-generated documents. CONCEPTS AND FACTS By JIM REBER, President and CEO, ICBA Securities ChatGPT Gets it Mostly Right on Yield Curve Shapes 6 NEBRASKA INDEPENDENT BANKER
The Impact of the Treasury Yield Curve on Community Banks The Treasury yield curve is a critical financial indicator that depicts the relationship between interest rates and the maturity dates of U.S. government debt. Typically, the yield curve slopes upward, reflecting higher yields for long-term securities compared to short-term ones. This essay explores how the shape of the Treasury yield curve affects community banks, focusing on their lending practices, interest rate risk management, and overall financial health. Understanding the Yield Curve The yield curve can take on various shapes, primarily categorized as normal, inverted, or flat. A normal yield curve indicates that longer-term bonds have higher yields, suggesting economic growth; an inverted yield curve occurs when short-term yields exceed long-term yields, often seen as a predictor of recession; and a flat yield curve signifies uncertainty in the economy, where there is little difference between short-term and long-term rates. Each of these shapes presents unique challenges and opportunities for community banks. Lending Practices Community banks primarily generate revenue through lending, and the yield curve significantly influences their lending practices. In a normal yield curve environment, community banks can borrow at lower short-term interest rates and lend at higher long-term rates, which supports their profitability. For example, if a bank can secure funding at a 1% interest rate for a one-year loan and lend it out at 4% for a 30-year mortgage, the spread — essentially the bank’s profit — is 3%. This difference allows community banks to support local economies, providing loans for homes, businesses, and other community projects. Conversely, when the yield curve flattens or inverts, the profitability of these lending activities diminishes. In an inverted yield curve scenario, community banks may find themselves in a position where they borrow at higher short-term rates than the rates at which they can lend long-term. This situation compresses margins, potentially leading to a reduction in loan origination and, consequently, a slowdown in economic activity within the communities they serve. Interest Rate Risk Management Community banks must also navigate interest rate risk, which is the risk of financial loss due to changes in interest rates. The shape of the yield curve plays a crucial role in how banks manage this risk. In a normal yield curve scenario, banks can match the duration of their assets (loans) with their liabilities (deposits) effectively. For instance, if a community bank has long-term fixed-rate mortgages, it can rely on stable, lower-cost funding from short-term deposits. Wrong! This is the very recipe for exposure to rising rates. This alignment helps mitigate the risk of rising interest rates. However, during periods of an inverted or flat yield curve, community banks face increased interest rate risk. Not necessarily. The duration mismatch can lead to a situation where liabilities reprice before assets, exposing banks to potential losses. To manage this risk, community banks may engage in interest rate swaps or other hedging strategies, but these can be costly and complex, particularly for smaller institutions with limited resources. Asset Quality and Loan Demand The shape of the yield curve also affects asset quality and loan demand, which are critical for community banks’ stability. In a normal yield curve environment, economic growth typically leads to increased demand for loans as businesses and consumers have greater confidence in their financial prospects. Community banks can capitalize on this demand, extending credit while maintaining healthy asset quality. However, when the yield curve inverts, it often signals an impending economic slowdown. As businesses and consumers become more cautious, loan demand may decline, and existing borrowers may struggle to meet their obligations, leading to increased default rates. This deterioration in asset quality can significantly impact community banks, which often have concentrated loan portfolios tied to local economies. It’s a bit of a non-sequitur to claim inverted curves cause a decline in credit quality. It’s more like the curve is reacting to that expectation. A rise in non-performing loans can strain capital reserves and lead to regulatory scrutiny. Conclusion The shape of the Treasury yield curve is a pivotal factor influencing the operations and financial health of community banks. A normal upward-sloping curve supports profitable lending practices and encourages economic growth, while an inverted or flat curve presents challenges related to interest rate risk, profitability, and asset quality. Community banks must remain vigilant and adaptable to changes in the yield curve, employing sound risk management strategies and maintaining strong relationships with their local communities. Understanding these dynamics is essential for community banks as they strive to navigate the complexities of the financial landscape and continue to support their local economies. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. NEBRASKA INDEPENDENT BANKER 7
CRYPTO SCAMS AND CRYPTO FRAUD DETECTION FOR FINANCIAL INSTITUTIONS By TERRI LUTTRELL, CAMS-Audit, CFCS, Compliance and Engagement Director, Abrigo With cryptocurrency investments rallying post-election 2024, consumers and financial institutions alike must stay alert to an ever-growing threat of crypto fraud. Offering many opportunities for investors, cryptocurrency is also a playground for scammers. As it becomes more integrated into our financial system and scams increase, crypto fraud prevention must be a priority. 8 NEBRASKA INDEPENDENT BANKER
As it becomes more integrated into our financial system and scams increase, crypto fraud prevention must be a priority. Fraud, in general, has continued to surge in the past several years. The FTC reports a staggering $10 billion in consumer losses to fraud in 2023, up from $3.5 billion in 2020. According to the FBI, cryptocurrency is fast becoming a favorite for scammers, not just in the murky realms of the dark web but in everyday transactions. Fraud involving crypto represents more than half of the reported fraud losses in 2023 at $5.6 billion. These numbers are likely lower than the actual losses, as many victims choose not to report due to embarrassment that they were fooled, possibly by someone they trusted. Why is crypto fraud skyrocketing? It boils down to opportunity. Cryptocurrencies have become more mainstream and accepted as legitimate investments, attracting not only investors but also international crime syndicates and tech-savvy scammers. Here are some driving factors: • More Investors, More Targets: As cryptocurrencies gain traction, even less-savvy individuals jump in, often without a complete understanding of the risks. There are currently an estimated 560 million crypto owners worldwide, creating a larger victim pool for fraudsters. • More Types of Cryptocurrencies Are Entering the Market: Cryptocurrencies come and go, sometimes rather quickly. In the first quarter of 2024, there were approximately 9,000 active cryptocurrencies. Some are more legitimate than others, and investors should research them carefully. • A Hidden Transaction Trail: Crypto transactions' decentralized, often anonymous nature makes it easier for fraudsters to stay concealed, and the growing popularity of digital assets creates an ideal breeding ground for deception. • Loose Government Regulation: The lack of regulation in the crypto space can create opportunities for fraudulent schemes. Although the regulatory agencies have pushed for enhanced regulation, it is unlikely that the incoming administration will call for oversight anytime soon. • Global Targeting: The U.S. is a prime target for scams because of its comparative wealth and willingness to embrace speculative markets. In addition, many Americans value online relationships, making them easy prey. Plus, let’s face it — many investors are drawn to get-rich-quick schemes. Should AI Be Blamed for the Rise in Crypto Fraud? Not entirely, but AI has made scams more convincing. While AI gets much of the blame, it’s one piece of the puzzle. AI-generated phishing emails are grammatically flawless, and deepfake technology allows scammers to impersonate high-profile figures and even executives. The result? Fake investment pitches or urgent transfer requests that seem legitimate. However, AI isn’t just a tool for bad actors. It’s also a game-changer for crypto fraud detection. Machine learning helps financial institutions analyze large amounts of data to identify red flags, like unusual transactions or deviations from a customer’s normal behavior. The key is leveraging fraud detection software to stay one step ahead of evolving tactics. NEBRASKA INDEPENDENT BANKER 9
Top 10 Crypto Scams According to the FTC, the top 10 crypto fraud trends to watch are: 1. Investment Scams: Investment scams come with “get rich quick” and “no risk” promises, often initiated through social media or online dating apps. In these scams, crypto can be the investment offered or the payment method. The invested crypto goes straight into the scammer's wallet. 2. Romance Scams: Romance scams prey on relationships and have both an investment and payment angle. After gaining trust, the perpetrator pretends to have wealth and casually offers investment tips to get their scheme rolling. Once a rapport is established, the victim is asked to send crypto to the scammer. 3. Business, Government or Job Impersonation Scams: In a business, government or job impersonation scheme, the perpetrator presents themselves as a trusted online source, such as Amazon, FedEx or a user’s bank, and convinces users to send them funds by buying crypto. The crypto offered by the scammer is fraudulent. 4. Rug Pull Scams: So-called rug pull scams are when investment scammers propose a new crypto opportunity or nonfungible token (NFT) that requires funding. After the project initiators receive payment, they disappear, leaving their investors no avenue to get money back. 5. Phishing Scams: Phishing scams use emails with malicious links to gather personal details, such as users’ crypto wallet key information. If they obtain enough information, the scammer can gain unfettered access to victims’ crypto. This type of fraud can also be perpetrated via text message in a method known as “smishing.” 6. Social Media Scams: The FTC reports that half of those who have reported crypto losses since 2021 said the scam began with an ad, post or message on social media. The most identified platforms used were Instagram, Facebook, WhatsApp and Telegram. 7. Ponzi Schemes: Ponzi schemes via cryptocurrencies work the same way they do with traditional payment methods. Scammers collect funds from new investors in order to pay the older investors, creating no legitimate investment opportunity and leaving investors with no recourse. 8. Upgrade Scams: Crypto platforms are a form of software that, at times, requires upgrades. Consumers are accustomed to upgrades as part of innovative technology. They can easily be scammed into giving up their private keys as part of an “upgrade” that turns out to be fraudulent. 9. SIM-Swap Scams: SIM-swap scams occur when someone obtains a copy of your cellphone's SIM card to access your phone data. With a user’s data in hand, scammers can steal two-step authentication codes required to open their crypto wallet, allowing the scammer access to account funds and information. 10.Fake Crypto Exchanges and Crypto Wallets: Inexperienced crypto users may be lured into investing in a new high-value cryptocurrency exchange opportunity or a “cheap” Bitcoin that doesn't exist. Scammers advertise the investment at a price under market value, and the victim is unaware that the exchange is fake until their investment is lost. A fake crypto wallet is a malware scam that infects a computer and eventually steals the user's private key. Recognizing Cryptocurrency AML/CFT Red Flags Consumers must be vigilant and conduct thorough research before engaging with any cryptocurrency platforms or investments. Crypto schemes vary in sophistication and complexity, and anyone can fall victim. Financial institutions can help their clients avoid falling prey by understanding and communicating the red flags offered by the FTC: • Scammers will guarantee profits or significant returns. No crypto investment is guaranteed to make money, let alone big money. No legitimate entity will require you to buy crypto. Not to solve a problem, not to protect your money. That's a scam. • Never mix online dating and investment advice. If a new love interest wants to show you how to invest in crypto or asks you to send them crypto, be wary of a scam. • No legitimate business or government will ever email, text or message you on social media to ask for crypto. Legitimate fundraisers will never demand that you buy or pay with crypto. • Never click on a link from a random text, email or social media message, even if it seems to come from a company you know. • Don't pay anyone who contacts you unexpectedly and demands payment with crypto. Urgency is a red flag. • Never pay a fee to get a job. If someone asks you to pay upfront for a job or says you should buy crypto as part of your job, it's a scam. • Use reputable crypto wallets and platforms with solid security measures, such as multi-factor authentication. • Beware of “too good to be true” investments — if it seems off, it probably is. • Educate yourself and vulnerable loved ones about common scams, especially seniors and individuals with diminished capacity, especially romance schemes that evolve into crypto cons. In a joint statement on Crypto-Asset Risks to Banking Organizations, the regulatory agencies stated that their examiners will focus on risk assessments relating to crypto custody services and other distributed-ledger technology 10 NEBRASKA INDEPENDENT BANKER
products and services. Your AML risk assessment must be enhanced to include a thorough analysis of crypto risk within your financial institutions, along with all mitigating factors. How To Avoid Crypto Fraud: Protecting Your Clients The good news? Financial institutions aren’t powerless. They can help protect consumers and fight back against fraud. Here’s what financial institutions can do: • Invest in fraud detection software like Abrigo’s AML software solutions, which flag suspicious activity and alert the client of potential fraud. • Monitor unusual transactions, such as large transfers to high-risk regions or activity on less reputable digital currency exchanges. • Conduct regular staff training to recognize red flags and respond quickly. • Engage your customers with educational resources to empower them against scams. • Employ customizable rules that are tailored to your institution’s specific risk profile, including monitoring senior accounts or transactions involving privacy coins. Conclusion: The Future of Crypto Fraud The threat of crypto scams underscores the need for constant vigilance. Whether it's investment opportunities that seem too good to be true or the peculiar urgency of a stranger's request for crypto, recognizing the red flags can help prevent falling victim to crypto fraud. With the right tools and proactive strategies, you can protect your clients — and your reputation — from these emerging threats. Crypto is most likely here to stay, and so is the fight against fraud. Fraud detection can be resource-intensive, but with Abrigo’s “human-in-the-loop” approach, the technology works alongside investigators, streamlining efforts and ensuring critical cases get the attention they deserve. Together, financial institutions and consumers can navigate this threat and build a safer investment future for everyone. Terri Luttrell is a seasoned AML professional, former director and AML/OFAC officer with over 20 years in the banking industry, working in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size. NEBRASKA INDEPENDENT BANKER 11 100 South Phillips Avenue, Sioux Falls (605) 335-5112 - Teresa Thill advantage-network.com MORE OPTIONS FOR YOUR CARDHOLDERS When you source your debit card production with The Advantage Network, you’ll have access to cutting-edge technology, quick turnaround times, and our high-touch customer service. Because your cardholders deserve the best, and so do you. • Instant Issuance • Contactless cards • Customize Your Card program • Surcharge-free ATMs worldwide Visit our website to learn more, or reach out to me and let’s start a conversation.
THE SECTION 1033 FINAL RULE After more than a year of debate and uncertainty, the Notice of Final Ruling on section 1033 is finally here. The vast majority of community banks — with the exception of those with fewer than $850 million in assets — now face a compliance timeline of about two to five years, depending on asset size. However, this new open banking regulatory landscape is about more than compliance. It’s about embracing innovation and the opportunities it creates for community banks to better understand their account holders — and to acquire and retain them. With the Final Rule in place, community banks can now take the steps to prepare for and capitalize on the opportunity 1033 presents when the compliance deadline arrives. The following are a few things community banks should focus on between now and then. Providing Community Banks With the Perfect Innovation Opportunity By BRADLEY WALLACE, Director of Compliance, CSI 12 NEBRASKA INDEPENDENT BANKER
It’s about embracing innovation and the opportunities it creates for community banks to better understand their account holders — and to acquire and retain them. Updating Vendor Due Diligence and Gaining Alignment With Service Providers How community banks assess and model risk will need to change, especially when integrating third parties like fintechs and core providers. The growth of open banking over the last decade has created a complex web of partners, technologies and data flows. A lack of control until now can increase the risk that comes with data living with multiple entities, each with its own set of standards and processes. Compliance teams should start an open dialogue with their vendors to assess their current data standards, how they update their policies as a result of the Final Rule, and how they manage user controls and permissions. Start the Discussion About Customer Education and Awareness Community banks have a fundamental advantage over their national competitors: They understand their local markets and provide a more intimate banking relationship with their customers. Lean into that advantage. Take the time now to determine how you can effectively communicate the impact 1033 will have on them. How will you engage with every account holder every year to reauthorize data-sharing permissions? How do you reach the digital-savvy millennial versus the 85-year-old retiree who still writes checks and prefers mailed statements? Create that policy now so that, when the deadline comes, it’s embedded in every process, employee and department. Embrace Innovation Community banks have several years to meet the 1033 compliance deadline. Use that time to gain even greater insight into what your account holders want. That starts with reducing friction within existing products and workflows, such as digital banking, account opening and lending applications. But what else do your account holders want and need? Hold focus groups, distribute a survey to critical customer segments, and conduct one-to-one outreach to loyal customers and those at risk of leaving. Build a policy for tellers and in-branch representatives to ask branch visitors what else they’d like to see from your bank. Leverage existing customer data to yield insights about individual behavior and trends at scale. Collect those inputs, analyze them, then assess how you can adjust your offerings and implement new ones across your most important lines of business and find the next solution that gives customers what they want and perhaps something they didn’t even know they wanted. That way, when the time comes, not only has your community bank deepened its existing relationships and minimized the risk of losing customers — it will be fully prepared to welcome new ones with open arms and a full suite of solutions that satisfy both their expectations and their needs. Bradley Wallace is the director of compliance at CSI, where he works directly with community banks of all asset sizes to understand and meet evolving regulatory and compliance requirements as they innovate and grow. NEBRASKA INDEPENDENT BANKER 13
Is your community bank bond portfolio performing? Meet Jim. Jim meets with community bankers across the U.S. to discuss ICBA Securities’ investment products, services, and education through our exclusively endorsed broker, Stifel. Investing through Stifel is a direct investment back into the community banking industry. When Jim is on the road, he always takes time to enjoy local restaurants and share on social media. As an ICBA member, you’ve got Jim’s help investing. Learn more at icba.org/securities Member FINRA/SIPC
THREE TIPS TO BUILD YOUR CASE FOR REGULATORY CHANGE AUTOMATION By WOLTERS KLUWER Today’s ever-evolving and increasingly complex regulatory landscape has made automating regulatory change management (RCM) more critical than ever. Community financial institutions that rely on manual processes to navigate this ecosystem face enormous challenges while exposing themselves to significant risks. Although web searches and spreadsheets may seem like an economical alternative, the process leaves organizations vulnerable to serious — and potentially costly — ramifications. To increase efficiency and productivity, manage complexity and reduce overall compliance risk, it is imperative for financial institutions to allocate funding for RCM automation. Doing so can help your organization avoid fees, fines and penalties associated with compliance failures resulting from manual process errors while delivering numerous organizational advantages. Not sure how to persuade your financial institution’s board members and decision-makers that automation is necessary? Consider this three-prong approach: 1. Quantify the Problems with Manual Processes Documenting the time and resources your company spends on manual RCM is just as crucial as highlighting the numerous drawbacks inherent in these processes. For example, not knowing who modified a record or why, or even worse, not knowing what to do when the person who created and managed the spreadsheet leaves the department, leaving others unable to understand the formulas they created. This puts the organization at considerable risk and exposure when only one or a few people hold the knowledge via manual processes. Consider how these common problems with manual processes impact your organization: RCM automation has the potential to yield significant paybacks for your organization, and presenting the advantages can be instrumental in building a solid case for investment. NEBRASKA INDEPENDENT BANKER 15
2. Highlight the Benefits of Automation RCM automation has the potential to yield significant paybacks for your organization, and presenting the advantages can be instrumental in building a solid case for investment. Automating RCM helps foster a stronger, more competitive financial institution by maturing your compliance program, enhancing efficiency, reducing compliance costs and risks and empowering your staff to focus on other business growth initiatives. The optimal solution will: Need More Help Making Your Case for Automation? The experts at Wolters Kluwer will help you zero in on the key regulatory insights for your financial institution as well as provide information about our AI-powered OneSumX® Reg Manager. This cutting-edge SaaS-based automation solution leverages advanced technology to monitor, structure and connect your regulatory changes, streamlining your compliance processes and enhancing efficiency. Wolters Kluwer is a global leader in information, software solutions and services for professionals in healthcare; tax and accounting; financial and corporate compliance; legal and regulatory; corporate performance and ESG. They help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with technology and services. The group serves customers in over 180 countries, maintains operations in over 40 countries and employs approximately 21,400 people worldwide. The company is headquartered in Alphen aan den Rijn, Netherlands. 3. Partner with Key Stakeholders The best way to achieve buy-in for implementing RCM automation is to gain support from leaders in other areas of your organization, such as senior management, legal, operations and IT. You can also build a compelling case by demonstrating the return on investment (ROI) afforded by an automation solution, as well as helping stakeholders recognize how RCM automation will benefit their work. Even more, decision-makers need to understand that while their overwhelmed compliance department struggles to manually manage the tsunami of information and regulatory changes, without an automated solution, other areas of the financial institution may not be aware of or implement new business requirements. 16 NEBRASKA INDEPENDENT BANKER
| Bank Stock Loans | Loan Participations | ATM/Debit | International Services | | Cash Management | Securities Safekeeping | Merchant Services | 800-873-4722 | NE: 888-467-5544 | www.bbwest.com Where community banks bank Est. 1980 – 40+ years of service to community banks “As a service provider exclusively focused on community banks, Bankers’ Bank of the West is here to help strengthen our clients and the communities they serve.” Across the western states and Great Plains, we’re the place where community banks bank. That’s because we provide the services, technology, and expertise to help you extend your resources, deliver for your customers, and stand out in your market. 5 reasons to partner with us BBW - President and CEO - Bill Mitchell You can unlock efficiencies and cost savings. We can provide sophisticated solutions and economies of scale because we’re powered by hundreds of community banks across our region. Our priorities are aligned with yours. You can expand your capabilities. We’ll never compete for your customers. You can count on prompt, reliable service. • Independent loan review • Loan and credit administration consultation • Strategic planning facilitation • Management, staffing, & succession planning • Acquisition & expansion • BSA/AML compliance • Regulatory risk consultation President, Jim Swanson President, Anne Benigsen • Consulting • Phishing Tests • Vulnerability Management • Security Monitoring Cyber/information security, strategic planning, independent loan review, AND MORE. Consulting Services $ 8.6B assets under management $ 1.9B daily transaction value processed/settled Serving more than 60% of community banks across 7 states
Proper due diligence of a fintech partner considers how the relationship could alter your risk profile. 7 QUESTIONS Collaborations between financial services technology firms (fintechs) and financial institutions are occurring more frequently than ever. Many financial companies see fintechs as an affordable, nimble solution to their technology gaps. Others partner with fintechs for assistance with compliance and regulatory governance. The fastest-growing fintech segment enables financial institutions to diversify their customer bases, expand revenue and even increase deposits via banking-as-a-service agreements. It is easy to recognize the contribution a fintech can make to your organization. However, it is more challenging to find the right fintech partner for your business. Ideas for how to do that is the goal of this article. We will discuss what steps you should take before entering a fintech relationship, efficient ways to conduct due diligence and ensuring the compatibility of your fintech partnership before and during the relationship. What to Know Before Committing Can the fintech you are considering produce consistent value over time? Can you demonstrate that the relationship is being appropriately managed amid increased regulatory scrutiny of third-party risk management? These are just a few of the things you will need to know before a partnership can begin. Ultimately, choosing the right fintech will come down to the quality of your institution’s due diligence. Done well, due diligence can save your business time, money and resources. It can also help focus your analysis by ensuring a potential partner can meet such criteria as: • Financially and operationally capable of providing the desired services. • Adds organizational value while maintaining proper controls. • Enhances your organization’s brand and reputation. BANKS SHOULD ASK A POTENTIAL FINTECH PARTNER By BHG FINANCIAL INSTITUTIONAL NETWORK 18 NEBRASKA INDEPENDENT BANKER
The Due Diligence Journey The discovery process starts with internal decision-makers and how they respond to the foundational questions, which are designed to help shed light on the pros and cons of a potential partnership: 1. What benefit(s) will we achieve by partnering with the third-party fintech? 2. What are the estimated savings and/or revenues we can expect over 1-5 years? 3. How much will it cost to establish and maintain the partnership over 1-5 years? 4. What kind of risk management program does the fintech partner possess? 5. Can our infrastructure and staffing handle the activity generated by the partnership? 6. Is the fintech’s risk culture and business approach compatible with ours? 7. Does the fintech have a good business reputation based on online research and discussions with current business partners? A company can deepen the effectiveness of due diligence by tapping into or creating additional resources. For example, your company’s existing third-party risk management team should help evaluate a potential fintech partner. A cross-disciplinary team could be assigned to other essential tasks, such as identifying critical risks and creating a partnership implementation plan. Even federal banking agencies can be a due diligence resource. In 2021, “Conducting Due Diligence of Financial Technology Companies: A Guide for Community Banks“ was published. Despite being targeted at smaller banks, the content generally applies to any business considering a strategic fintech partnership. The content put forward these six key topics to consider during a due diligence evaluation: 1. Business Experience and Qualifications • Company overview. • List of client references. • Ownership information. 2. Financial Condition • Financial statements and auditors’ opinions. • Annual reports. • Market information on competitors. 3. Legal and Regulatory Compliance • Organizational documents and business licenses. • Outgoing legal and regulatory issues. 4. Risk Management & Controls • Policies, procedures, other documentation. • Self-assessments. • Key risk indicator reports. 5. Information Security • Information security control assessments. • Incident management and response policies. • Incident reports. 6. Operational Resilience • Business continuity, disaster recovery, incident response plans. • Service-level agreements. • Outsourcing policies. Source: Conducting Due Diligence of Financial Technology Companies: A Guide for Community Banks, available at https://www.federalreserve.gov/publications/files/conducting-due-diligence-on-financial-technology-firms-202108.pdf Trust But Verify Although a fintech partner may perform duties or provide services on an institution’s behalf, it is the institution’s responsibility to properly oversee that relationship. That is a fundamental tenet of third-party risk management. Partnering with a fintech could raise or lower your company’s existing risk profile due to changes in credit, market, liquidity, reputational, operational, regulator and NEBRASKA INDEPENDENT BANKER 19
compliance risks. Proper due diligence of a fintech partner considers how the relationship could alter your risk profile. Your organization should trust but verify the information provided to you. There are some critical areas to analyze and confirm: established business relationships, financial performance, compliance program performance, reputation and litigation research, risk controls and technologies used. One crucial aspect of due diligence that should not be overlooked is the need for ongoing analysis once a fintech is integrated into your organization. No matter what service the fintech provides, your institution is responsible for confirming that the fintech meets its contractual and service-level responsibilities throughout the life of the relationship. Failure to identify and address inherent and developing third-party vendor risks could reduce a company’s revenue stream, cost the organization valuable time and resources, jeopardize the safety of customers’ personal identifiable information (PII), damage the organization’s public reputation and increase regulatory scrutiny. Concluding Thoughts The recent failure of several high-profile fintech partnerships suggests a lack of effective due diligence at some juncture in their relationships. The guidelines and information presented here are designed to help your institution avoid the same fate. Common sense dictates that any type of new business relationship, fintech or otherwise, should be fully vetted and understood before it begins. The due diligence journey is endless, but you do not have to go it alone. Turn to those who are ready to help you along the way. 800.228.2581 MHM.INC Now more than ever people want self-service options. With our core integrated ITMs we can make this a reality both in the lobby and in the drive-up of your branch. SELF-SERVICE BANKING 20 NEBRASKA INDEPENDENT BANKER
HOW EMPLOYEE DEVELOPMENT CAN HELP COMMUNITY BANKS GROW DEPOSITS Deposits Through Development Community banks play a crucial role in local economies, offering personalized service and financial solutions tailored to their customers’ needs. One often overlooked strategy for increasing deposits is investing in employee development. When employees are well-trained, engaged and empowered, they can drive customer satisfaction, build trust and ultimately attract more deposits. Enhancing Customer Relationships One of the biggest advantages community banks have over larger institutions is their ability to build strong, personal relationships with customers. Employees who receive ongoing training in financial products, customer service and relationship management are better equipped to engage with clients. When customers feel understood and valued, they are more likely to consolidate their banking relationships and increase their deposits with the institution. Increasing Financial Literacy and Advisory Capabilities Employee development programs that focus on financial literacy and advisory skills enable staff to educate customers about different savings and investment options. When customers understand how to maximize their financial potential through higher-yield accounts, CDs or money market accounts, they are more likely to move their funds into deposit accounts. A knowledgeable employee can serve as a By CONNIE WEST, Gallup Certified Strengths Coach, Regional Vice President, The James Paul Group NEBRASKA INDEPENDENT BANKER 21
NICB ENDORSED PARTNERS Bankers Compliance Consulting — Dave Dickenson Barret Graduate School of Banking — Memphis, Tennessee Community Bankers Webinar Network — Financial Ed Dell Computers ICBA Securities — Jim Reber ICBA Bancard NICB-CBAK Liquidity Program SHAZAM — presented last year at Area Meetings Spectrum Financial — Fee Income with Credit Insurance Products/ Services, Identity Theft Program, Flood Determinations — Scott Votava Travelers Insurance UNICO Group — Diana Poquette ASSOCIATE MEMBERS 2025 The Advantage Network BancMac Bankers’ Bank of the West Bankers Compliance Consulting Bankers Healthcare Group Barret Graduate School of Banking Bell Banks BKD LLP John E. Cederberg, CPA Central States Health & Life Co. CivITas Bank Solutions Computer Services Inc. (CSI) Cross Financial D.A. Davidson & Co. FIPCO — Compliance Federal Reserve Bank of K.C. (complimentary) FHLBank Topeka FNB Omaha Correspondent Banking FIPCO First National Capital Markets FPS Gold (Core) ICBA Bancard & TCM Bank ICBA ICBA Securities ITPAC Consulting LLC (IT audits) Kirk Gross Company Labenz & Assoc. LLC (CPAs) Maple Street Inc. Midwest Independent BankersBank Modern Banking Systems Money Handling Machines Inc. NFP Executive Benefits Perry, Guthery, Haase & Gessford PC LLO Purple Wave Auction QwickRate RESULTS Technology Scantron Technology Solutions SHAZAM Spectrum Financial Taylor and Martin Appraisal Services Travelers Companies Inc. UMB Bank N.A. UNICO Group United Bankers’ Bank trusted advisor, fostering loyalty and deepening financial relationships. Strengthening Employee Engagement and Retention Well-trained employees are more confident, engaged and motivated to contribute to the bank’s success. High engagement leads to better customer service, proactive outreach and an overall positive banking experience that encourages deposit growth. Furthermore, when banks invest in their employees' growth, they reduce turnover, ensuring that experienced staff remain in place to build long-term customer relationships. Driving Community Involvement Community banks thrive on local engagement. Employee development initiatives that include community involvement — such as financial education workshops or small business support programs — help banks By investing in training and professional growth, banks can enhance customer relationships, improve financial literacy, boost employee engagement and strengthen their role in the community. strengthen their local presence. As banks become more embedded in the community, customers are more likely to trust them with their deposits, knowing they support local growth and stability. Conclusion Employee development is a powerful yet often underutilized tool for increasing deposits at community banks. By investing in training and professional growth, banks can enhance customer relationships, improve financial literacy, boost employee engagement and strengthen their role in the community. These factors work together to attract more deposits and ensure the long-term success of both employees and the institution as a whole. For help with employee development, contact Connie West at The James Paul Group by emailing cwest@jamespaulgroup.com or calling (877) 584-6468. 22 NEBRASKA INDEPENDENT BANKER
BANKER SHOWCASE We Want to Feature You in Our Next Issue of The Nebraska Independent Banker! “ To be featured, please email Dexter at dexter@nicbonline.com. The Banker Showcase shines a light on those employees that make a difference. NEBRASKA INDEPENDENT BANKER 23
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