The root question for many banks wading into the fintech industry is: Are fintechs something I’m competing against, or instead can fintechs help me? The answer is that both can be true, and that tradeoff muddies the waters. In February, the Indiana Bankers Association surveyed 22 Indiana bank leaders on their thoughts, experiences and concerns with fintechs. Approximately 36% of respondents indicated that their banks are currently utilizing or partnering with fintechs. When asked what excites them about the potential of fintech, many respondents cited “We’re engaged with a few firms to start using bots in our mundane functions. We engaged with a firm to predict account closures. We’re considering a crypto fintech as well.” “Online loans, mobile banking, mobile payments.” “We have invested in a fintech-focused venture fund that is providing great access to many fintechs.” “Using for mortgage and personal loan applications, credit card applications, instant issue debit cards, looking at online new account applications.” “We have been mostly relying on our core provider to partner with fintechs and offer cost-effective access to solutions that also integrate well with our core.” “We partnered with Atlas StreetShares to originate, decision, document and forgive PPP loans. Atlas has come to market with an affordable commercial lending platform that we are currently evaluating.” “We are actively looking to partner with various fintechs to expand our product offering as well as our digital innovation capabilities.” “Evaluating opportunities to engage with fintech in various ways. These would include utilizing fintechs as a third-party vendor, partnering with fintechs to access new revenue streams and investing in fintechs.” “Investing in BankTech Ventures fund.” “We have not engaged with any new companies outside of our normal vendor group. However, we are entertained by the wild, vast array of clever names that the fintech folks come up with that we see in the voluminous collection of emails each week.” 0% 10% 20% 30% 40% 50% Currently using or partnering Doing little or nothing Exploring, either for first-time use or for new relationships/ partnerships 36% 45% 32% 59)78-32 ;LEX MW ]SYV FERO GYVVIRXP] HSMRK XS IRKEKI MR ƤRXIGL# plings of responses to each of the survey questions: 1. What is your bank currently doing to engage in fintech? 2. What excites you about the potential of fintech? 3. What do you seek in fintech relationships? 4. If your bank has been hesitant to engage with fintech, what are your primary concerns? Additionally, graphs indicate the number of responses in general categories, with some responses affecting more than one category. Note that this survey was conducted informally, and results are intended as general information only. Fintech may seem like a new frontier, but in reality technology has been blending with banking since the late 1800s, when the advent of the telegraph enabled the quick transfer of financial information across distances. While technology and banking have come a long way since then, what remains the same is that prudent bankers continue to weigh the potential risks, challenges and opportunities of each new offering. HB increased efficiency, attainable pricing and better ability to serve customers. Additionally, several respondents from smaller banks indicated that with these improvements, they would be in a better position to compete with larger banks. Some of the primary concerns cited with fintechs were potential regulatory issues, a hesitation to be drawn into trends, and a lack of time and/or resources to research, properly vet and train employees on new technology. Approximately 45% of survey respondents indicated that their banks are doing little to no business in the fintech environment currently, but 32% indicated that their banks are currently exploring and evaluating fintech relationships. There is some overlap between those banks already engaged with fintech and those actively seeking new relationships/partnerships. The accompanying exhibits show sam- MAY / JUNE 2022 Answers shown for each question represent a sampling of total responses.
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