Will 2023 be the year we see an explosion of Fintech and community bank partners beginning relationships? The crackdown on revenue streams related to overdraft programs and consumer service fees may have financial institutions (FIs) thinking of generating alternate streams of noninterest revenue. How does a community bank begin to explore the horizon of a Fintech partnership? Alex Lazarow, private equity investor and Fintech enthusiast, said he looks for these three “D’s” in a Fintech startup: distribution, data, and delivery.1 He gives examples like embedded processes, affinity channels for distribution advantages, and better serving the customer with more customized offerings because you have data that reveals consumer behavior. Lastly, he suggests delivering to the end user in a powerful way that helps provide the end user with the best possible The Courtship of BANKING & FINTEC By Katie Harrison, J.D., CRCM, FORVIS experience. As an investor, Lazarow says he looks for products that have at least one, and preferably two, of the three D’s. Fast-forward 10 months to Lazarow’s reaction after the fall 2022 Fintech conferences, and he’s on the fence: which advantage is most important, data or distribution?2 The Federal Reserve reported on community bank partnerships in 2021, placing Fintech types into three categories based on bank strategy: operational technology, customer-oriented, and front-end.3 An example of operational technology is realtime payments. Digital payments and real-time settlement are driving competition like never before in the financial services sector. According to a recent Bank Administration Institute (BAI) report, research shows one key characteristic a consumer desires from a deposit account is the availability of real-time payments.4 Within six weeks of connecting to a real-time payment network, one FI reported a 45% rise in realtime processing (RTP) transactions and a 61% increase in the number of customers receiving transactions.5 W 30
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