Pub. 9 2020 Issue 6

24 • A partner who can help identify and facilitate partnerships with relevant third-party platform providers. • A compliance team that is willing to work with the business to ensure that new partnerships and supporting technology are developed in a way that does introduce unacceptable financial or compliance risk. 4 Community banks and credit unions, of course, need to consider if deposit accounts sourced through third-party platforms are classified as brokered deposits. Proposed FDIC changes to brokered deposit rules may ease concerns here, especially if banks structure partnerships with platform providers such that the bank creates and maintains a direct relationship with the new deposit account holder. The ABA, among others, has suggested in formal comments to the FDIC that rule changes could go even further to facilitate more modern methods of deposit gathering. Transitioning From In-House to Partnership Beyond regulatory concerns, community financial institution executives need to acknowledge and embrace the idea that technology-driven customer acquisition requires a new mindset. Community banks and credit unions historically own and operate their own end-to- end distribution channels. Consumers today acquire deposit accounts through channels that are fully controlled by the bank or credit union, traditionally the branch. Only in recent years have financial institutions opened up to the idea that new accounts can be opened through digital channels, with no requirement for in-person interaction between the customer and the banker. But even new digital account opening solutions are typically contained within bank-owned digital channels (i.e., the bank’s own website). Opening up to third-party platforms means that other companies will control the initial experience the consumer has with the financial institution. This doesn’t mean the bank can stop providing great products or great service once the customer relationship is established. The bank must continue to have its own great servicing experience (online and mobile banking). But it is just as important to have the technology that allows bank services to fit into a user experience that is created by a different company. This is the future. 5 Modern digital banking providers are a good place to start looking for support. Digital banking is the solution layer that sits between the bank or credit union’s internal systems and processes and its customers. Digital banking providers have already done all of the connectivity work required to create a holistic banking experience for customers, tying together core, bill pay, card payments, statements, fraud management and financial management solutions. But, not all digital banking solutions can be easily extended into third-party user interfaces. Digital banking and the “presentation layer” have become synonymous over the years because of the architectural generation when solutions were first created. But this is changing. Well-architected modern digital banking solutions can point at any presentation layer, including those provided by a third party. This is done through APIs. The solution has to be architected such that business logic (rules that define what a customer can do online or in mobile) is separated from the presentation layer (website or mobile app). 6 The Ecosystem Approach Technology architecture, however, should not be the only consideration Digital banking is the solut ion layer that si ts between the bank or credi t union’s internal systems & processes and i ts customers. continued from page 23