Pub. 12 2021 Issue 1

Pub. 12 2021 I Issue 1 Spring 31 West Virginia Banker The banks that are the most innovative and future-focused often have a fintech representative on the board of direc- tors, who is responsible for challenging the status quo, asking “why,” and stretching the institution to continuously seek new products and processes. Additionally, you can also begin conversations with the board of directors to determine how the fintech strategy should align with your institution’s risk management process and fit with the preferred risk ap- petite, such as if the bank wants to be cutting edge, bleeding edge or continue on a more traditional path. Exploring these options to initiate your bank’s fintech strategy at the board level will increase any fintech strategy’s effectiveness. When considering how fintech fits into the overall custom- er acquisition strategy and experience, go well beyond the bank’s internal processes and efficiency models. If there is no robust customer acquisition plan in place, efforts should be made to understand how the bank obtains customers, particularly behind the backdrop of the COVID-19 pandemic. An example of a sophisticated fintech customer acquisition strategy would be using data analytics to identify current bank customers that are only utilizing one product, such as a checking or savings account, and then cross-selling other ser- vices to customers based on their needs. Another customer acquisition strategy could be built around identifying under- served or underbanked populations and directly targeting those groups with customized banking products. Other strat- egies could provide unique services to obtain new customers, such as robo-investing using artificial intelligence to help make investing decisions, therefore keeping costs down for both the bank and the user or providing lending products for borrowers trying to establish or improve their credit scores. As such, there are many ways these strategies could manifest as banks explore their options. Strategy Implementation Considerations As banks look to implement their fintech strategy, a few tactics can be used to become a thought partner with the fin- tech industry by participating in the fintech ecosystem rather Adam has close to 20 years of public accounting experience. He currently serves as managing partner of DHG’s Tampa Bay office, as well as an assurance partner with a focus on serving the following industry sectors: financial institutions, investment funds and other asset management companies; technology companies; and private equity-backed portfolio companies across a diverse group of industries. If you are considering the development of a bank fintech strategy, or are evaluating your current strategy and tactics, DHG can help assess your effectiveness and answer questions to help you improve your efforts. For more information, reach out to us at benchstrength@dhg.com . than reacting to its disruption. Some banks may consider finding a fintech vendor partner, which can be a straightfor- ward approach through your bank’s existing vendor manage- ment process. Others may seek to create their own internal development team, consisting of engineers on staff who can develop their own technology; however, this instance is typically rare for community banks and may not always make the most financial sense, depending on access to resources and budget. Perhaps one of the best integration tactics is to participate in the fintech ecosystem in some way that ties directly to the bank’s fintech strategy. This participation can manifest in a few different ways: • Consider investing directly into companies that further the bank’s fintech approach; • Explore potential joint ventures with other companies in some form of partnership; • Investigate options for buying or acquiring a company that aligns with the fintech plan.  When considering how fintech fits into the overall customer acquisition strategy and experience, go well beyond the bank’s internal processes and efficiency models. If there is no robust customer acquisition plan in place, efforts should be made to understand how the bank obtains customers, particularly behind the backdrop of the COVID-19 pandemic.