FinXTech Intel 2023 report final 2 - Flipbook - Page 12
FINDING FINTECHS
By: Kiah Lau Haslett
Having identified how technology may transform the bank in meaningful ways in keeping with
the bank’s core strategy, the next step for many
banks is to identify a technology partner.
ers across various platforms and establish a reconciliation
The first place many executives may want to start with —
API between its third-party loan platform and its core pro-
but should not limit themselves to — is their existing core
vider, other banks bundled activity from an API architecture
provider to see what’s available.
provider and posted those flows to their core at a regular fre-
process to the general ledger.
“Banks vary in their approaches to these considerations,”
the Fed researchers wrote. “For example, one bank built an
quency, and others invested in a central data repository that
“I definitely would want to talk to my core, because I’d want
could combine data flows from distinct silos.”
to understand on the front end if there are preferred vendors
that they know work well with my existing platform,” says
John Behringer, a financial institutions leader and risk consulting partner at RSM US LLP.
Finding Fintechs
Cores have become more amendable to fintech integrations in
There are a number of places to look for fintech solutions.
recent years, Behringer says. They understand their commu-
One place is Bank Director’s FinXTech Connect platform.
nity bank customers are interested in adding digital function-
FinXTech Connect is a curated directory of fintechs that are
alities and don’t want to be seen as a limitation. Several core
currently working with banks of all sizes and have verified
providers have gone so far as to establish connections with
financial institution customers.
certain fintech firms via application programming interfaces,
or APIs. The Federal Reserve Board’s 2021 white paper on
bank innovation through fintechs points out that some banks
may feel more comfortable using their core-created APIs
To see a listing of companies and platforms in
FinXTech Connect with 150+ customers, see page 12.
compared to forging their own. And some cores may be able
to build customized or open APIs for their bank customers
— arrangements that the Fed says can be convenient but
costly and potentially inflexible in the long term.
Outside of that, there are fintech and innovation working groups associated with bank trade organizations that
may recommend vendors, such as the American Bankers
But relying on a core for technology is “an utterly crazy
Association and the Independent Community Bankers of
strategy,” says Clayton Mitchell, manging principal of fin-
America, as well as accelerator programs associated with
tech at Crowe LLP. The core’s preferred technology vendors
groups like The Venture Center and banker alliances like Alloy
may be a poor fit, or more expensive than other companies a
Labs. There are even venture capital funds that banks can
bank could choose. Banks may need to create a work-around
join as limited partners that, in turn, invest in fintechs; partic-
approach if their preferred fintech doesn’t directly integrate
ipating banks have opportunities to learn how their VC fund
into the core, like a middleware layer that sits between the
vets prospects and can even try out the technology.
fintech’s technology and the core.
Existing peer bank networks can be a useful way for bankers
But adding another layer of technology, even to increase con-
to quickly identify recommended vendors — or companies to
nectivity, can sometimes introduce complexity for banks that
avoid. Executives at peer institutions and external advisors
they will need to manage. In its white paper, the Fed points
the bank already uses may have useful experiences to share
out that banks may need to consider how to identify custom-
or can facilitate an introduction.
10 | FINXTECH INTELLIGENCE REPORT
POWERED BY BANK DIRECTOR