Pub. 9 2020 Issue 1

The CommunityBanker 6 Chairman’s Message M E S S A G E By Lloyd Harrison VACB Chairman Virginia Partners Bank The Future with Fintech I recently attended Bank Director's "Acquire or Be Acquired Conference" for the second year in a row. Both years featured a lot of content around Fintech, but there was a subtle change in tone about Fintech it seemed to me. In 2019, the message I heard was more along the lines that Fintech posed an existential threat to community banks. This year, what I heard is that community banks have what Fintechs need to suc- ceed, namely customer data and customer relationships. For these reasons, Fintech will look for partnership opportunities with community banks. My sense from listening to a number of vendors is that they are very aware of the con- cerns that new technology brings to bankers. Data privacy and cybersecurity are on top of this list. They understand the margin pressures we are under and our need to control costs. They understand our regulatory framework. Fintech has the potential to take a lot of "friction" out of day-to-day banking, whether customer-facing or back-office. This will only improve what is already the core strength of community banking – the relationships we have with our customers. One of the challenges, though, is that Fin- tech will have to work with the core processors. And we all know what a joy that is… Applica- tion Programming Interfaces (APIs) may be able to ride on existing infrastructure provided by core processors. I attended a session by Aaron Silva, Presi- dent & CEO of Paladin and the Golden Contract Coalition entitled "What if Trump Negotiated your Next Core IT Deal?." The presentation was infor- mative and hilarious. (By the way, Mr. Silva will be making this presentation at the ICBA Live 2020 in Orlando Tuesday, March 10). One piece of information he shared was truly alarming. What he said was that your core contract might have a provision wherein if you use a third-par- ty vendor solution that competes with a product offered by your core, you might have to pay the core as if they were your vendor! Fintech holds a lot of promise for commu- nity banks. It certainly is a game-changer. But as in so many things, it is what you make of the change that matters. Fintech has the potential to take a lot of “friction” out of day-to-day banking, whether customer-facing or back-office. This will only improve what is already the core strength of community banking – the relationships we have with our customers.