Small Financial Institutions Are Under Threat
Elam noted that the kinds of banks she represents, with minority ownership and assets under management averaging less than $400 million — “the smallest of the small,” she called them — are confronting an existential crisis. They need all the help they can get and fintechs may provide part of the answer.
“How do we get community lenders to be able to capture this next generation of customers? Consumers are changing, and it all revolves around technology,” Elam said. She added that those who can’t adapt “just won’t be around anymore.”
Low-code and no-code software platforms allow businesses to deliver new services without the need to write their own code, something few community banks have the technical or financial wherewithal to do.
“Consumer expectations are changing faster than organizations can adapt, and software developers are often the ones controlling the narrative,” said Joseph Akintolayo, CEO of Deposits, a fintech that provides Low-Code as a Service solutions to banks, credit unions and others. “What I see low-code and no-code tools doing is allowing people to get started a lot faster — allowing them to get an A/B test without the difference between A and B costing a million dollars and six months.”
Small Banks Lack Qualified Tech Talent
Gabriel Krajicek, CEO of Kasasa, a fintech whose services are aimed at small banks and credit unions, said that people want to bank at local financial institutions, which they regard as more trustworthy than large banks, but find that the smaller banks can’t keep up with the services that big institutions can provide.
“There’s inherent trust with community financial institutions,” Krajicek said. “We’ve all seen It’s a Wonderful Life. What they don’t have is any technology people. The technology team at a community financial institution with maybe $500 million to $1 billion under management — the CTO is an integrator, an IT guy, and so they buy their technology and then try to integrate it. And they buy it from one of several companies that aren’t really investing in the upkeep of their solutions.”
That limits what community financial institutions can do. For example, Krajicek said, he asked a group of 65 such CTOs at a recent presentation what it would take for them to be able to offer their customers access to funds from direct deposit a day or two sooner, a service that large banks are increasingly touting. “They said it would be impossible; they just couldn’t do it. So, I see low-code and no-code as being a solution for those kinds of problems.”