What to Think About When Working with a Fintech

​Thanks for posting Steve!

Great insights from Mark Jacobsen here about the challenges of banks aligning with a FinTech.  I believe that pre-FDIC bankers may have been very entrepreneurial - more like FinTech operators than most of today's bankers.  This material effectively presents the evolution of new financial technology offerings.  As our bank, TS Banking Group has a vision of leading the resurgence of community banking, we are living this out.  My role as banking executive and FinTech founder and CEO of The CorePoint causes us to address the issues which are well-identified here.  We are respectful of the boundaries and barriers (real and perceived) to introducing new banking processes, products, and tools.

My advantage of being embedded in high-performance commercial banks for the first 25 years of my career has been hugely beneficial in avoiding many of the traps that would-be FinTech entrepreneurs fall into.  For example, at The CorePoint, we knew that integrating with the data centers of our clients would be the kiss of death to our initial endeavors.  We built our system with principles that are simple and easy to understand while presenting iterative incremental enhancements of legacy banking activities without creating any negative impacts. 

You can see as bankers how this banking experience formed The CorePoint's guiding principals:

• Simple and logical
• Good for the depositors
• Easy to sell and even easier to buy
• Making money for the bank
• Produces depositors who are as happy at the end of the deposit as they were at the beginning

Notice that we don't simply glorify what the consumer wants.  It takes a full spectrum awareness of the needs and wants of all the stakeholders.  That is not naturally observed in the FinTech world.  It must be developed over time as a participant in the industry.

A wise bank service provider told me at the beginning of my FinTech efforts "Neil, you have what it takes to do this" - I was encouraged.  Then he added "But, it is going to take everything you have!"  That was a big dose of reality.  Those words have rung true these past 8 years as a FinTech provider and banker simultaneously.

"It must be considered that there is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order; this lukewarmness arising partly from the incredulity of mankind who does not truly believe in anything new until they actually have experience of it."
― Niccolò Machiavelli, The Prince

I encourage bankers to engage FinTech.  However, it will take everything you have to initiate a new order of things.  Do so with your eyes wide open!

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Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
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Original Message:
Sent: 07-25-2018 16:39
From: Steve Kinner
Subject: What to Think About When Working with a Fintech

Today, many banks are asking themselves if they should partner with a fintech company and, if so, how they should manage the associated risks.  At a recent conference, Promontory Interfinancial Network's CEO, Mark Jacobsen, outlined his thoughts on the fintech lifecycle and potential ways to mitigate risks at various stages along the way. Attached are the slides and notes he developed for that presentation. This document has not been published elsewhere and is exclusively for Peer Intelligence participants (as a thank you for participating in this pilot).  Of course, banks have to conduct their own due diligence and what's right for one institution might not be right for another, but in the attached Mark shares some of his real-life experiences and takeaways. He and all of us here hope you find this helpful.

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Steve Kinner
Promontory Interfinancial Network
Arlington VA
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