Release: Survey Reveals FinTech Firms and Regional Banks are Teaming Up

Survey Reveals FinTech Firms and Regional Banks are Teaming Up
Consumers have spoken, and a great deal of them want their banking needs to be met digitally via computers, smartphones and tablets.

In turn, thousands of regional and community banks are clambering to meet such demands by turning to FinTech, according to a recent report from Manatt, Phelps & Phillips, one of the nation’s leading law and consulting firms.

The report, “Growing Together: Collaboration Between Regional and Community Banks and Fintech,” polled senior executives from regional and community banks, private equity firms and FinTech companies, among others.

The survey found 81 percent of regional and community banks are already working in tandem with FinTech firms, and a whopping 86 percent of community bank execs said working with FinTech is “absolutely essential” or “very important” to their success.

“Rather than compete or acquire one another, we’re seeing these institutions begin to form partnerships, and we predict that collaboration will be the primary way that they continue to interact,” Brian Korn, Manatt’s digital finance and marketplace lending practice chairman, said in a release.

Banks believe working with FinTech will improved online and mobile services to their customers while also reducing technology costs and lending rates.

FinTech firms, too, see untapped potential in teaming with regional and community banks. Nearly 6 of 10 FinTech respondents said they see an advantage working together with such entities because it provides credibility and access to customers.

“This is the beginning of a new trend that points specifically to an increasingly symbiotic environment,” Korn said.

What’s keeping more FinTech firms and banks from partnering?
It’s not always easy for banks to revamp their position and adapt to FinTech. One executive from a Southeastern community bank admitted it might be taxing to restructure their processes and give employees the proper training to handle such new technologies. However, a likely partnership still looms on the horizon.

“We foresee a slowdown in our business if we do not find new solutions to implement,” the executive said in the survey. “So currently I would say we are unprepared, but on the way to getting prepared, for the necessary changes.”

In addition, 19 percent of bank respondents who are not yet working with FinTech firms stated cybersecurity as their biggest concern.

“Despite the demand for mobile services, cybersecurity will be the chief concern as these institutions come together,” Craig Miller, co-chair of Manatt’s financial services, said in the release. “FinTech opens numerous doors for traditional banks, but at the same time, it leaves the possibility of a cyber breach wide open.”

The survey was conducted in association with MergerMarket, a business development and market intelligence tool.