How to Leverage Fintech Companies to Grow Your Own Bank Neil Falken, Principal, CliftonLarsonAllen LLP Joshua Juergensen, Principal, CliftonLarsonAllen LLP
AGENDA 1) What is Fintech? 2) State of Fintech today 3) Are Fintech s really stealing my customers? 4) How to leverage Fintech to grow externally 5) How to leverage Fintech to grow internally 6) Where to go now?
WHAT IS FINTECH? Companies that use new technology and innovation with available resources in order to compete in the marketplace of traditional financial institutions in the delivery of financial services. Financial technology companies consist of both startups and established financial and technology companies trying to replace or enhance the usage of financial services of existing financial institutions.
POLLING QUESTION #1 Has your bank partnered with a Fintech provider or startup?
o Rapid Growth STATE OF FINTECH TODAY o Fintech and related startups now outnumbers Banks o Significant increase in funding, although slight decline from 2015 to 2016 o 87% that have partnered with Fintech cut costs o 54% have actually increased revenue o Significant shift in strategies from both Banks and Fintech
STATE OF FINTECH TODAY VS
STATE OF FINTECH TODAY Copyright CBInsight.com
POLLING QUESTION #2 Has your Bank had discussions with any Fintech providers or startups about a potential partnership?
o Easy Answer: Yes IS FINTECH REALLY STEALING MY CUSTOMERS?
o Easy Answer: Yes IS FINTECH REALLY STEALING MY CUSTOMERS?
o Easy Answer: Yes IS FINTECH REALLY STEALING MY CUSTOMERS?
ARE FINTECH S REALLY STEALING MY CUSTOMERS? Complicated Answer: Some are, some aren t take advantage of opportunities with those looking to partner! o Fintech needs Bank customers, Banks need their technology o Fintech needs to utilize the low-cost funding of Banks o Banks have regulatory access Fintech needs o Legacy systems are broken from the point of being able to do new things, but they're perfectly OK for what they're already doing - Suresh Ramamurthi American Banker article
Does a digital lending platform make sense for your bank? HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY o Improved customer relationships o Leverage personal relationships and networking opportunities with millennials o Investment opportunities o Invest in technology!
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY o Cross River Bank Teaneck, NJ o $561M as of 12/31/16 o Received $28M in venture capital funding $2.4B Originations 24% ROE $13.5M Net Income 14.1% Leverage 0% Non-Accrual 44% Efficiency
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY Plan for Retirement!
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY
HOW TO LEVERAGE FINTECH TO GROW EXTERNALLY What is missing here?
POLLING QUESTION #3 Thinking about your own Bank, does your institution have an individual(s) who could be charged with developing Fintech relationships to take advantage of these opportunities?
HOW TO LEVERAGE FINTECH TO GROW INTERNALLY o Strategic alignment between governance, senior management, and operational staff
HOW TO LEVERAGE FINTECH TO GROW INTERNALLY o Data Analytics - Public data is now easier to access and analyze
o Leverage Millennials! HOW TO LEVERAGE FINTECH TO GROW INTERNALLY
WHERE TO GO NOW? o Consider startup accelerator programs to connect with Fintech o Don t be afraid to have preliminary discussions o Poll your customers to see what services they are looking for o Utilize millennials within your organization to lead the charge
QUESTIONS? Neil Falken, CPA CliftonLarsonAllen LLP 612-376-4532 Neil.Falken@claconnect.com Joshua Juergensen, CPA CliftonLarsonAllen LLP 612-397-3261 Joshua.Juergensen@claconnect.com