Helping banks innovate and find fintech partners
Helping banks innovate and find fintech partners
About two and a half years ago, Jeff Sinnott was talking to companies in the blockchain space to figure out if his bank, Vantage Bank Texas, might want to work with them.
"We felt blockchain technology was going to have a major impact on many industries including financial services," Sinnott said. "We'd start conversations and then we'd quickly whittle that down to who had the ability to possibly be a good partner for us."
He liked one company a lot, and his team liked the other firms' staff, "but there wasn't a lot of appreciation of the regulatory hoops and the pace in which we had to verify things," said Sinnott, the San Antonio bank's president and CEO. "They were frustrated with us as well, not understanding some of the things banks have to do."
Sinnott turned for help to Patrick Sells, who at the time was chief innovation officer at NYDIG. The year before, Sells had been American Banker's Digital Banker of the Year and chief innovation officer at Quontic Bank in New York.
"You might meet a fintech at a conference," Sells said. "But if they've never done an integration with yourcore or online banking, it's a far harder proposition."
The two men found they had "a lot of kindred ideas" about how community banks and smaller credit unions could thrive, Sinnott said in an interview. "He had a unique perspective of technology and banking and the regulatory pieces that surround that. I come from a technical background too, so we speak a lot of the same languages." Sinnott was formerly a software engineer and chief information officer at Vantage Bank Texas. They stayed in touch.
So when Sells called Sinnott to tell him he was setting up a new company called True Digital that would help bankers with digital upgrades and fintech partner due diligence, Sinnott was in.
Another yes came from Jeff Ludwig, CEO of Midland States Bank in Effingham, Illinois.
"They understand the problems and solutions we as bankers face," Ludwig said.
True Digital launched this week. One of its first offerings is Mind Shift, a series of two-day seminars that banks' staff, executives and board members can attend to learn how to build a culture of innovation in their banks.
"What I've heard from many banks is, look, the last three to five years we've been told that we need to be more innovative," Sells said in an interview Monday. "But it's not clear as to, how do I do that? And how do I get those skills that I need?" The agenda will include emerging technologies like AI, the metaverse and cryptocurrencies.
Sinnott plans to attend the Mind Shift seminars, starting with the first one at the end of January.
"If you don't have the right type of understanding across the board of directors, the leaders of the bank, and those working across these efforts, it doesn't matter if you have the right fintech partner; you're likely not going to get to the finish line," Sinnott said. "You're going to have a hard time executing, because it's not easy. I think it's extremely important for people to understand there's a type of mind shift or type of thinking, support and consensus you need to have. And most importantly, perseverance, because it's a tough journey."
Another True Digital offering is Fintech Finder, a matchmaking platform that will help bankers hook up with the right fintechs to partner with. Sells plans to roll out the platform in the first quarter of 2023.
Fintech Finder will have data on the services fintechs provide, the banks they work with, the core banking systems their products integrate with and who their competitors are.
"You might meet a fintech at a conference," Sells said. "But if they've never done an integration with your core or online banking, it's a far harder proposition."
Sinnott hopes Fintech Finder will help him qualify potential partners. When he was looking at blockchain companies, "We cast a wide net. It was an extraordinary amount of effort and energy, and 98% of the fintechs we talked to were not candidates to move forward with."
"Fintechs are so vastly different from regulated financial institutions," Sells said. "We've been trying to force two vastly different things together. And sometimes that works, but a lot of times it doesn't and just causes frustration. You need to identify what those differences are and then address them and then move forward."
Executive Editor, Technology At American Banker, American Banker