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4 Strategies to Build a Tech-Forward Community Bank

author Michael Berman
3 min read
Jun 2, 2022

To compete today and in the future, financial institutions must engage in a forward-looking technology strategy that is aligned with its mission, vision, and goals.

While each institution allocates technology dollars differently depending on their strategic vision, there are four basic areas where the savviest community banks are making their technology investments: 

  1. Creating a Tech-Centric Workplace to Attract and Retain Talent

Attracting and retaining talent is among the top business challenges for more than half (48%) of community banks, according to the Independent Banker 2022 Community Bank CEO Outlook Survey.

Banks can’t compete with Silicon Valley in terms of compensation, so they need to offer other compelling reasons to attract and retain top managers and front-line employees.

Forward-thinking banks are enabling their staff to use digital tools and automating processes wherever possible. This frees staff from mundane, repetitive activities so that they can concentrate on work that is more engaging for them, and more rewarding to the banks, like helping a customer better understand the benefits of a new loan.

An engaging culture is also critical to attracting and retaining talent. Banks that haven’t already done so can boost engagement to create a more appealing workspace by investing in tools like a company intranet that helps connect employees for workplace collaboration and socialization. 

Want to learn how you can improve your company culture with an Intranet? 
“How to Activate Your Company Culture with an Intranet (in 7 Steps) (ncontracts.com)”

  1. Partner with a Fintech

Fintech partnerships can be highly beneficial in helping community banks address technology innovation, which is critical to competing with both larger banks and nonbanks (or even digital disrupters), according to the Federal Reserve’s 2021 Consumer Compliance Outlook.

Many community banks have already moved in this direction. A Cornerstone Advisors survey shows that nearly two-thirds of banks and credit unions entered into at least one fintech partnership over the last year. More than half (55%) of those who haven’t already done so plan to this year.

What 5 types of fintechs are bans partnering with? 
Are Fintechs the Future? (ncontracts.com) 

  1. Invest in Green Technology

Climate risk, or the risk that climate-related changes pose to financial institutions, is demanding more and more attention from researchers, regulators, and boards of directors.

Additionally, today’s employees, particularly younger ones, want to work with companies that show concern for the environment.

The first step for community banks is to be as green as possible by eliminating unnecessary paper. Eliminating paper not only helps the environment, but with the right technology, it makes it easier to secure, file, and locate documents. The bank can also re-dedicate any space used for paper files for more productive uses.

Related: Fintechs Lead the Way for Digital Transformation in Financial Institutions

  1. Employ Enterprise Risk Management

While this has always been important, bank examiners today are looking more granularly at risk management, including operational risk, credit risk, cyber risk, and compliance risk. Community banks need to be proactive in enterprise risk management, not simply rely on the status quo.

In its Supervision Priorities for 2022, the OCC lists not only long-time topics such as cybersecurity, operational resilience, BSA, change management, vendor management, fair lending, and other non-financial risks, but also includes newer topics like cryptocurrency and climate risk, as well as complacency, noting that examiners will focus on safety and soundness of strategic and operational planning including “guarding against complacency.”

With the right risk management systems, community banks can stay on top of these risks and satisfy regulatory requirements.

What Will Examiners Look for in 2022? 
What Will Examiners Look for in 2022? OCC Releases Supervisory Priorities (ncontracts.com) 

To remain relevant, community banks must prioritize technology. With a tech-forward approach, focused on these strategies, and that aligns with its mission, vision, and goals, community banks can position themselves more competitively today and in the future.

 

Learn about the key components to look for in an enterprise risk management solution in our latest guide at
Enterprise Risk Management Buyer's Guide | Ncontracts.

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