We’ve come to accept the narrative that Big Brand Banks and Fintech giants are eating the market and leaving Regional and Community Banks in the dust. While there’s some truth in this framing, it's a story that’s not yet over. With an estimated 10,000 regional banks and credit unions in the US, how this story finishes is important for many millions of people and small businesses across the country.
The very weaknesses typically ascribed to smaller banks — i.e. technology and innovation deficit — could quickly become their greatest strengths. Unencumbered by bureaucratic slog, proprietary tech and interdepartmental rivalries, these smaller banks could roll out innovative Fintech services at low cost and high speed, potentially years ahead of their bigger rivals.
The combination of the innovative Fintech products and their traditional strengths in value for money and service could allow smaller banks to not just compete with larger institutions, but actually to win. Faster to market, lower cost and more nimble in execution gives a clear advantage over both Big Brand Banks and large Fintech players alike.
What could a turnkey solution in the form of an all-in-one money management tool mean for Regional and Community Banks? It could mean completely changing the tide of American banking. And with Unifimoney, that solution is here.
“There is a pile of money so big it is hard to fathom sitting in the large banks and it is getting bigger every day. Fintech companies like Unifimoney and Community Banks need to combine forces — that much is clear,” FedFis CEO Dave Mayo says. “At FedFis, we believe that this is exactly the type of collaboration between fintech and community banking that creates a dynamic shift in power back to the Community Banks.”
Regional and Community Banks play a vital role in the US banking industry, delivering great value for money and customer service to the local communities they have served for generations. However, technology has created a major moment of inflection in the market: geographical proximity is less important than ever and entirely new services, features and functionality have emerged critical to the needs of new generations of digitally engaged consumers. Customers no longer choose banks based on how close the branch is to their home and expect an ever-widening offering from their bank. It’s been for many community banks to keep up.
In particular, as investing has hit the mainstream via Fintech apps and meme stocks, most community banks have faced insurmountable barriers to deliver a product that serves all their customers’ needs.
Retail investors are predicted to potentially account for over 30% of total trading volume in 2021, representing a 3 fold increase in just the last 10 years. That represents more trading volume than Mutual Funds, Traditional Hedge Funds, Quant Hedge Funds and Bank Trading.
And it's not just conventional equities that retail investors are engaging with. Cryptocurrencies have emerged as a major new asset class and even more esoteric trading opportunities have emerged including art, wine, collectables, fractional farmland and much else.
With consumers doing radically different things with their money than they did a decade ago, which companies have benefited most from the changing relationship and behavior consumers have with their money?
Major Fintech brands like Robinhood and Coinbase, as well as traditional investment platforms like Schwab and Fidelity have done incredibly well. But Big Brand Banks have benefited alongside them.
Deposits in Big Brand Banks have grown more rapidly than smaller institutions. In the period from 2010 to 2017, Big Banks deposits grew at 82% vs 46% for smaller banks. A staggering 49% of all domestic deposits are held by just the 10 largest banks!
Smaller banks, however, have been largely excluded from this transformative market (honourable exceptions include Quontic Bank with their Bitcoin Rewards Account) and the potential it offers to drive consumer engagement, especially among younger, more affluent digitally engaged consumers.
Yet consumers want these new services from their banks with more people likely to trade crypto with their banking institution than using dedicated crypto exchanges.
Big Brand Banks have the resources to channel billions of dollars into digital transformation, but they also suffer from complex and proprietary tech stacks that drive up cost and kneecap innovation. Regional and Community Banks have a radically different model. These institutions typically outsource a large portion of their infrastructure both front and back end to a handful of companies including FIS, Fiserv, Jack Henry, Nymbus, Q2 and DCI.
This means that a single integration with a core technology platform could implement innovative tech access for all the customers at high speed and low cost. It’s a one-to-many approach that means that Regional and Community Banks could implement new services and make them available to their customers in a radically shorter time frame and at a fraction of the cost of Big Brand Banks and even most Fintech companies.
By combining their historical strengths in customer relationships and value for money with a turnkey digital wealth management platform, Regional and Community Banks can deliver what no one else on the market has: a true one-stop shop for customers to manage and invest their wealth.
This is what Unifimoney is delivering in its new partnership program for Regional and Community Banks: a turnkey digital wealth management solution delivering bank customers one of the most comprehensive investment platforms on the market. Today, Unifimoney offers both active and passive investing in stocks and ETFs via a Robo Platform and via Commission Free Trading. On top of that, customers can invest in 37 cryptocurrencies as well as precious metals, with plans to expand to additional alternative assets over time.
This turnkey solution arriving right at this moment is especially essential, according to FedFis CEO Dave Mayo. The PPP loan exposed how the bigger banks felt about their small business partners, in many cases. The Big 4 banks were alleged to be cherry-picking which PPP loans to give, helping their most valuable partners while letting the less valuable ones fail. To Mayo, that fact married with the fact that the Regional and Community Banks stepped up, working 22-hour days to save their neighbor’s business, the kid on their baseball team’s dad’s business, etc. showed the Regional and Community Bank superpower: relationships.
“The largest banks let down many of their customers during the most dire days of the pandemic. With the powerful momentum coming off PPP, right now is the time for the community bankers to double down on that momentum,” says Mayo. “We can shift the tide, but it will only be done through technology innovations such as this one provided Unifimoney and working hand in hand with core tech platforms that these banks already use — a complete solution that has not been seen before.”
Unifimoney has solved for complex funds flow, operations, regulation, and compliance to create a multi-product platform that is infinitely extensible to almost any form of alternative asset or money management service. This is the Amazon of alternative assets and, through this partnership, we’re making the platform available in a frictionless way to Regional and Community Bank customers across the country.
A turnkey solution means reduced complexity and cost for all concerned. Any individual bank or platform attempting to create a similar feature set to Unifimoney today would be faced with an expensive and logistically taxing pursuit: deals and integrations with multiple vendors, increased costs, and demands on resources.
As important, attempting to recreate a platform like Unifimoney’s with individual partners would deliver a more fragmented and friction-laden customer experience. To compete with large Fintechs and Big Brand Banks, the Regional and Community Banks need an innovative platform that is straightforward, streamlined and allows digital-first customers to manage and grow their wealth all in one place.
Regional and Community Banks that recognize the need to innovate in order to attract and retain Millennial and Gen Z customers have, for the first time, the opportunity and ability to leapfrog their larger competitors. Uniquely, they can do so at high speed and low cost due to the one to many technology delivery model enabled through existing core platform providers. This is the moment to surprise and delight their customers with an expanded and engaging feature scope — it’s the perfect time to write a new ending to the American banking story!
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The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.