Editorial Team

The Braintrust: Charles E. Potts (ICBA) on Innovative Community Banking

As the executive vice president and chief innovation officer for the Independent Community Bankers of America (ICBA), Charles E. Potts feels like he needs to say the same thing again and again: “It's still very important to state unequivocally: community banks are being innovative. A lot of people don't believe that.”

But Potts is committed to making sure innovative fintechs have a path to partner with community banks. Since launching the ​​ThinkTECH Accelerator in 2019, Potts has worked to identify and foster community bank-enabled fintech partnerships.

Potts has seen that community bankers have a unique view of the actual problems facing small-business owners when it comes to money and capital. He’s watched as these bankers have partnered with innovative founders to create valuable solutions. 

We gave Potts a call to learn more about how fintechs and community banks can work together to change the way we save and leverage our money.  

What do you see as the biggest need that innovation can solve for community banks in 2022?

That's a great question, but let me actually unpack it a little bit. When you're talking about the community-bank marketplace and innovation, one of the things that we at ICBA recognize is the last three or four years have been about helping the banks understand that, frankly, innovation is accessible to all of them. It's not just something you leave up to the big providers and the big fintechs and the big banks — banks of all sizes can and are being innovative. 

So, it's still very important to state unequivocally: community banks are being innovative. A lot of people don't believe that. It's a large part of the reason why we've built our accelerator program and have had companies like Unifimoney come participate, because the bankers are the ones who have raised their hand and said: "We want to see solutions like this. We have these challenges. We have these problems that we're trying to address. And we want to see solutions that we can embrace and help bring to market.” 

The fact is: it's working. Many community banks are being innovative. They are finding solution providers. Whether it's Unifimoney or any of the other 40-plus companies that have come through our accelerator program in the last four years, they are embracing those solutions. They've worked with the entrepreneurs in the companies to make sure the products are sized right and delivered right in that collaborative nature. And they are actually meeting the needs of the market. They're finding innovative partners to solve the specific problems they're trying to address.

So much of the Founder Story is a person identifying a problem that they realize no one’s solved yet. Once they create the solution, it suddenly feels so obvious that people can’t believe no one has thought of it before. It’s fascinating to think about community bankers’ special position in identifying problems that need solving.

Look: the community bank marketplace is where two-thirds of all small-business loans are made and 80 percent of Ag loans are made. Most community banks don't think of themselves this way, but we recognize that they are some of the best small business owner-operators on the planet. They are Small Business America. They are the heartbeat of the small-to-medium-sized business when it comes to commercial lending and construction lending and agricultural lending. So, you get a chance to talk to the community bankers and you find out they actually understand what's going on in their communities; they understand the pain points and the problems. 

I'm going to lean on it as long as there's a breath left in me, but the PPP demonstrated to the world the power of the community bankers and the intimate knowledge they have of the small-business marketplace that they serve. And that speaks volumes. So, when we ask community banks what their challenges are, they're really resolute. They're really clear. Our accelerator program is designed to then go find companies like Unifimoney and others who can address those problems, and bring them together with the banks to help mold and shape the delivery of that solution to address that unique customer, market, or community that they serve.

How can Fintechs serve a role in helping these banks innovate?

So one thing that we like to make really clear to our audience of community bankers is not all fintechs are built alike and not all of them serve the same masters. We like the fintechs that are going to be partners with community banks to deliver that collaborative service. So, it's important that we differentiate those who are aligned with working with the banks to serve particular markets versus those who are there to disintermediate — the ones that focus on a direct-to-consumer business. 

The fintechs that the banks really like working with and the banks that the fintechs really like working with are mutually aligned. They have a common interest in serving a particular need and solving a particular challenge and enhancing a way of doing business. In the end, both sides of that equation like the fact that there is mutual alignment in the goals and objectives.

I've spoken with a lot of people in fintech, which means I’ve spoken with a lot of people who formerly tried to innovate within large banks, and decided they couldn't deal with the bureaucracy.

[Laughs] You could spend years crawling the halls of some of those larger banks and never get to a decision-maker.

So, when it comes to innovation, do you think that community banks actually have an advantage over the bigger, more bureaucratic institutions?

The biggest difference is that you can get right to the decision-makers. In today's high-paced, fast-fail, lean approach to technology and technology deployment, the world is moving at lightspeed. For any solution provider in sales, a fast "no" is as valuable as anything. 

In our world, you're sitting down with the person who owns the ultimate responsibility for making these decisions. And in our world, one reason these community banks really like the work that we're doing is that they too can get right to the owner-operator of a lot of these fintechs. When you can pick up the phone and say, "Hey, XYZ is working this way," it works better for all parties. Those are invaluable relationships — and that word is very important. Relationships are at the very core of what makes community banks important in the markets they serve. The relationship between the fintech and the bank and the bank and the fintech is everything. And it only strengthens the value of the solutions that the customers receive. 

In a big bureaucratic organization, you're hoping you can find somebody that can make a decision. This is more cut-to-the-chase on both sides of the equation. And I can tell you, our community bankers truly enjoy the fact that they get to know the owner-operators of these fintech companies, because they believe that together they're able to make some significant changes and truly enhance what they're doing at their banks.

And that allows them to solve specific problems, which I think is such a fascinating part of that relationship.

There's a riff on an old Thomas Watson, the founder of IBM, saying: if nobody buys your stuff, you don't have a business. People forget that. So, the bankers have to buy these fintech solutions. They have to put them to work and they have to solve the problems. If not, we identified the wrong problems or we identified the wrong solutions. De-risking that relationship is a key part of what we're collectively doing in our ThinkTECH-accelerator program — speeding it to market by getting that product refinement done between the bankers and the fintech operators themselves, and making sure that there is real product-market fit and alignment between the solutions and the problems that are being addressed.

In an ideal world, how can this partnership between fintechs and community banks serve customers when it comes to digital wealth management?

The answer is, it's already happening. The journey is underway and digital wealth is a piece of that puzzle. If you think about the layering of products and services that banks deliver to their customers that enhance the value of that relationship, this is a natural piece of that equation.

This technology is now accessible to everyone — it's no longer something that our community banks look around and say: "I can't provide this because I don't have a way to do that." Now they can look at somebody like Unifimoney and say: "I can do this and I've got somebody I can work within a very collaborative way to meet the needs of my marketplace." That's a journey we're all on and, two years from now, I frankly don't think this will be a question in anybody's mind

In 2020, PPP demonstrated that people want and need to do business with a banker, not just a bank. And most recent research out there, well over 70 percent of all consumers would rather do all of their financial services with a trusted financial institution like their community bank. Now, we just have to show them how.


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