A great consultant brings a wide breadth of experience and expertise to help with whatever issue may arise. Robert Zondag, a Senior Manager at Wipfli, definitely fits the bill. 

For 25 years, Zondag worked as an executive in financial services and private enterprise; he’s also been a CRO and is a Certified Treasury Professional. That wide range of skills and expertise is great for consulting with CEOs and founders and boards — it’s also perfect for Braintrust interviewees!

So, we gave Zondag a call this week because we wanted to better understand the working relationship between fintech and community banks. Are they competitors? Are they collaborators? What could the right community bank/fintech partnership mean for the future of Main Street America banking?

In what ways do you think Fintech can disrupt community banks and credit unions? 

I'll start off by saying that the discussion on disruption is past relevancy now. Technology has reached the point where it's already shifted how people live their lives in general ​​and fintech has shifted how people conduct their financial lives. The ongoing buzz about what is fintech? and how is it shifting banking? has become irrelevant. Now, the more important question is: how do community banks and credit unions remain relevant? How do they make sure their customers and members continue to choose to do business with them? 

I don't think there has to be a wide divide between fintech and banking. I think there can be a shift where financial institutions start to say: where should we look when it comes to partnerships? What is our niche? How are we going to remain relevant? We remain relevant by choosing partnerships that best serve our customers' needs. 

In my experience, I just don't think the conversation about disruption serves leadership teams well anymore.

Are there community banks and credit unions that have taken steps to embrace Fintech? Will that be a differentiator going forward?

Yes, there are. However, it's a matter of banks and credit unions evolving to say that they are committed to becoming digitally aware and digitally native and that they have a roadmap of what that change looks like. It also means having the competency of being able to bridge multiple technologies together into a cohesive experience. The key is for institutions to find a comfort level in stepping outside their traditional core processing solutions if that's where they've always been.

There was a moment a year or two back when every fintech wanted to be a bank. It feels like we’ve shifted to a new era where fintechs can serve as modular additions to banks and to consumers’ financial lives. Does the ability to add fintech services to their offerings allow the smaller banks to actually compete with the giant banks for the first time?

I'll address that in two ways. To the first part, I totally agree. We spent a lot of time discussing: "What's a bank versus a fintech?" We must be clear that banks are institutions that are able to provide FDIC and credit unions are able to provide NCUA insurance, and that has real value. But the trade-off of that insurance is regulation. There are fintechs who don't value what the bank brings in, and there are banks that don't value what the fintech brings. I think there needs to be a mutuality to these partnerships. 

To answer the second part of that question: though we always hear people saying that all banks are competing with big banks, I would say that when it comes to strategy, you don't have to be the biggest in the market. If you are focused on the right things, you can be very profitable. You can also be a success if you're a credit union focused on meeting the needs of a particular membership. Trying to compete with a huge money-center bank, if you're a community bank, is an irrelevant aspiration.

Do you see what we’re doing at Unifimoney as an opportunity for these community banks going forward? Is partnering with fintechs a way to fast-track digital?

The thing that has impressed our strategy team about Unifimoney is that you are clear about where you're going. That is: we don't have to compete with your traditional advisor; we are here for people that might not even invest currently and for those who want the ability to invest via mobile. Your platform fits very well with a strategy for any bank where there might not be people that are going to need a traditional advisor relationship but want this type of mobile access. 

Additionally, if we look at trends, such as the gamification of trading, there's a need to have a banking platform that's relevant to what people want to do on their phones. I mean, last night, I was sitting watching TV and I remembered a couple of things I needed to pick up from the grocery store, and I just ordered them on my phone. What I find funny is that financial institutions will talk about their customers wanting this and wanting that, but they rarely look to their own behaviors to answer what is needed. If you're trading on your phone, or people you know are doing it, then you can assume your customers want to do it as well.

When smaller banks and credit unions are able to take advantage of fintechs to add relevant services to their offering, how will that change the way the average American banks? 

We have to understand that in the United States we have a network of community banks that's unlike any other country in the world. I believe that offers Main Street America — the average American and the average business owner — the opportunity of choice. In my own experience as a community banker, I've seen that every community bank or credit union may not need all the bells and whistles. But you must understand your particular niche. You must be clear about what tools your niche wants, and you have to be able to provide them.

We can't underestimate the power of a tool like Unifimoney partnered with that local knowledge. It's very powerful. We saw what happened early in the pandemic with the PPP lending. The ability to go talk to a banker shouldn't be underestimated. 

So, if you are a bank that chooses the right platforms, and you have the ability to understand and connect with people on a personal level, then you can serve your customers in a powerful way. Instead of being afraid of fintechs and technology, being able to understand how it works, what the risks are, and who the right partnerships will be can change the conversation when it comes to community banking.