As part of our Fall Innovators Retreat, Narmi welcomed industry thought leaders as well as bank and credit executives from across the country to our headquarters in NYC.
Over the course of the event, attendees experienced best-in-class presentations from renowned speakers, partook in personalized networking opportunities, and explored various experiences across the city.
Many of the topics covered focused on how community banks and credit unions can best serve the unique needs of their customers and members, why technology such as FedNow can be a major differentiator, and the outlook on the banking sector six months after the collapse of Silicon Valley Bank (SVB) and Signature Bank.
Read on to discover what the experts had to say.
Joseph Berry, Co-Head of Investment Banking at KBW, kicked off the first session with Narmi Co-Founder Nikhil Lakhanpal. Making reference to his fireside chat during our spring session, Berry spotlighted the importance of keeping banking relationships personal, and how this will largely benefit community banks and credit unions, especially as the industry continues to change following the collapse of SVB and Signature this past March. He also spotlighted the importance of maintaining a solid funding stack in order to weather the current headwinds.
“There will always be a need for relationship-based community financial institutions. And as usual, we have an environment that has a lot of volatility. Just make it through the volatility.” – Joseph Berry, Co-Head of Investment Banking, KBW
And there certainly have been several important factors that led to this volatility. From additional regulatory pressures and rising interest rates, to increased balance sheet scrutiny and decreases in margins, community banks and credit unions have had to remain vigilant on their customer acquisition and retention in order to maintain a steady source of funding.
“The most important thing to do in an environment like this is to keep the customer through UX and ease of use. It is really important to make your customers feel like they’re VIPs, and hold on to them,” Berry noted, especially until balance sheets begin to stabilize and the demand for loans increases.
Berry also predicted that as regulation tightens, in order to meet these enhanced requirements, consolidation amongst banks (especially those with $50 to $100 billion in assets) is expected. As more consolidation across these banks occur, the level of service is likely to drop, thus causing customers to search for new banking relationships. The community banks and credit unions that have the technology and outstanding user experience will be the ones that capture these potential new clients.
“It’s about [having] a better digital experience and being able to bank anywhere, even on your phone,” Berry said. “You don’t want to have clunky APIs. Also, you want to create a community around your customer so they feel attached to you as their bank.”
Grasshopper Bank CEO Mike Butler was then welcomed to the stage alongside Narmi Lead GM Adam Shpiro. In particular, Butler highlighted the importance of creating strong relationships with fintech partners, ensuring leadership buy-in, and understanding the target market.
He began by discussing his time at Radius Bank (now LendingClub), where he pinpointed his efforts on creating a digital-only bank. In order to achieve this endeavor, Butler focused on fostering a culture and commitment to innovation and finding a fintech partner that could execute on this ambitious strategy. After transforming Radius into an industry-leading, award-winning consumer platform, Butler set his sights on a new transformative opportunity as CEO of Grasshopper, where he could turn his focus towards serving the needs of small businesses.
In this new role, Butler highlighted that he immediately implemented a fintech partnership model (instead of building in-house). Butler said, “We got to market quicker, and with a better product that has the opportunity to improve at a way faster rate than we ever could have done ourselves.”
Of note, he repeatedly described Narmi as a partner (and not a vendor) due to the nature of the relationship since both sides benefit from the creation of new products and are able to bounce ideas off one another. This relationship was further strengthened by how “incredibly responsive” the Narmi team is.
The next step in the process was for Grasshopper to understand their target market: small to medium businesses.
“Small business is really the core of the economy that we operate in this country, right? Small businesses are just about everything. Everywhere you turn, you can look out the window and see small businesses. They are the engine of the economy.” – Mike Butler, CEO, Grasshopper Bank
He noted that his team discovered these business owners were becoming more technology-focused than ever before, thus making it crucial to have a digital banking platform that worked when and how they needed it.
“If we as an industry and we as community bankers want to be successful, we need to advance our technology delivery,” Butler said when asked about his thoughts on technology spend as a growth investment. “It’s really a situation where people are going to force [banks and credit unions] to use technology and the demand will keep going up, and if you don’t have a good competitive technology solution, then you’re not going to be a very viable bank.”
Kelli Cumiskey, FedNow Product Director, sat down with Narmi Co-Found Chris Griffin to discuss the background, implications, and future outcomes of the instant payment service. The new infrastructure, which has been in production for four years and launched this past summer, was created due to the need for a faster, more convenient payment service with the U.S., especially when considering that current options such as ACH and wires can be a lengthy process and costly.
“In order to make payments truly ubiquitous, which is our policy goal for building the FedNow Service, [the Fed] decided to get into this space,” Cumiksey noted. “So, we built this brand-new infrastructure that’s cloud-based, which is the first of its kind.”
While the earliest real-time payment rail (aptly named RTP) launched in the U.S. back in 2017, it experienced modest adoption. What sets the FedNow Service apart from its predecessor is the number of banks that are already being serviced by the Fed one way or another. Through ACH and the Fedwire Funds Service, the Fed is already connected to nearly 10,000 banks and credit unions across the country.
Due to these pre-existing relationships, the Fed hopes this will lead to an uptick in FedNow Service adoption. When the service launched at the end of July, there were 35 participants; by end of year, it is predicted 300 financial institutions will be using the product with a target to add another 1,000 annually.
What further sets the FedNow Service apart is its liquidity management transfer (LMT) feature. As a result, financial institutions will be able to transfer large amounts of liquidity on nights and weekends, which was previously unprecedented.
One point of potential concern, however, is fraud. In particular, authorized push payment fraud (where a sender is manipulated into making a payment to a fraudster typically on the basis of impersonation), is something that is top of mind for the Fed. In order to combat this, sophisticated fraud controls that leverage machine learning have been rolled out, and an enhanced fraud roadmap is also underway.
Even though it has only been released for a few months, Cumiskey believes that the FedNow Service can be a major differentiator for community banks and credit unions, especially as they compete with larger players.
“If you’re not offering instant payments, you’re going to be a little bit behind. We do encourage banks, whatever size, to start thinking about it now. Another advantage of starting to join us now is the ability to influence our product roadmap. We built this service totally different than how we built other services. We really did it in partnership with the industry.” – Kelly Cumiskey, Product Director, FedNow
In the intro to her session, Tania Luna, celebrated author and speaker, asked the audience to consider how they can think about power more intentionally to unlock creativity and resilience across their respective financial institutions.
Luna highlighted why the concept of power is important for executing on big ideas and goals, especially within a matrixed organization. By using your power within a corporate setting to empower and enable those around you, she stated that it, “increases our collective capacity to get things done.” She further emphasized that by instilling trust in your team, the entire organization is able to run more smoothly, employees feel more appreciated, and deliverables can be executed quicker. When everyone feels valued and heard, this leads to better results on all levels.
“Notice who on your team could benefit from more power," Luna noted. "You can try to deliberately grow that. It might be things like giving them more authority, providing support, investing in their skills, or helping them build relationships. It's thinking about how you can use your own power to grow the power in others."
Alignment and direction are also important for ensuring employee satisfaction. She suggested reviewing company goals at the organization, department, and team levels. The next step is to layer in purpose on an individual level. This allows team members to make decisions without having to constantly review with others, while simultaneously removing self-doubt and bottlenecks from the equation.
Lastly, she suggested sourcing new ideas from throughout the company. By giving people a way to offer feedback through a structured proposal process, this leads to greater engagement, more collaborative conversations, and a dispersion of power.
“Creativity and innovation can only happen in a space where it feels more rewarding than threatening to be able to participate.” – Tania Luna, Author and Speaker
During the Innovators Panel Narmi GM Nick Cappy was joined by James Bargsley, Digital Product Owner at University Federal Credit Union (UFCU), Sean Dwyer, Solutions Architect at First Internet Bank (First IB), and Wendy Hammond, VP of Business Solutions at First IB to unpack how they leveraged technology to bring tangible results to their respective financial institutions.
Some unique challenges that these financial institutions faced before partnering with Narmi included low application completion rates, overly complicated KYC processes, and clunky user experiences.
When it came time for UFCU to look for a new digital account opening platform, it was important to find a partner that had Symitar knowledge and offered an exceptional user experience. As the team continued on the vendor selection process, what further set Narmi apart was the dedicated product team.
“If we have to buy a product off the shelf and then do the management of it, it’s a lot of additional work on our end. But when we partnered with [Narmi] who has their own product team that’s going to be working on the innovation with us, it legitimately augments our workforce.” – James Bargsley, Digital Product Owner, UFCU
For First IB, Narmi’s open platform allowed for unique customizations that could not be realized with other vendors.
“We’ve seen more enhancements come through that have really affected our business and its really nice to be able to see that,” Hammond said. “It’s exciting to see it grow and be able to experience the amazing things we are able to do because of the open platform.”
One such product that has been a game changer for First IB is Narmi Functions. Through the use of pre-built templates, this new tool allows community financial institutions the ability to build back office automations, bespoke features, and custom integrations.
“We continue to try and differentiate as we add new features that other small business banks or consumer banks aren’t doing right now.” Dwyer said. “Just in the past month we’ve done custom developments on the Narmi platform that we think will do quite well for us.”
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