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For Community Banks, the Future May Well be Here

Author

Michael W. Kahn

Michael W. Kahn

Nacha

The topic was “Future-Readiness of Community Financial Institutions,” but given some changes necessitated by the coronavirus, the future may already be at hand.

“I can’t think of a time across the number of years in my career where strategy has been more important,” said Deborah Matthews Phillips, Senior Vice President of Payments and Technology Policy at the Independent Community Bankers of America. 

Phillips moderated the panel on the April 22 session at Nacha’s Smarter Faster Payments: Remote Connect, where COVID-19’s impact on community FIs was the first topic of discussion.

“In this pandemic, I think all community institutions have really done their part. And our customers expect that,” said Kathy Strasser, Executive Vice President and Chief Operating Officer at IncredibleBank. 

“At the same time,” Strasser continued, “we’re at a turning point—we’re never going to go back to what it was 60 days ago. And it’s very important for community banks to keep pace with leading-edge functionality.”

At Extraco Banks, the pandemic is “accelerating our process automation and business process improvement initiative,” said Misti Mostiller, Executive Vice President and Director of Consumer Banking & Enterprise Innovation. 

“Having our lobbies closed and our drive-thrus open, it’s really causing us to look at—with a lot of scrutiny—why we force customers to come into the lobbies, and to try to give them other accessibility points,” said Mostiller. 

The pandemic has afforded Cape Cod 5 the opportunity to “pick up the speed on a lot of things that normally would take a lot longer,” said Chris Richards, Executive Vice President and Chief Banking Services Officer. 

“I think this has been a good opportunity for us to learn, and to automate, and also continue to have our understanding of the payments world evolve in terms of payments really are at the center of the relationship today, and how do we help accommodate those payments and get them to our customers faster,” said Richards.

Beyond coronavirus, the session looked at other topics, including the need for a payments strategy. Phillips said barely a third of the financial institutions responding to a Center for Payments survey reported having a payments strategy. And that’s not good, because as Strasser noted, “Everyone is tapping into payments.”

“The reason they’re doing it is because of the revenue and that connection to the customer,” said Strasser.

From small fintenchs to giants like Apple, more companies are taking a slice of the payments pie. And the result, Strasser said, will be erosion of banks’ revenues, deposit growth, and ability to retain customers. 

Mostiller urged fellow community bankers to take notice. 

“The way they’re focusing on the entire customer journey,” she said, “is a big wake-up call.”