Why fintech is a fundamental addition to Community Banks

By Carl Memnon, Co-Founder and COO at Grain Technology.

When it comes to banking innovation, we are seeing more and more financial services providers working to offer consumers better options for their banking needs, specifically by providing accessible, digitally native products.

While innovation is great for consumers, these new platforms can potentially threaten smaller, community-level banks that do not have the technological capability to compete. Rather than viewing them as a possible threat, community banks should consider partnering with fintech platforms as a way to ensure they can compete in this new digital-first era while continuing to provide much-needed banking services to their local community.

Closing the technology gap

A major pain point for many community banks is that their offerings lack the latest technology and services that Millenials and Gen Z prefer and that larger national banks offer their customers. Features like automatic payments and real-time transfers make transactions easier and more efficient for everyone.

While some community banks try to offer these services, they are not digitally native or UX-focused, which is crucial to younger audiences. As a result, customers are more likely to gravitate towards a larger, well-known bank where they have access to convenient, user-friendly technology. Moreover, many community banks do not truly have the resources to innovate their product offerings.

Fintech partner benefits

Partnering with a fintech platform provides a cost-efficient solution to filling the technology gap. In addition to ease of technology, partnering with fintechs can bring new and innovative thinking to a community bank’s existing offerings, appealing to younger demographics, expanding their geographic footprint and attracting new customers.

Introducing advanced technology through an outside partner will help position community banks as competitive players in the digital financial space, ultimately helping them compete with larger, national banks for this new customer demographic.

Forbright shines with fintech partner

Forbright Bank is a community bank that found success after partnering with Grain’s fintech platform. With this partnership, Forbright could access new technology and assist consumers in responsible credit building.

As a result, they’ve helped thousands of customers demonstrate their payment history and credit behavior, all while supporting their mission of sustainability and financial inclusion. Adam Hoehn, EVP and Head of Technology Banking Services, says supporting innovative credit products has been a priority for Forbright. His bank plans to continue partnering with fintechs in 2022 and beyond.

Community Banks build communities

Community banks are an integral part of communities across the nation because they support local economies and small businesses. Many people use community banks because of the longstanding, trusted relationships and easy access to customers. Unlike larger banks, community banks can use their smaller size to their advantage and offer a stronger sense of human connection.

In finance, trust and relationship building are two of the most important factors for retaining customers. In addition, customers want to ensure that they put their money somewhere safe and receive personal attention. While larger banks have scattered branches, customers can utilize services at community banks while staying local, making them more accessible.

Although community banks build strong relationships with individual customers, they also benefit the local economy by working with small, local business owners. Community banks still provide over 50% of small business loans, making a positive and robust impact on the local economy.

Technology opens the door to new customers

Customer retention is also critical and is the root of a bank’s success or failure. Fifty-seven percent of community bank customers are over the age of 52. In comparison, larger banks have more representation from younger age groups, with 62% of their customer base under 52.

Community banks need to take action now because their customer pool will begin to age out as time goes on. If they continue to lose the younger digitally-native generations to larger banks, eventually, they will not have a strong enough customer retention rate to survive.

By implementing more technology offerings, community banks can continue to benefit the community as a whole to the best of their ability while building their customer portfolio much quicker than they’d be able to without fintechs. In addition, new technology will assist in attracting current and future customers and staying up to date with the latest innovations. As technology continues to take over the financial landscape, partnering with a fintech platform is an investment that will play a fundamental role in a community bank’s long-term success.

Carl Memnon, COO & Cofounder,, Grain Technology

Carl Memnon is the COO and Co-Founder of Grain Technology, Inc. Previously, Carl worked at Goldman Sachs, KCG Holdings, and, most recently, as Associate General Counsel at Virtu Financial, a global market-making and execution services firm. Carl’s practice focused on securities, corporate finance, and commercial transactions in capital markets, technology, M&A, and he is passionate about innovations in fintech that provide inclusivity. He likes to go on runs and take trips to the park with his wife and two kids in his spare time.