By Carol Gilhawley
What will it take to become the most innovative community bank in the Midwest?
Lead Bank, a $205 million-asset bank in Kansas City, has taken on the challenge, leaving institutions of every size to watch and learn. Having pioneered emerging approaches to branch strategy and community engagement, the bank is now preparing to introduce Lead Labs in January 2018.
The concept is to partner with fintech companies that offer products that can benefit Lead Bank’s customers. “Our tactic, as a very small community bank, is to participate in fintech innovations nationally,” said Joshua Rowland, CEO of Lead Bank. “One problem community banks face is we don’t have the resources or geographic connections to participate in fintech innovations. But, we believe strongly that technology innovations in financial services will change the goals in banks of every size.”
Gaining access to the services customers need—and will soon demand.
Lead Bank does not have an actual lab on site—nor does it have an innovations department or an R&D effort. But its management team has singled out four fintech companies to partner with in pilot programs.
“What we’ve decided to do is to help source and support fintech innovators—through pilots with us and our clientele—so we can become active players in changes that are about to come,” Rowland said.
He believes all bank executives, regardless of their bank’s size and geography, should realize that fintech innovations can pose disruptive challenges to the way banks do business. And he’s calling for them to adapt. Lead Bank won’t make any money from these pilots, but the hope is that ultimately the bank will benefit from the halo effect of working with them.
Lead Labs’ first four pilots are with these four fintech companies:
- Blooom – A Kansas City-based startup that provides an online platform for 401k management. “Even though we don’t have a wealth management business we believe more people need to become aware of Blooom and get exposed to their technology,” Rowland explained.
- Goldbean – A New York-based wealth management company that provides an educational platform to convert small savers into active investors.
- Finspace – A San Francisco-based financial technology firm that allows people to securely share financial data.
- Og Money – A Kuwaiti company, formerly known as Payit, that is personalizing the payment experience to allow customers to pay for anything at any time—paying bills, for instance, or topping up a phone line.
How they’ll work.
Some of the pilot companies—such as GoldBean—will be creating services for Lead Bank customers to use through their online banking. To do that, Goldbean will integrate its technology into Lead Bank’s core banking system and online mobile banking app.
The customers who opt into the pilot program will be exposed to a new technology. Goldbean, in turn, will receive bank data from the customer’s account. It can then provide customized information about how the platform works.
Others pilot companies can be used by bank customers, but not through the Lead Bank interface.
- Users of Blooom’s services will help develop the product, while Lead Labs benefits by gaining insight about bank customers’ money management practices. Lead Bank employees are also encouraged to take advantage of Blooom’s 401K services.
- The Og Money pilot is expected to provide insights into customers’ use of mobile payments.
- The Finspace collaboration aims to gain insight from Lead Bank’s clients about the data handling process involved in making credit decisions. For example, the bank will pilot Finspace with about 12 Lead Bank clients who use QuickBooks online.
Investing in a better-educated customer.
Goldbean is designed with the beginner investor in mind—its goal is to improve the financial health of all people. “We’re an education-first investment advisor that puts people’s savings to work,” explained Jane Barratt, founder and CEO of Goldbean. She is a partner with Fiserv and working with Lead Bank to integrate software into its back-end systems. Goldbean has already started a financial-learning content relationship with Amalgamated Bank and will offer something similar at Lead Bank to show customers how much they’re earning, how much they’re saving and how they’re managing their debt.
Initially, content will appear on Lead Bank’s website and mobile app. It will offer weekly personal finance tips to encourage people to move forward with financial help. Down the road, they will add a software component that will give people investment advice, do risk analysis and portfolio outlooks.
Where Goldbean is different from other investment firms is that “most wealth management products are built for rich people and not built for those with less assets,” Barratt said. Goldbean’s content and software can be licensed by financial institutions that can plug and play and brand it themselves.
“Much of people’s attitude toward money is deeply engrained,” Barratt said. “We’re giving them a practical end-to-end investment solution through Fiserv. We don’t chase assets but we engage people to start them on their journey. We ask them to show us where they shop and based on their spending data we can make stock recommendations.”
There’s no doubt Rowland is excited about Lead Labs and believes other community banks could offer pilots too. “In order to serve our clients we need to connect them to what’s next,” he said. “We’re creating something cool that benefits them. We can find ways at the smallest level to tap into fintech innovations.”
Carol Gilhawley is a business and financial industry journalist based in the Greater New York City area.