ICBA's community banking fintech accelerator comes with warning to core providers

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Community banks are getting another ally in their struggle to keep pace with digital innovations in a competitive market.

The Independent Community Bankers of America this week launched a community bank-focused fintech accelerator program in Little Rock, Ark., in partnership with the Venture Center, which specializes in helping startups in the financial services industry.

The ICBA’s new ThinkTech Accelerator comes at a time when community banks have voiced their concerns about the major bank core processors’ inability to help them meet customers' technology demands.

“Community banks feel like they’ve been held hostage a little bit in not being able to innovate fast enough,” Kevin Tweddle, the ICBA's group executive vice president of innovation and financial technology, told American Banker ahead of the official announcement. “They’re looking for ways to do that and look for opportunities outside those core processors to find companies that help them solve the problems they have on a daily basis.”

The American Bankers Association has also called for core firms to give smaller banks better assistance.

“I’m well aware of the frustrations that many bankers have over their relationship with their cores,” Rob Nichols, the ABA’s president and CEO, said last week in New York at the association’s annual convention. “You want to be agile. You want to be nimble. You want to be responsive, but at times your core relationship has made that difficult.”

Tweddle argues that fintechs are in a much better position to help community banks be more agile when it comes to technology development, especially since those institutions lack the necessary personnel to invest in new digital products.

“Community banks don’t have the resources to develop products as quickly, and that’s the beauty of working with a fintech company to help" fill the gap, he said.

Tweddle said community banks are also a natural fit for fintechs.

“Fintech has really been spawned by those three large core providers that are not innovating fast enough,” he said.

The ICBA doesn’t expect community banks to see results from the accelerator program right away, but the long-term view is startups will have the ability to create products that are exclusive to community banks.

Lending and payments are two areas where community banks could use some help, Tweddle said.

“There are a lot of ancillary intangible" benefits to this partnership, Tweddle said. “We have the ability to focus on these solutions that are only associated with community banks. From an ICBA perspective, we have the ability to impact the industry and develop relevance for our industry instead of waiting for the right solution to come along" from the core processors.

Arkansas serves as the backdrop for the program, with Little Rock acting as a hub for fintech creation during the past several decades.

The Venture Center has become ground zero for this with a 12-week program intended to “increase industry innovation with a focus on cutting costs, driving customer engagement and increasing revenue,” according to the organization’s website.

Tweddle said the ICBA will invest in some companies participating in the program, which attracts fintechs that are developing core banking services such as payments and wealth management products.

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