President and CEO, Reading Cooperative Bank
Of all the threats facing community banks these days, two that worry Julieann Thurlow most are a competition from fintechs and an aging workforce.
As Thurlow, the president and CEO of Reading Cooperative Bank in Massachusetts, sees it, fintech lenders like SoFi have a “bullseye” on banks and threaten to steal their best customers unless banks — with support from regulators — can streamline the lending process for low-risk borrowers.
She saw this threat firsthand when she applied for a loan with SoFi and within seconds was approved for an $84,000 personal loan at an interest rate of 5.5%.
“If all of our best customers get their loans from SoFi using its easy, efficient and paper-free process to borrow, the credit risk in the loan portfolios of community banks will increase,” Thurlow said.
“Bank processes, consumer protections and disclosures are in place for marginal credits. There really should be some way for a financially sophisticated low-risk client to opt out of the bulky paperwork and self-serve.”
Relaxed regulation would help, but Thurlow said that small banks can’t delay investing in technology to ward off threats from nonbanks.
To that end, her $515 million-asset thrift is using data to analyze customer behavior and identify opportunities for branch consolidation and other cost-cutting measures. Reading Cooperative intends to use the savings to fund investments in mobile mortgages, mobile small-business loans and other mobile technologies.
Similarly, Thurlow said, small banks risk extinction if they do not make a more concerted effort to retain talent.
Reading Cooperative has been progressive in this regard, developing training, leadership and mentoring programs designed to prepare talented employees for more challenging roles and discourage them from going elsewhere or, as is sometimes the case with women, leaving the workforce entirely after starting families.
“There is a wave of retirement coming in the banking industry; leaders need to be mentoring their replacements right now or I fear we will see more consolidation,” she said.