Balancing Act: Pushing for Innovation While Mitigating Risks & Closing Remarks

Innovation is critical for community banks to remain competitive in the fast-moving world of digital finance. Partnerships with fintechs remain a viable way to accelerate growth in customer acquisition, new product development and channel optimization. Given the constraints facing community banks to provide a seamless digital customer experience, banks are increasingly turning to fintechs to help them meet customers where they are, regardless of channel or device, and deliver on real-time expectations. At the same time, banks need to identify the risks of fintech partnerships early and take steps to ensure they remain compliant with regulations. Our panelists will discuss strategies for vetting and selecting fintech partners, how to capitalize on emerging innovation and how to mitigate potential third-party risks and operational complexity.

Transcription: 
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.

Cosimo Schiavone (00:14):
Good afternoon everybody. Thanks for joining our panel. We'll have an exciting session today. My name is Cosimo Schiavone. I'm a partner in the banking practice at Oliver Wyman. We are a management consulting firm and I focus on financial technology. Joining me for this panel, we have Amelia Evert, head of partnerships at Increase; Anthony Sharett, President of Pathward; and Rodrigo Suarez, Chief Banking Officer at Piermont Bank. I'd let the speakers share a little bit more about themselves and their company. Amelia.

Amelia Evert (00:46):
Awesome. Hi folks. Thanks so much for having me. I'm Amelia Evert. I lead partnerships at Increase. We've been around for about five years and we offer parallel banking core and APIs designed for fintechs. So we work with banks to support companies like Ramp and Gusto and Pipe, and we support a range of products like payments, cards, accounts, and lending. And while we are a fintech ourselves, a lot of what we do is helping banks and fintechs connect on the technology side of their partnerships. Really looking forward to the conversation.

Cosimo Schiavone (01:21):
Anthony.

Anthony Sharett (01:24):
Good afternoon. Good morning, depending on where you are. Anthony Sharett, President of Pathward. For those of you that don't know, Pathward is really one of the OGs of sponsorship banking and bank and fintech partnerships. We started this part of our business over 20 years ago and just really tried to embody and live out our purpose, which is enabling financial inclusion for all and increasing financial access to those that need it.

Rodrigo Suarez (01:55):
And I guess I'll go next. So hi everyone. I'm Rodrigo Suarez, Chief Banking Officer at Piermont Bank. We're a relatively new bank out of New York City. We got our charter in 2019, so a little bit newer to this space than Pathward, but we have been working in the embedded banking space and partnering with fintechs for the last five years or so. We work with fintechs in a number of different capacities, both as partners to enhance our technology capabilities and also as partners for distribution purposes in our embedded banking business, where we work with a number of different companies to embed banking products or payments capabilities into their platforms. Looking forward to the conversation.

Cosimo Schiavone (02:41):
Great. Thank you all. So we'll spend the next 30 minutes on a couple of topics here and leave 10 minutes for Q&A for folks to put through. Maybe setting the stage a little bit based on some research that we have done, over 95% of community banks rely on fintech partners for critical banking activities, even in areas that drive differentiation like digital banking and customer engagement more broadly. They're just hard to build themselves. So the question on how to make the bank-fintech relationship work is really a critical one, particularly how to accelerate innovation while mitigating the risks along the way. So maybe let's start from the rationale: why do banks partner with fintechs? What do you see financial institutions needing the most help from fintech partners and why? Maybe we can start from Amelia and go around.

Amelia Evert (03:40):
Sure. I think fundamentally banks are partnering with fintechs because it's a growth strategy for them. It's a way for them to expand beyond the four walls of the bank and beyond the capabilities that they have in-house. Some of the common rationales we hear from our bank partners for why they're looking to start some of these relationships: one would be around deposit gathering—how can they more efficiently bring in deposits to the bank? Another common theme we hear is around revenue diversification—how can they increase their non-interest income and compete on capabilities beyond just price? And then I think finally, the thing that we often hear from folks is that partnering with fintechs really gives them some great market exposure so they can reach customers in segments that they might not ordinarily build for in-house. Think about partnering with vertical SaaS companies that build for dentists or contractors, really giving them access to different markets. So I think those are some of the reasons that we commonly hear from our bank partners.

Cosimo Schiavone (04:45):
Anthony and Rodrigo.

Anthony Sharett (04:47):
Yeah, I think for us, we keep it pretty simple. At Pathward, we're here to solve problems. We're here to solve problems in the marketplace because we know that there are gaps in the market that negatively or disproportionately impact certain folks. We're here to solve problems for our fintech partners that may have an opportunity or a new capability where they're here to grow and scale and we want to help them with that. And we're here to solve problems for the end users—those that want more choice and optionality around financial access, whether that be through a consumer loan, a card, or a debit product. It could be a small or midsize business that needs just a little bit of help, a little bit of working capital so that they can grow and scale their business. So we think that co-creation and innovation—we do some of that ourselves, but it's more scalable, more impactful, and more material when we do that with our partners. And we know that fintechs are really well suited, if not best positioned in the financial ecosystem, to solve the myriad of problems that are out there.

Rodrigo Suarez (06:02):
For us, I would say similar to what Anthony described, given that we're a relatively new bank, we sought out to build a model that was different from the traditional banking model. We don't have any branches and don't intend to build any branches, for example. So for us it's really about distribution. We've seen, and I think everyone is aware, that distribution in banking has been shifting from traditional bank branch channels to digital channels to non-traditional bank digital channels, including vertical SaaS companies and other platforms. We look for fintech partners that can help us reach new customer segments through differentiated digital propositions. If we're going to target a given segment within the SMB space, for example, doing so within the context of a vertical SaaS solution allows us to provide a differentiation in partnership with what the fintech or the vertical SaaS company is doing that we would not really be able to do without them. So for us, it's about finding those mutually beneficial partnerships that allow us to grow our deposit base and track more payment volume and as a result, grow as a bank, especially one that's digitally native in that regard.

Cosimo Schiavone (07:30):
Thank you. Hearing lots of different use cases, which is very interesting. Maybe let's dive deeper into the partnership model. Can you share a little bit more about what types of partnerships agreements work well, what does not work so well, and how do you expect the relationship with that partner to evolve over time? Rodrigo, should we start from you first?

Rodrigo Suarez (07:53):
Yeah, I think even before going into agreements and the nuances of how to structure those partnerships, the very first important thing to look at and what we have learned is that ensuring that there is a mutually beneficial objective is key and that incentives are aligned. Fintechs tend to have different incentives than banks. Banks are regulated; sometimes very fast growth is not necessarily the prudent thing to do. And on the startup side, there are instances where folks optimize growth at all costs, which can hinder what the bank is trying to achieve in a number of different ways. So we try to make sure that all of those things are clear from the outset, that the outcome is understood and mutually beneficial for both, and that we can balance those competing incentives in the most productive way. That's what I would share we have learned over the last few years.

Anthony Sharett (08:55):
Yeah, I'd say at Pathward, it really hasn't changed. We look for partnerships and partners where we're mission and purpose aligned first and foremost, and most, if not all of our decisions are really made through that lens. We look for partners where we are all thinking about expanding financial access for customers and small and mid-size businesses. Certainly that's where we start. After that, same as Rodrigo, we're looking for winners. That doesn't mean hitting home runs—we'll take singles and doubles—but we're looking for opportunities where there is a gap in the market, we're solving a problem, and it's scalable and repeatable. Also, one of our operating norms at Pathward is we want to build Legos, not unicorns. If we can build Legos and really build platforms—which includes people, process, technology and tools that can be layered—it can help not just one fintech partner but a broad set of fintech partners, which has more of a material impact in the market. Probably the third thing is we like to say we want to win with friends. Certainly we look for partnerships where we all think about how we want to treat the partnership, knowing things are going to come up that may be unexpected. How do we think about that? And then certainly the risk-adjusted return is something that we think about as well, which I think we're going to dig into a little bit later.

Amelia Evert (10:36):
To build on what Anthony and Rodrigo shared, I think success comes less down to the contract and more about how you work together. You really want to think about leaning into governance and a cadence with your fintech partners. On the bank side, having committees and clear decision making around how you're going to move questions forward. And then on the collaboration with your fintech partners, thinking about joint reviews, weekly and biweekly check-ins, and how you stay really close together on how you're going to approach the space. I think the strongest partnerships really feel like you're going to market together and not like a vendor relationship.

Cosimo Schiavone (11:18):
We started talking about risks a little bit, so let's spend a little bit more time on that one, both about onboarding and vetting fintechs, and then monitoring from an ongoing basis. How can banks accelerate the onboarding of new fintech partners while still properly assessing and mitigating risks? And then I'm curious to hear if there are other large fintechs that can help with this—I'm thinking about the core or digital banking providers. Any words on that?

Anthony Sharett (11:49):
You hear a lot of companies talk about the customer journey. We think of it as the partnership lifecycle. Like most bank and fintech partnerships, you've got a group of folks that are qualifying a lead or potential fintech prospect. I think all banks that are in this space have their own unique due diligence process. We certainly do once we find that certain prerequisites are met around purpose, alignment, gap in the market, scalability, winning with friends, and risk-adjusted return. Then what we like to do is commercialize things; make it easy for our fintech partners. One of the things that we know partners are really worried about is speed to revenue and the ability to get up to speed quickly, and they really want that seamless, frictionless customer experience with their bank. So that's certainly something that we continue to work on and refine.

(12:47):
Then as we think about program standards and policies that are necessary for a bank like Pathward through a fintech partnership, we've got to make sure that we are certainly compliant with the prevailing rules and regulations, but not having so many things in place that it makes it difficult for us to do the things that we contemplated at the outset of the partnership. I think this partner lifecycle—understanding that commercializing these things through program standards and also making sure that we are dogmatic about speed to revenue—that's typically how we approach new partnerships and programs.

Rodrigo Suarez (13:29):
Yeah, to build a little bit on that, I think in order to be efficient and onboard fintechs relatively quickly—at least as it relates to what a bank would normally do from a timeline perspective—the first thing is making sure that there's a very clear definition of what your risk appetite is. What sort of fintechs are you looking for and why you're looking for them. For some folks, "fintech" becomes this broad term or shiny object where without clarity on what you're actually looking for, you can end up making a lot of wrong decisions. Having clarity on that is the first step. And then as it relates to the diligence and the onboarding process, ensuring that you have put a very robust third-party risk management program in place is very important so that every fintech goes through a proper diligence process where the bank is looking at the areas that are relevant relative to that risk appetite and is able to quickly make decisions on whether to bring that program in or not and how to do so.

(14:38):
Lastly, I would say answering your question about what other capabilities banks can use to speed up that process, we have started putting in place additional tools to help us automate parts of our ongoing monitoring and testing as we bring new programs. We've also started putting together systems to help us more efficiently collect and review documents at onboarding, as well as ensure that certain minimal contractual provisions are in place as we move forward with a partnership. There are a lot of tools that can also make things easier both for the bank and the underlying fintech to work more effectively together and avoid some of the pitfalls that you see when the process is less structured.

Amelia Evert (15:27):
Yeah, when our bank partners vet fintechs, I think they think of it essentially as underwriting an operating partner. They want to make sure that this is a company that they'll be able to trust and that they'll be able to work closely with day to day. They look at things like: does the fintech have a strong team? Do they have strong financial runway? Do we think they have compliance maturity? Do we think we can trust them to operate controls? Really building confidence that this is a good partner to be working with and collaborating closely with. I think the banks that fintechs are most excited to work with are oftentimes the ones who are saying, "we're going to focus on scrutinizing and making sure we keep you safe, but also thinking about how we help you grow."

Cosimo Schiavone (16:10):
Okay, thank you. Maybe a follow-up on the ongoing monitoring of the bank-fintech relationship. You already alluded to a few aspects there, but obviously there's been a lot, particularly in banking-as-a-service and embedded finance, over the last year or so that has happened. I'd love to hear from you best practices on how to assess and mitigate risks, ensuring proper controls are put in place. Any case studies or anything that you can share from your experience would be helpful. Who wants to start? Maybe Amelia?

Amelia Evert (16:47):
Sure. I think something we've seen work well in new relationships especially is starting conservatively. Thinking about how do you build that trust and setting, for example, lower transaction limits to start, maybe doing more manual reviews, or reviewing each piece of marketing as you build the trust in how you're going to work together and what each party expects of each other. Being a little bit more hands-on to start and then building that cadence so that you can scale over time really helps you set up to collaborate well. I think monitoring is really not about finding "gotchas"; it's about giving both sides confidence that growth is going to happen within the guardrails that they both expect.

Rodrigo Suarez (17:31):
Yeah, I can add a little bit to that. I think the main risk, and really what this comes down to, is the fact that through that model that you described with banking-as-a-service or embedded finance, the bank is one layer removed from the end customer and is really interfacing with that end customer through a fintech partner or another software provider. It's really important to understand from the outset how you're going to ensure that you're treating that end customer with the same level of robustness as you would treat a customer that you interface with directly. To do so, I think you really need to understand how that third-party platform is operating and how those interactions are happening. It comes down to the onboarding, which we discussed initially. When we bring on a fintech, we ensure that we do a very thorough diligence and a related risk assessment so that we can identify all of the relevant risks for that specific partnership, because that partnership may present risks that are different from another one.

(18:51):
And in turn, using that to tailor the monitoring and oversight program as we're working with a fintech and growing a program together. I don't think there's a one-size-fits-all approach necessarily. I think it comes down to having a very deep understanding of how that third-party fintech is working with those customers so that as a bank you can really demonstrate that you have the right level of oversight. Obviously over the last few years, the expectation is that that program is incredibly robust. All banks that have gone through the cycles over the last few years have learned that, and as a result have come out of it either putting a lot more infrastructure to support this or potentially exiting the business given the risks and the significant investments that need to be made to do that well. That's what I would add. I think it's going to be a challenge going forward because the partnerships are complex and the distribution through these channels is a lot more complex than through traditional banking channels.

Anthony Sharett (20:04):
The way that I think about this is I think the analogy is buying a house. Most of the negotiation and the home buying process is around one thing and that's the price of the home. There's a reason why people spend so much time on that because clearly when you buy low, sell high and build equity. We think about the risk and compliance engagement model with our fintech partners in much of the same way. We spend a lot of time at the outset negotiating the risk framework, third-party risk oversight, BSA/AML standards, program standards, and putting controls in place around the residual risk. We spend a lot of time there because what we found is if you do that—despite the fact it may take a little more time and be a little bit more tedious—what could happen on the back end is going to be greatly mitigated and the growth is going to be accelerated.

(21:01):
So we spend a lot of time on it at the outset. We certainly don't do things well if we say to ourselves, "we'll worry about this particular risk later," or "let's go ahead and pilot something here and see how fast it grows and then worry about that." We have enough experience and have seen enough programs—whether it's payments, money movement, merchant acquiring, or fair lending—to where in many cases we understand where the heightened risk may be. The other thing that we do is we certainly want to quantify the types of risk that may be present in a particular program, both overall and more specifically around the individual risks that are there. So that's how we think about it: spend a lot of time at the outset, and most of the time you save a lot of heartache on the back end.

(21:54):
One of the reasons that Rodrigo talked about why you'll see some people exiting the space is because they underestimated the cost of capital of building a mature risk and compliance framework. We've seen all of the banks that have gone through the cycle. We know BSA/AML, third-party risk, fair lending—all of these things are top of mind, particularly for banks that are a little bit larger. The regulators expect mature frameworks despite the fact that some banks in this space may not have the deposit assets of some super-regional or national banks. Because of the flow of money and the proliferation of money movement, expectations are going to be a bit higher. We recognize that. Just like buying a house where negotiating the price is really what's important, for us, getting these things squared away on the front end is really important.

Cosimo Schiavone (22:53):
Makes sense. So you touched on a couple of themes. I want to go deeper. It almost feels like yes, there is innovation, but there are also obstacles to adopting some of that; risk is one important component. Taking a step back, what is really holding community banks from adopting more innovative solutions in the market? You mentioned payments—real-time payments, Zelle—still, there's a lot of banks who are not on Zelle. Open banking—and we know what has happened recently on some of the ruling there. AI—everybody's talking about GenAI in banking. There's a lot of innovation that's happening, but it still hasn't made it to the community banking world yet. Why is that and how can fintechs help? Who wants to take it?

Anthony Sharett (23:45):
Yeah, I just think a lot of that is the cost of investment and making sure community banks have smart leaders. One of the things that they have to determine is what is going to be the return on this potential investment and how sure are we, what's the strategic bet that we're taking? I think that's really one of the things that a lot of community bank leaders are going to have to haggle with because whether it's embedded finance, whether it's money movement, or whether it's AI, given the governance that Amelia talked about that it's going to take for us to do this the right way, for many community banks that's a steep investment. And so they're constantly doing, "what's the return on that?" I think that's interesting. I think secondarily, for some of these areas like digital currency, the regulatory environment and the rules are unsettled right now. We have a patchwork of laws that regulate things around digital currency.

(24:50):
You've got states that are offering charters, but then you've got the federal government saying, "we're going to preempt that." Given that fact it's unsettled, it's really difficult to understand what's the investment that we want to make. Third thing I'll say is when it comes to innovation, certainly we do some of that at Pathward and we're proud of what we do. A lot of what we do is iteration, which is a cousin of innovation. As we think about innovation, a lot of what we do is core: how do we make our processes better? How do we become a more effective company? But that co-creation is really through partnership. I think one of the challenges that community banks have is who's supposed to take the lead? Is it the community bank that may have a new core—a third-gen core which can enable some innovation? Or is the fintech partner going to take that lead because they're more nimble and agile but may have the inability to grow and scale? Those are the discussions that I think community banks have to really start having because I think that at times can lead to some stops and starts as opposed to thinking about co-creation throughout the lifecycle.

Amelia Evert (26:04):
To build on that, I think a lot of us get excited by shiny new innovation, but sometimes the biggest obstacles are actually just foundational. I think you have to get the basics right before you can expand the surface area. If your reconciliation and reporting around ACH and wires are extremely manual and challenging today, the idea of layering on new real-time payment capabilities just adds to your risk. I think it's kind of like driverless cars: before you can have those take off and really scale in a city, you have to pave the roads and fix the potholes.

Rodrigo Suarez (26:41):
And I think the other thing is also really understanding what those technologies do and how to adopt them while being able to formulate a business plan around them. To Anthony's point, many of those technologies are quite costly for smaller banks. So if you don't have clarity on how that's going to generate revenue and increase your profitability, I think it makes it a lot more challenging to adopt them, at least quickly. And on the talent side, there are a lot of smaller banks that have bankers that are used to more traditional banking models, and you can't really rely on a fintech to come in and tell you how a new critical component of your stack should work without your team understanding it. So I think it's also important for banks to start embracing talent outside of the traditional banking sphere so that as they continue growing and adapting to new technologies and capabilities, they can do so in a way that makes sense for them versus relying on a fintech or a vendor to come in and tell them that they should adopt whatever tool for X, Y or Z reasons that may or may not be ultimately as clear to them.

(28:05):
And lastly, I think you also have a challenge with a lot of banks that work with traditional legacy core providers that sometimes make it very difficult to adopt those technologies. The integration is quite cumbersome because you're sitting on very antiquated systems and legacy processes. Sometimes the incentives for those core providers to collaborate and help with enhancing the smaller banks' infrastructure are not there. So I think all of those things need to be better addressed for banks to continue adopting those technologies.

Cosimo Schiavone (28:51):
Yeah, makes sense. Anthony, you talked about co-creation, which is an interesting one because many fintechs, particularly early on, they do build their products or enhance them working directly with their clients. Anything that you want to share—what has worked well in your experience or not so well on the co-creation side particularly?

Anthony Sharett (29:12):
Yeah, that's a great question. A lot of this really depends on what stage the fintech is in. Is this a true startup, or is this a fintech that's pretty mature, or is this one that is well known and maybe a global fintech? I think you have to determine where along the spectrum the fintech sits because then you can determine what types of co-creation and innovation capabilities they have. I'll just give you an example for us: if it's a fintech that is beyond a startup but has grown and scaled some but is still looking to grow and scale a bit more, what we do is we take the folks that are part of our product team, part of our customer success team, and we'll sit down with them, sometimes for a few days, and really go through the design thinking process.

(30:06):
We don't start with the end in mind per se, but we do start with what problem are we trying to solve? At times we have pivoted away from the initial product solution or a capability that they wanted us to power and come up with something better because of the design thinking methodology. We are in these rooms together a few days at a time. We've got some things in concept, and then sometimes it's really about—we actually know that this product or capability is going to work because it's already in the market, they already have it, and this is really about growing and scaling. How do we go from good to great? So then the co-creation starts to pivot around optimization, growing and scaling, and maybe add-on products. There is no one-size-fits-all to this, but certainly getting proximate and close to our fintech partner, really understanding their journey, where they are, and who they're trying to interact with as far as the end users, that's really been helpful for us. We've been able to do this both in the consumer lending space and around earned wage access, which is really important and emerging. And of course we've been able to do this on our small and midsize business lending side as well.

Amelia Evert (31:37):
Yeah, I totally agree. And I think that the best innovations happen when each party is playing to its strengths. Banks bring operational depth and compliance rigor, and fintechs are great at speed and distribution. A recent example at Increase was that we had a partner bank's deposit operations team share some insights around check fraud and check adjustments. They talked about the pain points and the process that they typically follow, and we were able to understand what they're grappling with and then automate some of their workflows. And then from there we come together with them to validate: is what we're building going to help cut through the manual work? Is it going to work? And from there, we roll that out more broadly. So I think you really want to treat innovation as a shared roadmap and a shared way of working rather than a one-off experiment.

Rodrigo Suarez (32:33):
In agreement with both Anthony and Amelia shared, I think it's very important for both the fintech and the bank to know what their role is and how they contribute to whatever the joint outcome is. On our side, it's clear to us that we're not a technology company; we're a bank. So for us, it's important to look at things from that lens, but also understand what our fintech partner can help us achieve, playing to their strengths as it relates to reaching new customer segments or building differentiated front-end applications to solve a number of financial services problems that those end customers may have that are not adequately addressed by traditional banking channels. In doing so, really coming back to what the overall objective is and making sure that you don't miss the mark on that as you proceed and revise your initial assumptions and see how what you build ultimately performs relative to those objectives that you have.

Cosimo Schiavone (33:44):
Okay, that's very helpful. Maybe switching gears a little bit to talk about the regulatory and risk environment. What's top of mind for you and your clients and what are the implications for the fintech-bank relationship? Rodrigo, start from you.

Rodrigo Suarez (34:01):
Yeah, for us, what's top of mind—and Anthony somewhat alluded to this earlier on—is there are a number of areas that are new where we're still in a spot where more clarity would be important from a regulatory standpoint. We're not active in crypto, but I will use that example: in crypto, I think for a while there was emerging guidance that was supposed to come out and then it just didn't. A lot of banks that were operating in that space got burned without really having that guidance to begin with. As there are new emerging opportunities—maybe AI being the trendier one—I do think it's important for folks on the regulatory side to understand how those technologies work, what banks can do with them, and work closely with banks to make sure that the right framework and guidance is in place as banks start adopting those tools to grow, making sure that communication is clear and that the growth that results from those new emerging areas is sustainable growth. That's what's top of mind for us and for the folks that we work with in spaces that are new to financial services.

Amelia Evert (35:35):
To Rodrigo's point on regulatory clarity, I think the introduction of the Lummis-Gillibrand Act was an interesting example here. I think that offered folks some clarity and some definition around what stablecoins could look like. As a result, I think we're seeing a pretty big increase in the number of banks that are looking to explore this, and the number of fintechs looking to build here now that the path feels a little less ambiguous. Another area that we're seeing folks think a lot about is what is AI going to mean? I think there's both the opportunity and the risk side of that for sure. One concern that we're hearing is: what does this mean for the future of account security? How do you think about guarding against synthetic fraud and more sophisticated attacks? Both fintechs and banks will need to really pressure-test their controls and continue to make sure that the processes that they have stand up to evolving technologies.

Anthony Sharett (36:38):
Yeah, I think the one good thing about the regulatory environment that we're in, particularly as a bank—a nationally chartered bank—is we kind of know what the themes are through the regulatory cycle that a lot of banks have been through over the last few years. So I don't think there's really any surprises as to what's important and top of mind. I think what's more important is really around some of these emerging areas that Amelia talked about. I think banks have to do a couple of things. One is really around making a decision around readiness, whether it's AI, digital currencies, stablecoins, whatever it is. Banks have to really start making—particularly community banks—decisions around what's our readiness appetite, forget the risk appetite. Do we want to be ready on day one once there's regulatory clarity? Yes or no?

(37:30):
And then beyond that, then it's really around this risk-adjusted return. How much governance do we put in place before we even have a viable use case? Or do we start with viable use cases, understand what those are, do some work around that, understand what the return may be, and then think about the governance? These are things that particularly community banks that may not have the capital to invest in really have to think about. I think that readiness appetite is really important because it could be if the Lummis-Gillibrand Act were passed tomorrow and the bank is not necessarily—doesn't have the readiness appetite to go participate, that's one thing, because that's really what's going to dictate the investment level, the time, intention, sequencing, prioritization—all the things that all banks are thinking about that are mature under an enterprise approach.

Cosimo Schiavone (38:31):
Makes sense. One final question from me then sort of wrap it up. What do sponsor banks look for in a partner and what do fintechs look for in a partner? Can each of you share a little bit about it, starting from you, Amelia?

Amelia Evert (38:54):
Sure. I'll start with what I think we're hearing from fintechs. Fintechs really want to see that they're working with a thoughtful compliance team at their bank partner. They want to understand that there's a process that's reliable for how decisions get made and how approvals happen, and they want to make sure that their partners understand that the goal is to scale, to grow, and to potentially add use cases. A fintech recently told us that they were relieved by the tough questions that they were hearing from our bank partner because it just showed them that they're serious about the risk and gave them more confidence in the process that they were going to run. On the bank side, I think making sure that the fintechs that they're vetting have strong teams, a strong vision, have that compliance maturity that we talked about, and that they're a team that they feel like they can trust and that will be transparent in working with them. It's really a two-way street. Fintechs want banks that are not going to bottleneck them, and banks want fintechs that are not going to risk the charter. The best partnerships are ones that find a really good balance across those two.

Rodrigo Suarez (40:12):
Yeah, I would agree. We look for partners that have a certain level of maturity and a certain level of financial stability as well, that make us comfortable in the partnership having longevity and sustainability. And also, very importantly, making sure that the product or the offering that we're building with them is one that we can stand behind. We focus as a bank on business and commercial banking almost exclusively. So we look for companies that are building differentiated propositions that target specific SMB or business verticals—whether that's construction, logistics, manufacturing, or whatnot—where we can really confidently say that what they're doing is allowing us to serve that customer in a better way than we would have been able to do so ourselves. The combination of all of those things is what matters to us.

Anthony Sharett (41:19):
I consider those of us that are in this sponsor bank ecosystem very fortunate. What we're doing is cutting edge and exciting, but we're doing it within the confines of an adequate risk management framework. When we're talking to a potential new fintech partner, we like to keep the end in mind: if everything goes well, if we all got exactly what we wanted, how are we providing more financial access to the end customer? How are we scaling this capability and product so more people can use it? And then how might we be able to do more than we even contemplated at the outset of the partnership? Those are the partners that we want to work with, and we're going to have the risk and compliance framework and the trusted platform and all those things that they're looking for. The thing that we want to do is also make sure that we are being the best partners that we can, understanding their partner lifecycle journey and how they want to grow and scale their businesses, but most importantly, it's called a partnership for a reason. We want to be able to do this together. So that's ultimately what we're looking for as we are qualifying these new opportunities.

Cosimo Schiavone (42:52):
Thank you. If there are no questions, I want to thank the panelists and the audience and maybe, Mary Ellen, I'll turn it over to you.

Mary Ellen Egan (43:05):
Hi everyone. Thanks again for joining us. I want to thank all our terrific speakers and our moderators. It was a really interesting, informative discussion today, and I think it will help shape some of your answers, some of your questions, and shape conversations at your community bank going forward. We have a full slate of virtual summits coming in 2026, so please keep your eyes out on our American Banker website. For live events, we have the most powerful women in banking conference in New York City where I am on October 21st and 22nd. And we also have our small business banking conference in a much warmer climate in Hollywood, California on October 27th and 28th. We hope you can join us for our live events or our virtual events in the future. And thank you again for joining us today.