Independent Banker - November 2023 - 38

PORTFOLIO
" [The ThinkTECH Accelerator's] a robust
ecosystem of subject matter experts that
can help assess potential partners. "
-CHARLES POTTS, ICBA
Drafting a
watertight contract
If your community bank has
found a fintech it would like
to partner with, it's time to
establish a contract. Good
contracts will be detailed,
but three fundamental
elements emerge:
1. Protection of and access
to customer data
2. Performance criteria
3. An exit strategy
" Never give up the rights
to the customers' data, "
advises Andrew Tinberg,
president of CNB Bank &
Trust in Oak Forest, Ill. " It's
always ours. Make sure there
is a secure way to exit the
partnership, that the data
will be returned to us and
no remnants of that data
remain somewhere else. "
He adds that CNB
requires partners to be
Systems and Organization
Controls 2 (SOC 2) certified,
a framework created by
the American Institute of
Certified Public Accountants
(AICPA) to cover how
companies should handle
customer data that's stored
in the cloud.
Trust in Oak Forest, Ill., advises
bankers to ask specifically how
another bank is using a particular
technology and how it's measuring
the results. " They may be measuring
success differently than we would, "
he observes.
In forming fintech partnerships,
banks must be proactive in educating
their partners on what an exam
requires. " When we go through a
regulatory exam or an external audit,
the first thing the examiners are
looking at is did we follow the Federal
Financial Institutions Examination
Council [FFIEC] handbook, " says
Jennifer Moraczewski, SVP operations
and technology for Tioga State Bank.
" We have an extensive checklist
based on that, and we share that with
potential vendors. "
Sweat the small stuff
Even with a carefully vetted partner,
banks need to put in place detailed
contractual requirements (see
sidebar). Moraczewski says that Tioga
State Bank sets expectations of a
lengthy contract review with potential
vendors. " We make sure that both
parties are covered, " she says.
Dickinson Financial Corporation's
Robinson advises bankers to include
KPIs and review periods across
milestones in the contract. " If we
made assumptions about the growth
of the relationship, and after two
years we didn't get where we thought
we would, it's important to review
and agree to make changes or exit, "
he says.
Despite the complications, more
community banks are reporting
substantial benefits from their fintech
partnerships. Robinson reports that
Academy Bank has experienced
significant operational efficiencies
through various digital initiatives over
the past few years.
" We are saving thousands of
hours a year in our [operational
groups], and we are finding manual
processes in the organization that
can be automated, " he says. " That
allows organizational teams to be
redeployed to work on new products
and innovation. "
Based on CNB's experience,
Tinberg is a strong advocate of
fintech partnerships. " Whether you're
striving for operational excellence or
to take the customer experience to the
next level, innovation is the bank's
pathway to long-term success, " he
says. " CNB is all about maximizing
the customer experience. We're
super-optimistic about the future
of community banks, and I think
fintechs are really important to the
future of community banks. "
Judith Sears is a writer in Colorado.
38 // ICBA Independent Banker // November 2023
Independent Banker - November 2023

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