Arkansas Inc. Podcast - Fintech and Community Banks

In this episode of the Arkansas Inc podcast, host Clark Cogbill discusses the successful ICBA ThinkTech Accelerator with Tina Giorgio, President & CEO of ICBA Bancard. 

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Introduction: Welcome to the Arkansas Inc. podcast where we discuss the latest  topics and trends in economic development with subject matter experts and influencers from across the nation and around the world.

Clark: Welcome to the Arkansas Inc. podcast. My name is Clark Cogbill. I'm Director of Digital Marketing for Arkansas Economic Development Commission. Today my guest is Tina Giorgio, president and CEO of ICBA Bancard, a subsidiary of Independent Community Bankers of America. Tina is in Little Rock this week for the kickoff of the ICBA ThinkTECH Accelerator, the second one based at The Venture Center here in Little Rock, Arkansas. Welcome Tina.

Tina: Thank you Clark. It's great to be here.

Clark: In 2018 the Independent Community Bankers of America announced that it was partnering with the Venture Center in Little Rock to launch the ICBA ThinkTECH Accelerator, a community bank focused fintech accelerator program. A first of its find fintech accelerator provides an outlet for community banks to directly engage and partner with early stage fintech companies focusing exclusively on community bank product development. So Tina, why don't we start by getting just a little bit of background of ICBA, ICBA Bancard and your role in that organization?

Tina: Sure. So ICBA as you said, is Independent Community Bankers of America and it is the largest nonprofit group focused exclusively on community banks. So we are responsible for the education, the advocacy, the outreach and the support of community banks as we move forward. ICBA Bancard is a subsidiary of ICBA and there we provide payment solutions to the nation's community banks. So we go out to these large financial technology companies and we negotiate pricing and service levels so that community banks can remain competitive in the fast evolving payment space.

Clark: And how do you define a community bank?

Tina: A community bank is typically under $10 billion in assets, but really it is about exactly what it says, community. These are banks who are shoulder to shoulder with their community. They are small businesses in their communities and they support the needs of the consumers and small businesses in their markets.

Clark: Well, when we think about community banks as opposed to much larger banks, what is the market share in the banking community across the United States of community banks?

Tina: So there's approximately 5,000 community banks in the United States out of a total of, the number varies by day now with the mergers and acquisitions that are going on, but somewhere in the 11, 12,000 range, including large institutions and other types of financial institutions, credit unions, etc. But typically, how we look at community banks, community banks are the backbone of their community, they do about 90% of the agriculture lending in the United States, about 60% of the small business lending in the US so when you think about it in terms of those stats, community banks are really vital to the success of our small communities in the United States.

Clark: And so talk to us about what was the background or the need, the driver of the ICBA ThinkTECH Accelerator.

Tina: Well as financial technology evolves and things become more high tech, high touch and customers want to do things on their time, when it's convenient for them and how it's convenient for them, it became necessary to identify these startup financial or these early stage financial technology companies who wanted to work with community banks and make sure that they understand community banks and how we differ from other types of financial institutions and help them bring to market products and services that allow community banks to remain competitive and stay on par with the other types of institutions in market.

Clark: So, there's a need for a smaller community bank to compete with the larger banks. Is it easier for a small company, a startup, a fintech company to work with a community bank sometimes then an enormous bank?

Tina: I think it really depends on the type of solution they're bringing to market. I would say what we're doing at ICBA is enabling those early stage fintech companies to be able to make it easy to do business with a community bank.

Clark: Okay. When you think about starting an accelerator, a fintech accelerator for ICBA, what led you to Little Rock? Why did you choose the Venture Center and this location to start the ThinkTECH Accelerator?

Tina: So Little Rock is really the birthplace of fintech going back to the '60s and once we started doing our research on different accelerators and different opportunities around the country, we had the opportunity to meet the team at the Venture Center and spend some time with them. And it became clear to us that we had common goals and that they would be a good fit for us and for community banks. They understand the community needs and they understand what it means to be part of a community and helping us move that initiative forward was important to them. And so that just made it a good fit for both of us.

Clark: Obviously the other accelerator going on with the Venture Center is the FIS Fintech Accelerator. And so did you look at what was already in place up and running with that accelerator and some of the successes they've had?

Tina: Yes, I actually participate in the FIS accelerator as well, and we have some synergies. They're one of my key partners at ICBA Bancard. And so seeing the infrastructure that was here and the process, it just made sense for us to work with the folks at the Venture Center. They're a great team. Very, very well versed in how to manage an accelerator. There're accelerators all over the United States and I participate in various accelerators from different organizations, different sizes. Everybody does it a little different. But we need it different for us because every community bank is a unicorn. You're not going to find any two community banks that are doing the exact same thing for the exact same customers. So being able to have that flexibility to make it our own and build a type of program that we wanted was a win for us.

Clark: Tina, why is innovation so important for community banks?

Tina: Well, Clark for businesses and consumers who are interacting with community banks we're looking at a rapidly changing environment where the way we did things 10 years ago is not the way we do things today. We've got all this technology and the technology is moving faster than it's ever moved before and we need to adapt to that changing environment and make sure that we have the same product, services, sophistication, ways to interact with us, that any other company that consumer or business is interacting with. I mean the customer experience today is not just measured on what bank A and bank B do. It's measured on what other technology companies and big tech companies do and how they interact with customers.

Clark: When I think about my own personal experience, certainly the way I bank has changed so much in the last three to five years, whether it be depositing a check, paying bills, the way you pay somebody with all these different things like Cash App and Venmo, PayPal and community banks, their customers have those same expectations of innovation, right?

Tina: That's correct. And they actually more often than not have those same capabilities. It's just a matter of having a conversation with your bank and determining what your community bank offers. Community banks are not behind by any stretch of the imagination when it comes to financial technology and innovation. There's a lot going on with community banks that people just aren't aware of.

Clark: Is it sometimes easier for a community bank to be more nimble and innovate versus a much larger organization?

Tina: I think that's starting to happen. Yes. Community banks have historically been reliant on core processors like FIS as you mentioned. So their ability to innovate was dependent on their core processors ability to innovate. But now things are changing to what's called an open application interface or open API environment, which is making it much easier to go to market and just build that connection into that core system to be able to bring innovation to my customers faster.

Clark: So when we think about some of the companies that come through the ICBA ThinkTECH Accelerator, are they more likely to be brought on as a third party partner of a community bank or is the scenario more likely to be that a community bank will purchase their software internally? Or is it a combination of those things?

Tina: I would say there's no one way to solve for this. As I said, community banks are unicorns. So one bank may want to interact with that company one way and another bank might want to do things differently. Typically, though it's either software as a service where they're using them as a third party provider and that early stage fintech builds the integration into their other systems with their other vendors versus bringing it in house.

Clark: So Tina, this being the second year of the ICBA ThinkTECH Accelerator, there are 10 companies that were selected to be a part of this program last year and the inaugural program, there were eight. There've been hundreds of companies that have applied to get into this very competitive program. What's the selection process like? How do you choose 10 out of all these companies with all these really innovative fintech ideas?

Tina: So that's a great question, Clark. The process actually started last August, September timeframe when we opened up the application process. We have a selection committee at ICBA and based on the needs of our community banks and the areas that they say that they would like us to focus on our efforts is what kind of defines the categories of company types we're looking for. Then our selection committee, and there's 25 or 26 of us on the selection committee is made up of subject matter experts internally at ICBA but also bank CEOs around the country and some of them are very tech savvy and they run their own accelerators or they have their own strategies around early stage FinTechs and what they're doing. Some of them are on par and just moving along at the pace of everybody else versus being out there on the early edge of things.

So that cross function of expertise and diversity across the United States gives us the ability to look at kind of holistically the companies. And we actually go through and we watch their demos and we spend a lot of hours on the phone looking at demos of their products and reviewing their materials. Before we get to it, it gets whittled down to about 60 that we look at as the committee. The folks at the Venture Center really do the heavy lifting before that. They vet all those companies and narrow it down to the ones that we look at in score to determine who moves into the program.

Clark: So what are some of the things that put one company ahead that sets a company apart that the committee, the Venture Center says we got to get this company into this accelerator program?

Tina: It's a number of factors. There's not any one thing that decides that. I mean we look at do they have a viable product? Do they have customers using the product? Some of it is the entrepreneur. Are they coachable? Is it the right fit for us and who our constituents are? Community banks are, as I said, unicorns and we've got to make sure that company culturally from an entrepreneurial perspective is going to be a good fit for our members.

Clark: Once a company gets selected, walk us through what happens over this 12 week accelerator program.

Tina: So over the 12 weeks we bring in subject matter experts and that would include other financial technology companies, some of them, the larger, more established ones we bring in the core processors. We have I believe six coming through this year. We bring in regulators and we bring in community bank executives to work with the cohort to evaluate their product, discuss how they're taking it to market. Perhaps some ideas come up. Teslar is a great example of that. While they were going through our accelerator last year, some of our bankers came through and said, "It's a great product, but I don't want my bankers sitting in the branch. I want my bankers out on the street going to visit my clients." So, they pivoted right there and built a mobile instance of their solution to take to market. So, that's the type of mentoring that we're providing throughout the program. There's a number of us at ICBA who will be here for many weeks mentoring the cohort throughout. We'll work with them on everything from marketing to... Today one of my vendors is in talking to them about vendor due diligence and what they need to put together so that the bankers can meet the needs that they have for vendor due diligence from a regulatory perspective. So we'll continue to bring in those subject matter experts to educate them on our environment as well as give them feedback on their product development as they go to market.

Clark: Okay. And you are going to be one of those mentors throughout the program?

Tina: I will. I'll be in Little Rock for five weeks of the 12 and then they will be with us in Orlando for one of those weeks as well.

Clark: And you have a really good position to be a mentor. Tell us a little bit about your background before you joined ICBA Tina.

Tina: So I was a community banker for 30 years before I joined ICBA Bancard. And I worked in a variety of roles from operations to vendor management to marketing to technology while I was at one of the financial institutions for 20 years. So I have a pretty diverse background when it comes to banking in general, but it's all focused in community banking. So I get where community banks are coming from and what their needs are that are unique to a community bank.

Clark: Well that's got to be very valuable insight for these startup companies just to hear from folks who have been feet on the street, running the business, seeing the business evolve, great opportunity. So once the program concludes, after 12 weeks, what happens? Is the company destined for success? I mean, probably not, but what happens? What's next after the conclusion of this accelerator?

Tina: I would say Clark, when you spend this much time with these companies, it doesn't end after the 12 weeks. When I was walking over here actually to do the podcast, I was telling Becky who I was walking over with that I just got an email right before the holidays from one of the 2019 cohort CEOs who was giving me an update on the company and giving me a progress report and saying, "Hey, when can we get together again?" So the mentoring and the relationship doesn't end at the end of the 12 weeks. I would say it's just blossoming at the end of the 12 weeks. I personally at my company have an agreement with one of last year's cohort and I'm hoping that I've got two or three more in this year's that we'll be able to form a partnership with, but ICBA support doesn't end when the accelerator ends and we actually have a corporate membership, fintech membership that we move them into to help them get access.

We also, during the 12 weeks, the one week I mentioned we'll be in Orlando, we let them do a live demo at our annual convention ICBA Live. So, that gets them in front of hundreds of bankers. We have our ThinkTECH pavilion and our expo hall, so they'll have their booth there where they can meet with bankers. So we're helping them build those connections and those inroads that would take them years. Between our subject matter experts coming in here and our community banks and that exposure that they get to our community it would take them years to establish those types of relationships and get those kinds of connections.

Clark: Well that's such a great point. You can have a great idea. You can have cutting edge technology, but you have to have those business relationships. And I imagine after a 12 week program you form some pretty strong ties with folks that you interact with in this program. So that is tremendous value to those companies.

Tina:It is. And community banking we're in a relationship business. Community banks foundationally are about relationships. Whether it's your community, it's your customer, it's a relationship business for us. And it just kind of lends itself to having that connection and that relationship established with these companies as we move forward. One of the folks in the Venture Center said to me earlier today, they said, "You guys are family." We're not a vendor. We don't feel like a vendor. We feel like family. And I think that statement kind of expresses it all.

Clark: That's great. Let's talk about some of the success stories from last year. Some of the companies that graduated, if you will, from the first ICBA ThinkTECH Accelerator. Can you give us a couple of examples?

Tina: Well I mentioned Teslar already. Teslar is in Northern Arkansas and I believe it was 200, 250 referrals, lead opportunities they walked away with just from our ICBA Live convention and they've had wild success. We really watched them grow and blossom and evolve their solution. And I think it's been great to see that happen. We also, from a personal perspective, my company ICBA Bancard and our bank TCM Bank, both have a relationship with MK Decision, which is a loan origination system that went through the 2019 accelerator and we're standing up banks, we've got a strong referral pipeline, we've got several dozen banks already up and running, and those are the types of things again, without this opportunity with the ICBA accelerator would not have come to fruition that quickly for them.

Clark: Tina, as you think about the new class coming in for ThinkTECH Accelerator 2.0 what are some of the innovations that you're seeing from these companies?

Tina: Clark, we're really excited about this year's accelerator, which kicks off this week as you mentioned. We have a company from India. We have a company from Israel, so this really is a diverse group that we're bringing in and exposing to community banking in the United States. Obviously there're companies in Arkansas as well. There's one right down the street. They're commuting back and forth for the 12 weeks versus residing in Little Rock. But I think the diversity of the products that they're bringing in, the ideas that they're bringing are what really is the most exciting. I personally being in the payments space, there're companies in cybersecurity, which is a big deal for banks and the data that we contain within our systems. There's a company who helps expedite the chargeback process, which is when a customer files a claim for a transaction on their card that they didn't make.

So that being in the payments business is very interesting to me. We've got another one who is accelerating payments and the ability to do payments literally instantly. So there's quite a diversity there. Another company is doing what's called geofencing, where they can look at moments that matter in your life. So if you're looking for a new home, they can tell that you're looking for a new home and give the bank the ability to at that moment that matters, send you information on a mortgage versus marketing to you on things that are of no interest.

Clark: A lot of innovation and some exciting ideas coming out of this year's ICBA ThinkTECH Accelerator 2.0 based at the Venture Center in Little Rock. Well, Tina, I'd just like to ask you, what is your impression of coming to Little Rock and you're not just visiting for a couple of days. I mean this is a long multi-week program. So tell us a little bit about your visit here, the first time you came here and what your reaction was to the city and to the state.

Tina: So, the first time I came here, I really didn't know what to expect. I had never been to Arkansas. It was one of the handful of States I hadn't been to yet. And coming from Washington DC I really didn't know what to expect. I travel the country. So I've seen some rural places in America and so I kind of had that expectation in my mind. But I've got to say I was really surprised when I got to Little Rock because everyone knows everyone. And I talked about community and the sense of community that the community bank has. Little Rock is a community, a very tight knit community. Everybody knows everybody. Last night I was at the hotel restaurant and they remembered me from being here last year. This gentleman, he comes up to me, he's, "Welcome back Ms. Giorgio."

So I mean, I haven't been here since March, so just that sense of everyone knowing everyone and watching out for everybody and that sense of community has been what I like most. My first time here obviously was six weeks out of the first 12 weeks of 2019 and I was introduced to Mayor Scott and he immediately thanked us for doing our accelerator in Little Rock, thanked us for being here and then gave me his cell phone number and said, "If you need anything, call me." I can tell you I've never even met the mayor of DC and probably never will, but I'm certainly not going to have her cell phone number.

Clark:  So you have a cell phone for the Little Rock mayor. That's great. And what do you hear from the participants in the accelerators? Some of them are coming also to the state for the first time, sometimes internationally traveling here. What kind of feedback do you hear from them?

Tina: Overall the feedback is very positive. They're put in month to month apartments when they come here and it's so convenient to get around here and I think that's one of the things they like. There's diversity in the restaurants. They're able to walk everywhere. None of them have a car. They fly in. It's 10 minutes from the airport if that. And they walk back and forth to the Venture Center on Main Street. They walk to the restaurants, everything's right there for them.

Clark: So no complaints on the food. I think we've got a pretty good diverse food selection in downtown Little Rock.

Tina: No complaints. Even our vegetarians are happy.

Clark: Yeah. That's great. So Tina, what do you see when you think about community banking? What is on the horizon? What are the issues and the opportunities that lie ahead in the next five to 10 years for community banking?

Tina: I think the future is very bright. I think that as long as there are communities, there's a need for community banks. And I think what we're doing at ICBA and what are companies that are coming through the cohort are doing are just solidifying the ability for community banks to remain strong and remain competitive and innovative in their markets. I look at some of the things that our banks are doing and I'm in awe that people are coming up with these ideas and taking them to market and they're finding needs and filling them that other folks just aren't seeing. I tweeted this morning in the elevator at the Venture Center, when you get in the elevator it says, "Going up? Thought so." And I tweeted out, no place to go, but up. And I really believe that.

Clark: That's great. I've been in that elevator. Well, my guest today has been Tina Giorgio, ICBA Bancard president and CEO. ICBA Bancard is a subsidiary of the Independent Community Bankers of America based in Washington, DC. Tina, thanks so much for visiting with us today. Tina is in town for the kickoff of the second ICBA ThinkTECH Accelerator at the Venture Center here in Little Rock. To learn more about the ICBA ThinkTECH Accelerator, visit venturecenter.co/icbathinktech. To learn more about the Arkansas Economic Development Commission, visit arkansasedc.com. This is Clark Cogbill, Director of Digital Marketing for Arkansas Economic Development Commission. You've been listening to the Arkansas Inc. podcast. Thank you.