Chris Cox is the Chief Operating Officer of Apiture and oversees all aspects of business operations.
Even as the Silicon Valley Bank collapse fades from the headlines, the dust continues to settle and we see major trends emerging for community banks and credit unions.
SVB’s demise was caused by an old-fashioned bank run with a modern twist, co-orchestrated by the the bank’s own investment decisions And compounded by venture capitalists on Twitter urging customers to reconsider their deposits. Word spread quickly, depositors collected their money, and without a heroic investor to cover the withdrawals, the bank failed.
With the benefit of hindsight, we can look at SVB and get some insights for community banks and credit unions to both attract new customers looking to spread deposits and build confidence with existing customers who may be concerned about the state of the banking industry .
The aftermath
Even though the Federal Deposit Insurance Corp. decided to make SVB customers throughout“I have noticed that there have been stirring conversations at the bank about possibly raising the $250,000 FDIC insured limitdeveloping possible options for how companies with large deposits can increase coverage or charge if necessary large banks with large deposits to carry that burden alone.
There are two implications worth noting in today’s banking environment. Small institutions witnessed one record drop$119 billion, in deposits days after SVB collapsed as customers rushed move their deposits to larger banks. While having deposits with community banks and credit unions somewhat stabilized since the days immediately following the collapse of the SVB, this shows the sudden impact headlines can have on their balance sheets.
Lessons for community banks and credit unions
1. Build a strong online presence. I think community banks and credit unions are likely to catch some stragglers, but a strong online presence is a strategic necessity. Community financial institutions should strengthen their digital and social media communications to ensure they are part of all conversations customers have about them online.
Basic digital marketing skills and strategies are also a must, as many consumers today begin their product shopping journey with an online search and review. Keep in mind, though, that if someone can find a bank or credit union doing an online search, but the bank can’t immediately get them on board through digital channels, the institution could lose a potential customer.
2. Accurately evaluate technology partnerships. If you’re looking for an account opening solution, make sure it’s simple, intuitive, and easy to use for customers. (Full disclosure: My company offers this kind of solution just like others.) I also recommend evaluating what types of checks it performs and whether it can provide a full compliance assessment. While community banks and credit unions may not have the operational size of the major, national financial institutions, they may consider entering into technology partnerships to ensure the appropriate level of compliance.
However, when evaluating potential partnerships, community banks and credit unions should start by looking for cultural alignment. The most productive relationships begin with a shared business philosophy and a mutual understanding of work styles and project goals. When working with a technology provider, leaders at financial institutions must ensure that the provider understands the bank’s customers and can help them meet their needs.
3. Be prepared if you use banking-as-a-service or embedded banking. Through my company’s banking-as-a-service and integrated banking solutions, I’ve seen that these two options can give community banks and credit unions the ability to get deposits by working with partners. In a BaaS strategy, a financial institution powers the banking services provided by a non-chartered challenger brand. Embedded banking offers a different approach, with the institution providing its branded services, such as the ability to open an account, view balances or make transfers, within a partner’s website or app.
Since both BaaS and embedded finance rely on application programming interfaces, community banks and credit unions must ensure they have the necessary technology framework in place if they plan to implement these solutions. There is no right or wrong answer to whether financial institutions should choose to pursue these options. It all comes down to the needs of users and what types of services they need.
In either case, financial institutions need to be aware of each space’s compliance and regulatory requirements, especially as regulators begin to take a closer look at BaaS.
While a potentially broader banking crisis is under control, community banks and credit unions cannot afford to be complacent at this point. Community institutions must continually review their risk and investment practices, identify slack in their digital marketing strategies, monitor and actively participate in discussions about their businesses on social media, and consider how to attract new customers and deposits to strengthen their place in the current banking ecosystem. strengthen.
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Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.