Independent Banker - September 2023 - 20

PORTFOLIO
it was even five years ago. Industry
observers note that representatives on
both the vendor and the core provider
side have introduced changes that
make connection easier.
There could be connectivity issues
if you're trying to get data from a core
processor and your vendor hasn't
been properly vetted yet, says Loving.
" But most [processors] are moving to
a more open environment where you
can download data to the core from
the [processor]. "
Sequretek's Naik has observed the
same flexibility from the vendors' side.
" There are enough players ... that offer
coexistence with legacy technology
and new generation technologies that
can coexist and sit on top of existing
solutions, " he says. " This eliminates
the need to replace things or migrate. "
Community banks are responsible
for their own compliance and risk
and therefore also accountable for the
results of their third-party partners.
That's why incorporating regtech
solutions requires significant due
diligence. In that context, community
banks should realize that while
regtech providers are attuned to
regulatory mandates, they've often
originated in an environment that
emphasizes speed to market as
an imperative.
" Financial institutions need to
make vendors aware that they also
have to meet regulatory requirements
with regard to how the product is
used, " CSI's Monson emphasizes.
Kirk advises bankers to start the
selection process by considering
carefully what problem they're trying
to solve. " Know your needs and your
strategy, " she says. " Don't just pick the
newest, shiniest things. "
Queensborough has developed
a detailed process for evaluating
third parties. Kirk insists that banks
ask vendors any and all necessary
questions. Queensborough's team
asks questions about a company's
principals, funding sources, stage of
development, any publicly available
information, references and,
eventually, making sure the right
controls are in place in the contract.
" It's not a bad thing to have multiple
conversations. Get to know the
principals and understand your bank,
your strategy and your needs, " Kirk
says. " There are multiple companies
out there that [could] fill any need you
have. Get the right feel and the right
company for your bank's risk profile. "
ICBA's ThinkTECH Accelerator
finds star regtech partners
Inaugurated in 2018, ICBA's ThinkTECH
Accelerator has systematically nurtured
solutions specifically designed for
community banks and their customers.
ThinkTECH cohorts participate in a 10week
program, culminating in Demo Day, which gives them access
to community bankers and other successful fintech entrepreneurs.
" As part of our vendor-vetting process, we have relied heavily
on the ThinkTECH accelerator, " says William Loving, president and
CEO of Pendleton Community Bank in Franklin, W.Va. " One of the
benefits of ThinkTECH is that companies go through all the filters.
When a solution comes to market, we can be sure the company
better understands what our [vendor] requirements are. "
Kimberly Kirk, EVP, COO of Queensborough National Bank
& Trust in Louisville, Ga., serves on the ThinkTECH Accelerator
Selection Committee. " The cybersecurity landscape evolved so
quickly, and finding companies to help manage that has been one
of the biggest challenges, " she says. " Finding a Beauceron or a
Finosec [two ThinkTECH alumni] has been a tremendous benefit. "
Learn more at icba.org/thinktech
Weighing the benefits
Loving relates that PCB prioritizes
the significance of the risk the regtech
tool is designed to eliminate and how
much manpower it will save. " We look
at tasks that are labor-intensive and
carry the most risk if noncompliance is
at issue, " he explains. " We look at those
two first to see if a vendor could fulfill
those needs. "
It's clear regtech providers offer
important assistance to community
banks struggling to keep up with
mounting compliance obligations.
Charles Potts, executive vice
president and chief innovation officer
for ICBA, says, " These regtech tools
are designed to help banks do what
is inherently important to the banks
in a more efficient, cost-effective
manner with the least disruption
and furtherance of compliance
practices and continue to deliver the
high-value relationship service their
customers expect. "
Judith Sears is a writer in Colorado.
20 // ICBA Independent Banker // September 2023
http://www.icba.org/thinktech
Independent Banker - September 2023

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