What fintech trend are you most excited about?
I am curious to see what the confluence of fintechs and traditional banks will look like. Fintechs are not taking over banks. While there is some slight progress with fintechs successfully getting a bank charter, the number is too small in the grand scheme of things. Having gone through the de novo process myself, and serving on the New York State Charter Advisory Board, I don’t think getting a charter is a viable option for many fintechs due to various reasons. On the other hand, I think the U.S. banking industry is now at an inflection point where small community banks need to define their growth strategies and quickly embrace technologies and business innovation. Fintechs and banks are both here to stay, but who will most likely be the winner?
What trend are you most worried about?
Speed of growth comes at a cost. Fintechs are quickly expanding and offering banking services through APIs at a rapid pace. In bank-fintech partnerships, compliance is one of the most significant issues and a typical source of misalignment between them. Banks are equipped with solid risk management and regulatory expertise, but for fintechs, they have not been asked to hold the same regulatory compliance standards. It won’t be long before the regulators start to act on this. While fintechs are very strong as technology companies, I don’t know if they can build the compliance expertise quickly enough to bridge the gaps, or if they will be able to lean on their bank partners to get through the hurdle.
What was your biggest professional blunder and what did you learn from it?
Earlier in my career, I looked at banking as a risk management business, only to learn that it is a people business first. When you have good people, it makes everything else that much easier, including sound risk management. I built Piermont Bank as a hybrid bank that bridges the gap between banks and fintechs, and the talent need that comes with that approach is unique. For example, we need compliance officers to think both critically and creatively. Creativity is not a characteristic you would expect from a bank compliance officer, but it’s crucial to our business model. We need operations managers to have a much broader knowledge base, ability to think outside of the box, while in most banks, they are trained to follow set procedures.