Offset the 'Threat' of Fintechs in 2022

by Tim Klatt, Director of Retail Strategies & Head of Vivalociti

As featured in Financial Brand, February 2022:

Fintechs are not new, but for community banks and credit unions, perhaps for the first time, it’s getting personal. For years, fintechs have largely threatened big banks. But as fintechs take on lending - even Walmart is getting financial services - traditional financial institutions are feeling the impact of fintechs in new ways they cannot afford to ignore.

The data reflects the trend. The past decade has seen a tremendous shift, with the amount of loans originated by fintechs increasing by nearly 10 percent.

Fintech back then and now

According to Kasasa, a financial technology and marketing services company that works with community financial institutions, seven years ago, fintechs originated 5% of total loans, 43% were originated by credit unions and 52% of loans were originated by banks. Today, banks are down to 30%. Credit unions are down to 23%. And, fintechs are up to 44%.

If you’re a traditional financial institution, it’s hard to know where to begin, but the bottom line is if you aren’t devoting time, energy and resources to considering fintech’s impact on the industry, it’s time to reconsider, and we’re here to help show you the way.

Let’s start with the assumption that fintechs pose a threat in the first place. Are fintechs really coming for your consumers? Or, are they simply giving your consumers what they want? Sure, there are some gimmicks and some deals - but, for the most part, consumers are just finding what they want and need in a really easy-to-navigate way. Yes, you could view that as a threat. Or, you could sit back and take some notes on how fintechs are changing the industry and find a way to follow suit.

You may be reading this and thinking: “But I don’t want to be like a fintech - that’s not who we are!”

Yes, exactly. And that is precisely where this “threat” becomes an opportunity.

Fintechs cannot replicate what traditional financial institutions have - the “it factor” of any local bank or credit union. It’s the relational and personal impact of a community presence that builds confidence, trust and loyalty. But traditional financial institutions can replicate what fintechs have - and that’s where the magic takes place.

A couple of things to consider:

  • What does your financial institution have that can’t be replicated by fintechs? What are your key differentiators? Let’s elevate them and leverage them to increase interest, engagement and drive growth. Don’t have them? Let’s create them - and then broadcast them loud and proud across all platforms.
  • What can’t you do today that a fintech can? Where does a current or potential consumer feel a tension / pain point or inconvenience that sends them to fintech? Let’s develop our plan of attack for winning that customer back and stopping others from making the same move. Upping your digital game, and leveraging partnerships (yes, sometimes even with fintechs!) to transform your offerings is a great place to start.

You can choose to view fintechs as the enemy. Or, you can recognize their growth was born out of an unmet consumer need and consider what it means for your institution. The key is doubling down on the who, what and why that is unique to your brand identity, capitalizing on the opportunity to highlight and celebrate what makes “you,” you while simultaneously evolving how you determine and deliver against your consumers’ needs.

At La Macchia Group, it’s a journey we’re taking with countless clients across the country. In the coming weeks and months, we’ll continue to explore the threats - and opportunities - of fintechs and offer tips and strategies traditional financial institutions should pursue to best position themselves today and well into the future. We’ll bring in experts to share insights and we’ll highlight financial executives who have seen real, tangible results. Stay tuned.

In the meantime, we would be happy to discuss how you can and should evolve alongside - or even in partnership with - fintechs and how to do so in a way that stays true to your institution’s history, future vision and current and prospective consumers. Let’s connect.

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Tim Klatt | Director of Retail Strategies


Tim Klatt | La Macchia Group

With a background in Geography and Geographic Information Systems (GIS), Tim began his career 15 years ago with MapInfo Corp, consulting for Home Depot as well as national restaurant chains such as Burger King, KFC, Taco Bell, and Pollo Tropical. As Director of Retail Strategies & Head of Vivalociti at La Macchia Group, he brings an increased understanding of how successful national retailers view markets. Tim believes in the power of data supported by in-market intelligence to predict viability of new branch locations. Since joining La Macchia Group, Tim has become an expert in the industry, participating in industry colloquiums, focus groups, and round tables.