WORKWEEK

When your business needs to implement new financial tools, it’s like finding the perfect suit or dress. 

You could build a new system using your developers, which like a custom outfit, is tailor-made to fit business needs and requirements. But with custom-made clothing comes a higher cost and longer wait. 

Or you could retrieve the financial solutions you need through vendors, which like off-the-rack clothes, don’t necessarily fit well but are way cheaper and faster. 

Sometimes companies can configure these systems, but firms often find changing their business to suit the design easier than vice-versa.

This is where low-code no-code fintech, as an alternative, steps in. 

Today, low-code no-code is becoming increasingly popular as more businesses, particularly community banks, face challenges like time, technical expertise, and money required to launch modern financial experiences with just APIs. 

These challenges are boxing out community financial institutions and new financial brands from reaching their under-banked and underserved communities. 

On the Money 20/20 stage in Las Vegas last month, these four speakers came together to address these issues:

• Nicole Elam, President & CEO, National Bankers Association
• Dana Wilson, Founder & CEO, CHIP
• Joseph Akintolayo, CEO, Deposits
• Gabe Krajicek, CEO, Kasasa

Let’s get into it, ya?

First things first: WTF is low-code, no-code? 

Low-code programming is a way to create software using graphical user interfaces. This means that you can create software without having to write code manually. Instead, you can use visual symbols to represent code blocks and combine them using drag-and-drop.

Despite the need for manual coding, low-code programming can still be a faster and more efficient way to develop software. 

This is because the building blocks approach allows for greater flexibility and customization than traditional coding methods. And since the blocks can be rearranged and reused, it’s easy to make changes and updates as needed.

No-code programming is designed for people who don’t know how to code. 

These people are given “building blocks” that they can assemble without knowing how to connect them. No-code also uses graphical interfaces and is often presented as templates that community banks can manipulate to produce the user’s desired process.

What’s this mean for fintech? 

A few advantages: 

1. Low-code no-code applications allow organizations to respond quickly to changing business needs. 

Because users can develop and implement their systems, there is no need to wait for professional developers to make changes. This can be a significant advantage in today’s rapidly changing business environment.

2. Low-code no-code applications are typically much less expensive than in-house systems. 

This is because there is no need to hire professional developers to build and maintain the systems.

3. Low-code no-code applications can provide a close fit to business requirements. 

Because users can develop systems to meet their needs, community banks can tailor these applications to an organization’s needs.

Who Needs This? 

One primary example is Minority Depository Institutions, or MDIs, federally insured banks that are made predominantly owned and operated by people of color and serve minority communities. 

These banks were established out of racism because BIPOC immigrant communities could not go to mainstream financial institutions for their banking services.

According to Nicole Elam, President & CEO National Bankers Association, the average asset size of these community banks is about $380 million. 

So they are the smallest of the small banks. And when you think about some of these larger banks with asset sizes closer to $3 trillion, no code, low code solutions are crucial for community banks to leverage technology to scale.

What’s the Problem?

Consumer expectations are changing faster than people can adapt, and software developers often control the narrative. 

Now that has moved to the digital landscape. No code tools are allowing people to get started faster. Community banks can try new products and services in their community. 

What’s Stopping Them?

People often think that community banks want to avoid partnering with fintechs.

But it’s not that they don’t want to partner with fintechs, and it’s not that they don’t want to adopt the technology. 

Aside from the regulatory challenges, there are just a lot of challenges to them doing that. 

One of the main challenges for community banks is the cost of technology. 

Adopting new technology can be very expensive, especially for smaller banks. This can make partnering with fintechs problematic, as there are often additional costs associated with these partnerships. 

However, some community banks are beginning to adopt new technologies. 

This is often done in partnership with fintechs, as they can provide the necessary expertise and support. While there are still challenges to overcome, this is a positive trend for the future of community banking.

What’s Fintech’s Opportunity?

Community financial institutions are interesting because they get disregarded entirely in the marketplace. 

They typically need a chief technology officer. But instead, it’s an IT guy that helps integrate the software they buy from different vendors. 

The great thing about technology is that technology has the potential to drive access to and the affordability of financial services. 

So with tech now, you can reach more people and do it at a much lower cost. 

And that’s how fintech companies can step in. A symbiotic relationship can form where fintech companies can help inform what a community bank is building.

According to Elam, it’s changing banking so that community lenders may only exist if they figure out how to partner with and work with fintechs and become more innovative. 

“When I think about the last three years, which is when you started to see the boom of fintechs in a major way, what I found is that my member banks that had the technology and had fintech partnerships, they and the communities that they serve fared much better than any of the other community banks,” Elam said.

“The reason is that they were able to push out more PPP loans,” she said. “They could keep their virtual doors open when they had to close the lobbies of their banks. 

They could do things that maybe their community partners or other community lenders couldn’t do because they had the technology.”

Bingo.