Realizing the future for community banks and credit unions

Community banks are facing a new set of challenges beyond their traditional David-and-Goliath struggle with larger financial institutions. The market now includes disruptive technologies such as mobile and digital payments and powerful innovative competitors such as Facebook and Apple.

Up until now, many community banks have relied on their core services providers to fill the gap between their limited IT budgets and resources and market demands. But doing this has created two problems – one, expanding into the core’s features increases lock-in, and two, the core is commoditizing what should be innovation.

As dire as this situation may seem, it actually provides community banks with the opportunity to set themselves up for innovation and to outpace their rivals including the larger FIs. To accomplish this, community banks must embrace a strategy of Digital Transformation that will fundamentally change their technology, skillsets, and operating model. This strategy can be delivered incrementally with remarkably little overhead, and the wins can be realized quickly. In this context the core serves its original purpose as a financial ledger but is no longer the fragile lifeline and innovation roadblock for community banks.