Financial technology mania is spreading from Wall Street to smaller banks that are increasingly eager to participate online as consumers' adoption of fintech shows no signs of abating.
Wall Street institutions' adoption of online financial services products outpaced regional and community banks for years. Many big banks hedged against their own future with urban accelerator labs that launch products designed to do everything from detecting compliance issues to speeding research to managing automated investor portfolios.
For better, and for worse, Wall Street serves as an innovation hub of financial services products; smaller banks have limited access to pioneering entrepreneurs and must forage for partners. Fortunately for them, many start-ups are at a point where they, too, are eager to drum up more business, as asset-backed securities deals and initial public offerings that helped fintech companies amass cash in recent years became scarce in 2016.
"We've got a lot of smaller banks starting to think nationally," said Tom Michaud, CEO at financial services investment bank KBW. "We think fintech is going to converge with the banking industry."
While most small bankers are eager to embrace digital capabilities, uncertainty lingers. Al Dominick, president and CEO of conference organizer and magazine Bank Director, said at his company's conference in New York in early March that a whopping 55 percent of small, community and regional bank executives had not set up any meetings or presentations with potential partners, despite aspiring to do so.