Farm Bureau Bank has had proprietary technology in place since the late 1990s, but Chief Operations Technology Officer Mark Cromer advocates fintech partnerships to remain competitive. “We need to have a platform that will allow us provide what’s referred to as the ‘table stakes’ with the core functionality that customers look for,” said Cromer, senior vice president at the San Antonio, Texas-based bank. “But then we also are looking for a partner that will provide us with flexibility to customize things specifically for our membership base and on our sales channel.”
Cromer sat down with Auto Finance News’ Deputy Editor Nicole Casperson at the Auto Finance Summit to discuss industry cycles, best practices for vetting fintech partners and what’s on the horizon for Farm Bureau Bank’s technology initiatives. What follows is an edited version of Cromer’s conversation with AFE.
Auto Finance Excellence: From a technology standpoint, what has it been like seeing the industry change from the late 1990s?
Mark Cromer: What comes as a surprise is what I see as cycles in the industry. When Farm Bureau Bank started in 1999, server technology — if you remember — was just hot. Buying computing power so you could host your own applications on-premises was where community banks were going. That’s why most of our applications that we run today are on-premises applications. Before that, it was service providers. But we’ve come full circle now with cloud-based solutions.
Companies are pushing financial out saying, ‘You don’t need to do your own computing — send it to the cloud.’ We’re going to adopt that strategy. As we have the opportunity to move more things to the cloud, we’re willing to do that. But we still think that it’s important to maintain on-premises applications.
The other thing I’ve seen come in cycles is when we talk about fintechs. Back in the day — say, 15 years ago — when I would come to meetings like these and see software vendors, it was hard to tell what they sold. There were all kinds of startups that were trying to sell you software that, at the time, we would call it ‘paperwork,’ because you really didn’t know what they were trying to do.
AFE: What questions should lenders ask to evaluate potential fintech partners?
MC: When vetting fintechs, lenders should adopt the same practices they’ve always had — figure out exactly what these companies do and make sure they’re solid. Everybody has something to sell. You’ve just got to make sure that it works, and that it works for you.
This isn’t the first time that we’ve been faced with having to decide if it’s a technology company that’s been in the space for a while but calling themselves something different, or if they really are new entrants into the technology and financial services areas. The other question we lenders should ask ourselves — which is the biggest driver when we are deciding on our strategy at FBB — is
customer expectations. We’re concerned with how that changes. Once an expectation is set, you can never go back, and once an expectation is set by a competitor, then that becomes your customer’s expectation. You must invest in the reality of what you do, and you have to make sure that you have the systems that can deliver on expectation.
When we’re approaching this evaluation, we don’t think it’s going to be a partner that’s going to help us do what we want to do. We think it’s going to be multiple partnerships.
AFE: With that in mind, how do you differentiate yourself from the community bank down the street that might have some of the same partners?
MC: It’s difficult to think that you’re going to compete as a community bank on features and functions, because as soon as you offer something that the [bank] down the street doesn’t, they’re going to catch up and it’s just a constant game of cat and mouse. It comes down to looking at who our partners are going to be and how we decide on those partnerships. For one, we think that openness is probably the biggest thing — meaning that we don’t know what it is that we may want to do in two, three, five years, but we need to make sure that the platform is flexible enough to handle whatever future partnership we may need to establish or whatever platform we need to develop internally. So, openness is one.
And then, of course, is the relationship you have with the folks that you’re partnering with to make sure your expectation is communicated.
AFE: What’s on the horizon for Farm Bureau Bank?
MC: It’s hard to say, because we haven’t made the final decision yet. I know we want to be in the business lending market by the close of this year or first quarter of next year. But, using that agile approach, how we start that project is not necessarily going to be what it is going to look like when we finish — you know, the old ‘walk before you run.’ [That] ‘walking’ may allow us to set some the parameters and define what it is we’re going to be doing.
It’s complicated, because we’re not only putting in a new decisioning system, but we have to change all the interfaces on the front end and the back end. Then we need to complete all the training and communicate with our sales force, so to think the project could take up the entirety of 2020 is realistic.