18 Banks that Fintech Companies Need to Know

To build on last week’s piece (15 Banks and Fintechs Doing it Right), I put myself in the shoes of an early stage fintech company’s Founder.  Specifically, as someone with a new idea looking to develop meaningful financial relationships with regional and community banks in the United States.  With many exciting and creative fintech companies beginning to collaborate with traditional institutions, what follows is a list of 18 banks — all between $1Bn and $25Bn in size — that I think should attract the tech world’s interest.

By Al Dominick // @aldominick

Believe it or not, but bank CEOs and their teams are working hard to grow revenue, deposits, brand, market size and market share.  So a hypothetical situation to tee-up today’s column.

Imagine we developed a new, non-disruptive but potentially profit-enhancing software product (let’s put it in the “know-your-customer” sector since banks already spend money on this).  As the Founders, we want to approach banks that might be ready to do more than simply pilot our product.  While our first instinct would be to focus on recognizable names known for taking a technology-based, consumer-centric focus to banking, the low hanging fruit might be with CEOs and executive teams at publicly traded community banks — many of whom are above $1Bn in asset size and are just scratching the surface of developing meaningful fintech relationships.

With the idea that smaller banks can act faster to at least consider what we’re selling, we cull the field, knowing that as of June 1 of this year, the total number of FDIC-insured institutions equaled 6,404; within this universe, banks with assets greater than $1Bn totaled just 699.

So now we are focused on a manageable number of potential customers and can spend time getting smart on “who’s-doing-what” in this space.  Can we agree that we want to approach banks that share common characteristics; namely, strong financial performance that sets them apart from their peers and operations in strong local markets or big economic states?  Good, because assuming we are starting from scratch in this space, here are our top prospects (listed in no particular order with approximate asset size):

  1. Citizens Business Bank in California ($7.3Bn)
  2. Pinnacle Financial in Tennessee ($6Bn)
  3. Farmers & Merchants in California ($5.5Bn)
  4. Western Alliance in Arizona ($10Bn)
  5. Eagle Bank in DC ($5.2Bn)
  6. Prosperity in Texas ($21.5Bn)
  7. BankUnited in Florida ($19.2Bn)
  8. BofI “on the internet” ($5.2Bn)
  9. First NBC in Louisiana ($3.7Bn)
  10. Burke & Herbert in Virginia ($2.6Bn)
  11. Banner in Washington ($4.7Bn)
  12. Bank of Marin in California ($1.8Bn)
  13. Cardinal Bank in Virginia ($3.4Bn)
  14. State Bank in Georgia ($2.8Bn)
  15. TCF Financial in Minnesota ($19.3Bn)
  16. United Bank in Connecticut ($5.5Bn)
  17. Boston Private in Massachusetts ($6.8Bn)
  18. Opus Bank in California ($5.1Bn)

At a time when the concept of service is fast changing to reflect highly functional technology and “always-available” customer experiences, these eighteen banks — already successful in their own right — strike me as just the types to think about approaching.

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*Now I’m not suggesting everyone pick up the phone and call each’s institutions CEO.  But If you are with a fintech thinking about partnerships and collaboration, you could do a whole heckuva lot worse than spending some time learning what makes all of these banks more than just financially strong and consumer relevant.

Mid-April Bank Notes

I recently wrote How the Math Works For Non-Financial Service Companies.  Keeping to the quantitative side of our business, I’m finding more and more advisors opining that banks of $500 – $600M in asset size really need to think about how to get to $2B or $3Bn — and when they get there, how to get to $7Bn, $8Bn and then $9Bn.  With organic growth being a bit of a chore, mergers and acquisitions remain a primary catalyst for those looking to build.  But what happens if you don’t have a board (or shareholder base for that matter) that understands what it takes to grow a company through acquisitions?  This question — not deliberately rhetorical — and two more observations, form today’s post.

A Collection of Individual Relationships

Just because a bank is in a position to consider a merger or acquisition doesn’t mean it is always the best approach to building a business.  This thought crossed my mind with Nashville-based Pinnacle Bank’s recent acquisition of Chattanooga’s CapitalMark Bank & Trust — the first deal struck by the bank in the last eight years (h/t to my fellow W&L’er Scott Harrison at the Nashville Business Journal for his writeup).  Run by Terry Turner, the bank enjoys a great reputation as a place to work and business to invest in.  As Terry shared with the audience at this year’s Acquire or Be Acquired conference, he doesn’t hire someone who’s been shopping their resume, a point that stuck with me and resonated with a number of other executives I was seated near.  So when I think of team building, his institution is one I hold in high regard.

The same can be said for First Republic, who like Pinnacle, is known for organic growth and fielding a standout team.  The bank recently posted a 90 second video from its CEO and Founder, Jim Herbert, that gives his thoughts on culture and teamwork.  Having written about Jim as part of a “Best CEO” series, this clip highlights the foundation for their continued success.

General Electric decides it no longer needs to be a bank

If you somehow missed GE’s announcement, the Wall Street Journal reported this is the conglomerate’s most significant strategic move in years.  While I will let others weigh in on the long-term benefits in selling its finance business that long accounted for around half the company’s profits, it was nice to see our friends at Davis Polk advising GE through the sale of most of GE Capital’s assets.  So the assets of the 7th largest bank in the country, some $500 billion in size, will be sold or spun off over the next two years.  Why?  “The company concluded the benefits aren’t worth bearing the regulatory burdens and investor discontent.”  Feel free to share your comments on this below.

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