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24 n e w h a v e n B I Z | D e c e m b e r 2 0 2 1 | n e w h a v e n b i z . c o m While some banks see financial tech companies as threats, other lenders partner to adopt new digital services Fintechs: Friend or Foe? By Matthew Broderick T he past year and a half has been busy for David Mitchell. As Liberty Bank's executive vice president and chief digital officer since July 2020, Mitchell has led efforts to not only navi- gate the bank through shis in customer behavior during the pandem- ic, but more importantly to incorporate new technologies across nearly all aspects of the banking experience. at includes everything from money movement and customer onboarding to small business invoicing and customer service. e hope is that it will drive the mutual lender's growth and revenue amid a market landscape that has seen a steep decline in the number of banks over the past decade and skyrocketing growth among financial technology, or fintech, companies. Mitchell himself knows both the banking and fintech worlds well. Before joining Liberty Bank last year, he was president of Glastonbury-based NYM- BUS, a cloud soware provider to the fintech industry. "Since the Great Recession of 2008, the number of [traditional] finan- cial institutions like banks and credit unions has dropped from 20,000 to around 8,000 now," Mitchell said. In contrast, there have been more than 35,000 fintech deals since 2010, worth more than $1 trillion, according to 2021 S&P Global Market Intelligence data. As fintech companies like Mint, PayPal, Venmo and Apple Pay have gained traction, they have disrupted the traditional banking model and forced banks and credit unions to invest in or partner with innovative technologies that align with the convenience and simplicity consumers demand in an in- creasingly mobile device-fueled society. at's driven large financial institu- tions and private equity companies to invest billions in fintech. For the first three quarters of 2021 alone, fintech in- vestment has increased to $91.5 billion in global funding, nearly doubling the total the sector attracted in all of 2020. JPMorgan Chase, the biggest U.S. bank by assets, has acquired three fin- tech companies since last December. Some banks, particularly large mon- ey-center institutions, view fintechs as a threat to their business, as on- line-only financial services companies have poached millions of customers in recent years. But others, including smaller com- munity lenders, view them as an opportunity and are partnering with fintechs to adopt new technology they otherwise wouldn't be able to develop in-house. For example, Liberty Bank has signed partnership deals with several new vendors, including Alkami, one of fast- est-growing digital banking platforms with more than 10 million live users across the U.S. "We wanted to find one combined platform that could support retail, small business, and cash management for dig- ital/mobile banking," Mitchell said. Liberty, which has $7.3 billion in as- sets, has also inked a deal with Glaston- bury-based Payrailz to be its new money movement partner, supporting account-to-account transfers, new account funding and loan services. It has also added new partners to support financial wellness and credit monitor- ing, as well as one to help small busi- nesses manage invoicing and payments, and another to provide digital customer service. Meantime, the parent company of Stamford-based Patriot Bank, with $962.8 million in assets, announced earlier this month it was buying Amer- ican Challenger Development Corp. to establish a new digital national bank headquartered in Connecticut. For many banks, new partnerships with financial technology companies are a survival strategy, as fintech adop- tion by consumers has risen steadily in recent years — from 16% of global consumers using at least one fintech platform in 2016 to more than 60% in 2019, according to Ernst & Young survey data. And COVID-19 only hastened the pace of fintech adoption, says Cynthia Merkle, president and CEO of Dan- bury-based Union Savings Bank. "e pandemic accelerated the use of mobile and [customers] moving away from [bank] branches for transactions," Merkle said. Bigger tech budgets Union Savings Bank's stepped-up focus on fintech adoption pre-dates the pandemic, Merkle says. For the past five years, the bank's innovation center team — composed of cross-functional representatives from product management, IT, marketing, data and customer service — has been working collaboratively, including on new fintech partnerships. Cynthia Merkle David Mitchell is leading Liberty Bank's efforts to establish partnerships with fintech companies so the mutual bank can add new digital services. PHOTO | STEVE LASCHEVER

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