Worcester Business Journal

12 Worcester Business Journal • February 1, 2016 www.wbjournal.com FOCUS Banking & Finance Community banks embrace fintech to meet technology demands As a result of technological advances, the financial technology, or "fintech" industry, has emerged, and it has changed the way banks do business, according to local bankers and experts. This shift in the banking industry pres- ents a new set of challenges for smaller, community banks, which often lack the funds and reach to stay on top of the lat- est technologies by themselves. "The pace of change in the financial services segment is much more rapid than it ever used to be," said James Lively, chair of the Massachusetts Bankers Association and president and CEO of Bridgewater Savings Bank. This has led to local banks partnering with fintech providers – from estab- lished core processors to smaller startup firms – that can propel financial institu- tions into cutting edge technologies that the modern business and consumer requires, such as mobile banking. Hudson-based Avidia Bank has teamed with a California tech company to devel- op a cloud-based payment system for its business customers while Whitinsville- based UniBank has adopted Apple Pay. "The bank as a whole is trying to embrace technology and see how that can work with our existing processes, with the availability of financial prod- ucts that we offer – basically to improve the way we can deliver products to com- mercial clientele and merchants," said Cliff Thompson, payments business development officer at Avidia. Make way for fintech The path to a booming fintech indus- try started at the beginning of the finan- cial crisis, when people started trusting their banks less, according to a December 2015 report from business consultant McKinsey & Co. After that, the Dodd- Frank Wall Street Reform and Consumer B anks have traditionally been perceived as infalli- ble ivory towers entrusted with protecting the money and assets of their customers – arguably one of the world's most stable and untouchable industries. But today's world, no business is untouchable – at least not by technology. BY LAURA FINALDI Worcester Business Journal Staff Writer Cliff Thompson, payments business development officer at Avidia Bank, helped get Avidia Pay, the bank 's new payment platform for busi- nesses, off the ground. Protection Act passed, and banks large and small were faced with the challenge of complying with its regulations. At the same time, technology started running the world, and the smartphone became a necessity. Suddenly, consum- ers had ways to pay for things by just touching their iPhone screens, and everything – from ordering food to checking email to banking – became an intensely personalized experience. Enter fintech companies, which were able to tap into a customer's desire for an easy, personal financial planning experi- ence in a tech-savvy way. Well-funded fintech startups are popping up in Silicon Valley and Boston, to name a few places, and many of them have created apps that eliminate the bank as the middleman towards, say, getting a small business loan. McKinsey estimated the number of fintech startups around the world to be 2,000 as of December 2015, a figure that more than doubled in just nine months. Venture capital investments in fintech have also increased – investors poured an estimated $12.2 billion into fintech startups in 2014, a 205-percent increase over the year before. While fintech startups offer many P H O T O S / M A T T V O L P I N I

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