Hartford Business Journal

www.HartfordBusiness.com • September 11, 2017 • Hartford Business Journal 21 By Gregory Seay gseay@HartfordBusiness.com W ith the recent arrival of a financial-technology, or "fintech,'' company in Glastonbury, community banks and credit unions in Connecticut and New England are brac- ing for intensified competition to digitally deliver access to cash, deposits, loans and other financial services. In June, Florida digital-services provider NYMBUS opened an office at 200 Glaston- bury Blvd., with 45 employees as it prepares to debut this fall its core digital-services platform to banks and credit unions. By year end, the company will have around 75 workers in Glastonbury. NYMBUS represents the state's newest fintech entrant, but it's certainly not the only player. In fact, central Connecticut houses a small fintech cluster — including established companies like COCC in South- ington and SS&C Technologies in Windsor — whose recent growth is proof of financial institutions' quickening pace to adopt digi- tal technology that customers increasingly prefer, observers say. Connecticut's deep pool of IT talent, too, is a draw to fintechs. Their presence is matched by larger national players such as FIServe and Jack Henry & Associates, which are increasingly developing digital services that will enable banks to make their products and services cheaper, more efficient and more widely available, says Matthew Rhodes-Kropf, a Boston venture-capital investor in fintechs and other technology companies. "The (fintech) landscape is huge,'' said Rhodes-Kropf, managing director of Tecton- ic Ventures in Boston and a visiting finance professor at the Massachusetts Institute of Technology. "People are trying to reimagine banking.'' Small bank tech lifeline Financial institutions covet the kind of digital innovation in their retail-banking operations that enhance their "customer ex- periences,'' much as Amazon, Facebook and Google do, says David Mitchell, a Vernon native who is NYMBUS' president. To accomplish that, smaller, community financial lenders, with the help of fintechs, are adapting their core IT networks to do more than just track loans and checking- savings accounts, accept deposits and dis- pense or transfer funds. Banks increasingly want "smart'' networks that filter customer data so lenders can anticipate what other retail products or services consumers need, such as retirement accounts or financial- planning services, before they ask for them. "We are laser-focused on helping these community financial institutions not just survive but thrive in this Digital Age,'' Mitchell said. "In the end, community banks and credit unions are the pillars of our local communities, aren't they?" With so many nonbank options available to consumers online, traditional brick-and- mortar financial institutions, especially smaller, community lenders, are finding that their older, legacy IT networks are not fully up to competing for consumers in the digital era, Mitchell said. While large, money-center institutions like Bank of America, JPMorgan Chase Bank and Wells Fargo Bank can afford armies of in-house product and app developers, fintechs offer the same to smaller institutions at a frac- tion of that cost, fintech experts say. Moreover, the shrinking numbers of U.S. banks and credit unions have lent a sense of urgency to fintechs. Connecticut counts some 40 community banks — about half as many as in 1994. For survivors, the chal- lenge is having enough capital to invest in digital technology. Fintechs can level the competitive playing field for smaller financial institutions, said New England technology entrepreneur Louis Hernandez Jr., who co-founded Rocky Hill digital-payments facilitator Payveris and Open Solutions Inc. (OSI) in Glastonbury, which was eventually bought by FiServ. He continues to invest in technology via his Digital Transformation CT fintechs reimagining the banking landscape NYMBUS President David Mitchell says financial-technology services providers, or "fintechs'', like his aim to assist smaller, community banks in Connecticut and New England move deeper into the Digital Age. HBJ PHOTO | STEVE LASCHEVER Continued on next page BY THE NUMBERS Fintechs' Growth 38% The percentage increase in venture capital raised by financial technology companies during the second quarter of 2017. $5.19B The total venture capital raised by fintechs during the second quarter of 2017. 19% The projected increase in fintech venture capital investment in 2017 compared to 2016. Source: CB Insights

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