As smaller community banks create or upgrade digital banking systems for their customers, many are turning to third-party fintechs for help. One example is Sage Capital Bank, a Texas-based community financial institution that recently announced that the software company Apiture would power its online and mobile banking by the end of 2025.
Sage Capital, which has $700 million of assets, selected Apiture in large part because its technology aligned well with Sage Capital's API middleware and core systems vendor Fiserv.
"The technology fits our strategy for digital innovation," said Sage Capital Chief Technology Officer Gene Stroman. "Apiture had just recently performed an integration through that middleware for another banking customer, and getting away from legacy integration and going to an API-first mindset was part of the digital strategy."
Apiture's technology runs exclusively on the Amazon Web Services cloud. The code is updated monthly and pushed out to Apiture's clients through the cloud integration. Apiture also uses React Native to build mobile bank applications for iOS and Android operating systems.
Apiture Chief Revenue Officer Matt Ellis said the company best serves banks and credit unions with total assets between $500 million and $5 billion, a range that Sage Capital falls into. Sage Capital will also be using Apiture products in fraud detection and data analytics.
"Functionally, the product that we have is going to allow those banks and credit unions to compete with both regional competitors and national competitors," Ellis said. "We work really, really hard to make sure that our customers know that their success is our success."
Digital transformation has now become a top priority for smaller community banks, according to Market Insights senior strategist Jim Perry.
"I think there are a lot of banks that are hitting the panic button," Perry said. "As we came out of the pandemic and there was sufficient evidence of how consumer behavior had changed, many smaller banks all of a sudden realized, wow, we are really playing catch up right now."
Customers are now interacting with their banking institutions in primarily a digital form, with a recent
Sage Capital Bank's upgrade of its online and mobile banking systems through Apiture comes at a time when many small banks are adapting to that consumer demand for digital banking options.
"If you're a small institution, if you've been waiting to really upgrade your mobile app, or to upgrade your online banking, you've got to stop and and realize the degree to which our customer behavior has really shifted when you start talking about 80% of people now preferring to actually do their banking online or on mobile," Perry said.
Digital banking upgrades also allow community banks to remove potential barriers for account growth, as Sage Capital Bank identified when it attempted to grow its market share in recent years and ran into some challenges with its legacy digital platform.
"What we have encountered over the last few years is that digital banking was becoming a barrier to growth, especially on the commercial and cash management side," Stroman said. "We would have opportunities as a pretty heavy CRE lender to bring operating accounts and things of that nature, and yet we did not necessarily have all of the pieces of technology we needed to service those deposit relationships. We're looking at Apiture not just as digital innovation but as a way to remove some growth barriers in our local markets."
For many banks, digital banking upgrades are motivated more by a need to improve efficiency than a need to grow, Perry said.
"If Sage Capital is improving its online digital experience and mobile app, that's great," Perry said. "It's going to help not only retain customers that they have, but it may even help them attract some in their market area that they haven't been able to up until this point. But one of the biggest areas for operational improvement through fintech partnerships and third-party partnerships is going to be increasing those kinds of operational efficiencies so that they can actually grow by working better and working smarter."
"There are any number of partnerships available to smaller banks these days that can help improve their operational efficiency," Perry continued. "That's one of the largest areas that's going to help them remain competitive."
