SAN FRANCISCO — Regional banks and credit unions should redefine what it means to be a “community” financial institution when considering new technologies to tap into underserved customer groups.  

“I love the idea of changing the way we think about community banks from, instead of the community that’s near us, is there a niche community of customers where we’re not meeting their needs?” Rilla Delorier, a board member at Coastal Community Bank, said Tuesday at Finovate Spring 2023.  

Financial institutions can change their value proposition by changing a policy or process, or adding data or technology to serve underserved communities, Delorier said. 

“With digital, [customers] don’t have to live within three miles of your branch, they can be anywhere,” she said.

Banks and credit unions should look at the customers they naturally attract and then implement intentional strategies to build out that customer base, Delorier said.  

For example, general contractors (GCs) use a product called Blueprint, which helps them pay their [subcontractors], manage their time and accounts payable and get a loan on site, Delorier said.  

“Word of mouth has spread like crazy,” Delorier said. “Every GC says, ‘I need that. I don’t want to deal with a traditional bank.’”

Another example is a company called Propel, which began as an app to help customers see their food stamp balances and now offers banking services, job postings and opportunities for upskilling.  

“[Propel] has gone from just meeting an unmet need to creating now a loop system of support for a population that also makes a bunch of money,” Delorier said.  

Still, financial institutions need to ensure they remain diversified to avoid a situation like Silicon Valley Bank, Delorier said.  

“They took this [strategy] way too far,” she said. “A year ago at this conference, we were celebrating them. They took the idea of niche strategy and they did it really well, but the problem was they weren’t diversified.”

Editor’s note: This article first appeared on Auto Finance News, a sister publication to Bank Automation News.