Florida-based Locality Bank is partnering with banking core vendor Nymbus to provide integrated digital banking services to small business customers, launching this month with a focus on cloud-native community banking and lending.

The $35 million challenger bank also has a physical branch for hybrid customers, Chief Technology Officer Corey LeBlanc told Bank Automation News.

“We’re trying to build a community bank that can serve the businesses and areas on a path that they’re expecting,” LeBlanc said. “That means a digital-native component and a set of tools that empowers them to be more successful.”

API-enablement for insights, innovations

Locality Bank’s first priority was selecting a core vendor that could provide an integrative digital banking experience for back-end and customer-facing processes.

“When we started vetting that initial core provider, along with mobile and online banking applications, there were quite a few options,” LeBlanc told BAN. “However, there were not a lot of options that were fleshed out, where we could go build a commercial banking platform without having to go back to a legacy infrastructure and architecture company.”

Nymbus offered an “end-to-end” digital banking core, with application programming interface (API) integration providing opportunities to test and incubate systems with partnered institutions and fintechs. Pre-existing APIs, both public and private, work into the bank’s processes, while Locality-built APIs can be published into the system, fostering a symbiotic banking environment.

“We have the ability to work directly with their development team to build into an open API library, so we can start to write custom APIs that we can then publish,” LeBlanc said.

Locality leveraged Nymbus’ digital toolkit to bypass traditional issues in the challenger bank space, avoiding a costly digital build on a brand-new framework.

“Instead of us hiring a ton of staff to put the hardware and software in place to support that API integration, we were able to use their system to get up and running,” LeBlanc said. “It’s not just public APIs. There are private APIs, and there are layers on the customer level that give us the ability to control and move for ourselves.”

Challenges for digital-first banks

There are a host of “glaring” challenges in launching and operating a digital-first challenger bank, LeBlanc said.

“When you build off modern architecture, and these systems that haven’t been around for 20-plus years, traditional processes and systems have to be baked in and tested,” he said.

The bank tweaked and iterated its systems regularly in the days following the launch, working with “strategic customers” to test and implement processes, LeBlanc said, adding that while new banking automations provide exciting opportunities for banks and customers, the innovations themselves can be a challenge without an existing model.

“In some cases, money hasn’t moved on these rails this way, or one system has never connected with this other system before. And so, there’s challenges there,” he said.

Challenger banks must account for both large banks with capital to make major digital investments and community banks that know the local area and maintain long-term relationships with customers, LeBlanc said. To compete, challenger banks should focus on digital innovation and iteration based on ebbs and flows in the environment.

“The version of the product that we’re going to launch on day one, and the version we’re going to launch on day 90 or day 365 is going to be different,” he said. “It’s going to keep adjusting with those customer needs as well.”

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