“While ICBA has not fully reviewed the 1,700-page rule, the bureau has exempted thousands of community banks from the onerous full-payment test or the principal-payoff option, consistent with ICBA’s recommendation,” Fine said. “Any lender that makes 2,500 or fewer covered short-term or bal-loon-payment small-dollar loans per year and derives no more than 10 percent of its revenue from such loans is excluded from these requirements.” FORGING AHEAD, AGILITY AND TECHNOLOGY WILL BE KEY FOR BANKS BY MICHAEL SCHEIBACH, EXECUTIVE EDITOR C ommunity banks, already grappling with the impact of millennials and regulatory compliance, are now caught in the middle of a technology “arms race” between the mega banks and the new wave of fi ntech start-ups — each moving ahead aggressively to off er next-generation services across multiple channels to an increasingly digital-fi rst con-sumer. Moreover, the OCC’s recent decision to off er special-purpose national charters to fi ntech companies only adds to the challenge facing community banks, which, in simple terms, is to develop an eff ective strategy that enhances the ability to com-pete as they transition to the digital age of banking. “Th e OCC’s decision is a sign of the times,” said William Moss, chief executive offi cer of COBIS Systems Corp. (www. cobiscorp.com), a fi nancial software company. “Th e reality is that the banking sector is changing very rapidly as new online platforms keep entering the market to off er fi nancial services. Th ese new companies present real challenges to the legacy banks, which, in reality, cannot hide behind a ‘regula-tory moat’; they must instead confront the challenge with innovative thinking.” Th ese hyper-focused fi ntech start-ups are unleashing new so-lutions at an exponential rate to counter the massive technology fi repower of mega banks. Yet despite all this, community banks are well-positioned to compete if they understand that it is not about being all things to all people. “As technology continues evolving,” said Moss, “it is about building a strategy that highlights what the bank is really good at, and then matching that capability with profi table market seg-ments. Th is niche approach may make the bank smaller in the short run, but ultimately also more effi cient and profi table. Th ere is much that needs to be done, however, and while many com-munity banks are embracing the opportunity that innovation of-fers, too many are still not fully understanding the challenge that technology disruption presents to the banking sector.” Many community banks, for example, are circumventing their core systems as they add new digital products and services, but sooner or later their digital strategy also must encompass updat-ing the core platform, according to Moss. Although a bank’s strategic priorities may not have core platform modernization at the top, many institutions will fi nd at some point that the work-arounds are not ideal and that to become truly digital, their core platform — often built on very old technology — needs modernization, too. “First and foremost, banks must develop a comprehensive 24-month strategy that identifies their goals and objec-tives,” said Moss. “Once these are identified, then banks can outline the technologies — and the agile methods — with which to execute them. In our experience and opinion, be-coming ‘digital’ is about having a technology platform that can rapidly configure and deliver robust banking products and services that address real client needs, anytime and anyplace, in a fast, automated manner that generates an excellent user-experience.” Th e successful bank of the future, in the words of Moss, “is an agile, technology-driven organization that excels as a niche player, thoroughly understanding client needs and attend-ing them in a superior way with fi nancial services delivered wherever and however the client wants them.” He believes the branch will be in the smartphone that everyone carries in their pockets today, as physical locations become less prevalent. And by becoming more agile and technology-driven, banks will be better able to respond to market opportunities while maintain-ing cost-eff ective and effi cient operations. “Make no mistake, however. Th is is only the beginning,” Moss added. “Banks must continue forging ahead with a strategy that will eventually lead them into becoming a more tech-driven operation from the front offi ce to the back offi ce. Ultimately, there might not be as many banks in the future. But those that move fi rst, move fast and move consistently toward innovation will be stronger and more successful.” For Bank Board Letter subscription information, visit www.BankNews.com or contact Kristi Wagner, firstname.lastname@example.org or 800-336-1120, Ext. 7053. Annual subscription: $74. Published by BankNews Media • 5125 Roe Blvd., Ste. 200, Shawnee Mission, KS 66205-2391 800-336-1120 • www.BankNews.com All rights reserved. Reproduction in whole or in part forbidden.