Ranking 51st in American Banker’s Top 200 Publicly Traded Community Banks in 2022, Timberland Bank has been serving communities across Washington state for almost a century. With over $1.8 billion in assets, the bank recently announced a partnership with Plinqit, a digital savings tools provider which pays customers for engaging with educational materials.
Thanks to their big budgets and engineering teams, large FIs have been able to compete head-to-head with fintechs over the past couple of years. Meanwhile, community banks have had to contend with their traditional opponents as well as fintechs, with a fraction of the technical and financial prowess. In this environment, partnerships like these allow smaller banks to offer the latest and greatest in their customer experience without having to build complex solutions of their own.
Unlike most integration stories, Timberland Bank’s COO Jonathan Fischer said that the integration with Plinqit went surprisingly smoothly. “With all the integrations we've done over the last decade, it just seems like it takes a long time, but with Plinqit, it went very smoothly and very quickly,” he said.
This is partly because of the work Plinqit has put into its integration process behind the scenes. Kathleen Craig, CEO and founder of Plinqit, elaborated on their integration strategy by adding that, “Since we're all former bankers, we know how busy Jonathan and his team are with running the bank, so we try to take the lift on Plinqit’s side. We calculated an average implementation, and our goal is that it takes less than 10 hours of resources to get to testing.”
Kathleen’s experience as a banker informs more than just Plinqit’s quick integration strategy. With most users starting the automated savings program with 12-14 month goals, it seemed like a natural progression to make use of the user’s attention and speak to them about their finances.
“Banks have these beautiful websites, with great financial education content, that they're trying to get into the hands of the consumers. But unfortunately, 90% of the clients go right through the beautiful website and go into online banking,” said Kathleen. To make sure that this content finds its audience, Plinqit offers Build Skills, which pays customers for engaging with educational content. “Our hypothesis was, if we rewarded them for it, even 5 cents, 10 cents, and we put that into their savings, they'd be more likely to click,” she said.
The strategy seems to work: Plinqit as a standalone savings tool has about 5% to 10% increased engagement, and after integration with banks, that number can shoot up to 20%.
With B2C algorithmic savings tools like Hello Digit making headlines for damaging consumer financial wellbeing, banks and consumers alike can be forgiven for showing some skepticism. Unlike Hello Digit, however, Plinqit does not run on an algorithm. This is because the company wants to avoid being unpredictable.
“We don't want people to be surprised. Since they’re setting aside money because they have a big bill due and then all of a sudden our app sweeps the money out. With Plinqit, they're in control of how much they save. They set it and then they forget it. We're not coming in and grabbing surprise money from them,” she added.
The differences don’t end here – developing a B2B savings tool is a different ballgame than pushing D2C products. Since Plinqit allows banks to brand the savings experience, the company must ensure that their product follows through with strict standards for compliance. Another potential safeguard is the company’s business model. According to Kathleen, the company does not earn through end-consumers; instead, they “make money with the bank because we saved them money on these deposits and how we've structured the account. By saving on operating costs, they are then able to pay us for the platform and we don't have to monetize through the end user”.
By combining an engagement strategy that gives back with strong internal compliance policies and banking experience, Plinqit has built an example that can help set priorities straight in the fintech space.
However, these integrations would be impossible without community institutions like Timberland Bank that want to keep pushing the needle. The bank has been integrating with fintechs for the past decade, and picked up its pace as the industry grew more competitive over the past few years.
Jonathan’s approach to fintech integrations provides useful pointers for community banks looking to make a change. He offers 3 specific areas of advice:
Techies On Team: “We've been very active, going to the ICBA conventions and talking to vendors. I'm trying to find what ideas work and what might work in our environment. We have a very progressive board that has also been pushing a focus on the technology we have. Formerly, one guy worked at Apple and Hewlett Packard, and we've got a current director that works at Microsoft.”
Partner Up: “We partner with several different firms that have the expertise to do cloud migrations. We use a lot of consultants to help us to implement when needed, but we do have an excellent team. Internally, that helps as well.”
Keep Pace: “Even though 10 years ago we were adding fintech slowly, at that time we might have been looking at one or two – now we are looking at maybe 5 to 10 different integrations per year.”