Torpago founder and CEO Brent Jackson recently made an appearance on Nasdaq Trade Talks. Brent joined host Jill Malandrino on Nasdaq TradeTalks to discuss the advantages community banks and credit unions have when compared to larger banks and his thoughts on where the banking industry is going.
Impact of the March 2023 crisis on regional banks
The conversation began with a discussion of the impact of the March 2023 bank crisis, which was initiated by the collapse of Silicon Valley Bank, on community banks.
Brent commented that in the wake of that crisis, community banks have been focused on retaining and growing deposit bases following the collapse. However, he doesn’t see their primary approach for that – increased deposit rates – as a sustainable growth differentiator in the long term.
Instead, he believes banks need to focus more on people, technology, and products to improve their holistic proposition in notable ways. In Brent’s view, the banks that reach this goal will become more attractive to customers and succeed in the marketplace.
Recent community bank ratings downgrade
When asked about Moody’s recent downgrade of several small and medium banks, Brent cited commercial real estate exposure as the primary impetus of the move, with additional impact from net margin compression caused by rising interest rates.
In his view, banks will need to increase non-interest revenue streams going forward from sources such as credit card programs and software fees – a challenge Torpago is helping banks solve with our Powered By program.
Advantages of community banks
On the subject of the advantages that community banks have over larger competitors, Brent highlighted their ability make decisions and innovate more quickly - when properly motivated.
Where are business credit programs falling short?
One of the key limiting factors Brent called out regarding banks’ business credit offerings is the legacy infrastructure that powers many of their programs, which limits the technology functions they can offer. As a result, these systems cannot offer functionalities common among consumer credit cards, such as the ability to add a card to a digital wallet.
He believes banks are struggling partly because they cannot offer these technology features to prospective and existing customers, a problem that our Powered By module was created to solve.
Brent shared with Jill that this need for modernized banking infrastructure was noticed during the development of the Torpago business credit card program. The learnings from that effort guided the creation of Powered By as an end-to-end solution for launching fully-branded credit card and software programs to offer to their customers.
Trends in banking in the next few years
Lastly, Jill asked Brent what his thoughts were on the trends in banking in the next few years.
Brent once again commented that he sees consolidation coming to the sector, with bigger banks that are currently on the sidelines starting to acquire smaller banks as well as fintechs in the near future. Many fintechs have aquired significant numbers of customers in recent years and, they are increasingly looking like attractive acquisition targets.
Additionally, Brent believes modernization will be a big trend, with banks of all sizes looking to beef up their infrastructure. This wave of new technology and modernization will help banks capture more deposits, get more customers, and generate additional revenue.
Get Powered By for Your Bank
If you’re looking to upgrade your bank’s business credit card program or to add spend management to your offerings, Powered By will help you get set up and launched quickly and easily. Request a demo today to learn more about its capabilities and integrations!
