Traditional banks have been at the receiving end from fintechs and Neobanks. This has created a difficult scenario for the banking sector. Even in this situation, it is possible to build a modern hybrid bank that works on a digital-first basis. A bank in Florida has done this successfully and is now offering a model for others to emulate observed Bahaa Abdul Hussein.
The importance of a hybrid bank
A hybrid bank is one that combines the features of a traditional community bank but is modern with a digital-first approach. The need for a hybrid bank comes from the fact that businesses are feeling the need for community banks to be back in operation. The difficulty in getting financing has led to businesses feeling this way.
At the same, many community banks wound up mainly because they could innovate and cater to changing requirements. This created an opening for a new community bank that is modern. Such a bank would extensively use technology to offer services to clients.
Modern banks are no longer community-oriented focusing mainly on technology. Hybrid banks can fill this gap. The banks would reach out to local communities and serve them, so their needs are met. At the same time, it would use technology to optimize operations.
How it works?
Technology is the key in today’s world. Banks need to partner with technology providers who can help them create a core banking system. It is important to find a partner who understands both technology and banking. This would ensure a perfect partnership where both partners benefit.
A hybrid bank needs to be different from other community banks, if they have to thrive. They can do this offering a wide range of financial services, something others don’t do. Technology can help them do this in the best possible way. When they use technology in the right way, they can use customer data to engage better with customers.
An innovative way in which they can reduce costs is by now having an ATM network. They can instead ask customers to use other ATMs. They can then reimburse the customer fees charged by the ATM. In the process, they allow customers flexibility to use any ATM. At the same time, they can avoid spending big money on setting up ATMs.
This doesn’t mean physical banking can be dropped. Customers still prefer a physical bank where they can talk to a real person. With minimum manpower, such banks can focus more on building relationships.
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