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On Friday, December 8, 2023, at 10:00 a.m. (ET) Subcommittee on Digital Assets, Financial Technology and Inclusion Chair Congressman Hill and Ranking Member Congressman Lynch will hold a hearing entitled, “Field Hearing: Connecting Communities: Building Innovation Ecosystems Across America."
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Witnesses for this one-panel hearing will be:
• Arthur Orduña, Executive Director, The Venture Center
• Joel Wheelis, Senior Vice President, Head of Products and Services for Banking Large Financial Institutions, FIS Global
• Susannah Marshall, Arkansas Bank Commissioner and Securities Commissioner
• Ravi Loganathan, Head, Financial Institution Services and President, SardineX Consortium
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Fintech’s Role in Helping Build and Support Communities
Emerging financial technology companies (fintechs) are offering alternative financial products to meet evolving consumer demand. The term “fintech” is broad, encompassing a range of technologies across the financial services sector. Generally, a fintech firm employs technology to support financial services for consumers or businesses by offering financial products in a new or novel way. Many established financial institutions have utilized technology or worked with a fintech firm to both enhance their services and reach new customers. Similar to traditional financial products, there is a broad range of services offered by fintechs. Fintech firms may offer products and services in a variety of segments of financial services - including payments, insurance, regulatory and supervisory functions, cybersecurity, among others.
As a result of the services that fintechs provide, there has been an evolution in consumer preference and rapid growth in the number of payment products offered by fintech firms. Although banks initially viewed fintechs as disruptive, they are now partnering with these companies to develop enhanced and customized products for customers, employ faster payments, and improve efficiency in their operations. These partnerships are not limited to specific subsets of banks. In fact, according to Federal Reserve Governor, Michelle Bowman, “small banks tend to be more reliant on third-party relationships to support innovation, including the critical relationship between small banks and their core service providers.” Given the valuable role that small banks play in the U.S. financial system and the communities they serve, the role that bank fintech partnerships play in small communities across the United States cannot be understated.
Bank fintech partnerships are becoming increasingly prevalent in the state of Arkansas. The Venture Center, which is located in Little Rock, hosts a fintech accelerator, FIS Fintech Accelerator Program. These accelerators are focused on bolstering fintech’s presence in the state and enhancing opportunities for fintechs to partner with financial institutions. Moreover, several state banks have also launched successful partnerships with fintech companies. For example, First National Bank of North Arkansas partnered with Teslar Software to enhance its commercial lending operations.
Local Communities’ Efforts to Foster Innovation
Despite the various geographical, regulatory, and demographic challenges associated with fintechs and their funding options, communities across the United States have recognized the benefits these partnerships bring to their small businesses and communities. Incubators, accelerators, and venture centers have emerged across the United States to help facilitate innovation that bring solutions to the various challenges facing these towns and cities.
Incubators and Accelerators
Incubators and accelerators reduce the risk of early-stage startup failure by helping teams find a product/market fit and raise initial capital. Most are founded and run by experienced entrepreneurs that have previously built companies and who understand the difference between theory and practice. Although these terms are often used interchangeably, there are slight differences between accelerators and incubators. Accelerators “accelerate” growth of an existing company, while incubators “incubate” disruptive ideas with hopes of building out a business model and company. Thus, accelerators focus on scaling a business while incubators are often more focused on cultivating innovative ideas.
Generally speaking, accelerators typically offer a group of start-ups a six- to 12-week bootcamp. These start-ups must have founders who have a business model and a team...
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Hearing page: democrats-fina...
28 окт 2024
