One Bank’s ‘Calculated Chance’ with an Unproven Partner

Some community banks have decided that it’s not enough to buy a fintech solution off the shelf – they go big with a partnership.

Many community banks still hesitate to work with emerging technology companies, despite signs that the sector is maturing. While there’s no shortage of risks to consider when embarking on a new project with a new company, there are times when partnering with a newer company not only makes sense – it creates big opportunities.

Woburn, Massachusetts-based Northern Bank & Trust Company wanted to connect its core, customer relationship management (CRM) software and loan origination system together so it could automate the loan-booking process. It started the normal proposal process, talking with several of the recommended, “more-traditional” integration companies, says Warren Brown, vice president and head of emerging markets for the $2.2 billion asset bank.

“Ultimately we were dissatisfied with costs, time and their understanding of what was required,” he says. “They were talking about cost and time estimates that really didn’t make sense. And so that’s what got us looking further afield.”

Northern’s search eventually led it to Sandbox Banking, a Boston-based technology company that built a “universal adapter” to connect any banking system or software. The concept was impressive, but the Sandbox team was clear in early discussions that they didn’t have experience with the bank’s CRM software or core system. While this gap might have put the kibosh on a deal for other banks, Northern identified a culture and attitudinal fit with Sandbox that trumped those concerns. They decided to keep talking.

“As I talked to Sandbox about their approach and how they were thinking about things, it just felt like there was a good commonality, in terms of our belief in trying to do the right thing and get things done right,” he says.

There are three reasons why the executives were ultimately comfortable with selecting Sandbox, which could serve as an interesting guide to other banks.

First, Northern had “looked hard elsewhere” and found traditional options lacking, Brown says.

Second, the bank had an immediate need and support from stakeholders in the bank. We “had business users who were saying, ‘we need this, and we need it yesterday,’” he says. “There was a hunger to get something done and the business users were willing to invest their time and expertise in supporting the development process.”

Third, Northern had the talent to manage the project. The bank had been building a small, internal technology team that knew the CRM system well and had experience managing contract development.

“As banks, we all have the same restrictions and controls. But our DNA is: If we think it’s a good risk – if we think it’s a good opportunity – we’re willing to take some calculated chances,” he says.

After a lot of candid discussions, the bank decided to partner up with Sandbox for the project. The gamble paid off.

Automated loan booking has significantly reduced manual data entry, and the days of entering an address multiple times in multiple different systems are gone. The month-end loan booking – which could take up to 2 weeks – now takes just 1 or 2 days, with fewer errors.

“We took a bit of a chance, to be quite honest,” Brown says. “We’re very happy that we did.”

Other banks have had similar success partnering with an emerging technology company. On Aug. 11, Bank Director’s Best of FinXTech Awards recognized technology companies in the FinXTech Connect platform that proved they can help banks gain efficiency, grow revenue and stay secure.

Sandbox Banking won the “Best In Connect” category, which awarded partnerships where a bank and technology company co-created, customized or collaborated on a project. Treasury Prime and HT Mobile Apps were recognized as finalists. In all three partnerships, banks and technologies worked together to build entirely new products. While this is a gutsy move, it just might be the right one for banks with a clear, specific need and the talent to manage the project.


Amber Buker

Amber Buker is the program director of FinXTech Connect, a curated online directory of bank-friendly fintech companies. She conducts interviews with senior bank leaders and technology executives, writes profiles on fintech companies and maintains a database of information that helps banks source potential technology partners. Prior to Bank Director, Amber served as the Program Director for the Arts & Business Council of Greater Nashville. She earned her Juris Doctor with honors and a certificate in intellectual property from Lewis and Clark Law School in 2015 and holds a bachelor’s degree in Psychology from Northeastern State University. Amber is a member of the Tennessee Bar Association, where she serves on the Executive Council of the LGBT Section of the state bar.