Kasasa: Giving Community Banks the Tech to Succeed

Posted by Tim Fernholz

GOOD readers know we support community banks and credit unions, the local financial institutions that have a strong track record of providing fair banking to their customers and good service. But because of their smaller size, these institutions don’t always have the capability to invest in the technological innovation that is changing the way we bank, a challenge that hurts their chances of attracting the next generation of customers.

Bancvue, a GOOD Company Project finalist, has been working since 2004 to change that dynamic with Kasasa, an online banking site that links consumers with community banks that provide unique financial products—free checking accounts that offer cash back on purchases, high interest rates, or automatic charitable giving. Kasasa combines the virtues of community banking with cutting-edge retail banking technology. 

Last year, while reporting on online banking pioneer BankSimple, I spoke with Gabe Krajicek, Bancvue’s CEO. “What we want to do is help community financial institutions be able to give to their accountholders the same kind of seamless, integrated solution had they gone to one of the best online banks like ING or one of the more high-tech megabanks like Chase,“ Krajicek said.

Krajicek and his colleagues put together a network of more than 50 community banks under the umbrella of the Kasasa network. They also provide a suite of tech services to some 1,300 individual banking clients to help them offer the best online product possible. “It’s still about customer service, [now] what the word means is different,” he said. “Customer service is not just where your branches are located or how nice your reps are, but it’s how easy to use is your mobile application, is it available for iPad, do you have a really easy-to-use online banking system, interesting rewards that cut through the clutter, those types of services that community banks in general have not realized that they need to embrace.”

Some banks have been reluctant to join the Kasasa network, preferring to keep their own brand identity, but the folks at Bancvue believe that only collaboration between community banks will create a real shift in the banking industry. “We can see that share of deposits shifting back into community banks, [but] it’s going to be hard to make that happen unless there’s something we can all unite around,” Krajicek said. “What’s gotten them over the hump is when we’re able to go into markets where we have launched that brand, and show that institution has a 30 percent increase in the accounts… Bankers like numbers, and if you prove that numerically, they can get over the branding fear.”

And while the fear of change is perhaps most acute in community banking—home to some of the most traditional relationship banking still around—Krajicek warns of other industries that have been revolutionized by information technology with or without the consent of existing firms. If community bankers don’t adapt to digital retail banking, they’ll miss a chance to preserve the best legacies of their institutions—a focus on sustainable communities and healthy financing—in the new economy.

Photo courtesy of Kasasa