How this small black property bank is going around with fintech


An African-American bank of $ 52 million in assets in South Carolina hopes that a technological makeover can restore it to profitability and expand its services to underbanks consumers nationwide.

South Carolina Community Bank, founded in 1921, was hit hard by the financial crisis and has struggled to recover ever since. It lost $ 1.6 million in 2017, but its losses have slowed this year to $ 132,000, and it expects to be profitable by the end of the year. Part of his turnaround, according to bank executives, is a new perspective from a new CEO, an emphasis on technology and a growing network of fintech partnerships.

"As a small bank, we do not have a large budget for the innovation lab, we do not have thousands of people focused on developing products that big banks have," said Dominik Mjartan, who joined became part of the bank as president and CEO last September. "But we have some excellent partners we're working with that could really transform our ability to innovate and scale innovation."

At a recent staff meeting, Dominik Mjartan, president and CEO of the South Carolina Community Bank, conferred with colleagues.

If the bank's moves were to pay, it would be another sign of how even small institutions can use technology to increase profits and reach more customers.

A bank in transformation

The first step in the technology undertaken by the bank was to sign with Sageworks, a provider of banking software, which helped digitize and digitize its loan files. Since then, the bank has launched other modules to increase the speed and efficiency of processing loans as well as ongoing loan portfolio management.

"This was a significant incentive and cost savings that were fairly immediate because the time to handle paper files is significant," said Mjartan.

The bank is also updating its mobile banking tools to include remote deposits, immediate release debit cards, e-wallet payments, cash management for small businesses, ACH origin and wire and payroll services. To do this, the bank relies heavily on the fintech partners.

"We think it will allow us to grow, to capture customers that we are not able to reach today," he said. "We do not have a traditional banking mentality." We want to use fintech to grow our bank. "

But Mjartan argues that fintech partners also need banks to actually make a big deal.

"What some of them have understood is that they need a bank, they need a deposit," said Mjartan. "It will be much harder for them to scale their impact if they do not have access to the banking system, which is why I was interested in a bank as a platform for financial transformation empowerment services."

Mjartan says that the size of the bank advantage as they can make decisions quickly.

"For now we have sufficient capital, and we have partners who are deeply concerned about our mission and who are concerned with helping bring people excluded from the system into the system," said Mjartan. "With these things, we hope to destroy the predatory financial system by offering responsible alternatives."

One thing that fintechs are helping the bank create is "customer-centric design," said Mjartan.

"Why not let the customer design the product he wants to use?" He said. "Think about how to build a Dell computer, choose the options you want, the amount of memory you want, the type of processor you want, if you want a touch screen, why not let bank customers decide exactly what they need and build them on the spot and make sure that those parameters immediately create the product they want to use – coming to a bank and having to choose between its control and savings products, which can be overwhelming. "

A customer can choose an -statement, a debit or credit card or a small credit line. The customer can choose and choose all the banking services he wants, put them in a shopping cart, press a "checkout" button and see the cost, which could be free either $ 5 or $ 10 a month. If the customer does not like the result, he or she can reconfigure the options and press "checkout" again until they get exactly what they want for a price that is acceptable.

"It should not be that difficult," said Mjartan. "It's something that computer companies have figured out how to do – why can not we do it? If you're a low or moderate income person who has been indebted or underpaid, you need simplicity, transparency and speed – we should be able to offer it. When you get paid on Friday, you should be able to use your money on Fridays without having to borrow your money to make the payment on time.You should be able to pay your bill without having to withdraw a money order and take it to the service companies You should be able to get a one dollar loan without going to a payday lender These are just some of the things we would like to be able to offer with a simple personalized account to improve the financial life of all people, not only unbanked and underbanked. "

The roots of community development

Mjartan came neg he United States as an exchange student at 16 from the former Czechoslovakia and attended the University of Arkansas. After earning an MBA from the University of Ulster in the UK and working as a senior manager of an IT services company, he served as executive vice president at the Southern Bancorp community development bank for 12 years and managed the Community Development Fund.

During his years at Southern Bancorp, he was trying to improve the lives of low-income people in Arkansas and Mississippi. A few years ago, says Mjartan, he began to be influenced by reading the fintech trends, seeing technology as a way to improve people's lives on a scale larger than possible using a traditional community bank model.

"Southern Bancorp's approach to finance empowerment is incredibly effective, but I was looking for a way to scale the impact beyond our budget," said Mjartan

. He started looking for a bank he could buy and eventually met some South Carolina Community Bank board members at a conference.

"They had a bank that had struggled, they had largely repaired and recapitalized, and they were looking for someone to run it," said Mjartan.

The bank had been hit hard by the economic crisis.

"We are a bank owned by African-Americans," said Paul Mitchell, president of the bank. "The communities we serve are the first to feel the effects of an economic downturn and the last to recover, just like that.Most of the bad loans were generated in 2008, 2009 and 2010."

Mjartan joined the Columbia, SC, bank last year as CEO and investor.

South Carolina Community Bank was originally called the Victory Savings Bank. It is the only bank controlled by Afro-Americans of South Carolina and one of the 22 of the country. It is both a minority deposit facility and a financial institution for community development. Most of the bank's voting shares are controlled by African Americans.

A year ago, the South Carolina Community Bank was under a consensus order, but it was also healing.

"Around 2016 and 2017, we began to recapitalize the bank, selling off some of the bad assets, so we started to better manage our non-commercial assets," said Mitchell. "We were able to rehabilitate some borrowers, we made a concentrated effort to do it, we stabilized the bank to a certain extent, and when Dominik came in, he continued and gave a big boost."

Mjartan, Mitchell and the council is renaming the Optus Bank bank.

"We have explored many names," Mitchell said. "We came to that in part because" op "is part of it – great opportunities, we thought that the name had a lot of positive connotations, we wanted to be abstract and not traditional, which has just come to an agreement."

new name is being introduced and should be official in about three months. It's a way to start over and "break away from some of the inherent perceptions," Mitchell said.

The publisher of Large Penny Crosman welcomes feedback on [email protected].

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