{"id":7062,"date":"2020-06-17T02:35:23","date_gmt":"2020-06-17T02:35:23","guid":{"rendered":"http:\/\/www-staging.carta.com\/sg\/?p=7062"},"modified":"2021-03-05T06:54:48","modified_gmt":"2021-03-05T06:54:48","slug":"why-tech-partners-with-community-banks","status":"publish","type":"post","link":"https:\/\/www-staging.carta.com\/sg\/blog\/why-fintechs-partner-with-community-banks\/","title":{"rendered":"Why fintechs partner with community banks"},"content":{"rendered":"\t\t
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As fintech and banking infrastructure has evolved, more and more tech companies are entering the banking space. Companies like Wealthfront, Credit Karma, and Betterment have been disrupting the financial services industry since the mid 2000s, but now, even consumer companies like Apple and Uber offer credit or debit cards, with rumors more will soon follow suit<\/a>.<\/p>\n

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Even though fintech companies allow their customers to borrow, lend, spend, save, and invest, they\u2019re not banks. Meeting the capital, regulatory, and insurance requirements to start a bank is often too difficult for startups. So fintech companies partner with banks to reduce certain regulatory and compliance risks. But massive, traditional banks and innovative, fast-moving startups don\u2019t usually see eye-to-eye.<\/p>\n

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Instead of partnering with banking behemoths, tech companies like Stripe,1<\/a><\/sup> Affirm,2<\/a><\/sup> Robinhood,3<\/a><\/sup> and now Carta<\/a> partner with community banks to meet growing demand for new financial products.<\/p>\n

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What is a community bank?<\/h2>\n

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Traditional definitions of a community bank have focused on where and how the bank does business; for example, whether it\u2019s limited to a geographic region or focuses on relationship lending. <\/p>\n

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The FDIC looks at several criteria to decide whether a bank can opt into special regulatory frameworks for community banks. According to the FDIC, community banks have a leverage ratio of greater than 9% and less than $10B in consolidated assets, and meet some other criteria, including limited amounts of off-balance sheet exposure.4<\/a><\/sup><\/p>\n

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When Carta decided to offer capital call loans, we considered a traditional bank, but we found that traditional banks were elitist, slow, and had trouble integrating with our technology. Instead, we decided to partner with Coastal Community Bank<\/a>, Member FDIC.<\/p>\n

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Community banks are ideal tech partners for a few key reasons:<\/p>\n

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