Fintech offers digitized payments options for community banks

Allied Payment Network, founded in Ft. Wayne, Ind., in 2010, announced in February that 84 financial institutions on-boarded its payment product in 2024..These new clients range in assets from $10 million to more than $3 billion, including NWSB, New Washington, Ind. The 117-year-old bank goes by the motto “People you know wherever you go.” With 10 branches throughout the state, the bank is typical of the type of institution looking to digitize while continuing to offer face-to-face service.The $3.1 billion Red River Bank of Alexandria, La., is also a new client. “Although Allied is a smaller company, they are innovative and customer-centric, with a product that’s far superior to our previous provider,” Edwin Lagarde, chief innovation officer at Red River Bank, said.BankBeat spoke with Geoff Knapp, Allied’s CEO, about what makes new payment platforms profitable for community banks and how they meet customers where they are without disrupting a community bank’s culture.What are elements of new payment systems that community banks might not be aware of?Geoff Knapp: Modern payment solutions, like the ones we provide at Allied, deliver real-time capabilities, enhanced fraud prevention, and seamless integrations with digital banking platforms. The right solution can help a community bank quickly and easily scale to offer a feature set that’s on par with that of the largest financial institutions, with seamlessly integrated features like real-time bill pay, P2P, and account-to-account transfers.Some bankers feel a bit stuck, with one foot in a more traditional style of banking while looking for ways to modernize. What type of message do you have for a banker who is hesitant to “over digitize” their operation?GK: While customers increasingly expect digital-first options, offering them doesn’t have to mean sacrificing the personal touch that community banks are known for. Modern payment solutions allow banks to offer the convenience customers expect while maintaining the trusted relationships that set them apart. Instead of an all-or-nothing approach, banks can start with strategic upgrades like real-time bill pay. By making incremental changes, they stay competitive without losing touch with the values that make them who they are.Talk a little bit about security and regulatory compliance. How does your payment system satisfy the requirements of both?GK: Security and compliance are at the core of our payment solutions. We adhere to industry standards like Nacha rules, PCI-DSS compliance, and FFIEC guidelines to ensure data protection and regulatory adherence. Our platform employs multi-factor authentication, tokenization, and real-time fraud monitoring to safeguard transactions. Additionally, our solutions integrate with banks’ existing security protocols to ensure seamless compliance with evolving regulations. By staying proactive on security and regulatory changes, we provide banks with a payment system that is both robust and compliant.Pricing is a concern for community banks with limited resources. In what ways can modernizing pay systems help the bottom line?GK: While we understand how limited financial resources can be for community banks, the reality is that modernizing their payment systems can reduce operational costs and generate new revenue streams that, over a relatively short period of time, can more than recoup that initial investment. For instance, offering real-time payments can attract and retain customers, increasing deposit volume and engagement. By implementing scalable, cost-effective payment technology, community banks can enhance the customer experience without significant upfront investment, making modernization a smart financial decision.Where do you see payment systems heading? Do you think digital currency is poised to be a major factor?GK: The future of payments is, without a doubt, centered around speed, customer experience, and security. While real-time payment systems like FedNow and RTP are important advancements, banks need to realize that real-time payments are already available with certain digital banking providers, like Allied, without the need to join either FedNow or RTP.This can alleviate concerns about cost, security, and interoperability that come with those networks. By implementing real-time payments now, community banks can keep up with — and stay ahead of — customer expectations. While digital currency is gaining attention, regulatory uncertainties and adoption challenges mean it may take some time before it plays a major role in mainstream banking, if at all.