Jason Henrichs, CEO The digital-first world upended banking. Leading banks that digitized products and processes to meet new customer expectations quickly realized going digital is not enough. The industry is going through a fundamental transformation. Small and mid-sized banks that don’t have access to the same resources as large institutions, venturefunded startups, or encroaching players from adjacent industries need a new playbook to thrive in the digital era.
Enter Alloy Labs, a consortium of community and mid-size banks that work together to more efficiently keep up in the digital arms race and reinvent what it means to be a bank.
A New Playbook
“Our first conversation with a bank CIO often starts with them asking the question ‘what vendor should I use?’” says JP Nicols, co-founder of Alloy Labs, “But that question can’t be answered without revisiting the fundamental bank strategy.”
“Innovation and technology are often used interchangeably,” continued Jason Henrichs, the consortium’s CEO. “Innovation is about doing new things to drive growth, deepen customer engagement, or expand the bank’s business; technology is just part of the equation.”
The pursuit of innovation takes many forms, from creating internal innovation teams to participating in accelerator programs. For resource-constrained organizations that need to execute on their existing business and upgrade the technical infrastructure, innovation often ends up at the bottom of the to-do list. Investing in venture capital funds or joining business accelerators may check the “innovation box” for some, but these activities don’t often drive results.
Alloy Labs takes a fundamentally different approach that focuses on tangible outcomes. Banks participate in workgroups and Centers of Excellence that align with their strategic objectives. Work is the operative word as there are no bystanders in the consortium, just bankers rolling up their sleeves to work on projects of mutual interest.
Members express that being part of the Alliance isn’t something extra on their plate, but a way to accelerate their operating tempo while taking advantage of the group’s collective knowledge. Outcomes have included partnerships with startups and incumbent players that want to leverage the scale and speed of Alloy Labs, the development of industry standards for Banking as a Service, and best practices for Third Party Due Diligence, to name a few.
What Sets Alloy Labs Apart
Most innovation models focus on either the exchange of ideas or bringing banks and startups into close proximity. Alloy Labs flips the model and starts with collectively defining the problem to be solved and what insights can be leveraged, and only then begins to look for partners.
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Actions are greater than words, and outcomes are greater than actions
“We have an extensive venture capital and entrepreneur network we leverage to get access to market leaders and emerging stars,” said Henrichs. “Our value-add makes us a preferred partner for both startups and investors.”
Part of this value-add is a reverse accelerator that builds partnerships with startups outside of traditional banktech. Alloy Labs also runs a multi-tenant corporate venture capital fund to make strategic investments in partners and startups that can yield strategic insights into where the industry is going.
“Alloy Labs is a key to our continued success as we accelerate the pace at which our bank innovates,” said Julie Thurlow, CEO of Reading Cooperative Bank and Vice Chair of the American Banker Association. “The tagline ‘Banking, Unbound.’ is very fitting as we push the boundaries of what we can accomplish by working together.”