Writer: Max Crampton-Thomas
2 min read May 2021 — TCM Bank, N.A., a subsidiary of ICBA Bancard, serves as a trusted adviser to community banks, helping build and strengthen customer relationships with a market competitive and fully branded consumer and business credit card agent program. President and CEO Damon Moorer spoke with Invest: about the bank’s role in the community lender segment, while also addressing the impact from low interest rates and the PPP loan program.
How does TCM Bank fit into the community banking sector?
The credit card market is highly competitive. A credit card program requires a highly specialized skill set to offer and manage. The recent adoption of mobile, contactless and other payment features has also accelerated.
A community bank that wants to offer a competitive and dynamic credit card program may not have resources to do so. This is where TCM Bank comes in. TCM is a credit card only community bank that offers customizable credit card programs to community banks across the country. Our solutions provide our clients the ability to compete directly with national issuers while providing the high touch customer service community banks are known for.
What is the impact of the historically low interest rates for banks and how is TCM dealing with that?
The low interest rate environment compresses Net Interest Margin highlighting the need for a diverse product suite. Many payment products meet consumer needs and generate non-interest income. Utilization and spend can help offset the deficit created by the current low rate environment. Banks and merchants have the ability to reduce friction and increase customer satisfaction by supporting Account on File transactions (card stored at a merchant). Merchants offer the ability to authorize recurring payments at a set frequency and dollar amount. This allows a consumer or end user to set up a payment once and future payments will automatically take place without further intervention. One of our goals at TCM is to highlight the benefits of Account on File transactions as part of our overall business strategy.
How important a role did community banks play in the PPP loan program and its impact?
During this pandemic, community banks have been the nation’s economic first responders. The community bank industry quickly moved funds to where they were needed to get the economy afloat. We were able to respond to the needs of local businesses because as relationship lenders, we have a deep understanding of our clients and communities.
The economy is built on Main Street with small and mid-size businesses accounting for more than 60% of new job creation. We are now beginning to see signs of recovery, in part due to the hard work of the community bank industry. If it weren’t for our nation’s community banks, I do not think we would have a positive economic outlook at this point in time.
What is the impact of bigger banks’ growth in smaller communities?
I do not believe bigger banks will push out community banks. I remember five years ago when Fintech firms emerged and pundits were predicting the demise of the community banking sector. Not only are we still here but we’re thriving. In many cases, Fintech firms and community banks have partnered to meet consumer demand for ease, speed and convenience. There’s an engagement between the community and community banking that cannot be replicated or replaced. Adopting high tech but maintaining high touch will ensure community banks are here to stay.
How are crypto currencies going to further disrupt the banking and payments space?
There has been some market disruption as crypto currency acquisition and acceptance increases. It is hard to ignore the fact, crypto’s now exceed $1T in market cap. I think crypto is here to stay and it will continue to evolve. The banking sector has taken notice and numerous discussions are across the industry. A few banks are becoming a trusted vehicle to purchase crypto currency or offering crypto currency as a reward option. That being said, one data incident could still devastate the entire market so long term stability will be the key to how things play out.
What are your outlooks for the banking and payments industry?
My outlook is continued ideation and innovation. Meeting customer expectations in new and exciting ways. We are in a digital first world – convenient, fast, and frictionless. Community banks also have the ability to use deep customer insight to proactively provide timely and prescriptive solutions. When life in general normalizes, our industry will have a great opportunity to leverage lessons learned and respond to pent up demand. The year 2020 accelerated the addition of digital solutions and improved market agility, which will serve us well going forward. I believe we will see a strong economic recovery and I am optimistic for the future of the banking industry.
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