our innovation office hours, we learned that a wide range of partnership models are emerging, with varying benefits and challenges. some banks are engaged in customer - oriented partnerships, where a bank selects a fintech partner to improve the customer experience, develop new products or services, or acquire new customers. in one case, a bank partnered with a fintech company to centralize each customer ’ s financial data and provide personal financial management tools. other banks are engaging fintech partners to automate or improve the efficiency and effectiveness of compliance and regulatory processes, which is often referred to as “ regtech. ” for example, a fintech partner automating the bank secrecy act / anti - money - laundering process may be able to provide notable cost savings and enhance compliance, while freeing up resources for other areas. we have also seen instances where a bank offers its financial services to a fintech partner that, in turn, offers financial products or services to its customers. in this type of relationship, a bank plays an important part in the delivery of products and services. the list goes on. my point is there is great possibility and a wide variety of options for engagement. and everyone, from the banks to customers to the regulators, needs to be thinking about these changes and their implications. with the emergence of additional core - service providers, we are also seeing more opportunities for community banks to access the technology infrastructure they need to improve basic banking activities. these basic banking activities include tasks like reconciling transactions to the general ledger or simply offering expanded digital services. furthermore, there are new opportunities for integration of cloud - based platforms and apis. community banks should take advantage of the new technologies that make sense for their business and the communities they serve. still, even as community banks prepare for the future, there is the very real challenge of finding partners and knowing how to navigate the regulatory environment once an institution has identified a potential partnership arrangement. we certainly understand this concern. from the fintech perspective, one provider noted the challenges they face during the onboarding process with financial institutions, including struggles to navigate siloed compliance and risk - management functions. participants in the fed ’ s innovation office hours told us that they would benefit from the fed broadly sharing information on the current landscape of such partnerships, on a range of practices, and on relevant guidance for banks to consider. in response, early next year we plan to publish a white paper that documents examples of community bank partnerships with fintech companies and outlines effective practices

is a necessary constraint – the main key to success, however, is a smart business model that is built to last. ladies and gentlemen, the “ new normal ” is forcing institutions to rethink their business models and management approaches. it is a setting in which the cake is continuing to shrink. logically, cake recipes and their preparation look set to become all the more challenging – but saying that, i firmly believe that the cakes of tomorrow not only have to be tastier ; they should also be more palatable for customers, the real economy, supervisors and the banks themselves. all of you here today are working on these new and improved recipes, and while there is still some way to go, i am in no doubt you are on the right track to come up with successful recipes. thank you for your attention. 1 dombret, andreas ( 2016 ) : digitalisation – repercussions for banks and their supervisors. speech delivered at the 16th norddeutscher bankentag at leuphana university 2016. www. bundesbank. de / redaktion / en / reden / 2016 / 2016 _ 06 _ 08 _ dombret. html 4 / 4 luneburg, june bis central bankers'speeches