Southern Bancorp’s innovation division is looking to gain a competitive edge against larger financial institutions by developing products specifically for the communities it serves.

The $2.5 billion Arkansas-based bank decided “we better get focused,” Vance Smiley, chief of enterprise operations and integration at Southern Bancorp, told Bank Automation News, noting the bank will “have real trouble competing selling commodities against Bank of America. … Selling the checking accounts that are basically the same with some bells and whistles on it against the big folks is probably not a good, viable, long-term business.”

That’s how the bank decided to focus on its unique client base, including the needs of nurses and teachers, through its TeamWALT innovation division, Smiley said.

TeamWALT

TeamWALT: The wealth-accumulation and lifestyle technology team at the bank is focused on pinpointing client needs and developing ideas in a 90-120-day period, Southern Bancorp Chief Executive Darrin Williams said. The innovations are built on the bank’s cloud-based core processor, System 61, partially owned by the bank, Smiley said.

To create the team, “we go hire young people and we say, ‘Pretend you know nothing about a bank. What would you build?’ and this [is how] you come up with these random ideas,” Vance said, noting that three such ideas have been deployed.

For example, the bank introduced automated savings app Wealthable and savings game Envie Envelope Challenge, which each launched in less than 120 days, Smiley said.

Wealthable, which remains in testing on the app store, has $600,000 in deposits within the app, with no marketing or selling of the app from the bank, Vance said. “It’s growing without any work at all.”

The savings game app Envie Envelope Challenge, meanwhile, “builds this habit of saving small amounts over long periods of time into people’s daily lives. … Every day you put away $5, $6, $7, and you’ve locked away $1,000.”

The use of gamification is similar to Truist’s Long Game app, which teaches clients financial literacy, Lindsay Holden, head of Truist Foundry and co-founder of fintech Long Game, said at last week’s Bank Automation Summit U.S. 2023, noting that data is used by the $548 billion Truist to build deeper client understanding and relationships.

Innovating narrowly

TeamWALT innovations are described as being “in tune with customer challenges,” Smiley said. For example, it offers summer loans to teachers who might not be receiving pay.

“Getting focused and becoming an expert in people’s lives, so that you deliver value — more than just a checking and savings account can or a small loan — is really, really important. And we think that’s the future of small banks.”