With their sights set on regaining market share—and with banking operations under increasing scrutiny from regulators after bank failures in 2023—community banks are bound to undertake major operational overhauls in the coming years.

But community banks have unique needs and relatively constrained resources, raising the question of how community banks will choose the fintech partners they’ll work with, and how they’ll implement their insights and products.

Community banks are aware of their unique priorities and are looking to build out many of these solutions in conjunction with up-and-coming tech providers. Community banks are importing their long-term ethos into this process, helping shape the market in their image.

According to Carey Ransom, Managing Director at BankTech Ventures, a strategic investment fund made up of 100 community banks, this banking subsector brings a different set of goals to the investments it makes.

“​​The business value of those companies that we invest in is critical, and the business stability of those companies is critical, because our banks need almost 100% of those to at least survive,” he said.

Straddling an R&D department and an investment wing, BankTech Ventures also helps community banks implement and operationalize the solutions they invest in. In addition to seeking feedback from community banks that are part of its ecosystem to determine which companies to invest in, the fund also makes an effort to build out playbooks that can help community banks succeed.

This sort of model diverges significantly from most venture-driven investment models, which can let most companies flounder as long as one or two major winners emerge from the pack to generate returns. But with such limited resources—and, for many, experience in tech—investing in a volatile fintech could make or break a community bank.

Instead, by functioning as an intermediary between community banks and tech challengers, investment models like BankTech Ventures’s offer an alternative vision, wherein investors emphasize the long-term existence of fintech outfits and their banking partners, rather than returns and growth.

“The power law type of return profile of venture fund is just not suitable for how we think,” Ransom said.