Frequently Asked Questions (FAQs)

about the Alloy Labs Alliance

Alliance Membership
What are the benefits of joining the Alloy Labs Alliance?

As one member put it, joining the Alloy Labs Alliance is "like getting access to a full innovation team for less than the cost of a part time teller". It also brings you into a community of like minded institutions dedicated to innovating the delivery of financial services. The community serves as a source of ideas, insights and experiences as members learn from each other. All of our activities and priorities are member-driven, so members drive the discussions, benchmarking, curated content, demos, and research in areas aligned with their own strategic objectives.

 

Many members derive significant value from these activities alone, but those wanting to go deeper and accomplish more ambitious goals have additional options to derive even greater value. They are all structured separately, so members only pay for what they need, when they need it:

  • Anvil™ custom tailored in-house workshops to build internal innovation capacity and process Learn More

  • Peer workgroups to address specific problems or opportunities Learn More

  • Innovation Blueprints and implementation kits to adopt new solutions developed and vetted by other members Learn More

  • Strategic investments in promising fintech companies through advantaged insights and scale Learn More

We are still very early in our innovation journey, how do we get value from the Alliance?

Many of our members have started out slowly at first, learning from peers and our best practices until they are ready to dive deeper. They have found our on-site Anvil™ sessions to be particularly helpful in kickstarting (or restarting) their own internal innovation teams and processes, and they love our empirical approach to value creation that balances creativity with compliance. These immersive, hands-on sessions with your leadership team provide foundational frameworks for innovation decision-making, funding, and agile risk management to enable repeatable, scalable, and sustainable execution. Learn More

 

We are already pretty innovative and we already partner with fintechs, how will this help us?

Our members include some of the most innovative banks in the nation. Not only will you have access to exclusive discussions, insights, reports, surveys, curated content and experts, but you’ll also have the opportunity to share risks, lower costs, and speed learnings and time to market by working with your peers.  As one of our more innovative members puts it: “Today I do about 20 proofs of concept a year and maybe 1 or 2 go live. By leveraging the knowledge and power of the group and sharing the costs, I can do 30 a year, and because the process is more effective, I expect more like 7 or 8 to go live.”

Our more advanced members also appreciate the ability to share revenue from the sale of any Innovation Blueprints that they help to develop as a Leader Bank of a Workgroup.

What if my competitors join, can I have exclusivity in a given market?

 

Just about every member has asked this question, and ultimately have decided that the value of members collaborating and the network effects achieved far outweigh any competitive issues. Our membership represents well in excess of $120 billion in combined assets, which would place us in the top 30 banks in the country if we were a single entity, and we reach over 27 million+ consumers and 5 million+ business customers  in all 50 states. That kind of combined scale and diversity is a massive advantage when working with regulators and technology providers, not to mention the network effects that come with larger sets of data, users and markets in developing new solutions.

 

Ultimately, the technology is just an enabler and how the bank executes its strategy will provide the differentiation. Members also tell us that they feel the greatest competitive threats are no longer coming from the bank across the street, but from the megabanks, the giant tech platforms, and fintech companies of all shapes and sizes. That said, banks can avoid joining the same Workgroup as competitors in areas that are strategically sensitive, and all of our members are bound by confidentiality agreements.

How is this different than an incubator or accelerator program?

 

We are complementary. An accelerator is an organization created by experienced tech entrepreneurs to help early-stage tech companies develop their product, hone their business model, and — most importantly — connect with investors.  

 

We work exclusively for the benefit of our member banks, not the fintech companies. Our interest is in helping community and regional banks to improve their ability to partner with fintech companies (including graduates of incubator or accelerator programs) and increase their innovation capacity internally and through fintech partnerships and investments. Benefits include:

  • The ability to develop better solutions faster

  • Reducing the risk of partnering with earlier stage companies taking advantage of the VC money that’s flowed into the space

  • Sharing best practices and working collaboratively to manage implementations and integration and managing risk with legacy systems

  • Pooling capital and expertise to make strategic investments

We are service provider, how can we join?

Membership is strictly restricted to U.S. community and mid-sized banks only. Our members drive the activities and priorities of the group and we select fintechs and services providers through a rigorous curation process focused on the needs of members. We do not accept fees from service providers, and they cannot influence the selection process in any way. We are always looking for unique and effective solutions, so service providers are encouraged to register in our providers database, and we will let you know if your capabilities align with any current member priorities.

Anvil™ Innovation Strategy and Execution Sessions
What is the purpose of these sessions?

 

Our immersive, hands-on Anvil™ sessions are designed to help financial institutions forge ideas into results effectively and efficiently. The first part is designed to align executive teams and/or boards around key opportunities and threats and translate top strategic priorities into actionable steps. The second part is designed to help the cross-functional team(s) charged with delivering those results quickly move from strategy to execution in a way that maximizes both effectiveness and efficiency. Pre-session assessments are followed by an on-site session customized for your unique goals and situation.

What are the outcomes?

 

  • Pre-session discovery and organizational assessment to assess your organization’s current innovation maturity across seven key dimensions

  • Create and strengthen alignment around key strategic priorities

  • Using multiple strategic lenses, map existing and new initiatives to begin construction of an Innovation Portfolio unique to your situation and objectives and aligned with your risk/return objectives

  • Create a Declaration of Innovation™ that defines the “who, what, when, where, why, and who” for innovation initiatives

  • Assemble or enhance internal innovation governance and leadership team and framework with established roles and responsibilities

  • Create first FIRE™ Team(s) to drive execution, along with the FIRE™ Break (Risk and Compliance) and support teams needed

  • Put into practice tangible tools and frameworks aligned with your existing culture and interest in adopting a test and learn approach

  • Create governance and funding approach for new initiatives

  • Develop appropriately scaled KPIs
     

Do we have to be members of the Alloy Labs Alliance to participate?

No. Many members started by using an Anvil™ session to help them build their internal innovation capacity and structure, then joined the Alliance to further increase the effectiveness and efficiency of their efforts by working with their peers. Think of it as the equivalent of hiring a personal trainer to design a diet and exercise program custom tailored for your unique situation and goals; and joining the Alloy Labs Alliance is like being a member of the gym, with the opportunity to take classes (join Workgroups) in those areas most important to you.

The entire process is built on our trademark FIRE™ Process (Fast, Iterative, Responsive Experiments) leverages the best practices of modern agile business methods to deliver better results quickly, with less wasted time and effort. We have worked with hundreds of leaders around the world, and our work has been featured in leading industry publications and conferences around the world and has been taught at leading graduate schools of banking.
 

Members do receive priority scheduling and special member pricing. Learn more or schedule your session here.

Peer Workgroups

 

What is a Workgroup and how do they work?

Workgroups are formed by members to address specific opportunities or problems. All Workgroups are member-driven and any member can start a Workgroup if there is sufficient interest.

 

Each Workgroup is conducted in three distinct phases; Discovery, Solution Selection, and Implementation. Each phase provides a distinct value proposition, and members can choose to participate in one, two, or all three phases depending on their objectives and priorities.

  • The Discovery phase is a critical element that defines and refines the opportunity the Workgroup is pursuing or the problem it is trying to solve, who the targeted customer or end-users are, and the success criteria for any potential solution. Participants in this phase benefit by working with their peers to create a clear problem/opportunity definition and can take these insights back to their bank to work on individually, or continue on with the Workgroup to select a viable vendor partner.

  • The Solution Selection phase answers the questions of how the opportunity/problem should best be addressed and what external vendor partner is best positioned for successful implementation. Participants in this phase benefit by taking part in solution demonstrations and participating in the due diligence process to identify the most viable vendor partner and can take these insights back to their bank to work on individually, or continue on with the Workgroup to implement the chosen solution.

  • The Implementation phase of the Workgroup process tests the selected solution and vendor partner by Workgroup members for technical feasibility, business viability, and user desirability. Participants in this phase benefit by conducting real-world testing of the selected solution and vendor partner.

All of this work is compiled in a detailed Innovation Blueprint and implementation kit that is available for sale to other banks that were not a part of the Workgroup.

 

What are the benefits of joining a workgroup as opposed to working directly with a vendor?


Most powerful is the benefit of harnessing the diversity of experiences and expertise of multiple members to provide perspectives that far exceeds what any one organization typically can typically access. As one member puts it, “Having five smart people from different banks working on a problem is far more powerful than my five smartest people working on it because I gain new perspectives we simply could not have gotten by working alone.” The effectiveness of the outcomes is further improved because all of the participants are working on industry-leading common tools and frameworks and proven best practices.

Workgroups also provide economies of scale by sharing the soft and hard costs across multiple participants, further enhanced by the exceptional combined market power of the Alliance to negotiate favorable terms and pricing.  With over $120B in combined total assets, Alloy would rank as a  top 27 bank in the U.S. if it were a single entity. 

In one recent example alone, Workgroup members paid less than $10,000 each for the due diligence and compliance assessment of a vendor partner that would have cost in excess of $100,000 if undertaken by a single bank. We were also able to secure a discounted vendor contract with a discount of 40-90% less than what has been quoted to individual banks​.

How much does a Workgroup cost? What is the value?

Workgroups will aid your institution in reducing risk, lowering costs and speeding time to market on fintech partnerships. Workgroups vary in scope, effort and value, and so does the cost of participating. This is driven primarily by the hard costs that are shared by participants, and Workgroup Leader Banks typically about pay half of what a Participant Bank pays because of the sweat equity labor they contribute through the assessment and implementation phases. In either case, the net cost is designed to be less than working on the project alone.

 

Workgroup participation has several hard dollar savings, including:

  • Personnel time for sourcing and evaluating potential partners spread across participants

  • Shared costs of risk, compliance and security assessments conducted by Crowe

  • Centralized contracting, vendor diligence and ongoing vendor management

  • Discount provided by the partner

  • Overall reduction in implementation costs through collective process and shared best practices

 

The soft benefits beyond cost savings provide even greater value:

  • Deeper insights driven by varied experiences among participants

  • Ability to partner with earlier stage companies with group relieving pressure on financial viability that causes most startups to fail vendor management and the amount of effort to work with early stage technology spread across the group

  • Greater influence on partners’ technical roadmap

 

Who does what in a Workgroup?

All work is conducted by Workgroup member banks, and is facilitated, coordinated and supplemented by the FinTech Forge team, and further supplemented by our risk management partners at Crowe, LLP, and other subject matter experts as needed. All phases are documented in an Innovation Blueprint, which is made available for sale to other Alliance members.

Roles in a Workgroup:

  • Leader Banks - Typically the initiators of the Workgroup, along with one or two other banks for whom the topic is a major priority. Leaders drive the key decisions, are the most active in vendor partner diligence and selection, and are the first to the key elements of the solutions. 

  • Participant Banks - Often engaging at a slightly lower level because the Workgroup topic is not a major strategic priority for them, and/or they don't have strong pre-existing ideas of the final solution, but they are opportunistically participating to benefit from the learnings and cost savings because it's something they have on their existing project list. Participants can choose which phases to join and provide key input in the process, and receive early access to all findings.

 

Participants in all three phases of the Workgroup receive a copy of the resulting Innovation Blueprint as a benefit for helping to develop and document it. Further, Lead Banks in contribute relatively more effort to the process and were the first to implement the solution, so they will also share in the revenue generated by sales of the Blueprint to other Alliance members. If you only participated in one or two phases of the Workgroup, you will receive a discount on the purchase price of the Blueprint commensurate with your Workgroup fees paid.

 

Depending on the nature of the topic, the group might start with a broad mandate and break down into smaller groups over time based on interest in a particular part of the opportunity or structural issues such as which core technology provider the members use. Banks can choose to be a Leader in certain Workgroups, be Participants in others, adopt the Blueprint from some, and opt out completely from others, all depending on their needs and priorities.
 

What kind of vendor due diligence is completed on the selected vendor partner?

 

Our risk management partners and Crowe, LLP perform due diligence on the selected vendor partner and issue a Risk Applicability and Impact Report that covers the following assessment areas:

 

  • Operational Risk

  • Digital Risk

  • Compliance Risk

  • Third Party Risk

  • Strategic Risk

 

Below is an example of some specific assessment areas that are reviewed for this report.

 

  • Systems Governance & Personnel Security

  • Network Security

  • Logical Security

  • Business Continuity

  • Data Protection

  • Secure Development 

  • Vulnerability Management

  • Supplier Management

  • BSA/AML & Sanctions

  • Compliance Management 

  • Complaint Management

  • Forms & Disclosures

 

Each applicable area is assessed based on supporting evidence provided by the vendor partner.

Is each member supposed to just adopt the risk assessment as-is, or can they ask additional questions?  If the latter, do the questions go through Alloy Labs,  or can members follow up directly with the vendor?

Our goal with the Crowe due diligence process is that it covers everything that banks typically ask during a vendor review.  Upon reviewing the Crowe report, should there be a question that hasn’t yet been addressed, Workgroup participants have the opportunity to work with Crowe on any  remaining questions that are likely unique to your financial institution.

Is the risk assessment evergreen or is it a one time assessment?

The risk assessment is refreshed periodically so as to remain evergreen throughout the vendor contract term.
 

Am I obligated to adopt the solution selected by the Workgroup?

Workgroup members may ultimately decide they do not want to pursue the chosen solution and are under no obligation to adopt any of the solutions.

 

Does Alloy Labs negotiate one vendor agreement for all members? 

 

Alloy negotiates a standard agreement with the vendor which includes attractive terms and a significant member discount that reflects the economies of scale achieved by working as a group through a single discovery, assessment and due diligence process. The goal is to get a standard contract agreed to for covering 80% of member banks. We understand there may be some nuances/one off situations. 

 

Each member then signs an individual agreement between their bank and the selected vendor partner reflecting those terms and pricing, if they choose to adopt the solution selected by the Workgroup.

 
Who performs legal reviews of the negotiated vendor contracts?

 

Typically one or more bank participants will leverage their internal legal department(s) in reviewing the final contract with the goal of agreeing upon a final draft that will be 90-100% acceptable for all member banks. Alloy also has relationships with several law firms that can assist with vendor contract review as needed. 

Who handles integration with core banking providers or other technology providers for members?

 

The Implementation phase will document the integration needs for the necessary technology providers in use by the Leader Banks in each Workgroup, and will look for opportunities to scale this across members with similar providers. Each Workgroup will also provide directional guidance to improve the ease and speed for integration with other systems in use by other members.

Each member’s technology and needs will be somewhat unique, so members will have to work with their own vendors for their specific integration needs that differ from the Leader Banks.
 

Who owns the Intellectual Property for solutions developed in Workgroups?

 

The majority of time, the IP will be owned by the vendor partners. In some cases, members may have the opportunity to invest in the vendor partners (see Strategic Investments). If Workgroup members develop or contribute unique new IP, we will likely form a separate company owned by the appropriate parties.

 

If a member leaves Alloy, what happens to the Blueprint and their vendor relationship that resulted from the workgroup?

Any agreement that you sign with the vendor partner is independent of your membership in the Alliance and the terms of that agreement would continue.

Banks that take a leader role in a Workgroup that generate an Innovation Blueprint receive a share of the revenue when others purchase the Blueprint. If you leave the Alliance, you forego future revenue from sales of the Blueprint after you leave.

Innovation Blueprints
What is an Innovation Blueprint?

 

The output of the Workgroup is memorialized as an Innovation Blueprint and Implementation Kit, beginning with opportunity definition through the executable contract with the discount. Risk, security and compliance assessments are kept up to date with the ongoing vendor management process of the Workgroup. As one member expressed: “the Innovation Blueprint is basically the first 9 months of work in a 12 month project with the added benefit of seeing results before I sign.”

Why buy an Innovation Blueprint?

Blueprints accelerate a bank’s ability to derive value from technology partnerships. Hard cost savings alone generate an attractive return on investment; the additional reduction in soft costs, compressed time frames, and strategic upside maximize the return. Blueprints accomplish this by:

  • Shortening the time to find an appropriate partner and take a partnership live

  • Reducing the upfront costs associated with diligence and implementation

  • Negotiating preferred pricing based on the scale and reach of the Alloy Labs Alliance

  • Accelerating learning through shared best practices and network effects

How is the price of an Innovation Blueprint determined?

Alloy determines the price of the Innovation Blueprint based on the relative value provided and the complexity and effort required to create it. Blueprints are priced at a premium to Workgroup participation because of the sweat equity put in by those members. Half the revenue from a Blueprint is shared back with the Leader Banks from that Workgroup, turning their innovation cost center into a potential profit center.  

What do I get in an Innovation Blueprint?

 

Each Blueprint is the culmination of many collective work hours conducted by Alloy Labs Alliance members who have chosen to work together to address specific opportunities or problems in a peer Workgroup in three distinct phases; Discovery, Solution Selection, and Implementation.
 
This work is facilitated, coordinated and supplemented by the FinTech Forge team, and further supplemented by our risk management partners at Crowe, LLP, and other subject matter experts as needed. A Blueprint incorporates all of this work to give Blueprint buyers as close as possible to a turnkey solution that has been vetted and tested by peer members, including significant cost savings over conducting the process alone. 

Download more details:


 
 
 
 
Strategic Investments

How can members participate in making strategic investments in promising fintech companies?  

Strategic investment opportunities are expected to arise from Alliance efforts, but opportunities could also arise independent from Alliance activity. In practice, we operate similar a “corporate angel group” of investors providing capital to startups or early stage companies in exchange for ownership through equity, convertible debt or other securities. We seeks investments providing a positive return along with strategic fit and synergy.  

Most institutions do not have the existing expertise to make private investments and/or are investing dollar amounts that don’t justify adding expensive headcount. The average investment size relative to effort and the lack of expertise as an early stage investor can make taking capital from a financial institution unattractive to a startup. Without the benefits of the Workgroup, an institution needs to invest additional resources to extract strategic value rather than just passively seeking financial gain.

  • We leverage the deep customer relationships developed through the Workgroup to make investments that should see venture capital-like returns at significantly less risk than if investing on their own:

  • Venture Capitalists critical diligence items are understanding the product/market fit, sales cycle and customer pipeline, which is provided by the Workgroups
  • A strategic investor has the benefit of understanding the fit and their own sales cycle but does not have insight into whether this perspective is shared by other customers and whether the startup will be able to scale quickly enough to achieve financial viability
  • Combining Workgroups with strategic investments provide unique insight that is difficult to replicate, and makes us an attractive partner for startups and their venture capital backers
     

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