A number of regional banks have pushed for scale to invest in digital channels, but some even smaller players have enlisted the help of financial technology firms to build platforms.

Midwest BankCentre, a St. Louis-based bank with $2.05 billion in assets and $1.58 billion in deposits, decided two years ago that it wanted to launch a digital deposit platform that would efficiently attract core deposits and younger customers. The bank opted to engage MANTL, an enterprise software company, to launch a new digital platform, dubbed Rising Bank, in February 2019.

Dale Oberkfell, president and CFO of Midwest BankCentre, the banking unit of Midwest BankCentre Inc., said in the latest "Street Talk" podcast that the bank hoped to raise $100 million in the first year but exceeded that target by July, attracting customers from 48 states.

"It's an efficiency play. It's an attempt to engage more effectively with younger demographics and at the same time create core deposits from a different channel," Oberkfell said on the podcast.

Rising Bank offers a high-yield savings account at a rate of 1.90% and a 1-year CD at a rate of 2.15%, which customers can open in three minutes without providing any documents, Oberkfell said. He added that 6% of the high-yield savings account customers are in the 18- to 25-year-old age group, a cohort the bank does not attract at its traditional brick-and-mortar branches.

The executive believes that the bank would have needed to open at least 10 branches to attract the same level of deposits. While the rates offered at Rising Bank are higher than Midwest pays customers in its traditional branch network, Oberkfell believes the overall cost to the bank is lower.

"I refer to it as a laboratory sometimes," Oberkfell said, "so we can drive that efficiency knowledge to the 100-year-old bank network that we have."

Oberkfell said Midwest BankCentre customers will be able to open accounts online at its traditional brick-and-mortar branches in 60 days. The company is also in the process of rolling out 1-4 family loans and home equity loans on the Rising Bank platform.

He said Rising Bank will face the challenge of retaining customers with maturing CDs, but he noted that the digital platform will allow it to market and communicate far more effectively because it has everyone's email addresses and cell phone numbers.

"All of these things make it available for us to communicate at a much lower cost point to 100% of our new customers," Oberkfell said.

Raj Patel, COO and CFO at MANTL, said his firm offers technology that gives community banks the firepower to compete with much larger institutions. MANTL has also worked with Radius Bancorp Inc., which just agreed to sell to LendingClub Corp. Patel said MANTL's products borrow from the technology offered by the nation's largest banks and the services provided by neo and challenger banks.

"We're seeing a gap where they've been underserved," Patel said of community banks. "We're putting a tool in their hand."

Patel believes that banks should consider marketing all their products online. Right now, most digital products are consumer-focused, but Patel believes institutions will begin rolling out commercial digital products this year.

"We're working on a product and will be in market shortly, and we know others are as well," Patel said.