66 community banks place their trust in a $150M fund

The fund’s 66 limited partners have combined assets of over $600 billion

An affiliate of Jacobs Asset Management called JAM Special Opportunity Ventures (JSOV) and FINTOP Capital have closed its $150 million investment fund called JAM FINTOP Banktech. The fund aims to accelerate technology adoption at U.S. community banks.

But this isn’t your typical investment fund. Its 66 limited partners are all community banks that have more than $600 billion of combined assets, according to the news release.

The fund is going to invest in bank technology companies, Adam Aspes, a General Partner at JSOV, told FinLedger in an email.

Aspes explained community banks are currently “drinking from a fire house – there are literally thousands of fintechs calling upon them offering slick demos. “

“But we know that many community banks struggle to identify, implement and properly use tech,” he stated. “To help with this we plan to actively engage with our community bank limited partners so that we understand their pain points and needs, and use that feedback to help inform our areas of focus and investment.”

Aspes went on to explain that after the COVID-19 pandemic began, technology adoption rapidly accelerated and these types of banks became more open minded about using tools to enhance their core processing systems.

We know that many community banks struggle to identify, implement and properly use tech.

“With innovators like Amazon, Google and Square increasingly influencing customer expectations around how financial services should work, we see rapid adoption of the right tech as table stakes for community banks to remain relevant and competitive,” he said.

While JSOV has a long history of investing in community banks, FINTOP Capital specializes in fintech investing.

FINTOP’s Managing Partner, Joe Maxwell said in a statement that “with JAM, we’re helping community banks find solutions that make them more competitive and cost-efficient. We believe community banks can prosper if they embrace the right technology and we see JAM FINTOP Banktech helping them achieve that goal.”

The fund’s JAM FINTOP banktech investment team is looking at B2B banktech companies to invest in.

“At JAM, we have been meeting with and investing in community banks for 26 years, and we’ve increasingly witnessed the challenges they are facing in competing with the megabanks, neobanks and well-funded fintechs,” Aspes said in the email interview. “We are committed to helping community banks prosper and believe they can continue to do so if they have an innovation mindset and the right tech stack.”

In other bank tech news, fintech Avant, which provides underserved customers access to credit, has completed its acquisition of Zero Financial and Level, its neobank and “design-forward banking app assets,” according to a news release.

Also, Plaid has raised a massive $425 million in Series D to help grow its platform and “enable the next generation of digital financial services,” according to a blog post by CEO Zach Perret.

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