By Charles Potts, ICBA
The COVID-19 pandemic positioned unprecedented stress on meals provide chains, with bottlenecks in farm labor, processing, transport and logistics, in keeping with the Group for Financial Cooperation and Improvement, and these challenges present no indicators of letting up. Towards this backdrop, agtech—the appliance of know-how to each facet of the meals manufacturing course of, from farm to desk—is rising in significance to the mission of ICBA and neighborhood banks.
As ICBA reported in March of this 12 months, neighborhood banks with lower than $10 billion in property present 80% of all ag financing and are sometimes the catalysts for brand new and expanded enterprise alternatives inside their communities. The truth is, neighborhood banks present about $155 billion in agriculture loans.
Regardless of the demand, the mortgage course of within the agricultural sector stays predominantly handbook. This presents a possibility to use advances achieved in different lending areas, particularly business lending, to remodel ag lending.
For instance, by making use of synthetic intelligence (AI) to research information and create standardized processes that embody benchmarking and lending threat assessments, neighborhood banks can improve the effectiveness and effectivity of the mortgage course of for the agricultural neighborhood. Improvements like these, utilized to the farming business, can speed up the lending course of for farmers, saving them money and time.
Typically, neighborhood banks sit in the midst of the ecosystem, offering level options to varied members within the agricultural course of—from the farmer and grower to the processing and transportation sides. The chance to create a cohesive end-to-end provide chain and enterprise useful resource planning system, the place neighborhood banks could be the facilitators of shifting cash, eradicating friction and enhancing money stream, turns into a pure by-product.
Farmers and Retailers Financial institution in Milligan, Neb., serves for instance. Simply earlier than the pandemic, the $130 million-asset financial institution carried out distant signatures, empowering farmers to e-sign mortgage paperwork and return them electronically to the financial institution. About six months in the past, the financial institution additionally employed a distant mortgage officer who makes “farm calls.” The mortgage officer takes the paperwork to the farmer and opinions it earlier than scanning and submitting the paperwork by way of safe e mail. The financial institution can also be contemplating a video chat-based app that may enable it to host safe digital conferences.
As alternatives in agtech ripen, ICBA is exploring improvements focusing on this market phase. To that finish, ICBA is asking its neighborhood financial institution members to assist determine potential agtech candidates for its 2023 ThinkTECH Accelerator Program.
Begin by speaking to your agricultural clients to determine areas of friction, ache factors and alternatives to enhance the pace and effectivity of the lending course of. Then, share that data with ICBA so we will discover and supply potential options and suppliers.
No know-how barrier ought to preclude a farmer and lender from enhancing the pace, effectivity and effectiveness of the lending course of. The demand is clear. Discovering progressive methods to harness what we all know to offer extra environment friendly and efficient approaches to addressing the wants of all people concerned within the agricultural ecosystem is the shining gentle of alternative.
Charles Potts (firstname.lastname@example.org) is ICBA government vp and chief innovation officer