Choice Bank started out as four community banks, heavily rooted in agriculture. Even as it expanded over two decades, the Fargo, N.D.-based community bank never stopped focusing on agriculture and being the bank of choice for its local farmers, growers and producers.
Today, the more than $5 billion-asset Choice Bank is still the largest agriculture lender in North Dakota, but faced with competition from national companies, it was worried about losing part of that customer base, even as its other its lines of business grew. The community bank wanted to make sure it remained the top lender for local farmers.
So, in January 2023, the community bank launched Choice Ag Solutions, a digital agriculture supplier origination platform that now allows the bank to handle the full origination process in real time for farmers, growers and providers.
It’s a seamless, fast process that connects Choice Bank to local businesses in a new way: through retailers, to which farmers have been increasingly turning for financing instead of community banks.
“We are trying to innovate and provide some new forms of capital,” says Todd Borchardt, president and chief ag credit officer at Choice Bank. In addition to making for a better customer experience, the Choice Ag Solutions platform has helped the bank regain revenue that it had lost.
A shift in ag financing
Choice Bank first realized it was losing ground in the agriculture financial sector in the mid-2010s, when it saw a change in where farmers, producers and growers were borrowing money. Instead of getting a house line of credit with a community bank like Choice Bank, they were taking out loans via retailers, such as co-ops and seed or chemical dealers. Choice Bank continued to grow overall, but it risked losing this portion of its business to national corporations that had swooped in to grab farmers’ attention at the point of sale.
“We began to think: How do we be that capital source, and how can we provide that expertise in terms of banking and a financial lend?” Borchardt explains.
Simpler financing for farmers
The community bank started exploring how it could take back that position of lender of choice and how to make banking with it easier for its agriculture customers. That led to the creation of Choice Ag Solutions.
Through the platform, a farmer can take out a loan at a retail location, with the financing done by Choice Bank. The platform works on a smartphone, tablet or computer, so the producer can apply either through their own device or one provided by the retailer.
“They type [their information] into the program, and it flows through our system,” says Borchardt. Depending on the size of the loan, a farmer can go from application to fulfillment in as quickly as 30 minutes.
“Rather than dealing with a corporate seed company or a corporate chemical company … They’re going to dial me directly and not go to a corporate system and sit on hold for an hour and a half”
—Todd Borchardt, Choice Bank
To create the product, Choice Bank partnered with several fintechs. Now, the loan process “can be done a lot more seamlessly than we ever really dreamed it could be from the get-go,” says Borchardt.
Continuing the local mission
According to Borchardt, Choice Ag Solutions has been an easy sell to retailers, since they often prefer to work with someone local instead of sending money away from the community and having to deal with bankers who may not prioritize them if something goes wrong.
“Rather than dealing with a corporate seed company or a corporate chemical company, they can call me up, where I’m 10 miles up the road, and say, ‘I got an issue with this,’” says Borchardt. “They’re going to dial me directly and not go to a corporate system and sit on hold for an hour and a half.”
“It’s nice to have a local bank. You know if you absolutely have to go in and talk to somebody, you can, rather than just being another number on a screen for a bigger corporation.”
—Joel Smith, S&S Grain
Joel Smith, co-owner of S&S Grain in Walhalla, N.D., started working with Choice Bank via the Choice Ag Solutions platform back in February. He sees the advantages of partnering with someone in the area to serve S&S Grain’s customers.
“It’s nice to have a local bank,” he says. “You know if you absolutely have to go in and talk to somebody, you can, rather than just being another number on a screen for a bigger corporation.”
Borrowers also like Choice Ag Solutions because it provides “access to capital that does not take a lot of time. It’s very easy to apply,” says Borchardt. It keeps dollars local, which is in line with community banks’ mission.
Thanks to the platform, Choice Bank has retained and recaptured some of the volume it lost when lending shifted to retailers.
“It also allows us to plug into environments and markets where we maybe aren’t doing as much for the market share as we prefer to be doing,” Borchardt says. “It’s a growth opportunity.”
Smith notes that the solution is relatively easy to use. S&S Grain signed up too late to capture most of its business prior to the 2023 growing season, but the platform is expected to play a bigger role in its business next year. “It’s definitely going to give us some more financing options for our customer,” he says.