A weekly wrap-up from Silicon Valley on what’s making the news in fintech, banking, and disruptive trends
The ‘To-Die-For Customer Experience’ Starts with Tech
What it is: For Manolo Sanchez, the chief executive of BBVA Compass, the future is about sharing technology and the basics of banking with fintech partners, and getting help from them in turn, without relinquishing customer relationships.
Sanchez discussed where BBVA — and banking, for that matter — will have to go next to capitalize on experiments. Partnerships with innovators are essential to ensuring banks do not fall behind in the race to turn new technologies such as APIs, real-time payments and mobile wallets into services that customers will crave, he said.
Why it is important: Sanchez gives expert insight into key issues facing the banking industry: 1) Fintech is simultaneously focused on unbundling part of financial services and on the Uberization of financial services, 2) using technology tools to build better customer experiences and help customers take advantage of their finances, 3) the future of mobile wallet, and 4) bitcoin helping to create a generation of tools that disentangle certain shortcomings because it is such a data-driven platform.
Is the Fintech Industry the Next Tech Bubble?
What it is: Many experts believe that since banks offered such a wide multitude of services, they have lost their focus and have overextended themselves. This is why many fintech startups started in the last decade are starting to give banks a run for their money. Most of these fintech startups specialize in one particular field and focus on customer experience and convenience.
Why it is important: The U.S. tripled investment in accelerators, incubators and competitions helping new startups connect with potential partners and investments. Fintechs latest trends include service-based investing, robo investing, and digital-based equity crowdfunding.
Fintech is leveling the financial playing field by making high-level, top-of-market services more accessible to all kinds of customers, not just institutional clients, and high-net-worth individuals.
Mobile Banking Moves Out of Online Shadow
What it is: In 2015 there were 29 million more US mobile banking users than in the previous year, a dramatic shift that has put pressure on financial institutions to innovate in a clearly hugely popular channel, says Javelin. This has contributed to a dramatic jump in financial institution support for m-banking enrolment through a mobile device.
Why it is important: Emmett Higdon, director, mobile, Javelin, says: “We are finally seeing mobile banking moving out of online banking’s shadow. With strong support for tools to discover, open, and monitor financial accounts through mobile devices without first interacting with online banking is a key strategy in attracting, and retaining, profitable mobile-first customers.”
Fintech Can’t Disrupt Wall Street: Report
What it is: Wall Street banks’ defense system against a growing onslaught of start-ups is working, according to a Moody’s report, which says that while banks may lose some market share to financial technology competitors, industry incumbents will survive. Banks have two big things most fintech, companies do not: enormous user bases and sizable credit underwriting capabilities. While more start-ups may partner with big Wall Street firms, the Moody’s report said it is highly unlikely that they will ever overtake big banks.
Why it is important: It is a sign that as various American industries are being disrupted by digital competitors, the banking industry — partly due to its vast funds, partly to it being more heavily regulated, and partly because traditional banks offer a broader range of services — will be able to stave off fintech’s recent surge in popularity.
Time for Fintech to Stop Thinking Small?
What it is: Technology is impressive on the surface; underneath, it offers little competitive value.As an industry, fintech needs to develop solutions to hard problems rather than touting technology that is already commonplace. This is what successful technology companies like Google, Facebook and Amazon do repeatedly. Using proprietary technology, they create solutions for customer needs.
Why it is important: To pull off the feat, fintech can learn lessons from the development of artificial intelligence. AI has been able to conquer really important, hard-to-solve problems in technology, resulting in truly impressive functions. Think facial recognition or opening doors with robotic hands. AI researchers refer to these big problems as “AI Complete.” There needs to be a financial industry effort to identify “Fintech Complete” problems — the stuff that solves hard problems and creates massive value for customers. Or fintech will become irrelevant.
Digital Innovation Transforming the Banking Industry
What it is: It is agreed that banking is going to look a lot different a decade from now (or maybe even by 2020). In the report, “Banking Reimagined: How Disruptive Forces will Radically Transform the Industry in the Decade Ahead”, Deloitte examine how current and future trends will come together to influence the future of banking.
The question surrounding the banking industry today is not whether the industry will be transformed, but how it will be transformed. New competitors, new technology, and new consumer expectations are impacting the banking industry faster and to a more significant degree than ever experienced.
Why it is important: As the digitization of all industries continues, consumers will expect banking experiences to replicate those in other industries. With significantly fewer visits to a local branch office or even a phone call to a customer service representative, conveying a consistent brand experience will be more challenging. The importance of developing personalized experiences based on data analytics will be paramount.
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