Opinion
In the face of coronavirus-induced market volatility, banks should emphasize personalized service to reassure anxious customers. Customers worry about money safety, loan support, and digital banking access. Community banks with strong customer relationships can offer tailored advice, especially on refinancing and small business loans, contrasting with fintechs' high-volume approach. Banks must also assist seniors with digital tools and prioritize health and safety while maintaining communication.
Many community banks face a sink-or-swim moment as the definition of community shifts beyond physical locations to shared interests and affiliations. This article outlines three strategies for community banks to reimagine their strategic vision: creating mini financial services ecosystems, catering to affinity groups, and making the physical branch an extension of the virtual experience. Examples include partnerships like First Horizon and SunTrust with Operation HOPE, Pinnacle Bank's collaboration with the Memphis Grizzlies, and Capital One cafés. By harnessing affinities and digital transformation, community banks can build organic loyalty and sustain long-term growth.
The era of open banking may finally be arriving in the U.S., with private-sector working groups beginning to design voluntary standards. However, these groups alone cannot deliver open banking. Lawmakers and regulators must treat them as a starting point and work to update federal regulations, assert consumers' rights to permission access to all their financial data, and create rules for accountability and liability. Industry-led groups must include all stakeholders and address key areas such as scope, permissioning, accountability, legal structure, technology, and governance. Without legal rights and comprehensive standards, the U.S. risks an uneven playing field and limited consumer choice.
Over the past decade, fintech innovation has driven global commercial transformation, with local payment methods such as mobile wallets rapidly gaining traction in emerging markets like Latin America and Asia, helping the unbanked access e-commerce and achieve leapfrog development.
An explosion in fintech has closed the technology gap and connected consumers worldwide, even those without bank accounts. In Latin America, where 38.3% of the population is unbanked and 17% of online transactions are cash-based, solutions like RapiPago, BoletoBancario, and Oxxo have driven a 22.9% increase in B2C e-commerce growth. In China, consumers leapfrogged credit cards, with mobile e-wallets accounting for 55.7% of online transactions versus 22% for cards. Across Asia-Pacific, 57.5% of e-commerce transactions are completed on mobile devices. These local payment methods, which now comprise 77% of global e-commerce spend, offer a viable alternative to card-based payments by leapfrogging traditional banking infrastructure.
As banking becomes fully digital, the focus in 2020 will shift from 'whether to digitize' to 'why digitize.' Based on the views of Jeff Hindle, Global Head of Retail Financial Services Segments at Mastercard, this article outlines five major trends in banking worth watching in 2020.
In this commentary, Jeff Hindle, global segment leader for Mastercard's retail financial services team, argues that 'digital' has become inherent to banking, so the focus in 2020 will shift to purposeful digital capabilities. He outlines five trends: financial services adopting an 'as-a-service' model, businesses demanding paperless payments, Big Tech becoming big banks, digital connections bringing digital crime, and going cashless to enable financial access. Each trend is examined with supporting data and implications for banks and fintechs.
Partnerships between fintech companies and financial institutions are becoming increasingly common, but not all collaborations go smoothly. Based on industry practices and data, this article proposes three key assessment questions: whether the partner has a good relationship with regulators, whether its anti-fraud measures are mature, and whether its business model is sustainable in the long term. These questions help identify risks early in the partnership to ensure success.
In this article, Luvleen Sidhu, co-founder, president and chief strategy officer at BankMobile, discusses how fintech partnerships can help financial institutions innovate and scale. She cites a study where 53% of C-level executives at midsize banks and credit unions believed fintech partnerships would be important in 2019. BankMobile's partnership with Upstart for personal loans is highlighted, with over two-thirds of loans originated through Upstart fully automated and approved in real time, and an NPS of 82. Sidhu then presents three questions to assess a potential fintech partner: whether the partner has a positive relationship with regulators, whether it has a proven approach to combat fraud (especially for online-only accounts and identity verification), and what the long-term sustainability of its business is. She emphasizes the need for proper regulatory planning, vendor management, fraud prevention measures, and a clear business plan for growth.
The digital environment is inherently anonymous. Although banks lead other industries in trust, they still need to use customer data more intelligently and maintain transparency to consolidate customer relationships. Experian's report points out that 76% of consumers trust companies that can control the use of their personal information more.