“Statement”: I Am All In On IoT

By Al Dominick | @aldominick

Quickly:

  • Thanks to companies like Amazon, we are closing the gap between the physical & digital world.
  • Given our industry’s relentless pace of change, I think banks should place a big bet on figuring out how to “get involved” with the Internet of Things (IoT).
  • I am personally intrigued by the potential of car-based payments.

Getting smarter about the Internet of Things has been a focus of mine since talking with US Bancorp’s CEO, Richard Davis, in January.  He shared various areas of technological interest for the 5th-largest bank in the U.S. (e.g. biometrics & security to machine learning… distributed ledgers to digital identify). However, his take on our interconnected world and the promise of IoT really captured my attention and imagination.  Since then, I have taken much deeper dives into the world of Amazon’s Web Services, IBM’s Watson and Salesforce’s IoT Cloud.  I’ll not break any new ground for those well versed in the underlying technologies or principles with this post, but I would suggest that those in the banking world think about how connected devices might catapult their businesses forward.

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Take, for example, the potential of a Tesla.  Last week, I had a chance to see one of their high-end model S cars here in DC.  Spectacularly designed, I couldn’t shake the idea that the way we bank might radically change given innovations taking place at companies such as this one.  (*To be fair, I had recently read a McKinsey report that suggests a linking of the physical and digital worlds could generate up to $11.1 trillion a year in economic value by 2025).

Still, if I were running a bank today, I would immediately make a commitment to figuring out what we can do to intersect with the waves of new opportunity being created by companies like this.

I would dedicate both time and resources to figuring out how emerging technologies might enhance our institution’s insight into revenue opportunities, areas of unexpected risk and emerging customer expectations.  I’d welcome as many new ideas in now while I have the chance to consider what remains strategically possible.  Basically, I’d stick a sign on our front door with a simple word: Ambitious.

3 Examples of Next’Gen Partnerships

News & Notes from February 13 – 17
By Al Dominick, CEO of DirectorCorps (parent co. to Bank Director & FinXTech) | @aldominick

A few weeks ago, I made note of an interesting new relationship between a bank and a technology firm.  Specifically, BBVA Compass’s announcement that it has been piloting Amazon Lockers in eleven of its Austin-area branches.  This is the first time Amazon Lockers are available with a bank in the United States — and may provide a creative spark to those thinking about how to increase traffic into an existing branch network.

Since sharing my observation on this partnership, I’ve made note of a number of new relationships that reflect the changing nature of the financial industry.  This week, three things caught my eye:

In addition, I took note of Wells Fargo forming a new innovation team (called Payments, Virtual Solutions, and Innovations) to better build out its digital banking experiences.  The three pillars of this effort revolve around payments, artificial intelligence and APIs. For Wells Fargo — and banks in general:

  • Payments are a critical driver of relationships for consumer, small business, and commercial and corporate banking customers.
  • In terms of artificial intelligence, the bank sees an increasing number of opportunities to better leverage data to provide personalized customer service through its bankers and digital channels.
  • Application Programming Interfaces (APIs) technology enables commercial and corporate banking customers to integrate products, services and information into their own digital environments.

So as financial institutions continue to search for new growth opportunities, I intend to share weekly recaps like this as a way to share what I find compelling.  Let me know what you think — and if there are other news & notes I might share.

10 Banks and Fintechs Doing it Right

In advance of April’s FinXtech Summit
By Al Dominick, CEO of DirectorCorps (parent co. to Bank Director & FinXTech) | @aldominick

Quickly:

  • An increasing number of financial institutions are using partnerships with technology companies to improve operations and better meet customer needs.
  • For the past few months, banks and/or fintechs submitted case studies on specific technology solutions helping financial institutions produce real, quantifiable results to our team at FinXTech.
  • With more then 100 submissions in hand, a committee of FinXTech advisors worked with our team to compile a top-10 list during Bank Director’s Acquire or Be Acquired Conference in Arizona last week.

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Throughout Bank Director’s annual Acquire or Be Acquired conference, I found myself in quite a few conversations about the continually changing nature of financial services. Many of these discussions revolved around the possibilities generated by traditional institutions partnering with emerging technology firms.  Some of these took place on-stage; for instance, I opened the second full day of the conference by polling an audience of 900+ on a variety of technology-related issues:

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With results like these precipitating editorial coverage from our team and attendees alike, you’ll probably understand why I find the just-released ten finalists for our “Best of FinXTech Awards” so compelling.  Indeed, as the financial landscape continues to evolve, and executives grapple with a fast-changing operating environment that requires partnerships and collaboration, each of these relationships shows what is really possible when leaders explore something new together.

  • Bank of Nova Scotia (Scotiabank) + Sensibill: Scotiabank’s customers can store, organize and retrieve paper and electronic receipts through the Toronto, Canada bank’s mobile banking app and wallet, the result of a partnership with Sensibill, also based in Toronto. The service was launched in October 2016.
  • Franklin Synergy Bank + Built Technologies, Inc.: Built Technologies, in Nashville, Tennessee, improved the loan administration process for Franklin Synergy Bank, in Franklin, Tennessee. The $3 billion asset bank now manages a greater number of construction loans with fewer staff.
  • Green Dot (Go Bank) + Uber: Pasadena, California-based Green Dot Corp., which issues prepaid credit cards, partnered with Uber to provide the San Francisco transportation company’s drivers a fee-free debit card and an instant pay solution that allows drivers to be paid instantly.
  • IDFC Bank + TATA Consultancy Services (TCS): Due to a regulatory mandate, India’s IDFC Bank had just 18 months to expand into rural areas to better serve unbanked customers. The bank’s partnership with TCS, based in Mumbai, India, included the use of micro ATMs, which are modified point-of-sale terminals that expand the bank’s reach in rural areas.
  • National Bank of Kansas City + Roostify: San Francisco-based Roostify improved National Bank of Kansas City’s formerly inefficient and incomplete digital mortgage application process. Customers at the bank, based in Overland Park, Kansas with more than $600 million in assets, can now fill out a mortgage application in a little as 20 minutes, with no need for a phone call or trip to the branch to visit a loan officer.
  • Somerset Trust Company + BOLTS Technologies: BOLTS, based in Bethlehem, Pennsylvania, improved the account opening process at Somerset Trust Company, saving the $1 billion asset community bank in Somerset, Pennsylvania, roughly $200,000 in the first year by better automating the process and reducing error rates. Customers can start and complete the process on multiple channels.
  • Toronto-Dominion Bank (TD Bank) + Moven: TD Bank, based in Toronto, Canada, launched a real-time money management application in April 2016, developed by Moven in New York.
  • USAA + Nuance: USAA, based in San Antonio, Texas, made its website a little smarter in 2016 with the virtual assistant Nina, which provides support for USAA’s members. This use of artificial intelligence is the result of a collaboration with Nuance in Burlington, Massachusetts.
  • Woodforest National Bank + PrecisionLender: Partnering with Charlotte, North Carolina-based PrecisionLender to improve its loan pricing strategy helped $4.8 billion asset Woodforest National Bank, in The Woodlands, Texas, grow commercial loans by 16 percent and gain almost 20 basis points in net interest margin.
  • WSFS Bank + LendKey: WSFS Financial Corp., headquartered in Wilmington, Delaware, with $6.6 billion in assets, partnered with the lending platform LendKey, in New York, to expand the bank’s consumer loan portfolio with a student loan and refinancing product.

All ten of these partnerships demonstrate the strongest combination of collaboration and results.  For those interested, my colleague Kelsey Weaver (the President of our FinXTech platform) announces the three “winners” on April 26, 2017, during the FinXTech Annual Summit, at the Nasdaq MarketSite.

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Closing bell ceremony at Nasdaq / Bank Director + FinXTech’s FinTech Day (March 1, 2016)

In advance of that announcement, I invite you to follow me on Twitter via @AlDominick, FinXTech’s President, Kelsey Weaver @KelseyWeaverFXT, @BankDirector and our @Fin_X_Tech platform and/or check out where and how this annual Summit — and these awards — fits into FinTech Week New York that we are hosting along with Empire Startups starting April 24.

We Are On To FinTech Week

#AOBA17 conference intel (Friday)
By Al Dominick, CEO of Bank Director | @aldominick

Quickly

  • The “bank of the future” is not about technology, it is all about customers.
  • For many financial institutions, the time may be right to retire legacy systems for cloud-based platforms.
  • Numerous financial technology companies are developing new strategies, practices and products that will dramatically influence the future of banking..

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The intersection of technological innovation with strong depository franchises may lead to more efficient banking processes, reductions in fraud and a win/win/win for banks, financial technology firms (fintechs) and consumers.  Globally, nearly $23 billion of venture capital and growth equity has been deployed to fintechs over the past five years, and this number is growing quickly. Still, the nature and extent of impact that fintechs have on the industry remains unclear.

Throughout this week’s Acquire or Be Acquired conference, bank CEOs talked about the continually changing nature of financial services — with fintech often front and center.  For many, collaboration between traditional institutions and emerging technology firms bodes well for their future.  Here, Bank Director’s FinXTech provides authoritative, relevant and trusted content to a hugely influential audience, specifically:

  • Fintechs who view banks as potentially valuable channels or distribution partners;
  • Banks looking to grow and/or innovate with fintech companies’ help and support; and
  • Institutional investors, venture capitalists, state & federal regulators, government officials and academicians helping to shape the future of banking.

We designed FinXTech as a peer-to-peer resource that connects this hugely influential audience around shared areas of interest and innovation.  As a host of FinTech Week in New York City this April 24 – 28 (along with Empire Startups), we bring together senior executives from banks, technology companies and investment firms from across the U.S. to shine a light on what is really generating top line growth and bottom line profits through partnerships, collaboration and investments.

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Given the changing nature of banking today, this week-long event in New York City looks at the various issues impacting banks, non-banks and technology companies alike.  So as we move towards FinTech Week in New York City, I invite you to follow me on Twitter via @AlDominick, FinXTech’s President, Kelsey Weaver @KelseyWeaverFXT@BankDirector and our @Fin_X_Tech platform and/or check out the FinTech Week New York website for more.

3 Things to Know from Day 1 at Acquire or Be Acquired

#AOBA17 conference intel (Sunday/Monday)
By Al Dominick, CEO of Bank Director | @aldominick

Quickly

  • New competitors and innovations are continually changing the business of financial services.
  • The continued shift towards technology, data, algorithms and smart analytics impacts how value and profit are created.
  • In the last 10 years, this is the best time for banks to access the capital markets.

_ _ _

The possibility of less regulation and a change in corporate tax policy have quite a few attendees feeling bullish on the immediate future of community banking.  Below, I share why I am so optimistic about the state of banking in 2017.

For those interested in following the conference conversations via social channels, I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector and its @Fin_X_Tech platform, and search & follow #AOBA17 to see what is being shared with (and by) our attendees.  To see what I’ve already shared from this year’s conference, check out my Saturday outlook and yesterday’s mid-day recap.

Departing Administration Leaves Gift of Fintech Principles

By Al Dominick | @aldominick

Quickly:

  • The White House’s National Economic Council left a “framework for fintech” for the incoming administration.
  • I’ve been part of several conversations at the White House that helped shape today’s perspective.
  • I shared these thoughts on both our platforms – BankDirector.com and FinXTech.com earlier today (so apologies if you’ve seen this already).

It may strike some as odd that President Barack Obama’s White House’s National Economic Council just published a “Framework for FinTech” paper on administration policy just before departing, but having been a part of several conversations that helped to shape this policy perspective, I see it from a much different angle.

Given that traditional financial institutions are increasingly investing resources in innovation along with the challenges facing many regulatory bodies to keep pace with the fast-moving FinTech sector, I see this as a pragmatic attempt to provide the incoming administration with ideas upon which to build while making note of current issues. Indeed, we all must appreciate that technology isn’t just changing the financial services industry, it’s changing the way consumers and business owners relate to their finance–and the way institutions function in our financial system.

The Special Assistant to the President for Economic Policy Adrienne Harris and Alex Zerden, a presidential management fellow, wrote a blog that describes the outline of the paper.  I agree with their assertion that FinTech has tremendous potential to revolutionize access to financial services, improve the functioning of the financial system, and promote economic growth. Accordingly, as the fabric of the financial industry continues to evolve, three points from this white paper strike me as especially important:

  • In order for the U.S. financial system to remain competitive in the global economy, the United States must continue to prioritize consumer protection, safety and soundness, while also continuing to lead in innovation. Such leadership requires fostering innovation in financial services, whether from incumbent institutions or FinTech start-ups, while also protecting consumers and being mindful of other potential risks.
  • FinTech companies, financial institutions, and government authorities should consistently engage with one another… [indeed] close collaboration potentially could accelerate innovation and commercialization by surfacing issues sooner or highlighting problems awaiting technological solutions. Such engagement has the potential to add value for consumers, industry and the broader economy.
  • As the financial sector changes, policymakers and regulators must seek to understand the different benefits of and risks posed by FinTech innovations. While new and untested innovations may increase efficiency and have economic benefits, they potentially could pose risks to the existing financial infrastructure and be detrimental to financial stability if their risks are not understood and proactively managed.

A product of ongoing public-private cooperation, I see this just-released whitepaper as a potential roadmap for future collaboration. In fact, as the FinTech ecosystem continues to evolve, this statement of principles could serve as a resource to guide the development of smart, pragmatic and innovative cross-sector engagement much like then-outgoing president Bill Clinton’s “Framework for Global Electronic Commerce” did for internet technology companies some 16 years ago.

The University of Maryland’s Marketing and Finance Super Day

I’m looking forward to keynoting today’s University of Maryland, Robert H. Smith School of Business’ Marketing and Finance Super Day.  What follows is a sneak peak of my remarks on the intersection of technology with financial services and why FinTech matters to business-school students.

Investments in financial technology have grown exponentially in the past decade – rising from $1.8 billion in 2010 to $19 billion in 2015.  Global investments in financial technology ventures in Q1 2016 were reported to reach $5.3 billion, representing a 67% increase over the same period last year.  Still, profitability remains elusive for many large FinTechs, despite attracting large volumes of customers and creating significant revenue.  So against this backdrop, I developed my remarks for current MBA students and fellow Smith-school alumni.

The opinions I’ll share reflect a number of conversations I’ve had throughout the year.  One, made by Chris Flowers at the International Finance Corporation’s annual FinTech CEO Summit this October, certainly bears mention.  In his words, a bank “is not just a business model, it is a regulatory concept and a social undertaking.”  So as much as some expect recent investments to radically change the nature of banking, I’m far more optimistic that creative new partnerships will emerge that ease payment processes, reduce fraud, save users money and promote financial planning.

Since this is a more academic audience, my remarks explain how the fabric of the financial industry continues to evolve as new technology players emerge and traditional participants transform their business models.  As part of the school’s Marketing and Finance Super Day, I’ll provide insight into the profound transformations taking place throughout the financial sector while sharing graphics like these from our friends at LetsTalkPayments

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If you’re interested to see the full presentation, I’ll share a link on LinkedIn and Twitter later today after I wrap up my remarks.