Category: Payment strategies

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What Is FinXTech Connect?

WASHINGTON, DC — Last month, our team celebrated ten years of “Bank Director 2.0.” As I look back on what we’ve accomplished, a few projects stand out. Today, I’m shining a light on the development of our FinXTech Platform, which we built specifically for financial institutions.

Bank Director’s FinXTech debuted on March 1, 2016 at Nasdaq’s MarketSite in Times Square. Positioned at the intersection of Financial Institutions and Technology Leaders, FinXTech connects key decision makers across the financial sector around shared areas of interest.

We initially focused on bank technology companies providing solutions geared to Security, leveraging Data + Analytics, making better Lending decisions, getting smarter with Payments, enhancing Digital Banking, streamlining Compliance and/or improving the Customer Experience.

As our brand (and team) grew, we heard from a number of bank executives about the challenges they faced in discovering potential technology partners and solutions. To help solve this issue, we built FinXTech Connect.

Sorting through the technology landscape is no easy feat. Nor is finding, comparing and vetting potential technology partners. But week-by-week, and month-by-month, we added to this proprietary platform by engaging with bankers and fintech executives alike. All the while, asking (whenever we could) bankers who they wanted to learn more about at events like our annual Summit or Experience FinXTech events.

Banks today are in the eye of a digital revolution storm. A reality brought about, in no small part, by this year’s Covid-19 pandemic. So I am proud that the work we do helps banks make smarter business decisions that ultimately help their clients and communities. To wit, the various relationships struck up between banks and fintechs to turn the SBA’s PPP program into a reality.

As we look ahead, I’m excited to see Bank Director’s editorial team continue to carefully vet potential partners with a history of financial performance and proven roster of financial industry clients. For those companies working with financial institutions that would like to be considered for inclusion in FinXTech Connect, I invite you to submit your company for consideration.

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Tech Trends in Banking (Since WFH Began)

WASHINGTON, DC — Since March, I’ve talked with quite a few bank CEOs about their interest in modern and secure technologies. The underlying focus? Improving the experience provided to their customers.

In parallel to such one-on-one conversations, my colleague, Emily McCormick, surveyed 157 independent directors, chief executive officers, chief operating officers and senior technology executives of U.S. banks to understand how technology drives strategy at their institutions — and how those plans have changed due to the Covid-19 pandemic.

She conducted the survey in June and July — and we just released the results in Bank Director’s 2020 Technology Survey, sponsored by CDW. Here are a few key takeaways:

Focus on Experience
Eighty-one percent of respondents say improving the customer experience drives their bank’s technology strategy; 79% seek efficiencies.

Driving the Strategy Forward
For 64% of respondents, modernizing digital applications represents an important piece of their bank’s overall technology strategy. While banks look to third-party providers for the solutions they need, they’re also participating in industry groups (37%), designating a high-level executive to focus on innovation (37%) and engaging directors through a board-level technology committee (35%). A few are taking internal innovation even further by hiring developers (12%) and/or data scientists (9%), or building an innovation lab or team (15%).

Room for Improvement
Just 13% of respondents say their small business lending process is fully digital, and 55% say commercial customers can’t apply for a loan digitally. Retail lending shows more progress; three-quarters say their process is at least partially digital.

Spending Continues to Rise
Banks budgeted a median of $900,000 for technology spending in fiscal year 2020, up from $750,000 last year. But financial institutions spent above and beyond that to respond to Covid-19, with 64% reporting increased spending due to the pandemic.

Impact on Technology Roadmaps
More than half say their bank adjusted its technology roadmap in response to the current crisis. Of these respondents, 74% want to enhance online and mobile banking capabilities. Two-thirds plan to upgrade — or have upgraded — existing technology, and 55% prioritize adding new digital lending capabilities.

Remote Work Permanent for Some
Forty-two percent say their institution plans to permanently shift more of its employees to remote work arrangements following the Covid-19 crisis; another 23% haven’t made a decision.

Interestingly, this survey reveals that fewer banks rely on their core provider to drive their technology strategy. Forty-one percent indicated that their bank relies on its core to introduce innovative solutions, down from 60% in last year’s survey. Sixty percent look to non-core providers for new solutions. Interested to learn more? I invited you to view the full results of the survey on BankDirector.com.

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Who is the Next nCino?

WASHINGTON, DC — With this week’s news that nCino is readying itself for an IPO, I thought to postulate about who “the next nCino” might be in the fintech space. By this, I mean the tech company about whom bank executives cite as doing right by traditional institutions.

For context, nCino developed a cloud-based operating system for financial institutions. The company’s technology enables both customers and financial institutions to work on a single platform that’s optimized for both retail and commercial accounts. In simple terms, they provide everything from retail and commercial account opening to portfolio management for all of a bank’s loans.

In its IPO filing, the company says it works with more than 1,100 financial institutions globally — whose assets range in size from $30 million to $2 trillion. Personally, I remember their start and been impressed with their growth. Indeed, I’ve known about nCino since its early Live Oak Bank days. I’ve gotten to know many on their executive team, and just last Fall shared a stage with their talented CEO, Pierre Naudé, at our annual Experience FinXTech conference in Chicago.

Al Dominick, CEO of Bank Director + FinXTech, Frank Sorrentino, Chairman & CEO of ConnectOne Bank and Pierre Naude, CEO of nCino at 2019’s Experience FinXTech Conference in Chicago, IL.

So as I think about who might become “the next” nCino in bankers’ minds across the United States, I begin by thinking about those offering solutions geared to a bank’s interest in Security, leveraging Data + Analytics, making better Lending decisions, getting smarter with Payments, enhancing Digital Banking, streamlining Compliance and/or improving the Customer Experience. Given their existing roster of bank clients, I believe the “next nCino” might be one of these five fintechs:

While I have spent time with the leadership teams from each of these companies, my sense that they might be “next” reflects more than personal insight. Indeed, our FinXTech Connect platform sheds light on each company’s work in support of traditional banks.

For instance, personal financial management (PFM) tools are often thought of as a nice perk for bank customers, designed to improve their experience and meet their service expectations. But when a PFM is built with data analytics backing it, what was seen as a perk can be transformed into a true solution — one that’s more useful for customers while producing revenue-generating insights for the bank. The money management dashboard built by Utah-based MX Technologies does just that.

Spun out of Eastern Bank in 2017 (itself preparing for an IPO), Boston-based Numerated designed its offering to digitize a bank’s credit policy, automate the data-gathering process and provide marketing and sales tools that help bank clients acquire new small business loans. Unlike many alternative lenders that use a “black box” for credit underwriting, Numerated has an explainable credit box, so its client banks understand the rules behind it.

Providing insight is something that Autobooks helps small business with. As a white-label product that banks can offer to their small-business customers, Autobooks helps to manage business’s accounting, bill pay and invoicing from within the institution’s existing online banking system. Doing so removes the need for small businesses to reconcile their financial records and replaces traditional accounting systems such as Quickbooks.

The New York-based MANTL developed an account opening tool that comes with a core integration solution banks can use to implement this and other third- party products. MANTL allows a bank to keep its existing core infrastructure in place while offering customers a seamless user experience. It also drives efficiency & automation in the back-office.

Finally, Apiture’s digital banking platform includes features such as digital account opening, personal financial management, cash flow management for businesses and payments services. What makes Apiture’s business model different from most, though, is that each of those features can also be unbundled from the platform and sold as individual modules that can be used to upgrade any of the bank’s existing systems.

Of course, these are but five of hundreds of technology companies with proven track records of working with financial institutions. Figuring out what a bank needs — and who might support them in a business sense — is not a popularity contest. But I’m keen to see how banks continue to engage with these five companies in the months to come.

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Bank CEOs and Their Boards Can Lay Claim to These 5 Technologies

Quickly:

▪ Regional and community banks continue to lay claim to innovative technologies that attract new customers, enhance retention efforts, improve efficiencies, cut costs and bolster security.

By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech

ATLANTA — The digital distribution of financial goods and services is a HUGE issue for bank executives and their boards.  Margins on banking products continue to decline due to increased competition.  In my opinion, this provides ample incentivize for banks to seek partnerships with specialized product and service providers.

I shared this thought earlier today at Bank Director’s annual Bank Board Training Forum. During my remarks to an audience of 203 officers and directors (representing 84 financial institutions), I laid out five potential area of collaboration that community bank CEOs and their boards might spend more time discussing:

1. New core technologies;
2. Machine learning / Artificial intelligence applications;
3. RegTech;
4. Payments; and
5. White labeling product offerings.

I elaborated on why I think our audience needs to explore each area before expanding on how banks might take steps to incorporate such technologies into their culture and business.  I wrapped up by providing examples of companies in each space that attendees might learn more about.

For instance, when it comes to the core technological systems offered by Fiserv, Jack Henry and FIS, many banks are investing in “integration layers” to bridge the needs of client‐facing systems with their core system. While these layers have proven valuable, banks are also aware of the need to migrate away from legacy cores should the flexibility they desire not come from these companies.  Hence the advent of companies like Finxact, a cloud banking platform promising to be the most transparent and open core banking system available.

In terms of machine learning and artificial intelligence, I see five potential use cases for banks to consider: smarter customer acquisition, better Know-Your-Customer efforts, improved customer service, smarter and faster account openings and the ability to offer more competitive loans.  Here, I am impressed with the work being done by companies like Kasisto, whose conversational AI platform is pre-loaded with thousands of banking intents and millions of banking sentences.  It promises to fulfill requests, solve problems, predict customers’ needs and improve performance on its own using sophisticated machine learning.

Given the cost and complexity of compliance, RegTech offerings promise to simplify fraud prevention and detection, improve the interpretation of regulation while accelerating reporting functions.  Further, RegTech companies held simplify data access, storage and management while strengthening risk management efforts.  There are quite a few companies in this fast-growing space that I highlighted.  One is Fortress Risk Management, a company whose advanced analytics predict and detect financial crime while its tool enable efficient case management, dispute management, reporting and regulatory compliance.

With respect to payments, our rapidly changing and oh-so-interconnected markets of debit, credit, mobile, prepaid and digital payments proves both a blessing and a potential curse for traditional institutions. As we move toward a cashless society and payments become less visible, banks need to maximize their opportunities to become the default payment method, and keep abreast of innovations in credit scoring, faster payments, analytics, security and fraud detection.  Case-in-point, BluePay delivers non-interest income to banks of all sizes by aggregating customer data coupled with the latest merchant processing technology.

Finally, white label product offerings are nothing new.  However, technology companies like SimplyCredit and StrategyCorps continue to help banks reshape and rethink customer engagement, setting new and higher bars for their’s clients’ experiences.  For banks seeking innovations like rapid loan adjudication, partnering with technology providers like these enables a bank to keep pace with the customer experience expectations set by large technology firms.

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If you weren’t able to join us in Atlanta and are curious about today’s featured image, here is a link to the pdf: 2017 Bank Board Training Presentation (Tech-focused). As I shared, New Zealand’s All Blacks are the world’s most successful sporting outfit, undefeated in over 75% of their international rugby matches over the last 100 years.  Their willingness to change their game (and their culture) when they were at the top of their game inspired me — and allowed me to challenge our attendees to think if they are willing to do the same with their banks.  I’m also inspired by my colleagues who helped develop this year’s program. From our conference team to editorial group, marketing to data departments, I’m proud to work with a great group dedicated to the idea that a strong board makes contributes to a strong bank.

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Early Takeaways from Bank Director’s Growing the Bank Conference

With continuous pressure on bankers to grow earnings, developing clear strategies, repeatable practices and incorporating exceptional user-experience technologies has to be high on almost every executives to-do list.

How do you bank?

By taking a pause before answering this question, you will appreciate how, regardless of age, we all expect greater pricing transparency, ease of use and always-on access to personal information as part of an integrated banking experience.  The challenge for most bankers?  What many consider state-of-the-art today — in terms of features and services — quickly becomes part of the norm that will be expected and insisted upon in the coming years.

At this morning’s Growing the Bank Conference, I jotted down a few thoughts that builds on this “how do you bank” query.

  • When it comes to the classic build or buy technology decision, partnerships are now de rigueur — with 87% of our 240+ person audience indicating they see technology as presenting opportunities to banks (and not threats).
  • Historically, banks organize themselves along a line of products; however, many have suggested re-orienting operations around customer needs and expectations.
  • To retain deposits, banks should ramp up their customer relationship programs, increase cross-selling efforts and invest in product lines that attract stable deposits.

While we haven’t gotten deep into the payments space (yet), I do encourage bank executives to think about the dramatic growth in that area of banking  — which continues to transform how efficiently banks connect with their customers.  Likewise, I wasn’t kidding when I suggested attendees spend some time reading the OCC’s “Supporting Responsible Innovation” white paper.

Finally, a “did-you-know” that I meant to share from the stage during my conversation with Brian Read, Executive Vice President, Retail Banking, Umpqua Holdings Corp. and Umpqua Bank.  According to the Federal Reserve, 85% of mobile banking users — a bank’s “most advanced” clients — still use branches from time to time. So as he shared with us, there really is a place for a physical presence in banking today.

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*FWIW, we’re in Dallas at the Four Seasons Resort and Club Las Colinas in Dallas, Texas where the annual Byron Nelson golf tournament wrapped up yesterday evening.  The picture above is of Jordan Spieth — the former number one player in the Official World Golf Ranking and two-time major winner — a gift to some of my team who were intent on getting a photo of him.  As a former student of St. Marks, I will not hold it against him that he went to Jesuit, a rival high school.

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FinTech Day is One Week Away

The fabric of the financial industry continues to evolve as new technology players emerge and traditional participants transform their business models. Through partnerships, acquisitions or direct investments, incumbents and upstarts alike have many real and distinct opportunities to grow and scale.  If 2015 was all about startups talking less about disruption and more about cooperation, I see 2016 as the year that banks reciprocate.

By Al Dominick, President & CEO, Bank Director

Next Tuesday, at Nasdaq’s MarketSite in Time Square, our team hosts our annual “FinTech Day.” With so many new companies pushing their way into markets and product lines that traditionally have been considered the banking industry’s turf, we look at what fintech means for traditional banks. Likewise, we explore where emerging fintech players may become catalysts for significant change with the support of traditional players.  When it comes to trends like the personalization of banking, the challenges of scaling a company in our highly regulated industry and what shifting customer expectations portend for banks and fintechs alike, we have a full day planned. Take a look at some of the issues we will address.

Riding The Wave Of Change
Al Dominick, President & CEO, Bank Director
Robert H. McCooey, Jr., Senior Vice President of Listing Services, Nasdaq

At a time when changing consumer behavior and new technologies are inspiring innovation throughout the financial services community, we open this year’s program with a look at how collaboration between traditional institutions and emerging technology firms bodes well for the future.

Banking’s New DNA
Michael M. Carter, CEO, BizEquity
Vivian Maese, Partner, Latham & Watkins
Eduardo Vergara, Head of Payments Services & Global Treasury Product Sales, Silicon Valley Bank
Moderated by: Al Dominick, President & CEO, Bank Director

With continuous pressure to innovate, banks today are learning from new challengers, adapting their offerings and identifying opportunities to collaborate.  With this opening session, we focus on the most pressing issues facing banks as they leverage new tools and technologies to compete.

Who Has the Power to Transform Banking
Jeana Deninger, Senior Vice President, Marketing, CoverHound, Inc.
Brooks Gibbins, Co-Founder & General Partner, FinTech Collective
Colleen Poynton, Vice President, Core Innovation Capital
Moderated by: Al Dominick, President & CEO, Bank Director

While fintech startups continue to spearhead the technological transformation of financial services, recent efforts by systemically important financial institutions call into question who reallly has the power to tranform banking. From an investment perspective, recent market turmoil may put some opportunities on hold – while others now have a higher, sharper bar to clear. In this session, we talk to investors about the traits that they look for when backing a venture in the context of a changing economic environment.

Opportunities to Reinvigorate the Banking Industry
Tom Kimberly, General Manager, Betterment Institutional
Thomas Jankovich, Principal & Innovation Leader, US Financial Services Practice, Deloitte Consulting LLP
Pete Steger, Head of Business Development, Kabbage, Inc.
Moderated by: Al Dominick, President & CEO, Bank Director

Many fintech companies are developing strategies, practices and new technologies that will dramatically influence how banking gets done in the future. However, within this period of upheaval – where considerable market share will be up for grabs – ambitious banks can leapfrog both traditional and new rivals. During this hour, we explore various opportunities for financial services companies to reinvigorate the industry.

Opportunities to Financially Participate in Fintech
Joseph S. Berry, Jr., Managing Director, Co-Head of Depositories Investment Banking, Keefe, Bruyette & Woods, Inc. A Stifel Company
Kai Martin Schmitz, Leader FinTech Investment LatAm, Global FinTech Investment Group, International Finance Corporation
Moderated by: Al Dominick, President & CEO, Bank Director

While large, multinational banks have made a series of investments in the fintech community, there is a huge, untapped market for banks to become an early-stage investor in fintech companies. Based on the day’s prior conversations, this session looks at opportunities for banks to better support emerging companies looking to grow and scale with their support.

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While this special event on March 1 is sold out, you can follow the conversations by using #Fintech16 @aldominick @bankdirector @finxtech and @bankdirectorpub.  And as a fun fact, I’ll be ringing the closing bell next Tuesday flanked by our Chairman and our Head of Innovation.  So if you are by a television and can turn on CNN, MSNBC, Fox, etc at 3:59, you’ll see some smiling faces waving at the cameras.

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The 5 Corners of Technological Innovation in Financial Services

To grasp what the future of banking holds, look no further than the five areas of focus for Wells Fargo.  Last week, the best performing large bank in the United States launched an “Innovation Group” in San Francisco.  As they share, this team will will work in partnership with its major businesses to meet evolving customer needs and stay ahead of the shifting competitive landscape.  Initially, such efforts will center on five areas:

  • Research and development;
  • Innovation strategies;
  • Payment strategies;
  • Design and delivery; and
  • Analytics.

As a nationwide, diversified, community-based financial services company with $1.7 trillion in assets, Wells Fargo now has six innovation labs along with its startup “accelerator.”  Given that a number of the world’s largest finance sector companies are reviewing their business models following the rapid growth of “fintech” entrants in the sector, the investment in both time and resources by Wells Fargo gives shape to the potential future of banking.

Wells Fargo Labs invite customers to “Come out and Play: Be one of the first to test out latest ideas and technologies – from still-in-development beta offerings to newly launched products.”

Personally, I’m drawn to this new addition to the Wells family in light of a report by the World Economic Forum, supported by Deloitte Consulting, entitled The Future of Financial Services:How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed.

As noted by the paper’s lead author, “for decades, banks and insurers have employed similar, highly profitable business models. But they realize those models are coming under pressure due to fintech innovations… Financial technology companies are deploying online platforms, have small capital bases, and make strategic use of data, to acquire customers and revenues at a fast pace. Banks and insurers noted that, and are contemplating their response.”  So as major players like Wells Fargo explore the “transformative potential of new entrants and innovations on business models in financial services,” seeing the cards they are putting on the table provides real color for what the future holds for many here in the U.S.

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