Earlier this week, we published our quarterly print issue of Bank Director magazine. If you haven’t seen it, our talented editor, Naomi Snyder, shines a light on the “tech bets” being made by Fifth Third, a $142 billion asset institution. Having worked for an IT firm, I appreciate the three questions their President & CEO, Greg Carmichael, asks his team to consider before investing in new technologies:
- Does it improve the bank’s ability to serve customers?
- Does it drive efficiency?
- Does it create a better experience for customers?
As he shares, “not every problem needs to be solved with technology… But when technology is a solution, what technology do you select? Is it cost efficient? How do you get it in as quickly as possible? You have to maintain it going forward, and hold management accountable for the business outcomes that result if the technology is deployed correctly.”
“The challenges are how to grow the franchise and reposition the franchise to serve our customers in the way they want to be served, which is more of a digital infrastructure.”
-Greg Carmichael, President & CEO, Fifth Third Bank
While Fifth Third plans to invest some $60M this year in technology, Naomi notes that the bank doesn’t have an R&D lab with a staff separated from the rest of the bank and dedicated to inventing things (like its competitor U.S. Bancorp). Nor does Fifth Third have the reputation of being highly innovative, like a BBVA. Nonetheless, the regional bank, headquartered in Cincinnati, has a laser focus on developing practical solutions to everyday problems.
So to build on this issue’s cover story — and the efforts we’re making with our FinXTech platform — let me offer my take on who I consider standouts in the payments, lending and retail space today. Those addressing “everyday problems” may find inspiration from the work being done and/or want to explore partnership opportunities.
Payments + Transfer
When one thinks about payments — and the movement of value via cash, credit card, check and other transactions — some big names come to mind: Apple Pay, Chase Pay, Square, Paypal, etc. But don’t sleep on these companies:
In the lending sector, a lot of people continue to talk about LendingClub’s travails, scoff at SoFi’s change of heart from anti-bank to pro-partnerships and follow Prosper’s efforts to shore up its business. Within the lending space, these companies also deserve time and attention:
- Affirm, a digital lender that provides installment financing;
- Orchard, a technology and infrastructure provider for marketplace lending;
- Lendio for small business loans;
- Even, a new kind of financial app that turns variable pay into a steady, reliable income; and
- Earnest, a technology-enabled lender that enables one to consolidate and refinance student loans.
Considering the core functions of retail banking remain the establishment of deposits and making of loans, those pushing the envelope in a way consumers desire include:
- Ally Bank, known for its “No Branches = Great Rates” tag line;
- Atom Bank, one of the first Challenger Banks in the UK;
- Tandem, a new digital bank in the UK;
- Moven, a pioneer in smart phone banking; and
- Simple, part of the BBVA family that is reinventing online banking.
While these banks are pushing forward, many legacy institutions will be challenged to meet the expectations of their customers. They will need to assess the additional risks, costs and supervisory concerns associated with providing new financial services and products. Accordingly, I’m not alone in believing that financial institutions need to invest in services “for life’s needs” through collaboration and partnerships with companies like those shared in today’s post.
I realize there are a number of companies “doing it right” in these three sectors – and this simply highlights some of the players that standout to me. Feel free to comment below on others that I might highlight in future posts.