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Essential Fintech Reading: Aug 22-28

Community Banks: Adapt Or Perish?

Writing for Forbes, Rohit Arora argues that community banks will face extinction unless they make significant technology investments or partner "with FinTech companies to make lending activity faster, simpler and more responsive to the needs of commercial borrowers." Arora notes that Fintech companies are taking advantage of big data for lending purposes, recognizing and pricing risk in newer and better ways which undermine "a traditional competitive advantage of community bankers based on local knowledge of the communities they serve." Between 1984 and 2011 community banks' share of total U.S. banking assets fell from 38% to just 14%.

Salesforce Leaps Into Wealth Management

CRM power Salesforce.com is moving from the horizontal to the vertical as it unveils its Financial Services Cloud, pitched as an offering for financial advisers hoping to more efficiently manage their client relationships. Salesforce follows in the footsteps of companies like Box and TriNet Group which are also trying to tailor their software by industry. The Wall Street Journal notes that Salesforce  has also considered specialized services for health care and life sciences. The company's entry into wealth management was in part motivated by a need to deliver new kinds of services to millennials. The industry now is "a bunch of 55-year old men selling to a bunch of 55-year old men," said Simon Mulch, Salesforce's senior vice president of financial services.

Robo-Adviser Acquisition Activity Heats Up

Wired reports on the acquisition of FutureAdvisor by BlackRock, the world's largest asset manager. TechCrunch notes that BlackRock doesn't plan to target individual investors with this acquisition but will instead use FutureAdvisor's technology to enable banks and brokerage firms to more easily serve affluent investors. FutureAdvisor, the fifth largest robo-advisory firm, had previously identified consumers with between $100,000 and $1 million to invest as its primary target. With FutureAdvisor off the board, Bill Winterberg tells ThinkAdvisor that "all eyes are now on WealthFront and Betterment" as future acquisition targets

Impediments To Digital Transformation For Financial Institutions

Jens Lundgaard, Founder and CEO of Brandworkz, walks through the steps financial organizations can take in undergoing a digital transformation. Writing for the Financial Brand, Lundgaard notes that many financial organizations are still operating with manual processes or legacy systems. He identifies key elements of a successful digital transformation, which include an innovative mindset from the board of directors, a collaborative environment and strategic partnerships with technology vendors.