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Essential Fintech Reading: Jan 16-22

Jan 22, 2016 2:40:00 PM

Mobile Customers Hold More Products, Bring In More Revenue And Are Less Likely To Leave Their Credit Union

A new study from Fiserv finds that customers who use mobile banking bring in 36 percent more revenue than branch-only customers and are less likely to leave. Reporting on the study results, Credit Union Times notes that the attrition rate for members of large credit unions who used mobile banking was just 4.9 percent vs 13.4 percent for members who were not enrolled. Among medium and small credit unions, the attrition rate for mobile bankers dropped to a mere 2.8 percent. Mobile banking consumers also hold more financial products (2.3) with their credit union than branch-only consumers (1.3). The report notes that, "Increased mobile adoption and usage will net a larger ROI for financial institutions that proactively work to build a robust mobile channel - one that serves the needs of the highly valuable mobile banking consumer."

Ease Of Account Set Up, More Attractive Rates Top Reasons For Using Fintech

Last week MoneySummit briefly summed up Ernst & Young's Fintech Adoption Index. This week we dive deeper into its findings, exploring why people use fintech products and what the major impediments are to adoption. The ease in setting up an account and more attractive rates rank as the top reasons for using fintech: 


The top reasons for not using fintech include a lack of awareness that such solutions exist, a lack of need and a preference for traditional FIs:


Q4 Fintech Deals & Funding Diminish

Telis Demos and Peter Rudegeair of the Wall Street Journal report that the wind was finally taken out of fintech's sails during Q4, as dollars invested in U.S. fintech startups fell by 20 percent from Q3 and the number of deals fell by 11 percent to 310. The IPO market has also become more unfriendly as Elevate Credit Inc. delayed an IPO scheduled for last week and online mortgage and consumer lender LoanDepot indefinitely postponed its IPO. Analysts remain bullish on digital lending with Autonomous Research estimating that such firms will triple to $100 billion in loans globally by 2020. However, with more than 2,000 firms now competing in the space, Autonomous expects "some businesses will succeed, others will fail, and some lenders will be acquired by more traditional financial services firms." Wall Street has looked more kindly upon those lenders who are partnering with big banks, such as On Deck, which solidified its standing by partnering with J.P. Morgan Chase.

Biometric Projects Proceed Despite Sometimes Limited Customer Interest

Bryan Yurcan of American Banker reports that banks are proceeding with biometrics to enhance security but customer awareness of these offerings remains minimal. A recent Gartner survey found that many consumers were not even aware that their bank offered Apple's Touch ID, a fingerprint recognition feature. Still, some measures are gaining traction. Citi has launched a voice authentication project in the U.S. that allows credit card customers to verify themselves when they call their bank, with 250,000 opting in. Citi is also considering other technologies, including working with Diebold on iris-scanning ATMs. In early 2015 USAA reported that it had over 100,000 members using biometric options as it became the first major U.S. financial institution to initiate a full-scale rollout of voice and facial recognition. 

Fintech Predictions & Observations From The World Economic Forum

  • Deutsche Bank AG CEO John Cryan predicts the disappearance of physical cash within a decade.  "Cash I think in ten years time probably won't (exist). There is no need for it, it is terribly inefficient and expensive," said Cryan. 
  • Dan Schulman, CEO of Paypal, said cybercrime is the biggest threat to the financial industry. "The big next stress is that the financial system is going to be hacked for one or two days," said Schulman.
  • Richard Lumb, CEO of Accenture’s financial services business, told Business Insider that financial institutions now see the need to collaborate with fintech startups. "Before financials would look at fintech as something that wasn't as big of a deal, something new and something that wasn't going to make a difference to their customer bases. But now they realize there's customer disintermediation and it's not just one company that's eating at their customer base, it's like a shoal of piranha fishes nibbling away. The only way forward is to collaborate not compete."
Jeff Meredith

Written by Jeff Meredith

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