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Essential Fintech Reading: Nov 14 - 20

Digital Convenience Trumps Physical Location

Writing for the Financial Brand, MX Director of Content Jon Ogden urges FIs to stop making physical convenience the focal point of their brand identity and instead make it easy for non-locals to buy their products. Noting that consumers now open and expand relationships with financial providers all over the world, Ogden recommends that FIs be able to offer their products directly online or on a mobile device regardless of a customer's physical location.  "Hold too tightly to a legacy mindset — based on branches, billboards, and radio spots — and you’ll wake up one day and find that your consumers are all embracing brands that provide the ability to open and use accounts 24/7/365 without visiting a ‘local’ branch," writes Ogden.

A New Branch Experience Rises Out Of The Ashes

After one of its branches burned down in a fire, Evans Bancorp was able to reinvent the way it approaches its physical locations. Writing for American Banker, Bryan Yurcan shares how Evans used the insurance money to create a new branch, featuring universal bankers with tablets to service customers and interactive teller machines (ITMs). The ITM, a product of NCR Corp, performs the same functions as a traditional ATM while enabling customers to interface with remote employees via video. Evans has also rolled out a concierge desk where employees can greet customers and pull up data to offer them more personalized service. American Banker reports that the overall branch count in the US was 93,283 as of June 30, down 6.3 percent over the last six years. However, most of that is due to large banks closing branches and smaller banks have generally remained flat or even increased their branch count. 

Digital Capabilities Slow To Emerge, Revealing Capabilities Gap

While executives at major retail banking institutions recognize how crucial digital capabilities are, their ability to deliver them is lagging behind. An Oracle report, Banking is Changing ... With or Without Banks, finds that 92 percent recognize the importance of real-time synchronization but only 24 percent provide that capability. Location-driven services and real-time analytics are also viewed as crucial but few institutions can claim them:


Despite these discouraging capability gaps some progress is being made. While 74 percent of banks cannot yet facilitate digital on-boarding of their customers this figure is expected to drop to 24 percent within two years. 

Dwolla Founder Addresses White Label Service, Innovation & Regulation

Dwolla founder Ben Milne speaks with Finextra, detailing his firm's move toward a white label service and his thinking on innovation and regulation. "Innovation can happen inside of regulated environments, but it takes a commitment from a fintech company to understand and bake compliance into the innovative products and services that are sold," says Milne. "At the same time, lawmakers and regulators need to understand the way and the speed with which industries can change these days, and avoid slowing down innovation that can benefit everyone." Milne notes that big business customers wanted to access Dwolla's architecture but not have their branding "all over the transaction," justifying the move to a white label service. 

Not Just Rivals: Banks Investing In Fintechs

The bold talk of venture backed fintechs overtaking banks has instead given way to partnerships and investments by big banks in fintech, reports Daniel Huang of the Wall Street Journal. Huang notes that the six largest U.S. banks or their clients have participated in 25 fintech investment deals this year, including Prosper Marketplace Inc. and Circle Internet Financial Inc.


The relationship between upstarts and entrenched incumbents is not nearly as adversarial as some think and "even staunchly antibank firms need to play ball with banks," writes Huang. "Lenda, an online mortgage lending platform launched in San Francisco three years ago, doesn’t deal directly with banks, but its loans often pass through a bank before reaching investors."