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Essential Fintech Reading: Oct 31-Nov 6

USAA Partners With Bitcoin Wallet Provider Coinbase

USAA has partnered with bitcoin wallet provider Coinbase, integrating the firm's API which allows users to monitor their Coinbase wallet balances when they log into their accounts. This comes on the heels of a January 2015 investment by USAA and other financial services notables like BBVA Ventures, which helped Coinbase raise $75 million in Series C funding. USAA has historically been one of the most innovative banks in the country, initiating the use of mobile check deposit in 2011 and offering financial health scores to its customers. "It is then perhaps unsurprising that USAA is the bank to bring bitcoin into the fold of its retail products," observes Tanaya Macheel of American Banker. In May Reuters reported that USAA had commissioned a team to research the potential of the blockchain, an open ledger of a digital currency's transactions.


How Will Fintech Be Regulated? Tech Giants Form Lobbying Group As First Line Of Defense

Raj Date, former deputy director of the Consumer Financial Protection Bureau, discusses the proliferation of fintech startups and how regulators should approach them. Advising regulatory agencies to engage with small tech operations to learn more about what they do, Date notes that they should proactively issue guidance and rules around emerging financial technologies and also be flexible enough to modify those rules when they've erred. On Tuesday a new group, Financial Innovation Now, debuted as a defensive measure against banking groups which have been arguing that fintech companies are underregulated. Backed by Google, Amazon, Apple, PayPal and Intuit, Financial Innovation Now advocates for new technologies entering and competing in the marketplace and will center its policy promotion around financial inclusion, real-time payments processing, alternative financing and improved security

Banks Increasing Their Investment In Innovation As A Response To Fintech Threat

Sensing that the threat of industry disruption in retail banking is growing, 84 percent of banks are increasing their innovation investment. The 7th Annual Innovation in Retail Banking Report from Efma and Infosys Finacle reveals that banks expect mobility (59%), advanced analytics/big data (57%), open APIs (53%) and the Internet of Things (47%) to have a significant impact on the industry. Banks envision startups having the biggest impact in P2P payments and digital marketing. The number of banks with an innovation strategy has increased from 37 percent in 2009 to 73 percent today:


Concern For Customers' Financial Wellness Drives Engagement

Banks can dramatically increase customer engagement by improving their customers' financial well-being, reports Gallup. "When customers strongly agree that their bank looks out for their financial well-being, 84% are fully engaged, while none are actively disengaged," write Sean Williams and Bailey Nelson. Gallup finds that when banks address customers' financial well-being, they strongly increase customer confidence in their primary bank. 

As customers increasingly switch from using branches and call centers to using digital channels, Gallup observes that banks will still need to ensure they're offering engaging customer experiences in every channel.  


Digital Delivery And Innovation Crucial In Addressing Millennial Banking Needs

Banks must adapt to Millennial demands by thinking branchless, offering innovative products that meet their needs (e.g., alternative lenders that have offered ways to refinance student loans), establishing convenience and personalizing experiences. Writing for the Financial Brand, Vincent Molinari stresses that digital delivery will be paramount and that banks and credit unions that don't develop better online and mobile programs will see their businesses steadily erode. "As Millennials gain more capital and economic influence, they expect banking providers will respond to their preferences and lifestyles. Instead of investing millions into building inviting brick-and-mortar branches, banks should create more robust, personalized, and customizable digital experiences," writes Molinari.

Topics: Technology