Digital Banking's Big Ideas | Lead Bank Feature

Jun 23, 2019

By: American Banker

AUSTIN, Tex. — Facebook's cryptocurrency plans dominated much of the discussion at American Banker's Digital Banking conference here last week, with bankers wondering if the Libra digital currency could really help the social media giant challenge the role banks play and redefine the future of money. The reveal underscored the event's themes of digital transformation and competition.

 Many banks continue to struggle with how to serve the customer in the digital-first age, including simplifying access to products, speeding up account opening and approvals, and improving the user experience. But there were reports of successes too, with some institutions embracing fintech partnerships, while others innovated on their own.

 Attendees noted a shift in the purpose of technology use — how many banks were moving beyond the need to digitize services, and looking to new processes to help them increase accounts and deposits instead.

Following is a summary of some of the key ideas and themes presented at this year's conference.


Doubts about Facebook's Libra

Facebook's crypto plans got a cool reception from bankers and pundits at the conference, with many calling into question its potential stability and whether it could withstand regulatory inquiries.

 Pam Burch, director of product and service delivery at the $1.9 billion-asset Northwest Financial in Arnolds Park, Iowa, predicted that financial regulators would thoroughly scrutinize the Facebook Libra project.

 “For that reason, I don’t see banks supporting this anytime soon,” she said.

 Brad Leimer, co-founder of Unconventional Ventures, a venture capital firm for fintechs, took a wait-and-see approach to Facebook's new project.

 “They’ve been trying to do payments for 10 years,” he said. “The reason why payments in Messenger didn’t work was because they didn’t realize what Alipay and WeChat realized early on, that you have to make payments ubiquitous.”


Big Tech's Shadow

It's not just Facebook that worries bankers, however. Some predict that Amazon and Google will soon try to open a bank or credit union.

"It's a matter of not if, but when," said Salman Syed, vice president of business development at Marqeta.

And unlike Facebook, which has trust issues, consumers may well welcome the other big tech firms with open arms. Roughly 42% of recent and prospective homebuyers are potential supporters of having tech companies as mortgage providers, according to a survey released Thursday by PwC.

“That would become a great challenge for financial institutions,” said David Schiff, a principal in PwC's financial services advisory practice.

Schiff said consumers embracing tech companies for something as complicated and important as a mortgage is a direct result of them turning more to alternative lender over the years, especially online players such as Rocket Mortgage.

The survey showed that 34% of borrowers use online lenders, and consumers under 35 are more than twice as likely to use such a company.

“Digital is an option to help banks engage earlier, understand the needs of a particular individuals, and proactively help them meet their goals,” PwC said in the report accompanying the survey results.


Time really is money

Several small banks are struggling with whittling down onboarding times for new customers and products.

 Several attendees said they were in search of fintech partners that could help them create a smooth and speedy sign-up system that sill weeds out fraud.

 The objective of many companies is to get the time spent opening an account below three minutes, said David Mitchell, president of the core systems provider Nymbus.

 “There are a lot of people out there starting digital banks,” said Greg Bynum, president of the $306 million-asset Lead Bank in Garden City, Mo. “The goal is to touch customers where they are, then direct them to deposit products. … The issue is onboarding.”


Read the full article at American Banker here.




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