Technology plays an ever-increasing role in banking, particularly when it comes to innovation. For all the talk (and fear) about the power of online lenders, more than one speaker at recent national banking conventions noted online lenders control only 5 percent of the lending market. Chris Rentner, founder/CEO of a digital lending platform called Akouba, turned that around, telling the audience at the American Bankers Association’s annual conference that traditional banks should be able to win the digital lending game because they already have 95 percent of the customers.
While nearly all banks offer online banking, only 13 percent of banks say they have the ability to make a credit decision online. Only 7 percent of banking products are available online end-to-end, noted another ABA speaker, Christian Widhalm of LendKey Technologies. Most banking products are still bound to paper-based processes that occur inside brick-and-mortar offices.
A banker intent on staying in business a decade or more can no longer afford to ignore the digital arena, commented the futurist Walsh. Ninety percent of two-year-olds already have a working knowledge of cell phones, he said, and among the numerous ways digital experience is changing consumers: They increasingly expect companies to anticipate their needs and customize their offerings accordingly. Walsh invited bankers to consider the ads on their Facebook newsfeed. They typically reflect recent visits to Amazon and other online retailers.
Fintech partnerships are a growing phenomenon in banking. Kevin Tweddle, executive vice president of Innovation & Technology at ICBA Services Network, said a good fintech partnership “should improve revenue, lower costs, lower risk and/or improve the customer experience.” Banks need to seek out partnerships to use technology; a bank’s tech plan and its strategic plan, he said, should be one in the same. Skepticism is a reasonable response, given the numerous fintech partnerships that don’t work out. Bank CEOs typically respond to fintech partnerships with two questions: “Do you integrate with my core? What are the regulators going to think?” Fintechs that have done their homework can answer these questions.
And while we have heard for years now about the importance of big data, digital media expert Erik Qualman said at the ICBA annual convention that small data is much more important. That’s another way of saying bankers need to not only know their customers, they need to use their knowledge strategically.