Nov. 9, 2018 | by Elliot Maras
At left, Jim Marous poses a question to Vanessa Colella of Citi Ventures and Derek White of BBVA. Photo courtesy of Money20/20.
Nearly everyone agrees that technology is changing banking. It's also safe to say that many banks are partnering with technology companies to improve efficiencies and customer engagement. But these new partnerships are largely in the developmental stage, while different types of technology companies are expanding into financial services.
So far, experts have cited two types of technology companies in the financial arena: "fintech" firms — small, digital oriented technology companies (Venmo, PayPal and Zelle) — and "techfin" companies — big technology companies that offer financial services (Apple, Amazon and Google).
A keynote session titled, "The future of banking: fintech or techfin?" at the recent Money20/20 conference in Las Vegas attempted to clarify the roles that technology companies are playing in financial services and how traditional financial institutions are working with them.
Session moderator Jim Marous, co-publisher of The Financial Brand, wrote in a recent Forbes article under the same title as the Money20/20 session that financial institutions have recognized that collaboration with technology companies offers the best path to growth. The rationale, Marous wrote, is that banks partnering with technology companies can create a stronger organization than either entity could accomplish independently.
Fintech versus techfins
Panelists Vanessa Colella, chief innovation officer and head of Citi Ventures, and Derek White, head of client solutions at BBVA, agreed that technology companies are playing an important role in changing the way financial institutions engage with customers. Their responses indicated that banks are more focused on how they are interacting with technology companies — as well as the objectives they hope to achieve in these partnerships — than on the characteristics of those companies.
Colella, who gave technology companies high marks for developing products that appeal to consumers, said financial institutions will move toward ecosystems that will make it difficult to classify companies.
White said technology companies are already having an impact on how banks handle low volume interactions that — while low in volume — carry a lot of value.
Asked how a traditional institution builds a new type of organization given their legacy systems, White said his company has hired entrepreneurs to help drive change. The change, however, is not restricted to the technology, he said, but to understanding customer needs.
Marous then raised the need for banks to humanize bank processes. To this end, he said technology proponents face the challenge of selling the humanization of digital processes to organizations that are focused on saving costs. Both panelists said they were satisfied with the progress their companies are making.
"This is really about client expectations and what you're doing to achieve these expectations," Colella said. Her company validates clients' needs before undertaking new initiatives. Projects that don't achieve clients' needs don't get built. This approach, she said, has reduced the cost of bringing new innovations to market.
White agreed, saying that when customer needs are fulfilled, the costs take care of themselves. He added that the hardest challenge is delivering service with the speed that technology companies have been able provide.
In search of the ‘secret sauce'
Creating scale and speed, White said, is the "secret sauce" that will enable financial institutions to deliver new products and services to customers in less than nine months.
Both White and Colella agreed that customers are increasingly relying on mobile interaction with banks, and that innovation can improve the trust that is at the core of financial services.
Marous said banks face a challenge bringing data into customer interactions to make such interactions "smarter" in meeting customer needs. This is undoubtedly an area in which technology companies can help them.
Topics: Mobile Banking, Trends / Statistics
Elliot Maras
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.
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