Year End Round-Up

Fintech—Patti Hewitt, a.k.a. Paymentgal, observes that financial institutions need to reinvent the retail account to offer more than just the simple liquidity they’ve provided “for centuries.” She sees the bank-customer relationship itself as up for grabs.

The reason is the rise of fintech, well-funded non-bank financial-services startups with deep technology expertise. Bankers I’ve talked with who are looking at the long game feel that the fintech threat is not just the potential loss of the payments business, but also the loss of the very concept of financial matters being central to a person’s day-to-day life.

Ask a Millennial what’s important to her personally, and she’ll probably go through a half-dozen things before coming to finances. And when she does get to financial matters, she might not even mention banks or credit unions. I think it is this cultural shift that is the real issue for FIs.

Artificial Intelligence—Aite Group’s research director, Julie Conroy, sees financial advice based on artificial intelligence potentially coming from those with experience applying A.I. to fraud. She reasons that figuring out fraud schemes is as complex as making recommendations among a set of payment options. I would add that it is equally likely we will see financial A.I. coming from the big A.I. labs that can afford the thousands of person hours of knowledge engineering needed to get financial A.I. applications up and running.

Technology companies are focused on banking as an A.I. opportunity because it is an industry where the ratio of the amount of knowledge to be engineered relative to the potential revenue is favorable.

Multiservice Kiosk—Suzi McNicholas walked me through Source Technologies’ new multiservice kiosk. The first thing I noticed is that it looks like—and, more important, behaves like—an iPhone screen. This is just one way this kiosk is targeted at the digitally engaged customer.

The touch interface, hyper-rapid response, and think-ahead logic made using a bank kiosk actually feel like using a mobile phone. And it just may be Millennials, whom McNicholas characterizes as well-informed, price-sensitive, security-conscious, socially active, and time-poor, who will be the early adopters.

E-Wallets And Chip Cards—Could e-wallets and chip cards be getting closer to ubiquity? asks Peter Olynick, senior practice lead for retail banking at research firm NTT Data. He observes that chip cards may finally redeem themselves by returning to the original design concept where the chip contains everything in your wallet (identification, health-care coverage, car insurance) as well as facilitating purchases.

I looked up the patent on the chip card after we talked. It is dated 1968, meaning we are well beyond the historic 30-year span from conception to profitability of each successive payments method since the paper check. Peter also wonders if the current situation in which we have multiple, non-interoperable electronic wallets is going to mean a continued period of stasis where none of them attracts enough users and transactions to recover its cost. Or is the tipping point near as we are getting to three or four dominant wallets?

Peter feels the winning e-wallet will give consumers freedom to choose the payment channel for each transaction. I view the matter of who controls interoperability between payment systems as a territorial issue I think fintech will exploit and the banks and card schemes could lose control of.

Conference Report—Debbie Bianucci, president and chief executive of the Bank Administration Institute, had told me that the all-new BAI Beacon conference, where the above ideas were among the many presented, would showcase BAI’s new immersive conference-design principles. I found having everything in a single large space led quite naturally to more valuable interactions among attendees. Equally valuable, speakers were arrayed on multiple stages making it easy to drop in and out of presentations.

This fall’s Money20/20 conference included top presenters on A.I. in banking as well as a truly international attendee mix. The “Startup Row” feature was especially forward-looking, presenting innovations such as Bitmari, a pan-African, foreign-exchange-free Bitcoin payments system; SnapCheck, a clever merger of checks and e-payments; and Hello Soda, a mathematically sophisticated approach to using a customer’s presence on social media not only for identity verification for payments, but credit analysis as well.

— George Warfel • GWarfel@haddonhillgroup.com