As we think about the next generation of banking, we have to think about it in a variety of aspects and Day 1 of the Banking Innovation Conference held in Seattle had a lot of thoughts to add to the conversation.
Several trends appeared to emerge from the day and a few really stuck with me. The concept of Innovation Theatre evolved from Dan Kimerling, R&D Lead from SVB (Silicon Valley Bank) presentation. This is particularly relevant as our model of what Innovation is at M&T is evolving. The model is evolving to avoid doing exactly what Dan was discussing and that is putting on the show for the press regarding Innovation and having someone or a team of people that claim to be the only one’s innovating. Now that may not have been the case for our team; however, it is the case with several other institutions and in some aspects everyone needs to take a look at what they are doing. Is it truly innovation or is it all for show? Dan made note, having an open floor plan office is not innovation, which made me laugh because people have asked about our team’s space and what is innovative about what we do in the center. Scarlett Sieber, SVP from BBVA, noted that at BBVA, the management team had realized innovation could be utilized as an empowerment tool and have “vertical leads” in place who specialize in one area that FinTechs are focusing on which may be Bitcoin, P2P, Lending, etc. Your employees can be your biggest asset if you use them correctly. This concept is one of my biggest takeaways so far from the conference and I will be talking to the team when I return to the East Coast about how we can go about empowering this type of model and making this specialty for individuals a reality.
To go alone with the concept of R&D there is a challenge with what R&D means to banks? We aren’t Apple or Google but we can do R&D. To Dan, R&D = Perspective + Processes + People, I liked this analogy and he had another great one when he said just like sports, you have to practice R&D. Excellence is the goal, not perfection. I think from a banking perspective we have to remember there are very few things we can do perfectly, we hope from the Feds and audit perspective we can perfect our BSA/AML or KYC practices but in the technology space perfection is hard – excellence can be achieved.
Another topic that was discussed by the CEO and founder of Ripple, Chris Larsen, was thinking about “disruption”. He felt that disruption in FinTech focuses to much on the Fin and less on the Tech for FinTech teams. He also commented on the transition of the millennial generation and how we are all moving that way. This concept was seconded by Jonathan Rosen from PRN. We don’t just have to look at the true Millennial generation but also how the adopted millennial has moved digital, some would call this the difference because digital natives and digital immigrants. My question is why are banks so focused on the millennial generation vs. looking at it broken down in this granular way – those born digital and those who have learned digital technologies as they have come out?
Staying on the topic of millennial we have to think about what they like and don’t like, millennials have a distaste for hidden fees though they have a lower bar for trust in giving over information making them high targets for startups. Matt Oppenheimer, stated that when building a startup in the FinTech space, you have to find a business that is scalable but you can’t scale without a strong network of Trust – millennials can help you. Scarlett referenced that millennials make great customers when they love your product; however, they are quick to turn on you when they don’t and also jump ship if they like something else better.
Branch of the future has been a hot topic as of late and Jonathan Rosen had several things to say. We have to look at Branch of the Future as more tech, fewer people, and more devices. As we move to the “bank of the future” – Dan had an interesting perspective to say that based on behavior targeting, we should be showing our customers different versions of our online and especially the mobile platforms. This is contextual banking but how many banks are truly ready for it?
We couldn’t talk about the conference without talking about the FinTech company founders that opened the show. Joseph Pratner from dyme.co wants people to think about his company like Fitbit – taking small steps towards changing people’s behavior. I loved this analogy and feel that a lot of people can understand it and draw a connection to it. To me as someone who had never heard of dyme.co that statement made me want to look further into them. So if you are someone who has trouble with saving, wants a savings “coach” or “buddy” dyme.co may be for you and it is your choice of how much reminding they are going to give you.
Biometrics has been a hot area for patents as of late with the bigger banks so I was surprised that the topic really only came up once in the first day. As far as passwords are concerned, the conversation shifted towards biometrics. Liran Amrany said he sees the evolution of payments on your phone at the point of sale as much of a hassle as pulling out your credit card, the innovation will be when one can utilize their fingerprint and then say, a phone number or zip code. Joseph Pratner stated, the string of passcodes that we deal with now will be the evil joke that we look back on in 5-10 years which is funny to think because, what is the evil joke we look back on from 5-10 years ago in today’s world? To me the joke is remembering people’s phone numbers because I know there are very few numbers I still remember. Will passwords be like that?
To conclude, Matt Oppenheimer asked the audience how many people in the room felt they worked for a technology company, about 5-10 people raised their hands of a full room (my guess 100-150 people). He then stated in his talk, “Banks that do view themselves as technology companies, will be the banks that thrive and succeed”. But as one person on Twitter pointed out, you can’t forget about the customer’s needs while you create this technology.