“The whole value chain of banking is up for grabs,” said Manuel “Manolo” Sanchez, chairman and CEO of BBVA Compass, in response to a question about disruption challenges to the banking industry posed by financial technology (FinTech) startups. Citing payments as one area particularly ripe for disruption, Sanchez added, “Banks need to focus on partnerships or collaboration.”
Sanchez was speaking at the FinTech Forward President & CEO Panel Discussion during BAI Retail Delivery 2015 held October 13 in Las Vegas. He was joined on the panel by Arkadi Kuhlman, founder and CEO of Zenbanx and Jim Milde, president of Financial Services and Insurance with NTT DATA in a discussion moderated by Penny Crosman, editor-in-chief of Bank Technology News and technology editor of American Banker.
Among the topics covered:
- Areas of banking that are ripe for disruption
- The strongest financial technology competitors banks should keep in mind
- Are banks being picked-apart by nimble competitors and being left to act as utilities?
- What components of business banks should fight harder to take back
- The level of change – gradual or sweeping – banks have to make to stay competetive
- How banks can better serve customers on mobile and online channels
- Looking ahead at technologies banks will need to remain competitive
The panel highlighted real time payments as a segment that is most ripe for disruption, mainly encouraging banks to create an environment of partnerships and collaboration with developers in order to maintain competitive advantage. Sanchez cited BBVA Compass’ investment in Dwolla, a payments processor, as an example of how collaboration can bring faster innovation for customers.
The customer interface was also identified as a key source of disruption for the banking industry. Kuhlman emphasized innovation should be about banking instead of banks, and the panel agreed that customers are the driving force behind innovation.
“Customers today are changing how they use technology, how they are buying services and interacting with services. With banks being supply side driven, this presents a problem dealing with the demand side of the equation,” said Kuhlman. “Banks are having to bring technology from the customer interface to the backend.”
Milde noted that deepening the customer relationship is still the most critical issue for financial services providers. “In any business I’m in, I want to be close to the customer. I would be wary about any company that distintermediates that relationship.”
The conversation quickly moved to millienials and their direct impact on the banking industry and the future of banking technology. The panel briefly discussed the demographic, their perception of banking and the challenges they present. According to Kuhlman, “48% of millennials prefer to do banking through retail internet brand than a traditional bank.” With companies investing more and more in big data, we can look forward to seeing real data driving innovation, he said.
The panel also identified digital marketing as an area of opportunity for banks. With banking brands being up against more attractive messaging, battle is around content. “If anyone is looking to gain a competitive advantage they need to stay ahead of the curve in digital marketing,” said Sanchez.
Ms. Eshelman is a contributing writer for BAI Banking Strategies and public relations director for San Diego, Calif.-based Marketing Design Group.