Banking, Member Exclusive

Banking Briefing: All aboard the transparency train

  • This week, we take a look into creating transparency within digital-first FIs.
  • We also discuss how banks seem to be overlooking the basics in their offerings, like loyalty programs or advice on investments.

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Banking Briefing: All aboard the transparency train

3 questions on digital-first FIs and transparency with Bridget Abraham, Chief Compliance Officer at Remitly

Consumers continue to demand transparency from their financial service providers. But for digital-first FIs, bringing transparency into their services can be a challenge, especially with no face-to-face interactions on the table.

In this Q&A, Bridget Abraham, Chief Compliance Officer at Remitly, dives into what it means to be transparent as a digital-first financial institution.

What are some of the challenges that come with being more transparent as a financial service provider?

Security and privacy are paramount when it comes to protecting customers' information and trust. As companies look to prioritize transparency in more meaningful ways, lines of communication may open about data collection methods by financial service providers, how that data is then used, and in the case of remittances, some of the more complex details of how money is sent across borders.

For most, knowledge is power, and having more access to information on financial service providers will be an initially welcomed opportunity. For others, having access to this information, potentially for the first time, may raise questions and confusion about what truly happens when money is deposited into a bank account. Luckily, companies that plan to increase transparency with customers have the opportunity to mitigate confusion and build trust by providing customer service support 24/7 to inform and educate customers on the safety of their funds.

In the same vein, proper financial education is a key component of increasing customer transparency. For Remitly, our customer base is comprised of immigrants. When immigrants move to a new country, one of the first things to do is figure out a way to store and send money safely. In order to contextualize the opportunities at hand and the methods of acquiring those banking methods, it’s crucial to have an understanding of financial literacy: how to save, how much to save, how to invest, etc.

Financial institutions should challenge themselves to provide financial literacy initiatives for individuals learning the ropes of banking services, and transparency about international banking services and customer data protection should be part of those conversations.

How do you communicate the use of consumers' personal data in a way that makes sense to the user?

At Remitly, customer-centricity is a main priority, so we take transparency and protecting our customers' data seriously. Given the nature of financial services and the ability to move money across borders, we have to collect certain personal and sensitive information to help our customers do that. In order to inform our customers on what kind of data we collect and why, we provide transparency throughout our user experience, disclosures, and in our Privacy Policy on how their information is stored and used. We also take security seriously and use industry standards to protect the information customers provide us.

Why do you think 2023 is the year these digital-first FIs are tuning into trust and transparency?

2022 was a year that brought great promises of wealth and prosperity from the crypto industry. By the end of the year, cracks in the system were revealed and the world began to understand the volatility of cryptocurrency and the lack of transparency within crypto account management. While not everyone has invested in crypto, it was a year when many realized how important it is to understand how we can trust financial institutions to protect capital. 

Additionally, in 2023, I foresee continued guidance from the Consumer Financial Protection Bureau on compliance measures for financial technology companies. As the COVID-19 pandemic drastically shifted how many individuals send and receive money by moving to more digital channels, there is now time and space to refine regulations to protect customers’ hard-earned dollars.

In the numbers: banks spending too much time alphabetizing CDs

You know that moment when you desperately need to clean your apartment, but instead find yourself alphabetizing your CDs (or wondering why on earth you even have CDs – it’s 2023 for god’s sake!) and before you know it, you’re surfing the web and trying to figure out how much money you can get if you sell these and whether or not they qualify as vintage…and once again, I digress.

The point I’m getting at is that right now, it looks like banks are spending too much time alphabetizing their CDs instead of grabbing their mop and getting to work.

Because while banks are exploring the irresistibly groovy worlds of AI and blockchain, consumers are twiddling their thumbs, getting progressively more annoyed that banks aren’t offering the basics like loyalty programs, or advice on investments. 

According to a report by Sopra Banking Software, a fair share of customers are showing a fair share of interest in things like tailored credit products, alerts on overdraft risks, and loyalty programs for credit programs.

When it comes to the latter, for example, while 26% say they’re already offered this product and are using it, 50% say they don’t have access to this offer but would definitely like the option.

Source: Sopra Banking Software

Now, you could argue that things like AI and blockchain may lead to the ability of offering these products – like tailored credit products, or investment advice for customers based on events in their lives. 

Nonetheless, that may take a while, and in the meantime, customers are forced to wait…or, you know, they can leave.

What we're consuming

Like saving for a rainy day…or week, month, year or decade

Big banks like JPMorgan, Bank of America and Wells Fargo are all putting aside billions to prepare for a possible ‘mild recession’. (New York Times)

So you could say she wasn’t being frank with them…

Charlie Javice, founder of financial aid assistance platform Frank, is now under investigation for allegedly tricking JPMorgan Chase into thinking the platform had 4 million users.

Javice is being accused of paying a data science professor $18,000 to create a list of over four million fake names — it’s always great to see students taking advantage of office hours! (CBS News)

UK banks open for business with open banking

You know who loves open banking? The UK. So much so that they’re like, hey, banks, I’ve got a little roadmap here for you to follow to get your open banking act together.

And so far so good, it seems: the UK’s six biggest banks announced they’ve completed the roadmap. (PYMNTS)

Not quite ‘the golden days’ for Goldman Sachs

Goldman Sachs has been dealing with its fair share of hiccups (and that’s putting it mildly). Most recently, it reported a pre-tax loss of $3 billion in its new fintech unit. As a cherry on top, the company recently laid off thousands of its employees. (FT)

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