‘A slow-moving wave’: Why cardless ATMs haven’t taken off in the US

As mobile banking and digital wallets become more common, smartphones will increasingly be the key to unlocking cash on the go. 

Wells Fargo’s launch this week of cardless capability to its 13,000 ATMs across the U.S. is the latest example of how banks are touting the technology as the next big thing in consumer banking. The sales pitch notes that they save time, and since no card enters the machine, it’s harder for a fraudster to steal the card details. But cardless ATM banking in the U.S. is still far from the norm, largely due to technological and cultural hurdles.

“You need look at your customers and what stage they’re at,” said Andy Brown, marketing director of payments for NCR Corporation, a major ATM manufacturer. “The bigger challenge is the U.S. market. There’s not a high take up of contactless — you’ve probably got to do an educational exercise.“

The move from using a card to a mobile phone to access an ATM is seen by many industry watchers as the next step from contactless cards, or the ‘tap for cash’ capability. But since contactless cards have yet to catch on in the U.S., getting a customer to wave a smartphone to get cash at the ATM may not happen immediately.

“Customers want to do it stages,” said Brown. “When they are used to doing contactless then they can move on to next stage.”  

Other countries, including Australia, have successfully rolled out cardless ATMs accessible through NFC-capable phones, but they have made the transition from contactless cards, said Brown. So while many ATMs shipped to the U.S. are capable of doing transactions initiated by mobile wallets, it’s not a feature all banks have chosen to make live. By contrast, cardless ATMs that can be accessed by digital wallets have been out in Korea for over a year.

“It’s certainly not an overnight challenge to solve,” said Devon Watson, vp of global strategy and operations at ATM manufacturer Diebold Nixdorf. “In terms of their payment habits, consumers are a slow-moving wave.”

Apart from the user adoption curve, technological roadblocks may also hinder the move towards cardless ATMs in the U.S.

“The ecosystem overall needs to know how to digest that transaction type,” Watson said. “Banks need to enable ATMs to interact with an NFC-enabled phone, that’s one piece of it, but the other that’s probably the bigger inhibitor are the transaction networks themselves — the processors that have to be able to route and process that transaction.”

U.S. banks are nonetheless pouring money into the cardless wave. Bank of America, which currently has 8,500 ATMs that can be used with digital wallets, says its goal is to allow all of its ATMs to have this capability. Wells Fargo said it will be eventually be moving to cardless ATMs capable of being accessed with NFC-capable phones, but for now, the only way to access a Wells Fargo ATM without a card is to log into the mobile app for a temporary code. Others, including JPMorgan Chase, are cautiously going cardless, with Chase piloting a feature similar to the Wells Fargo app-activated cardless ATM.

Given these barriers, mass adoption in the U.S. is still far off. Analysts say U.S. cardless ATM trials, including a 2013 Diebold Nixdorf pilot with QR codes, show U.S. customers are interested, but widespread adoption is still years away. What’s more likely is that U.S. banks will offer it as a value-added service.

“At this point, cardless ATMs are primarily a kind of emergency rather than a regular feature — for instance, if you don’t have your card,” said Dominic Hirsch, managing director of RBR, a research and consulting firm that specializes in retail banking. “You’ll see more and more banks will market this as an additional service — it’s not critical but a nice to have.”

Citi Ventures and RRE invest $11 million in Clarity Money

The battle between personal finance apps just got a little hotter today with a major investment in upstart Clarity Money.

Citi Ventures, the venture capital arm of Citibank, and venture capital firm RRE Ventures announced an $11 million Series B funding round for Clarity Money, an artificial-intelligence powered personal finance app that launched just this year.

Led by Adam Dell, brother of Dell founder Michael Dell, the app connects to customers’ bank and credit accounts and suggests ways they can save money by helping users cancel unwanted recurring expenses. It also lets customers save for specific goals.

“The reason we made the investment is that we didn’t see any others that were able to advocate and create the value like Clarity did,” said Stuart Ellman, managing partner at RRE Ventures. RRE was an early investor in Clarity and has a number of prominent finance and technology companies in its portfolio, including Nerdwallet and OnDeck. RRE was also a seed investor in Venmo.

Clarity Money launched in January of this year and claims it has 100,000 users. But with a proliferation of personal finance apps on the market such as Mint, Digit and Quapital, investors are interested in Clarity Money because of its focus customer advocacy based on data analysis.

Dell said Clarity Money’s value derives from its ability to deliver a personal finance overview a step further with concrete, achievable steps. For Citi Ventures, the use of APIs to improve the consumer banking experience was an important factor in influencing their decision to invest in the company.

“The PFM [personal finance management app] market is crowded and building a successful consumer app comes with challenges, but we believe that Clarity’s application of machine learning and behavioral science is a unique and competitive offering,” said Luis Valdich, Managing Director at Citi Ventures.

Financial technology is a focus area for Citi Ventures, whose portfolio includes Square, Betterment, BlueVine and FastPay.

Banks’ partnerships with startups such as Clarity are becoming a key innovation channel for major brands such as Citi. Though no formal partnership arrangements are currently in place, the Citi Ventures is open to future arrangements.

“We think there will be opportunities to partner with them in the future, and we are exploring those options,” said Valdich.

While some may argue that the personal finance app market is already saturated, Ellman said that customer experience and ease of user interface are what will ultimately drive success.

“After twenty years of dot com and the web, there are no completely white spaces that I can think of,” said Ellman. “It comes down to whether you have a better product and if can you execute better than the other people in the area that you’ve chosen.”

The bank with a bar: Inside Scotiabank’s downtown Toronto ‘digital factory’

A bowling alley, a ping pong table and a speakeasy aren’t often the first things that come to mind when thinking about working at a bank.

Grey, glum, segmented cubicles, maybe. This is an industry known for its risk aversion and bureaucracy, after all. But increasingly, banks from Capital One Labs to BNP Paribas’ Innovation Zone are organizing themselves around digital hubs. Among them is Scotiabank, Canada’s third largest bank, which changing the way it’s organized: It’s opened three so-called “digital factories” this year — a Toronto, Canada location (January), Bogota, Colombia (February) and Mexico City (March), and it plans to open two more later this year.

Digiday spoke to Shawn Rose, Scotiabank’s evp of digital banking, to get a sense of its 70,000-square-foot digital factory, located in the heart of downtown Toronto in a former newspaper building. Employees enter the building biometrically, with a wave of a hand, and the layout — drawing inspiration from Google and LinkedIn campuses — emphasizes co-working with floor to ceiling windows and 17,000 square feet of whiteboard space. A rotunda with OLED screens welcomes visitors.

The bank sees it as a digital lab that will help it work more closely with a range of skill areas from within and outside the bank, including specialists in engineering, digital and design. It will also involve close collaboration with startups.

“Part of the reason that we’re partnering with startups is to be able to get used to the speed in which they’re moving,” said Rose. “When we talk about agile, we’re talking about moving from waterfall to something different — to have a development time both in terms of the ideation as well as the delivery from months and sometimes years down to weeks.”

‘Agile’: Inside Scotiabank’s digital factory

Beyond just working spaces, an on-site cafeteria, games area, fitness center and bar encourage work-life balance and help employees perform better, he said.

“Every square foot is dedicated to output and productivity,” he said. “It’s high density in working areas, but in common spaces, a team could bring in marketing and legal to cross-fertilize these ideas. We’re using this in in a test and learn way.”

Scotiabank is looking to focus on products that relate to the consumer banking experience, including mobile and digital banking, account openings, loans and mortgages. A customer usability lab lets customers test new products and give feedback to developers.

The bank wouldn’t reveal the price tag of these sleek new centers beyond saying that they are included in the $2.6 billion Canadian ($1.9 billion) annual technology spend. But analysts say the labs are more than just marketing, noting that the design model helps banks evolve with the changing nature of the business. The lab model allows banks to more easily share APIs internally and with other companies and quickly develop a new range of consumer products, said David Albertazzi, senior analyst at Aite Group .

“The developments coming out of these innovation centers are being made mostly in the area of user experience,” he said. “There’s no question that many banks are looking not just for agile infrastructure, but agile ways of releasing new products and services, and many financial institutions are looking towards being able to release new products and services faster than they’ve been doing.”

Photo credit: Techvibes (main image has been cropped)

Credit bureaus assess ‘unscoreables’ and offer others a second chance

For the millions of Americans who have bad credit or no credit, buying a car or home is still out of reach. Credit bureaus are now working to change that by using “alternative data” — a broader range of information than what’s usually considered in one’s credit report.

The proportion of Americans that can’t access credit is frighteningly large. A Federal Reserve survey last year found that 40 percent of those who desired credit had a “real or perceived difficulty accessing it,” while the Consumer Finance Protection Bureau estimates that about 45 million Americans are either “credit invisible” or “unscoreable”.

Until recently, offering access to low-score or no-score individuals was the domain of startups. For instance, Elevate Credit offers small-value loans (between $500 and $3000) to borrowers who may have trouble accessing credit through banks.

Elevate bases lending decisions on information outside of the traditional scoring models. It considers the applicant’s bank transaction history and other areas not usually considered by the major credit bureaus, including utilities. These types of borrowers are often middle-income earners who need an additional reserve of money to cover the “speed bumps,” said Jonathan Walker, executive director of Elevate’s in-house think tank, the Center for the New Middle Class.

“If you just go with FICO it’s not predictive enough,” he said.

Major credit bureaus, including FICO and TransUnion, are now working to incorporate new types of data into their scoring models. It’s a feature lenders have asked for, said David Shellenberger, FICO’s senior director for scoring and analytics.

Traditional credit scores consider the number of credit accounts, how long the individual has had those accounts, and payment history, but they often leave out other clues to an individual’s financial life, including how often they pay their phone bill or the cash flow in their checking account.

Credit bureaus have developed alternate scores that can be assessed alongside or in place of the traditional score. FICO’s XD Score uses utility and property payments data, and TransUnion’s CreditVision Link score also incorporates non-traditional data, including smaller loans not included in credit files such as rent-to-own furniture and magazine subscription clubs. TransUnion says the alternate score can move over 23 million Americans from non-prime to prime status and according to FICO, over half of previously unscorable borrowers can be assessed through its XD score.

“You get a much deeper view of the consumer and their willingness to engage in responsible bill paying activity,” he said Mike Mondelli, TransUnion’s svp of alternative data.

Elevate shares this view, noting that a holistic view of the consumer is key.

“When we talk about the underserved, everybody thinks it’s the bottom third of the income ladder, but it’s actually the top of the bottom third to the bottom of the top third,” said Stephen Shaper, a board member at Elevate. “They’re mid-America — they’re nurses, teachers, firemen. It’s the heart of America that makes America run.”

Why Zelle is more than just a Venmo clone

When a product’s name becomes a verb, it’s safe to say it’s caught on. The popularity of ‘Venmoing’ pizza or beer money goes one step further and offers proof that mobile peer-to-peer payments have changed the way Americans interact with money. For its largely millennial user base, Venmo is a social network that lets users add emojis, have a little fun and make transferring money less transactional. For banks, Venmo occupies a peer-to-peer payments space they haven’t been able to crack — until perhaps now.

Zelle, a peer-to-peer payments system run by major U.S. banks, is rolling out this year. Last month, Bank of America was the first major bank to announce Zelle integration into its mobile banking app, and others will soon follow. Zelle has often been portrayed as the banks’ way to go after PayPal-owned Venmo. Recent headlines called Zelle’s launch a “war on Venmo,” or “Venmo killer.” But it may be just a sign that the peer-to-peer payment marketplace is now large enough to accommodate multiple players, including older customers who are less likely to post an emoji every time they’ve made good on their promise to repay a friend back a few dollars.

Zelle itself is a rebranding of the bank-led clearXchange peer-to-peer payments network, run by Early Warning and owned by a consortium of major banks. It’s a network that will let customers of 19 major banks to make instant payments to each other, and through partnerships with payment processors, Visa and Mastercard, credit union customers will be able to use it, giving it huge growth possibilities.

Beyond a new option to send money to friends, Zelle may be out for a much larger piece of the pie than just Venmo users. With $17.6 billion in payments processed last year, Venmo is a force to be reckoned with. But Zelle developers say they are aiming for a much larger market.

Zelle’s marketing strategy focuses on consistent branding emphasizing the user experience — the security and the rapidity of payments — rather than the social element.

“When we talk about Zelle, it’s about a target market that ranges from 18 to 54,” said Jeremiah Glodoveza, vp of communications at Early Warning. “When we did our research, social sharing or those types of features, sure they may have appealed to a subset of that segment, but not all of them, so what we’re really optimizing is for an ubiquitous experience and that’s why some of that functionality wasn’t prioritized.”

Although banks may be behind on peer-to-peer payments, they have a strategic advantage over competitors with control over the payments infrastructure and inbuilt trust among some users. So rather than trying compete head-to-head with Venmo, Zelle is likely to organically draw in a large customer base.

“They just have to have a viable alternative,” said Bob Meara, senior analyst at Celent.

The peer-to-peer payments market may also be a way for banks to keep customers from leaving the bank’s ecosystem, increasing the likelihood that they may use other bank products.

“This is bigger than peer-to-peer payments,” said Meara. “Every time Paypal, or Square or Venmo takes a customer interaction away from a bank, that’s engagement a bank doesn’t have with its customers. If banks can keep their users engaged, then they have more of an opportunity to cement relationships with customers while providing a broader array of services.”

Venmo, however, says new entrants in the peer-to-peer payments marketplace is a net positive.

“The common enemy is cash, which makes up up the majority of payments between friends today,” said spokesman Josh Criscoe. “There’s plenty of room for several more folks in the market, so we think that if any additional folks enter the market, we welcome it.”

Criscoe said Venmo has a loyal user base built on word-of-mouth recommendations and social sharing. While it can take 24 hours or more for money to transfer over Venmo, he said instances when people need the money immediately is more the exception than the norm. He added that PayPal’s recent partnerships with Visa and Mastercard will allow Venmo users instant access to funds later this year.

While Zelle has the prospect of broad appeal due to the ability for bank accounts to interface directly with one another without requiring a third party, Zelle could benefit from taking a page from Venmo through social media outreach.

“Banks definitely should be looking at what Venmo is doing as far as connecting the user base using APIs from Facebook connections and other social media aspects to more easily connect consumers to each other,” said Brendan Miller, principal analyst at Forrester. “That was the secret sauce for Venmo and it’s something banks should try to replicate.”

Explainer: How neural networks are changing credit scores

A credit score has a major impact on a person’s life. It’s the key to getting a car loan, a house or an apartment. The traditional way scores are calculated is a method called logistic regression, which means assigning a value to a number of factors in your financial life (for example, payment history, number of credit accounts, length of credit history) and weighing them.

But credit bureaus are now looking into other ways to determine an individual’s credit history beyond the result of a static formula. They’ve integrated machine-learning into credit scoring methods to get a more balanced picture of someone’s likelihood of defaulting on a debt. But it’s more complex that that — we break down the method. 

The basics
This technology essentially integrates machine-learning into the credit-scoring process. There are multiple tools: NeuroDecision technology is a tool developed by credit bureau Equifax. Other credit bureaus, including Experian, are also reportedly exploring similar ideas. The technology is modeled on neural networks in the human brain, so it can assess the interrelationships between the different factors rather just spit out a number based on a static formula.

“Each attribute can have multiple weights,” said Peter Maynard, svp of enterprise analytics for Equifax.  It allows you to better or more accurately predict the person’s likelihood to default.”

The process
Artificial neural networks mimic the way the human brain works, so a non-human has the ability to think through the data and assess patterns.

So the machine has the ability to process the data like a human. Perhaps an individual with a historically poor payback record made improvements over time — a machine-learning tool may be able to take those details into consideration.

“A neural network more closely mimics the way humans think and reason, whereas linear models are more dogmatic — you’re imposing structure on data as opposed to letting the data talk to you,” said Eric VonDohlen, chief analytics officer at the online lender Elevate, in an interview with American Banker.

The traditional method has been popular because of the ability to provide specific explanations to customers, Maynard said. By contrast, neural networks have been seen as a “black box” due to the inability to understand how the decisions were determined. What’s new with Equifax’s tool is the ability to find specific reasons to explain why someone is declined credit. “The algorithm Equifax created allows full transparency into how each consumer is scored,” he said.

The implications
There can be biased outcomes depending on the human that inputs the data. Some industry watchers are concerned that the use of machine learning to analyze financial data can generate biased results. How the data is fed into the system and the instructions that are given to the machine are important factors contributing to biased outcomes, said Kevin Petrasic, partner at international law firm White & Case.

“The program can have the very powerful capability to model itself over time and turn into something it wasn’t originally programmed to do,” he said. “It may come to the conclusion that loans to people in a particular zip code aren’t good credit decisions, or people who hang out in a certain social network are not good credit risks because of whatever associations they have with people in that network.”

Equifax doesn’t share these concerns — for now. Maynard said its product was vetted to meet regulators’ standards, including those of the through regulators including the Office of the Comptroller of the Currency, the Federal Reserve and the Consumer Financial Protection Bureau.

“Currently, we do not have concerns, said Maynard. “First, the sample of data used to build the model is algorithm agnostic, meaning we use the same sample of data for both logistic regression and neural nets. Second, we follow our rigorous compliance and model governance processes to review and approve the model for use.”

How financial tech startups are reaching out to low-income Americans

The term “financial technology” may evoke images of wealthy sophisticates using their phones to do their banking and manage investments. Recent data shows that adoption rates skew toward younger urbanites. But financial technology companies like WiseBanyan are looking to new ways to reach lower-income customers, including those who don’t even have a bank account or use payday loan services instead of traditional accounts.

The market is big: According to a Federal Deposit Insurance Corporation study, in 2015, 7 percent of the U.S. households were “unbanked,” meaning no members had a bank account. Unsurprisingly, unbanked rates were higher among low-income customers, and outreach to this segment of the market has been a challenge for the financial services industry as a whole. Among the reasons cited for not having a bank account were insufficient funds and high fees.

The Pew Research Center defines lower-income households as those whose incomes are less than 67 percent of the American median household income, roughly $36,000. This segment of the population, according to Pew, is about a third of the U.S. population. Industry watchers say the traditional banking system isn’t designed for lower-income customers, creating space for financial technology companies to fill the gap.

“Financial technology offers the potential to better serve consumers on a host of issues where current products offered by banks either don’t meet the needs or the products offered by banks are at very high cost,” said Aaron Klein, economics fellow at the Brookings Institution.

Financial technology companies reach lower-income customers through easier access to money, credit and lower-cost services, he said.

One area where lower-income customers haven’t traditionally been considered is investment planning, often called “wealth management.”

WiseBanyan, a robo-adviser app, offers automated investment advice after analyzing its customers’ financial goals. Unlike traditional brokerages, it allows customers to deposit and withdraw without fees, regardless of income category. CEO Herbert Moore said the app’s goal is to reduce barriers to entry to allow individuals of any income category to achieve their financial goals.

“As a firm, we believe that people of any income or asset level should be able to achieve their financial goals,” he said. “We can help folks who would otherwise not be offered a service.”

Moore said a quarter of his 23,000 customers have incomes under $50,000. The app’s revenue stream comes from value-added services, including a fee-based tool that helps users look for tax deductions. These types of money management tools could potentially benefit a large swathe of the American population.

Legacy banks, however, note that low-income customers can take advantage of specially-tailored products to meet their needs. These include including low-fee accounts, like the Citi Access Account, and prepaid visa cards that offer many of the features of checking, like Chase Liquid or PNC SmartAccess prepaid visa card. Citi Access Account customers pay a $10 monthly fee that can be waived if they meet certain conditions, while Chase Liquid and PNC SmartAccess cards both cost around $5 a month.

“Our goal is to get people who are out of the mainstream— often for reasons that aren’t their own fault— to give them the tools they need to get back in the mainstream and hopefully become PNC customers,” said a PNC Bank spokesman.

Still, industry watchers say that financial technology companies have an opportunity to fill a void by offering banking and financial services to lower-income customers, said Courtney Robinson, policy counsel at the Center for Responsible Lending, a non-profit whose mission is to ensure a fair, inclusive financial marketplace for borrowers. “There is a gap that’s being filled for lower income borrowers, borrowers of color.”

Despite the advantages that financial technology companies offer, Robinson stresses that the lending space among startups still skews towards higher-income borrowers, and customers still need to be vigilant against high fees and lending rates.

“While some are masquerading as something different or unique, they’re offering almost payday loan-like prices,” she said.

For legacy banks, partnering with financial technology entrepreneurs may be the best way forward to enhance access. Through a $30 million contribution to a five-year partnership with the Center for Financial Services Innovation, for example, Chase aims to support financial technology innovation through funding, mentorship and support for early-stage entrepreneurs.

“It’s going to be us working together that’s ultimately going to reach low-consumers,” said Colleen Briggs, executive director of community innovation at JPMorgan Chase. “That’s how we’ll move the needle.”

WTF is conversational banking?

It’s often said that a conversation is the best starting point for a fruitful relationship. But is that the best way to work with your bank? Maybe, but not in ways you may think.

Until recently, “conversational banking” may have required talking to a bank employee at a physical branch or on the phone, and possibly getting stuck navigating endless voice menu choices. But increasingly, it can mean interacting with a bank through a chatbot on an instant messenger platform. So, WTF does “conversational banking” really mean?

What is conversational banking?
Conversational banking means interacting with a non-human about your finances, whether it’s checking your balance, finding out how much you spend on groceries or developing a budget.

“Conversational banking is about managing your financial life through voice or text,” says Keith Armstrong, co-founder of Abe, a chatbot that currently works through Slack or SMS messaging to monitor income, expenses or set a budget.

Is this another money management app?
No. While you may need to download apps to let the technology work on your device, conversational banking is about using chatbots to text or speak questions or commands.

“Consumers don’t download apps anymore; phones have become incredibly valuable real estate,” says David Sica, a principal at Nyca Partners, a fintech venture capital firm. “Banks should be able to interact with customers where they’re spending their time, and they’re spending time in chat.”

For instance, Finie, a virtual assistant developed by Ann Arbor, Michigan-based Clinc, is designed to be used on top of people’s existing apps. Clinc CEO Jason Mars says the company’s aim is to roll out the technology with several major U.S. banks by the end of the year.

How does it work?
Many of these bots are instant messenger chatbots that interact with the user’s bank account. Abe, for example, connects to a bank through Yodlee, a financial data provider, using an encrypted token. These bots can tell users how much money is in their account, how much they spent on a particular type of expense and possibly make a budget.

chatbotimage

Is this just a fancy way to say you’re using Siri or Amazon Alexa to manage your banking?
Conversational banking actually goes further than Siri or Amazon Alexa because it lets you communicate with the chatbot as if it were a real person. Advances in artificial intelligence have made financial chatbots able to ask and answer questions in familiar conversational language, according to Armstrong.

OK, fine. But isn’t it easier to just chat with a real person?
App developers say conversational banking can get answers faster than a human could. Here are some questions that Finie was able to answer, in a demonstration on the Clinc website:

  • What are some of the most expensive transactions that I’ve made recently? (Finie responded with a chart of the most of the most-highest-priced transactions.)
  • Can you show me a breakdown of my spending in the last three months? (Finie provided a dollar figure and a breakdown of expenses by category.)
  • I want to spend a hundred dollars on a fancy dinner tomorrow night. Is that all right? (Finie analyzed the user’s spending habits and visualized them in a chart, and decided that based on the user’s spending habits, it would be OK to spend that much.)

Financial chatbots use predictive analytics to push out real-time, informed responses, says Sica.

For some sticky issues, it may be easier to deal with a chatbot than a real person. For example, when a bank is collecting debts, Cica says talking to a bot is a lot less intrusive than dealing with a collection agency calling you up and hounding you to pay your bill.

“Chatbots can be incredibly powerful,” he says. “If done properly, if you’re in collections and if you want to have a hard conversation, it’s much less embarrassing over text message.”

Hi 5! The five fintech stories we’re following this week

top 5 weekly fintech stories

The new competition in financial services

Instead of focusing on fintech competition, incumbents should have their eyes on technology firms. So says top fintech investor, Caribou Honig of QED Investors.

Google, Apple, and Amazon are all making moves, which attendees at this week’s upcoming Money 20/20 conference will be able to witness in person. Here’s a Money 20/20 preview of what to look for at the event.

Of course, nothing goes up in a straight line. We didn’t need Moody’s to tell us that the massive growth the online lending industry experienced early on was based on a shaky foundation.

Waning interest in investing makes for good financial theater

Et tú, Barron’s? The financial publication launched Next, a new publication, targeting millennials.

It’s going to be tough. It isn’t just that old media can’t talk to today’s investors. People just aren’t that interested in investing. Cue the dying business of picking stocks and how the internet killed actively-managed mutual funds.

Regulating more transparency, like the SEC is trying to do with new ETF and mutual fund disclosures, may help (but unlikely when people don’t trust the entire system).

Top UX design comes to financial services

To compete, many financial services firms have hired top design talent from the media and ecommerce industries. Chase certainly has and here are 4 key design components the firm is infusing into all its products.

As this change comes to finance, it gets people in the industry thinking about their futures. They definitely think the future is digital and a recent survey shows they’re worried about their job prospects.

Be careful what you wish for

The majority of people polled in the US believe that they’ll witness the extinction of banks in their lifetimes. Apps and fintech are great but making banks go bye-bye is going to be hard, since people actually generally prefer using branches.

Maybe fintech revolutionaries are behind the surge in explosive attacks on European ATMs?

It’s hard to be a bank (IT manager)

The challenges of banking digital transformation are many, but most onerous is the cultural rigidity impeding change. Here’s a view from the front lines of digital projects (at CSFB, at least).

It’s not a problem that money can solve (though it helps). I wonder how this $1 billion UBS is using to “standardize IT” across its wealth management division is going to be allocated. BTW, who calls it “IT” anymore?

High 5! The five fintech stories we’re following this week

5 trends we're tracking in finance

Banks still not replacing core systems in face of falling tech costs

We talk a lot about the newest new thing in financial technology but that’s generally more on the periphery of the tech stack. Core banking systems aren’t being replaced. They’re being patched up. That’s why only 15% of bankers expect to build a new core in the near future. CEOs, when faced with short lifecycles in the C-suite, choose to merely maintain existing systems rather than take the pain (and cost) of building new ones.

That’s how you get 40 year old core IT systems like at ANZ. And it’s also why big banks are even contemplating creating their own digital currency for clearing and settlement.

Many in the industry think that banks are moving more to an ecosystem model, where they focus on core things and leverage tech firms for everything else. So you get fintech startups flocking to a 126 year old Kansas bank. It certainly appears things are headed in that direction, though maybe not in Australia, where banks are refusing to open up their data to third parties.

Looks like technology will be playing more of a role in financial advisory work, too. Whatever happens with the new DoL rule and how it may change Series 7 brokerage work, it will most likely require advisors to invest more in technology. That’s because people who help make financial decisions for clients will have to better track their advice and back it up with analysis.

Banks find it hard to catch a break

It’s not easy to be a big bank these days. You’re damned if you close the branches and damned if you don’t. It’s worse: even when you close the branches, some customers keep coming back looking for them. So, you may be improving your SG&A line, but you could be losing customers to your competitors that remain entrenched in neighborhoods.

In a deep way, banks understand this conundrum and that’s why they’ve been relatively slow to cut physical branches as society catches up with technology trends. So, they look for other structural changes to lower costs and improve service levels. Like AI for helping with compliance, for example.

Mr Robot’s view on the future of money and payments

Our journalists are getting sick of me quoting this series. But I’m hooked. In the USA Networks show’s second season, it takes the financial system seizing up for the migration to cryptocurrency to begin in earnest. What happens when trust in the financial services is completely lost? Mr Robot, at its core, is a story about the end of money.

I’ll tell you what happens (no spoilers). After the financial system is brought to its knees and the majority of consumer debt erased, somewhat ordered chaos ensues. Transactions move to cash, but even fiat money begins to lose its cache. “When you get down to it, paper money is a symbolic construct. With no financial records left, what value does it really have? What value does anything have?” wrote Vulture.

Investing more in the fintech game

There’s a trend with upstart fintech firms, especially ones that face consumers, to brand themselves as a friendly alternative to traditional financial services. LendUp fits that description. The consumer credit firm bills itself as a compassionate lender that helps people build their credit history slowly with tighter credit lines. It just closed on $47 million in a round led by Y Combinator’s investment fund.

Goldman Sachs isn’t too busy building out its online bank, Marcus, to get involved with other fintech deals. The investment bank created a $100 million lending facility for Fundation, an online SMB lender.

Visa goes all in at the Olympics

One credit card company went for gold in Rio. Precious metal, that is. As a sponsor of the 2016 Games, Visa spent an estimated $32 million for 242 national airings of their commercials during the games. The firm also gave tokenized contactless payment rings to Visa-sponsored Olympians.

This prelude of the credit card company’s promotion of its contactless capabilities was followed soon after by a wider rollout of its payment rings.