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Citi’s Andres Wolberg-Stok: “The bank of the future understands how to become a whole-life partner for every one of its clients”

Andres Wolberg-Stok of Citi

Andres Wolberg-Stok is the Global Head, Emerging Platforms and Services at Citi.

What are some of the most transformative things you’re seeing to impact banking? What are some of the most overblown?

Andres Wolberg-Stok, Citi
Andres Wolberg-Stok, Citi

The most impactful thing happening today in banking -and in fact it’s happening not just in banking but across pretty much every consumer-facing industry- is the digitization and the user-experience revolution. Now that we all spend so much of our time on our smartphones, those apps we use all the time have reset the bar for what we expect of every interaction. We all demand that everything be as simple and intuitive as the best apps out there from digital companies. It sets a really high standard for everyone else to strive for, and in some cases it requires a reinvention of the entire underlying process. And all of that is a good thing, of course.

You were the first bank to have an app for the Apple Watch. Can you share your thinking about mobile/wearable banking?

At Citi, we are always looking for ways to put our clients in control of their finances and to help them bank however and whenever they want. We’ve been on a journey of innovation for decades, led by that principle, working to bring your accounts ever closer to you. We pioneered the ATM in the 1970s, so you wouldn’t even need to step inside a branch. We were one of the early leaders in online banking, in the early oughts, so you could bank from home or from your office. We were the first major U.S. bank to offer a downloadable mobile banking application, back in 2007, putting the bank in your pocket. Last year, we became the first major U.S. bank to offer no-login access to your accounts (we were issued a U.S. Patent for that this year). And as you point out, this year, we became the world’s first bank with an app for the Apple Watch. You can see the progression, right? Ever closer, ever more available and closer to you. Wearables are here to stay, and your money has a rightful place on them. I just don’t know what we’ll need to do in order to get closer to you next time — what’s next, banking implants?

Your own work experience is truly global. Is that a competitive advantage in your role?

Citi is the world’s leading global bank. We operate in some 160 countries or jurisdictions, with consumer operations in 24 markets at this point. Globality is in our DNA, and it helps us cross-pollinate the best ideas from our colleagues around the world. It also allows transfusions of talent, and of regional perspectives, around the globe, and it helps us serve well those of our clients who are global themselves. To be succefully global, you have to be global and you also have to be local everywhere you are. In fact, together with digitization and urbanization, globalization is one of the three major strategic themes that drive our work.

We read a lot about the competitive pressures on banks. What will a bank look like in the future? What will be its main role and value proposition to customers, the financial ecosystem, etc.?

The bank of the future recognizes that every man, woman and child carries a supercomputer in the shape of a smartphone. It knows people want to pick and choose their experiences, and that they probably do not want to depend for everything on a single supplier of financial services. The bank of the future is the one that understands how to become a whole-life partner for every one of its clients, how to earn a spot at the heart of their individual web or assembly of financial services, and how to be by their side every step of the way for their day-to-day needs as well as for the major moments in life. That bank of the future works with, not against, the fantastic ideas coming out of the Fintech ecosystem – it figures out how to become an integrator of Fintech value for its clients. That’s what, here at Citi, we call “Fintegration”: the integration of Fintech. Banks have the heavy compliance machinery, the track record, the know-how to keep your money safe. Fintech companies can come up with great new experiences, and they need the scale. Fintegration is a win-win all around, starting with the client.

 

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Banks being disrupted…by search engines?

banks being disrupted by search engine

Traditional banks are finding out new competition lurks everywhere.

Pureplay startups like marketplace lenders, Lending Club and Prosper are originating billions of dollars of loans every quarter. Though volumes are small compared to total SMB outstanding loans (which in 2013 stood at $585 billion), some banks are turning to the marketplace lenders to buy loans, opting to partner instead of compete.

This move towards alternative lending, core to banking services, isn’t just a US phenomenon. Funding Circle, another leader among the current class of startup online lenders, has global aspirations.

Funding Circle’s co-founder, Sam Hodges recently explained to  Tradestreaming:

Our vision for Funding Circle is as a global lending exchange, where business from all over the world come to find finance from an army of investors, big and small. Small businesses are underserved in most of parts of the world, and we believe our marketplace model can help millions of businesses and investors to get a better deal. At the moment, we are focusing all of our energy on building a successful business here in the UK, USA and Europe.

There are high hopes for marketplace lending. Some investors, like Foundation Capital’s Charles Moldow, are betting on the market, between cannibalization and traditional banks moving into marketplace lending themselves, can grow to be a trillion dollars.

From banks to ecommerce platform

It’s not just marketplace lenders taking aim at banks. Traditional ecommerce players want in, too. Amazon is offering loans to handpicked sellers on goods on its ecommerce platform.

Like marketplace lending, ecommerce firms entering financial services isnt’ just happening in the US: PayPal’s Working Capital loans for small businesses has lent more than $1 billion to over 60,000 small businesses in the U.S., U.K. and Australia. Alibaba, the giant Chinese ecommerce platform, launched a money market fund for sellers to store their working capital. Within just 10 months, the fund, called Yu’e Bao had more than $90 billion in short term capital. That’s money that used to be kept in banks.

Search engines becoming lenders

On the heels of Alibaba’s success in money markets, Chinese search engine Baidu appears ready to launch its own banking solution. Looking to avoid some of the regulatory commotion around Alibaba’s own financial service offering, Baidu intends to partner with Citic, the 7th largest Chinese bank with 600 physical locations.

While Google got out of the direct lending business to its advertisers, it is now running a pilot with Lending Club. The marketplace lender is offering advertisers on Google a loan to fund their AdWords campaigns.

The nature of banking is changing and therefore, the players leading the charge are rearranging themselves. [x_pullquote cite=”TechCrunch” type=”right”]This year, over $11 billion has been invested in financial technology services companies. That’s up over $5 billion from the previous year, and the highest amount invested into financial services technology companies in the past five years[/x_pullquote]Pureplay lenders are filling an important role and ecommerce platforms have found a way to offer financing to some of their best customers. As this plays out, there are more companies popping up to help banks compete. Firms like LendKey provide banks with the tools, technology, and process optimization employed by nimble tech startups. More companies keep launching to help make the banking sector more competitive to the demands placed on them by consumers who are demanding the same speed, transparency, and service commonplace in other industries disrupted by technology.

This opportunity hasn’t been lost on investors, who are pouring money into alternative financing businesses. Lending Club and OnDeck both had well-received IPOs that gave the companies billion dollar marketcaps.

In 2015, there’s been hundreds of millions of dollars invested into alternative lenders. Just this week, alt lender Earnest announced a round of $275 million (equity and debt).

 

Regulation and branding will assure that banks aren’t going away but it’s getting more complicated to compete in core banking services. Direct competitors are emerging to challenge banks head on while others, like ecommerce players, are indirectly competing indirectly with them. Through general growth, partnerships, and some disruption, the banking industry is quickly evolving.

[x_author title=”About the Author”]

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5 trends we’re watching this week

weekly trends in fintech

Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s weekly newsletter (published every Sunday).

1. Computers vs. Humans: Who wins the investment game? (Tradestreaming)
Do humans have an innate ability to pick winning stocks or should we turn everything over to the machines. A frank conversation with 2 experts moderated by Tradestreaming’s managing editor, Zack Miller and hosted on Dealbreaker.

2. A Future Where Virtual Reality and Finance Converge (Finance Magnates)
In this week’s Fintech Spotlight, Finance Magnates delves into how virtual reality could become a big data tool of the future in the finance industry.

3. The Next Fintech Boom: Resource Maximization (Bank Innovation)
Former Thomson Reuters CEO, Tom Glocer predicts fintech startups to begin squeezing more out of the financial system. “Think of all the underutilized financial resources out there — credit lines, savings, advisory, illiquid assets. All are ripe for maximization.”

4. Why Every Financial Institution Needs a Digital Champion Now (The Financial Brand)
Is anyone spearheading your organization’s digital strategy? Here’s what banks and credit unions should look for when creating this new role.

5. Robo-Advisors Squeeze Advisor Profits, Not Fees (Michael Kitces)
Michael Kitces with a thoughtful analysis of the robo-advisor trend and how it’s impacting the AUM fees investors pay (it’s not what you think it is). While fees don’t seem to be dropping, profit margins are indeed getting squeezed. Worth a read.

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Who are the best investors in fintech startups?

Been talking a lot to entrepreneurs in the space. I get a chance to hear their perspectives on their financial backers, investors with an eye to the future of financial services.

Here’s the beginning of a list of some of the best VCs in fintech. Who do you think belongs on there?

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Bringing investment services online – with Personal Capital’s Rob Foregger

the future of the bank branch

Delivering investment advisory services solely through the online channel is a game changer.  But getting it right has eluded even the biggest of investment managers.

Fresh after a big funding round, Rob Foregger’s Personal Capital aims to be a dominant player in online finance. Rob’s got over 20 years experience in direct-to-consumer finance that he’s bringing to the table with the rest of Personal Capital’s A-team management.

Join Rob and me as we discuss the genesis of Personal Capital, how the online advisor intends to scale, and the future of online investing.

Continue reading “Bringing investment services online – with Personal Capital’s Rob Foregger”

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Get your first job on Wall Street – with Scott Hoover

Scott Hoover has prepared thousands of undergraduates for their first jobs on Wall Street.written by Scott Hoover

Associate Professor at Washington and Lee College, Scott is the author of a new book, How to Get a Job on Wall Street: Proven Ways to Find a High-Paying, High-Power Job.

In this episode of Tradestreaming Radio, we discuss:

  • what financial firms are looking from job applicants
  • how to slay your interviews
  • why job seekers need to say on top of current economic events
  • why Washington and Lee has been so successful placing graduates in Wall Street and how you can mimic the college’s success
  • more reading to stay on top of your job search game

Continue reading “Get your first job on Wall Street – with Scott Hoover”

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When Good Trades Go Bad: Deadly Portfolio — with John Hohn

The fine line between doing what’s right for a client and what’s good for you is walked daily by financial advisors.

Most of the time things go off without a hitch.But sometimes, the results of poor decision making are disastrous.

John Hohn joins us on Tradestreaming Radio to talk about his new book, Deadly Portfolio: A Killing in Hedge Funds. John had a 40 year career in financial services, all the while exploring his avocation, writing.

Deadly Portfolio is his first book and it explores the insides of the financial industry, how decisions are made, how brokers make a living, and how wealthy clients behave.It’s also full of murder and intrigue…
We talk to John about the book and his experiences in managing 300 brokerage clients influenced his writings. Continue reading “When Good Trades Go Bad: Deadly Portfolio — with John Hohn”

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Welcome to a wired world, investors and financial advisors (Future of Investing)

This post was originally included as part of an ebook that I published alongside the launch of my book, Tradestream, entitled “Tradestreaming and the Future of Investing”. The content was so good I wanted everyone to have access to it.

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Welcome to a world where the traditional ways in which we gather information, develop relationships, and make important decisions have changed dramatically.  Welcome to a wired world!  Our influences have changed with the explosive growth of the internet and the proliferation of blogs, social networks, online ratings and reviews, and micro-blogging
services that allow us to share, connect, engage and advance our knowledge.  Our networks are accessible from anywhere and everywhere, in real time, through our mobile devices and constant wired connections.  Whether we realize it or not, these online information channels and networks are significantly changing the way we think and behave.

The financial services industry is no exception to the wired world revolution with the emergence of new media investment platforms, social investing sites, and even financial advisors and professionals delivering their insight and guidance through blogs, social media and social networking.  At the same time, consumer access to financial information and guidance, low cost investment vehicles and platforms, increased transparency and choice, and new media tools are empowering individual investors to take control of their
wealth.  We have a paradigm shift happening that will forever change the future of investing like never before.

Investors who can sift through all of the financial content and find the “quality” insights will have the best opportunity for success.  The key will be discovering relevant resources and strategies that they can implement with discipline and consistency.  Financial advisors and professionals who provide high quality, differentiated content in their niche markets and focus on their areas of expertise will be most successful in the race to win relationships with investors.  Blogging, search, and social media will all be part of the strategy equation for attracting the right investors into a suitable model based on their goals and objectives.  Ultimately, investors AND financial advisors who understand and embrace the merging of social relationships and technology can truly become partners in achieving their respective goals.

*—> Like what you see? Hey! Don’t forget to subscribe to the free Tradestreaming newsletter for updates, tips, and special offers

WIRED ADVISOR was founded by Stephanie Sammons (LinkedIn).  Stephanie spent a total of 15 years in the financial services industry at two of the largest global wirehouse firms and served as a Financial Advisor, Branch Manager, and Regional Sales Manager.