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.
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.