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Fintech Articles

Compatible Partners: Banks and Fintechs

WSFS Bank grows student loan originations to over $55 million in 3 ½ years.

 By Vince Passione

We all remember the hype about fintech companies disrupting banks the way Uber disrupted the taxi industry. Venture funds invested billions of dollars and fintech CEOs took center stage at conferences declaring that the banking industry was dead.

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Navigating the Fintech Landscape

Use complementary systems to create competitive advantages.

By Donald Musso and Martin Henderek

Financial technology, or fintech, has a different meaning to different people. Specifically within community banking, fintech has different meanings for an organization’s customers, employees, management team and board members. With its recent rapid progression, this technology is changing banking for all stakeholders of an institution. This change is coming in product and service offerings, delivery channels, convenience, corporate governance and much more. Adapting and continual innovation will be necessary for community banking institutions to establish and maintain competitive advantages in this ever-changing technological landscape.

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Beyond Disruption

Modularity offers new way to keep pace.

By Michael Scheibach

As the threat of disruption continues unabated, financial institutions are moving ahead aggressively to offer omnichannel banking. Yet this might not be enough. Now enter artificial intelligence and bots, software algorithms that can mimic human interactions. Amazon’s Echo with its “Alexa” persona is just one example of a bot capable of engaging consumers in financial transactions as it listens with speech recognition and responds with speech synthesis.

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Disrupter, Interrupted

By Toni Lapp

Following the Office of the Comptroller of the Currency’s proposal in December 2016 to grant national bank charters to fintech companies, a Federal Reserve president recently said more oversight would help the fledgling industry. This development comes after a year in which many fintechs struggled.

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5 Seismic Shifts in Banking Expected in 2017

Software AG has released its top five predictions for the banking industry in 2017. Laura Crozier, CFA, global industry director, Banking, of Software AG noted: “There will be some seismic shifts in the banking industry in 2017 as threats and opportunities from digital banks, fintechs and regulation continue to shake up the landscape.”

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Priority One: Improving Customer Experience

Banking’s future is dependent upon meeting new expectations.

By Michael Scheibach

 

“Traditional banks see fintech startups and digital banks as threats to their business, and rightly so because these new entries into financial services tout an appealing, user-friendly customer experience, which can help successfully target groups like millennials.”

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Partnering for Payments

Fintech payments solutions offer new challenge.

By Michael Scheibach

Generating revenue, improving product offerings, streamlining operations and better serving customers are among the top priorities for financial institutions in 2017. They also are the priorities for small businesses, especially retailers, who constantly look for ways to reduce costs, better serve their customers and increase revenues. Many retailers, in fact, are now part of the Merchants Payments Coalition — representing nearly 3 million stores — whose mission is to reduce credit card fees and create “a more transparent system that works better for consumers and merchants.”

Needless to say, banks must confront this changing payments landscape or risk losing their retail customers to fintech startups. In a report released last year, “Banks, Retailers and Fintech: Reimaging Payments Relationships,” the authors point out that fintech companies “sense an opportunity” in payments and are “muscling in” on banks’ traditional turf. “Banks cannot afford to be complacent,” reads the report. “Changes sweeping the industry suggest that there is a lot more disruption ahead, with potentially much more significant impact on banks.”

An even greater threat than payments processing, however, may be the weakening of the overall business relationship with a retail customer — an area of strength for banks. In other words, fintech payments solutions often have expanded capabilities that strengthen the fintech’s connection with its customers.

An example of a fintech company offering more than a simple payments solution is Fattmerchant (www.fattmerchant.com), a subscription-based merchant processing company. Its solution also includes one-time and recurring online payments, invoicing capabilities, a reporting dashboard with analytics, a mobile app, technical support, customized reports and more.

Although Fattmerchant has focused primarily on retailers, professional services and ecommerce companies, it also knows the importance of working with banks because of their longstanding small-business customer base. To do this, the company recently introduced a white-label Partner Program for banks and credit unions that is fully customizable according to the financial institution’s brand standards. A financial institution that becomes a partner has access to tools and resources for marketing, customer service, technical support and account management. Plus, the program allows institutions to analyze merchant processing savings for clients and helps clients switch processors, all while the institution earns money.

CEO Suneera Madhani emphasizes that one of the biggest benefits of the program for financial institutions is the ability to partner with a merchant services provider with no markups. Financial institutions have traditionally worked with standard processors cutting into their customers’ bottom lines, says Madhani. Now they are able to recommend a company that works for the mutual benefit of both the merchant and the institution.

“Customers of financial institutions enrolled in our Partner Program have access to a network of available resources and transparent pricing to help them succeed,” said Madhani. “The program provides updated technology such as a detailed analytics dashboard and tools, as well as a fully integrated virtual terminal. By using Fattmerchant, merchants are offered major savings through no markups and no contract. Merchants also have the added benefit of working with both their bank and the Fattmerchant team to find ways to save, essentially expanding their financial support system.”

Although the Partner Program is new, Madhani said the early response has been positive, with small to medium-sized financial institutions seeing the greatest return. One such institution is Axiom Bank in Orlando, Fla. According to Daniel Davis, president and CEO, the bank and Fattmerchant are working together to provide customers with affordable merchant processing, and to ensure that customers are improving their return each month and reducing unnecessary spending on exorbitant bills.

“Small-business owners are seeking convenience, clarity and trustworthy services,” said Davis, “and that’s what they’ll find with this partnership.”

 

 Michael Scheibach is executive editor of BankNews.

 

 

The Case for Mobile Deposit

By Michael Scheibach

Mobile banking users want mobile deposit, or MD. The Federal Reserve’s report, “Consumers and Mobile Financial Services 2016,” in fact, found that MD is the second most common activity among these users, right behind receiving bank alerts; and 82 percent of mobile banking users have their bank’s application on their smartphones. This would indicate that every financial institution needs to move ahead, if it hasn’t already, with offering MD.

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The Future of Authentication

New technologies help improve consumer identification.

By Michael Scheibach

As banks continue their digital transformation, with expanded web-based and mobile offerings, the need for improved safeguards to protect their customers’ accounts and transactions is becoming even more critical . . . and daunting.

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Fintech, Payments and Banking

Creating opportunities by leveraging fintech and payments industry knowledge

By Chris McNulty

It has been many years since the local community bank required only a reasonable delivery of core banking skills to thrive. Yet most community banks still think of their business clients and payments in two separate ways. One is related to merchant services and how to provide this critical service to their business clients. The other is a more traditional cash management view of payments led by the need for ACH payments and bill pay functionality.

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