The Platformication Of Banking Has Started

Three takeaways from day three of Finovate.

 
 

The third day of Finovate Fall 2017 entered into unchartered territory because, well, there’s never been a third day of Finovate.

In past iterations of the conference, the two days were filled with live vendor demonstrations that highlighted what was on the horizon. In 2017, over the first two days, 76 fintech companies demoed their products.

This year, the conference added an additional two days of keynote speakers, breakout sessions, and thought leadership to put the previous days’ demonstrations into context. The agenda covered topics that ranged from working with millennials to the OCC’s fintech charter.

Here are three takeaways from the third day of Finovate.

No. 1: The Platformication Of Banking

Early in the day, Ron Shevlin, head of research for Cornerstone Advisors, spoke as part of a panel of fintech analysts tasked with presenting key ideas for the future.

He believes that the bank-fintech partnership — as appealing as it sounds and as zeitgeisty as it is — is an unlikely future. Says Shevlin, small banks don’t have the money, large banks can approximate these services in-house, and what makes us think that fintechs have the skills to partner?

“You want partnerships?” he asked, channeling his best Col. Nathan Jessup. “You can’t handle partnerships!”

Rather, he sees a new business model forming: the platformication of banking. This model, a plug and play method of service, “enables the connection of providers and consumers,” Shevlin says.

In this model, vendors that operate as platform service providers will emerge to play host to product and service offerings. Early entrants into this space have already appeared, as well: companies such as Avoke, Constellation, Fidor Solutions, FI.SPAN, and Temenos.

Think of it like Amazon for banking — One platform where consumers will go to choose or opt in to different products and services with providers competing for attention.

No. 2: Creating Foundations For Financial Literacy

Younger generations live in a world where information on anything is available within just a few clicks, including personal finance.

“They believe they can learn later in life. They don’t have money now so they don’t think they have to be concerned,” says Ederick Lokpez, director of engagement strategy at US Bank in an afternoon breakout session.

If that’s true, when do consumers find it important to start learning about their finances? 

 

 

A big life event, says Mimi Chan, founder and CEO of Littlefund. Like having a child.

Chan recently became a mother and recognized the importance of saving for her child and setting a strong foundation for the future. But she didn’t find financial institutions approachable and saw a lack of simple, modern tools to encourage savings among “the first digital generation who are becoming parents,” as Chan says.

Littlefund saves contributions sent from friends and family towards a child’s savings goal — whether it be college, a new toy, or anything in between. And the recipient doesn’t have to go to the bank to deposit it, like with cash.

“Parents have the responsibility to pass on this type of savings behavior, education, and awareness to their children,” Chan says. “But if they lack the tools or education? We’ve got to provide it in a way that makes families comfortable.”

No. 3: On Ramps For Millennials

In an afternoon session that focused on millennials and their relationship to banks, William Mills III, CEO of the William Mills Agency and the moderator, asked an interesting question to his panel of three: If millennials had the choice between interacting with an AI virtual assistant or a human which do you think they would choose?”

Zor Gorelov, CEO and co-founder of Kasisto, a conversational AI platform, sees benefit in AI.

AI can provide answers in near real-time and can be programmed with a greater breadth of knowledge than the typical bank or credit union member-facing employee.

Says Vicki Zhou, co-founder of WiseBanyan, an AI-powered financial advisor, product designers need to reconsider how they are using AI. Rather than assuming it’s a product everyone wants tacked on top, AI needs to be used in a way that surprises and delights people. A good use case for it, she says, is as a way to replace the FAQ.

“What if you never had to search for an answer?” she asks.

Ramona Ortega, founder and CEO of My Money My Future, a personal financial management platform for underserved millennials, considered the question from a more practical standpoint.

“How do you program AI to make sense for your specific audience?” Millennials are the most diverse generation ever, so AI has more value if programmers can make the experience more personal to the user.

“AI has to be linked to something personal and reflective of your user base for it to be useful,” she says.

 

Sept. 13, 2017


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