OBSERVATIONS FROM THE FINTECH SNARK TANK
In the movie All The President’s Men, Woodward and Bernstein (played by Redford and Hoffman) meet their informant in a parking garage and receive the following advice: “Follow the money.”
If you want to know which technologies are hot in banking, you should do the same.
Talk is Cheap
For all the talk and hype surrounding technologies like AI and blockchain, just a little more than one in 10 mid-size ($500m to $50b assets) financial institutions will invest in chatbots or machine learning this year according to a study from Cornerstone Advisors. What are these institutions doing? For the most part, they’re either talking about the technologies or the technologies aren’t even on their radar.
|Already deployed||Plan to invest
|Not on radar|
|Source: Cornerstone Advisors survey of 305 mid-size banks and credit unions, Q4 2018|
Follow the Money
What are the truly “hot” technologies in banking? They’re the ones that banks and credit unions actually invest in.
At the end of the past few years, Cornerstone has surveyed financial institutions to find out which technologies they plan to add or replace in the coming year. Here are the top five for 2019:
1) Digital account opening. Not only was digital account opening the most-frequently cited technology for addition or replacement, it was at the top of the list of technologies that banks plan to pursue fintech partnerships for. Some institutions may not get what they’re looking for, however. According to Cornerstone Advisors partner Terence Roche:
If financial institutions believe that digital account opening will be the driver of deposit growth, they may be disappointed. If their view of digital account opening is too narrowly focused on account opening and doesn’t include a hefty focus on digital marketing, contextual product offerings, data-driven campaigns, and a very tight, easy fulfillment process, then it won’t matter what investment they make. It won’t work.”
M&A developments in this account opening space–e.g., Jack Henry/Bolts, Temenos/Avoka, Q2/Gro Solutions, and a FIS/Zenmonics partnership–will have a big impact in 2019 and 2020.
2) Person-to-person (P2P) payments. Venmo and Square may get a lot of press regarding P2P payments, but banks (and credit unions) are the real leaders in the P2P payments race. Consumers moved a little more than $300 billion in funds to other people through their banks and credit unions in 2018, with Zelle accounting for about 40% of that….
Read More: The 5 Hottest Technologies In Banking