A panel of bankers met at LendIt to discuss the future of digital banking. The following discussion offers an interesting snapshot of what it might look like. I say, count me in.
Jeremy Balkin, head of innovation at HSBC USA, started the conversation with this observation: “We live during the ‘millennialization’ of everything. We value freedom and mobility. In banking, it’s no different.” Balkin went on to say that banks must cater to all types of customers, from Millennials to Builders, who aren’t likely to adopt emerging technologies. “The challenge is the adaptation of customer data.”
Millennial Banking, From the U.S. to China
Millennials have an average of 14 different financial services apps on their phones, Balkin said. In that regard, they are primed for mobile banking. Mitch Siegel, KPMG’s national FS strategy and transformation leader, agreed with that.
“I would say mobile first, not only,” he said.
While the average millennial is engaging with financial services companies on their phones, they are mostly performing simpler tasks, he said. Meanwhile, they’re putting off mortgages, kids, car loans, marriage, etc.
Cross River Bank (CRB), with its cutting edge technology and state of the art platform, provides a world-class back-end infrastructure to fintech companies. It is trying to untangle the banking services for the fintech industry by providing services like loan approval, origination, and payments, but with a more simplistic-holistic approach. The company also executes direct lending in the tri-state area with a focus on commercial real estate.
We believe CRB’s next step will be the offering of depositor services to fintechs. This will allow online lenders to offer Certificates of Deposits in the 1%-3% range and lend that capital back out. This new service would allow online lenders to compete with banks on cost of capital, as well. It will revolutionize their business capabilities and will allow for faster growth and more flexibility in the cost of customer acquisition. Additionally, it will make fintechs more competitive with banks.
Of course, we expect regulators will need a long time before getting comfortable with this. In the meantime, we hope they’ll be willing to monitor and observe in order for all participants to understand the best way to regulate such a critical and important step for fintechs.