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BANKING ON THE FUTURE

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BANKING ON THE FUTURE
Data from Accenture 2014 Digital Banking Survey

Data from Accenture 2014 Digital Banking Survey

In 1990, the top five banks controlled 9.67% of the industry’s total assets. In 2015, the top five banks control 44% or approximately $6.7 Trillion in assets.

The financial democracy that stimulated small business and middle class growth in the 1950s and 60s, has transformed to an oligarchy in which one percent of the population owns 48.2% of the world’s wealth.

For future economies to survive, this wealth needs to be redistributed.  It is doubtful that government will evolve quickly enough to correct this destructive trend. Open Secrets reported that in the 2010 election, one quarter of one percent of the population made 68% of the contributions to Congress. Special interest governance inhibits the ability for progressive change.

How Did We Get Here?

Prior to 1990, community banks and credit unions controlled their market share through customer loyalty.  Relationship banking was at its peak.

Early Internet users were provided with information and data centric remote access. Gen-X began demanding alternative remote solutions to make banking more convenient. Digital banking emerged, spearheaded by big banks that had the capital to invest in new technology.

Community bank and credit union customers demanded the same digital options and in order to compete, these financial institutions gave up the advantage of relationship banking to provide online access. Once customer loyalty was removed as a differentiator, consumers made choices based on cost. With a mass customer base allowing for economies of scale, larger financial institutions have increased market share at the expense of local community banks and credit unions.  The opportunity to mentor, advise and upsell a client based on relationship banking was lost.

Too Big To Succeed

According to a Kasara study, 78% of Americans blame big banks for the 2008 financial crisis. “Too Big To Fail” translates to “even though their systems and policies are antiquated, our government will bail out big banks because they have huge lobbies.”

The erosion of big banks’ control is already happening. The future is now, as new tech advances and high growth demographics are entering the market.  It begins with Apple Pay, Bitcoin, Lending Tree and PayPal. It continues with all Fintech disruptors who develop digital banking innovations. Fintech companies and community banks have an edge in adapting to this future market with an ability to iterate quickly through many new advances.

Top Five Reasons Big Banks Will Fail

  1. Legacy code and systems – approximately 70-80% of banking software and systems in big banks is obsolete.
  2. Long cycles of change – can take years to make critical decisions.
  3. Distanced from customer base – digital banking has precipitated erosion in customer loyalty.
  4. Hubris – assuming the federal government will always be there to back their ineptitude.
  5. Regulations – ironically big banks are strangled by the very regulations they lobbied to put in place.

What’s Next?

The solution is a shift to center that allows community banks and credit unions to again compete with big banks.  It is easier for these financial institutions to adopt new systems and adapt to change. The ability to make these agile decisions to service customers will create business growth.  The cost for the “next big thing” for community banks and credit unions is far less than the infrastructure needed for past online banking platforms.  The advantages of economies of scale are lost for big banks.  The renewal of community banking will impact local communities, their economies and survival of the middle class.

Remote convenience does not translate to “Do It Yourself”. For the first twenty years of the Internet, it was what banks could provide given the web’s limitations. The Internet was an information vehicle to develop transaction-based digital applications allowing remote access. This system required customers to become their own personal bankers and tellers. The trade-off of remote convenience was worth the effort.

The future of banking involves more than processing transactions. Financial advice is the reason 30% of banking customers visit their branch, and is the gestation of 70% of revenue. Financial vehicles such as loans and retirement accounts, which result from financial advice, are major profit generators. By disenfranchising clients who use remote digital options, banks have diminished opportunities for cross-sell and up-sell to customers visiting the branch to conduct transactions.

Feature

Internet platforms evolve rapidly and have created a new era in digital remote connectivity. Bandwidth and network growth now support instant remote communication. Customers expect one-tap solutions on their mobile devices, giving them instant service satisfaction. Current mobile banking solutions are patterned after existing web versions with too many features and screens to be effective using new devices.

Boomers might wait 30 minutes on an 800 number call; Millennials will not.  According to the Accenture 2014 Digital Banking Survey, “56% are interested in having a video chat with a bank representative by accessing a link on their bank’s website, mobile or tablet application”. Within 8 months of launching on Amazon Fire HDX, 75% of customer contact comes via their new video Mayday button.

How Do We Get There?

Easy, single-feature, Fintech solutions are a strong innovation focus in Silicon Valley. Today’s consumers expect immediate and visual contact.  They want service. “Do It For Me” has replaced the “Do It Yourself” trend of the past. Banks who respond quickly to this trend can recapture loyalty with a new customer centric focus. Rather than treating client interaction as a negative aspect of per transaction cost, it becomes a profit center.  The realization that each customer contact is an opportunity for growth and profit will enable those banks to recapture and grow market share.

Disruptive change in the financial sector is inevitable and exciting for the future of banking. Fifteen trillion dollars in assets are at stake. History reveals that economies rebound and thrive when all are involved with the benefits of financial stability, and not just the top one percent. Oligarchy fails and democracy succeeds. Redistribution of wealth is a mandate and no longer an option. The next digital evolution is here and Fintech innovation is leading the way back to economic democracy.

ABOUT THE AUTHOR

Bill Saris

Bill Saris

Bill Sarris, CEO and Co-Founder of Linqto, Inc.

American Banker and BAI named Linqto in the “Top Ten Tech Companies to Watch” for 2015 and last month Linqto received Monarch’s “Most Innovative” award for Business Banking. Bill Sarris, CEO, is a recognized expert in streaming technology and has developed banking solutions for twenty years. Linqto’s clients have included Microsoft, Intuit, Digital Insight, NCR, Google and Stanford. Linqto’s interactive banking communication suite includes Personal Banker and Community Banker. For additional information, contact [email protected].

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U.S. inauguration turns poet Amanda Gorman into best seller

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U.S. inauguration turns poet Amanda Gorman into best seller 1

WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.

Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped Amazon.com’s sales list.

“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.

Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.

While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.

“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”

Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.

“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.

“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”

The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.

“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.

A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.

She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.

Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.

“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.

Gorman’s books are both due out in September.

Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.

(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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Why brands harnessing the power of digital are winning in this evolving business landscape

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Why brands harnessing the power of digital are winning in this evolving business landscape 2

By Justin Pike, Founder and Chairman, MYPINPAD

Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.

As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.

As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?

Digital is an essential survival tool, and even more so in a COVID world

No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.

In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.

Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.

The challenges that rapid digital transformation brings to businesses

Justin Pike

Justin Pike

Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.

Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.

The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.

As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.

But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.

A digital world post-COVID

Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.

There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.

Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.

Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.

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Brexit responsible for food supply problems in Northern Ireland, Ireland says

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Brexit responsible for food supply problems in Northern Ireland, Ireland says 3

LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.

British ministers have sought to play down the disruption of Brexit in recent days.

“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.

The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.

(Reporting by Guy Faulconbridge; Editing by Tom Hogue)

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