The most talked-about companies at Finovate Fall 2016 weren’t even presenting on the stage at the New York Hilton last week. But they represent everything fintech innovators love to love and love to hate: The Succesful Disruptor and The Evil Bank.
If Amazon was the North Star — a beacon of simplicity — then Wells Fargo was the banking Death Star, summoning everything we hate about banks. Frankly, the army of fintech PR soldiers could not have summoned a better scandal than the one at Wells. 5,300 employees fired! 2 million fake accounts! Time for the disruptors to shove aside the corrupted legacy institutions.
Isn’t that why everyone returns year after year to Finovate — to sit through dozens of presentations — hoping to find The Chosen One, the one that will shame the incumbents and provide a shining service — friction-free! — that consumers never even dreamed of?
Let’s face it, after 10 years of demos, the thrill is gone. The excitement of disruption had been replaced with the long slog of actually building a company and competing with lots of knock-offs. Was that another gift card company? More biometrics IDs? More white-label banking systems?
In a conversation with Bank Innovation, Joe Salesky, CEO of CRMNXT, noted that more and more the innovators are focused on the plumbing of the financial system. The new crop is “selling to banks.” When mobile banks and peer-to-peer payments hit the scene, everyone was excited — these were consumer-facing products and so fresh. Salesky demo’d at the very first Finovate in 2006, gleeful to show a real product (on a flip phone) rather than numbing everyone with PowerPoint. By the time the financial crisis hit, anything not-a-bank seemed outright thrilling. Kabbage, Moven, Simple, TransferWise, Lending Club — they were making end runs around a clearly broken system.
The model for the new disruptors is the master e-company Amazon, where the razzle dazzle is behind the scenes. “Simple buying with more choices,” Salesky says.
The voice of Alexa ruled on the demo floor, cooing answers to questions asked on stage and in the exhibition area. “You have $17,000 in your bank account,” came an answer from Personetics, a white label banking financial management tool that helps savers understand their money flows. The Q&A format was mesmerizing and easy — although some regulars grumbled that all this voice stuff was fluff. Y Combinator graduate BankJoy (aspirational name or an oxymoron?) introduced its platform for developers at credit unions and small banks. In their demo, they said the link they built to Alexa took just one day. “Block my debit card,” BankJoy CEO Michael Duncan ordered Alexa. “Are you sure you want it blocked?”
At Finovate, Salesky demo’d the CRMNXT the platform, which gives bank employees a global view consumer accounts and enables customers to seamlessly transact from phone to desktop to phone. The drag-and-drop technology make it easy for bank employees to answer questions and sell products suggested by the software’s artificial intelligence.
Simple. But. After the problems at Wells, is cross-selling such a wonderful thing? Indeed, Wells Fargo sent out “an alert” on Friday telling some employees to put a hold on the practice, the Wall Street Journal reports. Cross-selling is not the evil, Salesky explains but a system that rewards account openings as well as “stove-piped processes” that mean A can’t see what B is doing are problems. The way the goals were framed and the fractured platform are the real problems.
Still, don’t assume so quickly that fintechs will be the great saviors of the banking industry, writes Ron Shevlin.
Some folks I know are planning to write an article on (in their words) “FinTech’s moral obligation to reform banking.”
Oh puh-leeze. Enough with the self-righteousness! I had two words for the would-be authors when I heard about this plan: Lending Club.
It’s disappointing that the story line of good and evil won’t work. The real lesson is more important: Bad incentives typically lead to bad results. Wasn’t that the moral of the 2008 crisis? Going forward, whether watching fintechs, legacy institutions, or their burgeoning partnerships, we should all consider where the incentives are leading the people who execute the business plans. North Star, Death Star, the action is here on earth.1 - Reader Likes This Post