Banks have been fairly active in tapping into new technologies recently, either through partnerships or with internal innovation groups. But with the rapid acceleration of the fintech space, how should banks decide if a new space or tech is worth pursuing?
An old-school cost analysis will do, according to Michael Baresich, chief information officer at Ally Financial.
“When we look at a space we want to enter, or a segment we want to serve, it’s always the case of how do we get there at the lowest cost, and in the shortest amount of time,” he said at a fintech panel in New York yesterday.
In many ways, Ally has been a pioneer of modern-day branchless banking, according to the tech veteran. However, a careful consideration of the cost and the timing of the “latest and greatest” technology has always been at the core of his strategy in deciding whether to buy, build, or copy a certain feature.
“Sometimes we would see that the speed of the market outweighs pure cost, and then cost would be the deciding factor,” he said. “So when we were looking at the robo advisory space, starting a year ago, we were considering all three possibilities: we had a lot of startups talking to us, and were thinking about acquiring them or potentially partnering, but we were also working on designing our own product.”
It so happened that Ally came across TradeKing – an online discount brokerage and digital wealth management platform. Ally acquired the platform in April 2016.
“We said, we can now jump into the market, inherit this capability immediately, with a profitable business — which, not that many robos can say that – and build on from there, integrating it with the rest of our products and services,” Baresich said.
The bank will be rolling out a new integrated product with TradeKing in a couple of weeks, Baresich added.
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