FINTECH ARTICLES OF THE WEEK 3/27/2017
It was just a matter of time before the notion that customers own their data and not banks became a point of contention and lobbying in the United States, especially after the Consumer Financial Protection Bureau said as much last fall. European banks soon will offer “open banking,” where customers can specify who has access to their accounts for payments, under the classically Eurocratically named Second Payment Service Directive (PSD2).
Last week, both the New York Times and The Economist referred to customer data as gold, and both noted that U.S. banks are not going to open up their data without a fight. As the Times put it, “banks are pushing for new data agreements in an effort to stop technology companies from getting access to customer data in ways they might not understand, or that could create security risks.”
That’s an awfully broad lobbying field, and the free-trade-oriented Economist suggests that regulators “hold their nerve” and be “ruthless both in ensuring that banks open up their infrastructure to others and in withdrawing the licenses of third parties that break the rules, particularly on cyber-security.”
Opening bank data to FinTech firms gives both banks and FinTechs the opportunity to develop innovative services where the consumer comes out ahead. Yet that’s likely to come later than sooner.
“My perception is that the industry is obsessed with this as a goldmine. It’s doing to be exceptionally revolutionary, but the consumer side of the equation is a bit ‘meh’. Most people I speak to just don’t care enough about their bank. It is seen as a utility,” Izabella Kaminska, an FT Alphaville blogger told a London tech panel.
Maybe so. But the utility business isn’t such a bad deal when profits are politically locked in.
Time for B2B payments to get standardized, says Nordea
Majority of companies surveyed by Nordea say they are collaborating with at least five banks for their payments and collection needs. “This creates a potential deadlock: Do banks risk losing business by insisting on using their own formatsreport asks. “Or do corporates limit their choice of bank by insisting on their preferred format?”
What a Durbin repeal would mean for credit unions
The Durbin Amendment, a merchant-friendly provision within the Dodd-Frank Wall Street Reform and Consumer Protection Act which caps interchange fees and requires issuers to support more than one card network, could be on the chopping block due to a Republican controlled Congress and White House, according to CUInsight. The move could mean more compliance costs for credit unions, because Durbin requires them to have two network options for card transactions.
What a Durbin repeal would mean for credit unions
The Durbin Amendment, a merchant-friendly provision within the Dodd-Frank Wall Street Reform and Consumer Protection Act which caps interchange fees and requires issuers to support more than one card network, could be on the chopping block due to a Republican controlled Congress and White House, according to CUInsight. The move could mean more compliance costs for credit unions, because Durbin requires them to have two network options for card transactions.
Meeting demand for mobile “it” feature at a community bank
“The No. 1 objection that customers have to getting a debit card: they’re afraid,” Betsy Gomez, first vice president and director of retail administration at Provident Bank tells Penny Crosman of American Banker. The Jersey City, New Jersey-based community bank, which has about $9.5 billion in assets, rolled out an option for debit card holders to switch their debit cards on or off in order to protect their assets and control spending.
Opinion: Insurers must improve their mobile customer experience
Insurers are at the bottom of the satisfaction scale in terms of consumer mobile experience, writes Pat Speer for Digital Insurance. According to the Effective Mobile Engagement report, 85 percent of consumers are unlikely to do business again with the same organization following a bad mobile experience. Insurers are aware of that shift toward mobile interaction, and Speer argues that they need to re-think their mobile strategy to acquire more customers.
New US InsurTech Fabric targets patents
Fabric, an InsurTech firm now up and running in 32 states, will offer an accidental death policy and a comprehensive 20-year term policy, Business Insider reports. There are 37 million U.S. families without life insurance, and Fabric aims to make the life insurance purchasing process a lot easier by not attempting to upsell customers and speeding up the application process to just two minutes.
Beating SMB Alt Lenders at their own game
As the small business lending demographic shifts from baby boomers to Gen Xers and millennials—a demographic that is more tech-savvy than their parents—banks need to focus on simplifying the loan application process, writes Elise Hauser for FinXTech. Younger business owners don’t have the time to go to the bank and sit through a lengthy loan application process, so they turn to speedier alternative lending platforms. To compete, banks need to simplify the application process and lower loan origination costs.
Prosper reports surging losses as loan volume falls
The loan volume fell to $2.2 billion, a drop of about 41 percent, PYMNTS.com reports. As the company’s revenue falls and it continues to slash staff members, it is unclear whether or not the firm will return to profitability and whether the institutional investors will feel comfortable enough to return to alternative lending platforms.