Trends in Financial Technology to Watch


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The FinXTech Advisory Group is comprised of several respected fintech leaders from around the globe, and we are honored to have Christa Steele, former CEO of Mechanics Bank in Walnut Creek, California, as a part of the group. During her time with Mechanics Bank, she improved core earnings 43 percent in a single calendar year, doubled the stock price, evaluated three separate and vastly different M&A combinations and in 2015 led the company through its successful sale to a Dallas-based investment firm at a market premium of 1.64x tangible book value. Since then, she has been involved in a variety of initiatives including alternative lending, robo-advisory, mobile/digital payments and blockchain. As a director for a mix of public/private company boards, and as an advisor to two blockchain organization, we asked Christa to share her thoughts on the future of banking and how blockchain will impact financial services. Here are her written responses.

What trends in financial technology should we all be watching?
The banking industry must adhere to the required paradigm shift being caused by digital, mobile, e-commerce and other robust cloud-based technology trends. The traditional bank financial model is under siege by competitors from outside the industry.

Did you know:

  • Online lender SOFI, which started out refinancing student debt and now funds home loans, offers wealth management services for a flat fee of $60 per year?
  • PayPal has more customer money than all but the 20 largest U.S. banks? Did you also know that PayPal’s deposits are not insured?
  • The transaction volume at Venmo, PayPal’s peer-to-peer payment processor, exceeds $1 billion a month and the company is now piloting a merchant program?
  • Mobile banking apps are becoming gamified to enhance customer engagement and attract and retain millennials?
  • Facebook Messenger is processing Bank of America client transactions and is said to be engaged with over 1,000 payment vendors to offer client services that interact through Messenger with a single sign-in process?
  • Over 60 of the world’s largest banks are testing a new technology called blockchain that could single handedly revolutionize how financial transactions are conducted today?

As a former bank CEO, what are some of the challenges that bank leadership teams must overcome during this period of digital transformation?
Each bank is different. Geography, economic trends, client mix (i.e., retail, commercial and wealth management), institution size and product offerings can all be different. My advice is to pay attention and understand how fintech is impacting client acquisition, client retention—and, ultimately, your bottom line. Evaluate whether your current infrastructure and growth strategy meets the needs of a digital world.

Based on your experiences, why is there so much time, energy and resources being spent on blockchain?
We’ve all been using cloud-based technology. I remember when banks were slow to move to the cloud at first because of their initial mistrust. Today we are centralized, but there are endless possibilities about where we go from here, including the use of open access IoT networks, public and a private system of records.

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Blockchain is a software that enables data sharing across a network of individual computers. A blockchain describes computers transferring blocks of records in a chronological chain aka a distributed ledger. A simple way to explain this technology is to think about vehicle assembly. Blockchain is the assembly line in the manufacturing plant. The end product is a car, or in the case of blockchain, an asset token.

How do you see blockchain impacting the banking industry holistically?
The impact of blockchain will not only affect banking, but we will see enhanced record keeping and data analytics, streamlined processes, cost saves and efficiency gains. Over the next several weeks, I plan to share a series of articles centered around the technology of blockchain and how it will directly impact the financial industry. I’ll take a look at how it works, why it matters, how to make it a reality and highlight some major players in the space. I look forward to sharing with you all the interesting and innovative movements around this dynamic technology.

Three Ways Fintech is Riding the Social Commerce Wave


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Consider two of the most prevalent digital trends over the last decade or so: social media and e-commerce. A growing number of users are interacting with companies on social media platforms such as Facebook, Pinterest and Instagram. An increasing number of people are also turning to the internet and e-commerce to purchase virtually any item, for any occasion. For these reasons, the emerging “social commerce” trend makes a lot of sense.

Social commerce is roughly defined as the intersection of social media and e-commerce. For example, Facebook has added a “buy” button, so consumers can make purchases directly without ever leaving the social network. In many ways, 2016 was the “Year of Social Commerce.” Worldwide, revenue earned directly through e-commerce using social media totaled $20 billion dollars in 2014, according to the software provider ReadyCloud.

As social commerce grows, so will the demand for products and services to manage the flow of payments from social networks to vendors and institutions on the back end. Fintech startups and banks are coming up with new ways to meet these demands. Here are three examples.

Social Gifting
There’s something inherently social about gift giving. Over the years, gift cards have become popular among both consumers and brands of all shapes and sizes. While gift cards might seem tailor-made for social commerce on a surface level, for the most part, people are still buying physical gift cards at retail locations and gifting them to friends and family, who then have to keep them in their wallet with countless others, which can be inconvenient.

That’s the problem that Texas social commerce startup Swych is aiming to solve. Swych has created a digital platform where consumers can send, manage and redeem their gift cards all in one place. Currently, Swych is available as an iOS app for U.S. consumers, and major retailers such as Amazon, REI and Sephora offer gift cards through the platform. Swych users can eliminate their physical gift cards by uploading them into the application if the retailer is on Swych. The company also introduced “Swychable” gift cards that can be redeemed with any retailer within the Swych ecosystem.

Swych aims to transform the gift card market from obsolete technology and a clunky user experience to a convenient and connected social future. Users can view friends’ profiles on Swych, see what brands they prefer and give a gift card that closely matches those preferences. Swych is tackling an outdated industry and making the experience better for both consumers and retailers.

Social Banking Apps
Many banks are wrestling with exactly how to adopt new technologies to capitalize on the social commerce phenomenon. Rather than spending the resources to develop social commerce technologies in-house, many banks are turning to white-label solutions. Urban FT helps banks integrate social commerce features into their online and mobile banking applications.

Specifically, Urban FT helps banks build social payment capabilities into the banks’ own apps, similar to what Venmo accomplishes. Moreover, banks can use Urban FT to provide retail customers with Yelp-style reviews, geolocation, coupons and other social features that people would typically find in third-party apps such as Foursquare or Groupon. Users can even make restaurant reservations or purchase gifts through banking apps that utilize Urban FT’s social commerce technology. Banks partnering with Urban FT realize that if they can offer these services within their own online and mobile banking ecosystem, they’ll be able to increase the lifetime value of those customers and learn more about their social commerce preferences.

Shopify Gets Social
Shopify is one of the largest players in back-end merchant e-commerce services. Anyone who wants to set up an online store, sell goods or services and collect payments recognizes that Shopify is probably the most comprehensive solution available. So it’s no surprise that Shopify is now introducing technologies that will make buying and selling on social media easy for everyday people. The company has developed a free app-based platform called Sello that allows anyone to easily set up an online store, share products on social networks and allow people to purchase these products on their mobile devices.

Sello exemplifies a broader movement within social commerce, which is the democratization of buying and selling, as social media has also done for content creation. Anyone can start a blog and share what they’ve written quickly and easily, so shouldn’t setting up a shop in order to sell something you’ve made be just as simple? Unlike online retailers like Etsy, Shopify has built Sello with social commerce at its core. The most direct purchase path of the future will be creating products, sharing them on social media and enabling a direct purchase from that point. In the future, Shopify hopes that novice Sello users become successful enough to start their own e-commerce business and migrate onto the full Shopify business platform.

Social media may be mature, but social commerce is still in a stage of growth and experimentation. The challenges of the future will be to make purchasing even more frictionless and leveraging social networks to better personalize product offerings. With innovations like social gifting and white label in-app social commerce for banks, it’s clear that our experiences on social media will likely involve much more buying and selling in the near future.