Global fintech investment hit $98 billion in the first half of 2021, promising a return to pre-pandemic levels, according to KPMG. So what can we expect for fintech M&A in 2022? Ritika Butani leads corporate development at the technology platform Toast, which provides payments and other services to the restaurant sector. She leverages her background to provide her expectations for fintech M&A, including cross-border transactions. Butani also shares her perspective on the traits of a great technology acquisition.
FinTech Day Recap: Rapid Transformation Through Collaboration
Over the next few years, the financial services industry will continue to undergo a major transformation, due in part to the speed of the technology movement. With continuous pressures to innovate, how can banks leverage these new technologies to stay relevant and competitive over the next five years? Filmed during Bank Director’s annual FinTech Day in New York City at the Nasdaq MarketSite, industry leaders in the banking, technology and investment space share their insights and perspectives on the challenges and opportunities facing traditional banks.
What’s Transforming Banking
Filmed during Bank Director’s annual FinTech Day in New York City at the Nasdaq MarketSite, Eduardo Vergara, head of payment services for Silicon Valley Bank, outlines three major changes impacting the banking industry.
Moving Beyond the Core Banking System
Filmed during Bank Director’s annual FinTech Day in New York City at the Nasdaq MarketSite, Brooks Gibbins, co-founder and general partner of FinTech Collective, discusses how many banks need to overcome this challenge to effectively compete with technology startups.
Developing Fintech Partnerships
Filmed during Bank Director’s annual FinTech Day in New York City at the Nasdaq MarketSite, Kai Schmitz of International Finance Corporation, reviews why traditional banks need to join the digital financial services economy rather than stay on the sidelines.
FinTech Day Recap: The Times They Are A-Changin
Over the next few years, the financial services industry will continue to undergo a major transformation, due in part to the speed of the technology movement. With continuous pressures to innovate, how can banks leverage these new technologies to stay relevant and competitive over the next five years?
Filmed during Bank Director’s annual FinTech Day in New York City at the Nasdaq MarketSite, Al Dominick, president and CEO of Bank Director, shares his thoughts on how banks who are looking for partnerships and opportunities to develop new technologies, may find fintech companies eager to collaborate.
Innovation Takes Center Stage
Technology has always been integral to banking, bringing both speed and efficiency to a transaction-intensive business. But in recent years, technology has stepped onto center stage as a prime component in every bank’s growth and distribution strategy. Technology has, in effect, gone from being a way to save money (a crucial function that it still fulfills) to a way to make money. Much of this activity is being driven by the continued growth of mobile and online banking.
In an effort to highlight the importance of technology and the evolving partnership between banks and their financial technology providers, Bank Director held its second annual FinTech Day today at the Nasdaq MarketSite in New York. The event brought together senior executives from banks, technology companies and investment firms to create a dialogue between these important groups, encourage cross-fertilization and build a foundation for collaboration.
This year’s event also featured Bank Director’s inaugural Best of FinXTech Awards, which recognizes examples of innovation and collaboration between banks and their financial technology providers. The awards have been given to five banks and their technology partners, chosen by Bank Director from among 10 finalists.
The five winners are:
- Univest Bank and Trust Co. in Souderton, Pennsylvania, and nCino in Wilmington, North Carolina. The project: Developed a cloud-based, end-to-end small business loan origination system that enabled Univest to meet the challenge of aggressive alternative lenders that are pushing into that important lending market.
- CNLBank in Orlando, Florida, and CheckAlt in Los Angeles, California. The project: Jointly developed a new solution for remittance processing that greatly reduced the volume of payment exceptions, resulting in reduced costs and improved commercial client retention. In December 2015, CNLBank was acquired by Wayne, New Jersey-based Valley National Bancorp.
- Somerset Trust Co. in Somerset, Pennsylvania, and Malauzai Software, Inc. in Austin, Texas. The project: Developed a mobile banking solution that allows Somerset retail banking customers to securely check balances, use picture bill pay and remotely deposit checks from any location of device.
- Metro Bank in Harrisburg, Pennsylvania, and BizEquity in Wayne, Pennsylvania. The project: Developed a private label version of BizEquity’s online business valuation service, available through Metro’s website, that is used as a tool to bring prospective business customers into the bank’s branches. In August 2015, Metro was acquired by Pittsburgh-based F.N.B. Corp.
- City National Bank in Los Angeles, California, and MineralTree in Cambridge, Massachusetts. The project: Developed an online business-to-business, invoice-to-pay solution that enabled the bank to differentiate itself from its competitors and attract new corporate customers. In June 2015, City National was acquired by Royal Bank of Canada.
The five winners were honored today at FinTech Day in New York. The other five finalists were USAA and Daon Inc., Seattle Metropolitan Credit Union and D+H, First Financial Bank and StrategyCorps, Central Bancompany and Ignite Sales, and Metro Bank and Zopa, both located in the United Kingdom.
Innovation Takes Center Stage
Technology has always been integral to banking, bringing both speed and efficiency to a transaction-intensive business. But in recent years, technology has stepped onto center stage as a prime component in every bank’s growth and distribution strategy. Technology has, in effect, gone from being a way to save money (a crucial function that it still fulfills) to a way to make money. Much of this activity is being driven by the continued growth of mobile and online banking.
In an effort to highlight the importance of technology and the evolving partnership between banks and their financial technology providers, Bank Director held its second annual FinTech Day today at the Nasdaq MarketSite in New York. The event brought together senior executives from banks, technology companies and investment firms to create a dialogue between these important groups, encourage cross-fertilization and build a foundation for collaboration.
This year’s event also featured Bank Director’s inaugural Best of FinXTech Awards, which recognizes examples of innovation and collaboration between banks and their financial technology providers. The awards have been given to five banks and their technology partners, chosen by Bank Director from among 10 finalists.
The five winners are:
- Univest Bank and Trust Co. in Souderton, Pennsylvania, and nCino in Wilmington, North Carolina. The project: Developed a cloud-based, end-to-end small business loan origination system that enabled Univest to meet the challenge of aggressive alternative lenders that are pushing into that important lending market.
- CNLBank in Orlando, Florida, and CheckAlt in Los Angeles, California. The project: Jointly developed a new solution for remittance processing that greatly reduced the volume of payment exceptions, resulting in reduced costs and improved commercial client retention. In December 2015, CNLBank was acquired by Wayne, New Jersey-based Valley National Bancorp.
- Somerset Trust Co. in Somerset, Pennsylvania, and Malauzai Software, Inc. in Austin, Texas. The project: Developed a mobile banking solution that allows Somerset retail banking customers to securely check balances, use picture bill pay and remotely deposit checks from any location of device.
- Metro Bank in Harrisburg, Pennsylvania, and BizEquity in Wayne, Pennsylvania. The project: Developed a private label version of BizEquity’s online business valuation service, available through Metro’s website, that is used as a tool to bring prospective business customers into the bank’s branches. In August 2015, Metro was acquired by Pittsburgh-based F.N.B. Corp.
- City National Bank in Los Angeles, California, and MineralTree in Cambridge, Massachusetts. The project: Developed an online business-to-business, invoice-to-pay solution that enabled the bank to differentiate itself from its competitors and attract new corporate customers. In June 2015, City National was acquired by Royal Bank of Canada.
The five winners were honored today at FinTech Day in New York. The other five finalists were USAA and Daon Inc., Seattle Metropolitan Credit Union and D+H, First Financial Bank and StrategyCorps, Central Bancompany and Ignite Sales, and Metro Bank and Zopa, both located in the United Kingdom.
Staying Relevant While Standing Out
During the inaugural FinTech Day sponsored jointly by Bank Director and NASDAQ OMX, Declan Denehan, BNY Mellon’s managing director for strategy and innovation, and Al Dominick, president of Bank Director, discuss innovation and technology products and services to stay relevant in today’s banking environment. The event was held in September at the NASDAQ’s MarketSite in New York’s Times Square with over 40 participants from 30 financial technology companies.
How One Large Bank Fosters Innovation
From left, Declan Denehan, managing director of strategic growth initiatives at BNY Mellon; Bank Director Publisher Kelsey Weaver; President Al Dominick; and Olivia Bajaio, BNY Mellon vice president of strategic growth initiatives, in New York City earlier this week.
Editor’s note: This article has been corrected from an earlier version.
Conventional wisdom holds that banks are not very good at innovation—and large banks, with their entrenched bureaucracies and clumsy legacy systems, are probably worst of all. It might then come as a surprise that Bank of New York Mellon Corp. has run a highly successful innovation program that has made a meaningful contribution to the bank’s profitability, and also manages to get most of the company’s 50,000 employees involved in the process.
Declan Denehan, BNY Mellon’s managing director for strategy and innovation, offered a look into the unusual program during the inaugural FinTech Day sponsored jointly by Bank Director and NASDAQ OMX. The event was held at NASDAQ’s MarketSite in New York’s Times Square and attracted over 40 participants from 30 financial technology companies.
Headquartered in New York, BNY Mellon is the 5th largest U.S. bank with approximately $370 billion in assets. Unlike most banks, however, it does relatively little lending but instead focuses on two core businesses: investment management, with $1.7 trillion assets under management, which makes it one of the 10 largest managers in the world; and investor services, a broad category that includes a variety of back office functions that banks, insurance companies and investment managers rely on to handle their customers’ accounts.
BNY Mellon’s innovation program began in 2009 when the bank’s senior leadership decided they wanted to encourage creativity and out-of-the-box thinking among the bank’s employees, Denehen said on-stage during an interview with Bank Director President Al Dominick. BNY Mellon places tremendous importance on the use of technology in all of its investment management and servicing businesses and is constantly looking for ideas that will lead to improvements in efficiency, profitability and the customer experience. After spending some time talking with senior managers in BNY Mellon’s six major business units to get their thoughts on innovation, Denehan established a pilot program to review ideas submitted by approximately 10,000 employees throughout the company.
“We found out that there was a pent up desire in those employees to get their voices heard,” he said.
The pilot generated a lot of suggestions that weren’t necessarily aimed at improving the company’s profitability, so Denehan realized pretty quickly that going forward he would have to provide the bank’s employees with more guidance in terms of what he was looking for. “You know the old saying that’s there’s no such thing as a bad idea? Not true!” he laughed. Denehan ended up receiving some 1,000 ideas and it took some time to review them all and select those with merit. The program found enough winners that it generated about $165 million in pretax profit for the bank that first year.
The innovation program has expanded steadily since the 2009—all BNY Mellon employees are encouraged to participate—and looks for ideas that are capable of becoming large scale projects and make a significant contribution to the bank’s bottom line. It culminates in an eight-week contest called “ACE” that proceeds throughout several elimination rounds, with the finalists giving a five minute pitch to a panel of judges in New York. The winning team is selected at this final judging and its members receive what Denehan described as a substantial cash award and are given the opportunity to leave their current positions and join a company-run incubator where they will develop their idea and make it operational. The program also provides for feedback so employees who do not win will not lose motivation to participate. Since its inception in 2009, the program has generated over 13,000 innovation ideas.
Denehan cautioned the audience that the search for innovation in a corporate setting is an evolutionary process. To be successful, it requires the engagement of senior management so that everyone understands that the undertaking is important. The ideas also need to be things that fit comfortably with the culture of your company, which is why it’s so important the ideas come from employees who understand that culture and have been shaped by it. And whatever process you establish to foster innovation in your company has to respect that imperative.
“You have to build [a process] that can create ideas that can survive in the DNA of your organization,” said Denehan. “You have to build for your culture. Culture is everything.”