Source reports on the operational costs associated with loans and how automation and artificial intelligence (AI) can help reduce those costs; automation can now replace manual processes such as credit checks, data consolidation, onboarding, loan documentation, know your customer and more; robotics and AI are also assisting in risk analysis for SMEs; additionally, machine learning solutions have also been evolving to evaluate thousands of data points from various sources; as these solutions evolve, banks too will need to integrate greater automation to stay competitive. Source
Innovative banks and fintech companies are disrupting the traditional one-stop banking model; a 2016 report from Accenture says bank customers are purchasing low margin products but looking elsewhere for brokerage accounts, auto loans and home mortgages; in 2016 nonbank mortgage lenders reported a significant milestone with 51.4% of the market's loan issuance an increase from 9% in all of 2009; as the trend continues, banks will have to increasingly monitor customer activity and offer new products that match nonbank competition. Source
Lisa Servon worked at a check cashing store to identify its benefits and whether or not the financial system should direct consumers to banking services which have previously been cited as less expensive and more efficient; in her experience at RiteCheck Cashing, Servon found three factors that influenced the use of check cashers by the underbanked; costs were lower in comparison to the fees and charges from using a bank; pricing transparency was more clearly provided for check cashing services; many customers also reported better service from check cashing tellers than bank representatives; Servon has published a book titled "The Unbanking of America: How the New Middle Class Survives" which provides full details on the benefits of using check cashing services. Source
The House Financial Services Committee has scheduled a hearing for March 28 with a panel of banking executives to gain greater insight into how Dodd-Frank has affected lending in the banking industry; the House Financial Services Committee works within the House of Representatives and is the main group governing regulation of the financial services industry; the hearing will help to gain insight into the effects on bank lending from Dodd-Frank which will help in directing Trump administration reform; the House Financial Services Committee is led by Jeb Hensarling who has previously reported the Financial CHOICE Act which is presented as a replacement for Dodd-Frank. Source
Since Lending Club announced the first bank partnership in 2013 banks have been increasing their involvement in the marketplace lending...
Banking-as-a-service, banking-as-a-platform, platform-as-a-service, open banking and open application program interfaces (APIs) are all terms being used by fintech companies who are building innovative products for banks; the long term question is will the banks buy or partner with this technology and in a banking system like the US how wide will adoption need to be for the banking system as a whole to change; recent surveys by Cornerstone Advisors of 300 community banks, regional banks and credit union CEOs shows the current economic environment and presidential election has them very optimistic; when they are making money, they innovate less. Source
Forbes reports on new technology in the automotive sector; says internet of things connectivity will allow users to connect their bank accounts with their vehicles; Forbes talks with industry experts about the market's evolution. Source
Many of the major US banks are now adopting digital strategies into their business; Lend Academy shares progress from JPMorgan, Bank of America, Wells Fargo, Citi and Goldman Sachs. Source
Sheltered Harbor began earlier this year and covers around 400 million accounts across banks and credit unions; members of the project are required to back up data so other banks can serve customers in the event that another bank becomes disabled; the project goes beyond concerns over customer data being stolen to address concerns that a cyberattack could destroy or lock data. Source
[Editor’s note: This is a guest post from Caribou Honig. Caribou is one of the founding partners of QED Investors,...