Wild, Wild Tech


By Camden R. Fine, President and CEO of ICBA

 Welcome to mobile mania. Financial innovation is booming. It’s freewheeling and chaotic. It also continues to transform the operational and competitive contours of our industry.

 Mobile technology combined with Internet connectivity results in a lot of data. Think about it. With email, search engines and mobile geolocation, companies have data on who you are, where you are, what sites you visit, what you have bought and what you are planning to buy. And many of those companies want to offer various bank-like services.

 Community banking in today’s rapidly digitizing world is rife with powerful rewards, but also with challenges and uncertainties too. Fortunately, community banks are patiently and prudently adopting powerful mobile and information technology in wondrous ways. Your institutions have all the technology that any consumer or business could need or that any other reputable financial company is providing. But we all need to tell that story more.

 Certainly, community banks have valuable, reliable technology partners, and we increasingly have formidable technology competitors too. So-called FinTech firms are creating new digital platforms for consumers and businesses to easily access loans, payments, investments and financial data (and even digital currencies). These non-FDIC-insured companies are enticing consumers to bypass FDIC-insured mainstream banks for new-fangled, sometimes risky or harmful products. Many of these leverage data analytics in highly sophisticated ways. We cannot take them lightly.

 Within this disruptive environment of financial technology innovation, what should ICBA and community banks do to continue delivering the best, most convenient and safest technology for our customers? ICBA sees three key priorities.
1. Promote bank-centric payments. As an industry and as a country, we have to continue advocating the benefits of a bank-centric payments system. Banks are proven, secure intermediaries for moving money. The value of our tested controls, security protocols and protections, including federal deposit insurance, must be understood and supported by consumers and policymakers alike.
2. Uphold uniform standards for everyone. Consumers need and deserve the same safety and reliability from all financial services providers. Consistent compliance of consumer protections must be enforced for bank and nonbank providers. Federal and state regulatory frameworks for the licensing and regulation of FinTech products and services should be the same as those for the banking industry.
3. Continue innovating. As an industry we can’t stop innovating—with our trusted partners and within our own institutions. While maximizing our nimbleness, we have to capitalize on our proven, longstanding business model while also adopting the best tools the digital world provides. This includes modernizing our existing banking and payments infrastructure. In short, we have to be high-tech and high-touch.
Of course, pursuing these priorities will require navigating the complexities of today’s financial innovation. But what’s certain is that digital banking and ongoing technology innovation are here to stay, which is wonderful and daunting at the same time. We may have to lean into today’s digital world together, but the opportunities for doing so will remain as rewarding for us and our customers as ever before.

Reach Camden R. Fine at cam.fine@icba.org.