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PayPal Holdings, Inc., recently announced enhancements that will enable its users to buy, hold, and sell cryptocurrencies within its app, and to pay for purchases with these crypto assets, as well. Most of the attention has naturally focused on Bitcoin - the household name of cryptocurrencies – and, by far, the largest. Not surprisingly, the price of Bitcoin quickly surged past $16,000, thanks to the associated visibility and implied credibility.

The annual budget process is usually an exercise in planning for uncertainty. Add to that, it’s challenging, time consuming, and complicated. Then, when finalized, all you know for sure, is that it is at best a pro forma. That’s because financial institutions (along with everyone else) operate in an environment with multiple variables they do not control…and that has become even more evident in 2020.

It’s December 2020 - do you know where your vendors are? 

Consolidation happens. Much of the time, like taking a chess piece, it can happen quietly, but with game-changing implications. Recently however, the size of the pieces taken among financial services vendors has raised some eyebrows - especially for their bank and credit union customers. The impacts of these moves can be positive...or not...which is why SRM keeps an eye on the board for these types of events.  

2019 was a record year for fintech deals, mergers, and acquisitions - then along came 2020. The complications brought on by the pandemic did not create a lull in M&A. In Q1 of ‘20, Visa announced the acquisition of Plaid. Visa positioned the acquisition as “both an entry into new businesses and complementary enhancements to Visa’s existing business, putting them at the epicenter of the fintech world.”

SRM recently announced a partnership with the Rochdale Paragon Group, incorporating SRM’s automated invoice auditing solution into Rochdale’s vendor management software and services portfolio. This alliance is an opportunity to deliver our 28 years of experience in high-dollar, complex invoice auditing to a broader segment of the credit union market as part of the best practice offering from Rochdale.  

The complexity of many critical vendor invoices makes it practically impossible for a financial institution to do a complete audit of them each month. Any auditing of these invoices is typically months after payment. Yet, over decades of auditing high-value critical invoices, our firm has discovered that 10 percent of them contain errors.  

At the beginning of 2020, "contactless" was an obscure term typically associated with the new generation of debit and credit cards. Using near-field communication (NFC) payment technology, these cards are capable of being tapped instead of swiped or dipped - shedding several seconds from time in the subway turnstile or checkout line. However, despite Visa and Mastercard's heavy promotion, US adoption has been gradual, shaded toward frustratingly slow…until the pandemic hit.

I recently had the privilege of speaking on a Minnesota Credit Union Network’s panel with some of the region’s local leaders about what they’re facing as a consequence of the pandemic. Although the venue was tailored to credit unions, I believe the perspectives apply to all financial institutions.

Four key points that stood out are noted below - some completely novel; some we can’t say often enough.

The banking industry’s biggest service providers, sometimes referred to as “battleships,”  have grown largely  through acquisitions. When market demand moves toward a new channel for delivering financial services (e.g., smartphones) or potential for a replacement solution opens up a new market tier (e.g., digital banking among regionals), these “battleships” acquire other entities to keep pace and/or unlock a new opportunity for revenue growth. Often, they wait for an upstart to gain some market traction then give its investors an exit strategy worth multiples of their initial stake.

Let’s begin by stating the obvious: this will not be a normal election season. As it has for so many aspects of everyday life, COVID has radically altered the basics of voting- from a huge uptick in advance and absentee ballots to the near-elimination of traditional campaign rallies.

We know that markets hate uncertainty – and that’s one thing in ample supply these days. Uncertainty creates hesitancy to invest in initiatives that could be upended based on the election outcome. This is especially problematic in our current environment, with so many critical issues clamoring to be addressed.

In the early stages of the US coronavirus pandemic, SRM reached out to banks and credit unions to gather insights on initial FI reactions and changes in customer behavior. A previous blog detailed the findings of that March survey.

In late June-mid July, SRM again collected responses on how perspectives had evolved once leaders had more time - and a bit more information - to assess their options. We received an even greater response, with impressive diversity in geographic footprint, asset size, and credit union/bank participation.

Google continues to make progress toward the launch of its much-anticipated checking product, recently announcing partnerships with six more financial institutions for a total of eight, so far. Both large banks and credit unions have signed on, with well-known names like Citi, BMO Harris, and BBVA on one end of that spectrum and the $2 billion asset Stanford Federal Credit Union and $800 million Coastal Community Bank on the other.