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The Bottom Line

Philanthropy is an important part of SRM’s own mission. We believe in giving back and we know that a number of our clients feel the same way.  That is why we decided to co-host an event that recently took place in scenic Seward, Alaska. It was an educational program, Earning Your Independence, and joining us as co-host were investment advisors, Performance Trust. The goal of the program was to bring together executives who were interested in education, adventure, networking and raising money for the Children’s Miracle Network.

Assuming you can drown out the blockchain chatter, artificial intelligence (AI) is this year’s hottest financial services topic. Although IBM’s Watson and Google’s Deep Mind remain somewhat abstract concepts from a mass market perspective, consumer breakthroughs like Siri and Amazon Alexa have begun to set expectations for banking interactions, leading to high-profile rollouts like Bank of America’s virtual assistant, Erica.

Most of the early-stage rollouts, focusing on chatbots and fraud detection, are coming from the industry’s largest players. Credit unions and community banks cannot afford to fall too far behind the curve and need ample opportunity to participate in exploratory ventures. At the same time, it’s important to remain mindful of AI’s potential downsides if not properly implemented.  

At SRM, we take the time – every six months or so – to step back from our various engagements with clients to identify the general trends we have seen in our work and consider how they might play out in the coming six months. Just past the midpoint in 2018, there are several forces in play worth mentioning.

It seems like basic blocking and tackling on the surface, but you’d probably be surprised with how often it slips through the cracks. Most financial institution vendor contracts include a requirement that the client file a “notice of non-renewal,” otherwise the agreement will automatically renew at “expiration” on pre-defined terms. A multi-million dollar organization should have no trouble tracking such administrative to-dos as vendor contract management, right?

In case you missed it, June 2018 saw another consortium enter the already crowded payments fray. As its name implies, the Secure Payments Partnership’s primary focus is “to address the ongoing battle against payment fraud and to devise improvements for the U.S. card payment system.” To understand the impact of this announcement, the history and context below must be considered. 

It’s no longer a question of “if”, but rather how and when. For an increasing number of consumers, the primary means of interacting with their financial institution is the mobile banking app that lives on their smartphone, not the physical branch. And this segment of the population will only continue to expand. Younger tech-savvy generations will continue to age into the need for banking services while, at the same time, other demographics gain more comfort with digital channels.

Ever had the experience of money coming into your life that you had not counted on from a source you did not anticipate? Some call it “found money” and others might describe it as a windfall. Whatever word is used to describe it, there is one question that always arises after such good fortune happens to someone: What should be done with the money? A shopping spree? Deposit it to savings? Maybe give it to a less fortunate person or a charity that is active in the community?

As many of you are aware, last August marked 25 years that SRM has been providing clients with vendor services. During that quarter of a century, our firm has delivered cost savings and revenue enhancements that represent billions of dollars in value to the banks and credit unions we serve. This year alone our work for these institutions will uncover approximately $70 million in “found money.”

Though I was not yet a member of the SRM team when that 25^th anniversary was celebrated, my decision to join the firm was influenced by the reputation SRM has built over those two and a half decades operating in the U.S. My responsibility is to extend the value of our reputation and brand to the clients we now serve to Europe.     

Last week, we presented the first half of two key considerations for how a bank or credit union committed to a mobile first strategy can best stay current in offering state-of-the-art mobile services.

If an institution is not counted among the largest of FIs, answering this question will likely involve evaluating an array of options to determine which best fits a bank or credit union’s goal. This environment is different from what has been seen in the past where a few very large providers controlled most of the offerings. This gives FIs of every size the chance to shake free of the constraints of legacy third-party solutions and become competitive again.

Let’s delve a bit deeper into what that exactly means.

Reality Check

The future of banking is digital. Period. Hopefully we’ve progressed to a point in financial services where this statement is accepted wisdom and no longer needs to be debated.  There are reams of data that support this and nothing about the future as it is unfolding now suggests otherwise.

Another given is that all digital engagement strategies should now be “mobile first.”  From the looks of some mobile banking apps deployed today, this has not yet reached the level of accepted wisdom in our industry.