Between security breaches, miles of red tape, and competition from agile FinTech disruptors, the traditional financial services industry faces a tough challenge when it comes to digital innovation. Legacy financial companies are popular targets for negative press, while the SEC and CFPB are constantly nipping at their heels (or biting off their feet).
Meanwhile, customer expectations are at an all-time high: frictionless digital experiences, 24/7 access to their accounts, and a range of customizable options. Some financial services companies are rising to this challenge, overcoming the regulatory environment to provide value through homescreen-worthy app experiences.
These four financial leaders make waves by positioning themselves as true technology companies.
1. Bank of America Merrill Lynch (BAML)
BAML won both the North American and Global awards for “Best Bank for Financial Technology” in 2018. Catherine Bessant, BAML’s Chief Operations and Technology officer, highlights BAML’s commitment to emerging technologies, including blockchain. Already filing for 15 patents related to blockchain, they are in the process of drafting even more.
Additionally, artificial intelligence (AI) is used for “multi-currency netting,” a way to help global companies reduce wire transfers, local accounts, foreign trade activity, invoice resources, and more.
BAML also implements predictive analytics to be at the service of their commercial and corporate clients. These metrics provide in-depth insight into their banking strategy. On a more personal level, BAML’s stated goal is to provide “high touch” service, regardless of how customers interact with them. The bank is also turning their physical branches into multi-functional destinations for customers. This project includes redesigning more than 1500 of their financial centers, adding over 5,000 new professionals, and offering “interactive tools, digital experts and technology bars.”
BBVA emphasizes digital partnerships as a primary method of evolution and visibility–with intent to expand beyond traditional boundaries. Using AI and data analytics as proactive tactics to enhance security, they are able to better neutralize threats and/or reduce the magnitude of negative impact.
Cloud computing, using AWS, Google Cloud Platform and Microsoft Azure, all factor into BBVA’s innovation strategy. In fact, they have brought some tech efforts in-house by launching their own engineering company, called BBVA Next Technologies. This group employs 1200 tech experts in Spain and Mexico. BBVA continues to fuel the fire with research around blockchain and cryptocurrency.
Furthermore, all of BBVA’s tech innovations are rooted in a culture that places emphasis on people. They center hiring on passion and alignment with the organization’s mission. Recently, the BBVA Foundation handed out “Frontiers of Knowledge” awards, to highlight valid scientific inquiry as a way of opposing a global anti-science trends.
BBVA is testing a “Selfie and Go” technology that allows customers to use biometrics as their payment login. Participating retail outlets offer customers a check-out screen that takes a photo and automatically processes their payment.
Although Simple is a member of the FDIC, it’s not technically a bank. Its customer funds are held by BBVA (above). However, Simple is a model citizen of today’s FinTech industry because its innovations put it at the top of many online bank ratings.
Simple is a mobile-only banking platform that completely does away with the brick-and-mortar, in-person bank experience. As a testament to its name, it offers one product: a free checking account. Simple also promotes features within your account to help you track spending and set saving goals. With stellar user reviews, Simple not only elevates consumer FinTech, it promotes a new kind of financial brand experience.
Simple goes the extra mile to educate customers about their spending. For example, the app shows how much will be left in their account after any scheduled future deductions and bill payments. In this way, its “Safe to Spend” balance is a much more usable, relevant number than traditional account balances.
- Eliminates all fees, including overdraft and ATM network fees
- Requires no minimum balance
- Offers instant transfers to other Simple customers as well as
- Has free online bill pay
As a 72-year old legacy financial services company, how did Fidelity attract 12,000 (roughly one third of the company) employees who are tech experts? Answer: with a commitment to innovation.
In order to inspire a technological revolution, Fidelity had to change their culture, alongside business objectives. Their contemporary open-plan office setting, casual voice, and digital drive has distinguished them within the industry, while also placing them in the considered set for accomplished tech candidates.
The sheer quantity of data Fidelity brings to work with is larger than most companies in general, not just among financial services competitors. Their in-house innovation company, Fidelity Labs, employs over 180 people who work on everything from digital currencies, AI, voice recognition and more.
Fidelity holds themselves to a standard set by Uber and similar apps, rather than comparing themselves to other financial companies–and users benefit tremendously.
- AI streamlines phone calls, instantly accessing customer information and predicting questions.
- A chatbot named Cora, as well as a robo-advisor delight users within their brokerage section.
- Customers can use the Fidelity app to check their cryptocurrency balances, and to donate to charities using Bitcoin.
- Employees are trained through virtual reality simulations to be empathetic to customer needs.
Leading By Example With Thought And Technology
In addition to business models and user experience features, these financial leaders do even more to communicate their mission to transform the industry.
- BAML sponsors “Technology Innovation Summits,” so financial companies can declare their presence in the tech environment, building bridges into the Silicon Valley-type culture which usually ignores them.
- BBVA fosters strategic relationships with AWS, Google, Microsoft, Salesforce, IBM and Cisco, and technology start-ups like Datio and Veridas. (BBVA holds the funds that people put into Simple).
- Simple defines financial services from the customer/user experience viewpoint instead of from the institutional view–otherwise known as an authentic brand definition.
- Fidelity Labs allows the company to “Fail fast and fail early.” The outcome of this experimental mindset has been a selection of useful applications like bSolo that helps independent contractors in the gig economy keep track of their quarterly taxes.
The trends patterned after the trailblazers previously mentioned will only intensify.
According to PWC’s Global FinTech Report:
- More than 80% of financial service companies feel they’re at risk.
- 77% plan to increase their internal efforts to innovate.
- 82% expect to develop new FinTech partnerships in the next three to five years.
- 77% plan to include blockchain in their systems by 2020.
- 30% percent of large institutions are already investing in artificial intelligence.
The opportunity for innovation partners is immense. Helping financial institutions unite the financial and digital worlds to create next-level banking and investment solutions will transform transactions into user experiences.