It’s safe to say that an unpredictable year brings yet another unpredictable twist.
As the convergence of financial technology moves closer to consumers and businesses, the focus on moving money shifts to the realm where money is typically kept: deposits.
“As we look at where financial services are going, whether it’s more technology or software, new platforms and new ecosystems are being created,” said John Briggs, executive vice president of commercial products and innovation at KeyBank. I’m going to go,” he said. Webster interview. “As money becomes more liquid and exists in different ecosystems, you need to be in the game to attract, grow and retain deposits. You need to participate.”
What if traditional banks had access to that share? The excitement around deposit accounts stems from what-if scenarios and discussions in many areas of the payments and banking sector. This was a topic of discussion between Mr. Webster, Mr. Briggs, and Ingo Payments CEO Drew Edwards.
The rise of technology and fintech has made opening an account easier and moving money in and out of an account more streamlined and secure. For example, virtual issuance converts payments from a sender’s account into a recipient’s digital account. Consider Starbucks and its loyalty program that features mobile payments.
FinTech has become an important intermediary that helps traditional banks when they have difficulty attracting and retaining deposits through traditional infrastructure. What if outbound payments to new accounts created the foundation for a new closed-loop ecosystem? What if banks and their commercial customers could offer senders and recipients incentives to save and spend money? What if publishers had new opportunities to monetize these accounts?
“That’s why we bought[cloud-based banking platform]Deposits, because it’s a central bank in the middle of the world where you need to create accounts on the fly, access ledger accounts, and facilitate the movement of modern money. Because that’s part of it,” Edwards said. “We need money mobility, and it allows us to build money mobility into these software experiences and financial experiences.”
Edwards called this process and experience “embedded money mobility.”
While it could be argued that there may be no need for consumers or businesses to open a separate account, the reality is that new ways of thinking about account opening and deposits will allow the account to run in the background in an embedded experience. Briggs said that means being considered as a person. For example, KeyBank has commercial clients who use ledgers and subledgers to better define payment activity and make it easier to track payments and reconciliations.
“They’re thinking less about opening new accounts to enable this process and more about streamlining the back office to improve the customer experience and the employee experience,” Briggs says. .
Regulations and opportunities
As traditional banks like Key and fintech companies like Ingo innovate and monetize deposits, regulators are watching closely. For example, Rule 1033 by the Consumer Financial Protection Bureau mandates account portability for businesses and consumers, but leaves open the issue of standardization of data access. The combination of Synapse’s bankruptcy and its complex account reconciliation footprint could lead to further regulation of deposit accounts.
Briggs suggested that we are only beginning to see the impact of regulatory changes in the banking and fintech space, particularly regarding deposit accounts. He said he expects banks and fintech companies to begin to understand how these changes will reshape the industry over the next year or two.
He said compliant companies will have an advantage in this evolving market. This advantage comes from working with banks that recognize and value their compliance efforts. Additionally, many companies with consumer financial products, such as Starbucks, can also influence these trends and influence regulators.
“We are already starting to feel it ourselves,” he said. “These large, sophisticated companies want to know who is driving their strategy. They want to know where that money is and who is standing behind it. It’s an interesting inflection point, and we want to understand the risk wrapper and equipment that’s around it. I think tech companies will continue to differentiate themselves.”
Key and Ingo are among those moving forward. Briggs said KeyBank has invested heavily in what it calls “embedded banking” over the past four years and plans to continue doing so. This approach recognizes the convergence of technology and financial services, which requires new ways of thinking about banking and specialized technologies.
He said embedded banking, if done right, opens up new business models, revenue streams and customer engagement opportunities. Although the industry is still in its infancy, institutions investing now will benefit from growth.
Many of KeyBank’s commercial customers want to upgrade their technology, integrate banking directly into their enterprise resource planning (ERP) systems, download plugins, and use APIs to make transactions smoother. Demand for improved account creation and access is also increasing. Mr Briggs said: He expects his speed to get even faster in the future.
next step
When Webster asked what it would take to turn “what ifs” into operational reality, both executives focused on partnerships and regulatory compliance as key areas of focus. Edwards said effective use cases and incentives will play a role in driving savings account innovation forward.
“To really drive adoption, to me it’s going to be about choice and incentives,” he told Webster. “And the incentives can be monetary, money speed, rewards, all sorts of things. And as these things become reality, we see some more of these distinctive use cases. That’s where banks like KeyBank will really push the boundaries of so-called batch-based treasury banking.”
“We strongly believe in having a fintech strategy,” Briggs added. “This is a complex area that requires technology and fintech partner acceptance, because in order to move forward with the roadmap and feature set fast enough to compete, fintech partners need to be part of the equation. ” And finally, prepare to educate, educate, educate. Internally, the industry has a lot of work to do in terms of educating ourselves and regulators about the business models that are being built and the risks associated with them. ”
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More information: B2B Payments: Outlook 2030, banking, banks, deposits, Drew Edwards, embedded finance, featured news, fintech, Ingo Payments, innovation, John Briggs, KeyBank, news, partnerships, PYMNTS News, pymnts tv, Regulation, Security, Software, Technology, Finance, Video
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