The Weekly Extract from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.
Lessons from the PPP Rollout
The Paycheck Protection Program ran out of money this week, with the initial funding of $349MM done and dusted. Many small businesses saying that they were shut out of the process.
Fintech firms noted that that they received approval to participate in the program too late, therefore impacting their ability to help the smallest businesses. Giving the green light to these digitally native services should have been a priority, as larger institutions continue to ignore the underserved and underbanked; deemed too insignificant and risky. Additionally, many banks took too long to rollout the digital platforms, services, and tools necessary to access funds, while FinTech’s by nature would have these tools in place.
While big banks botched the rollout, community banks and credit unions seen success. Many crediting that success to their community presence, nimbleness, and adaptability.
This is the time for community banks and credit unions to shine.
Meanwhile, regulators are concerned about reports of loan stacking and other fraud. They are holding “listening sessions” with lenders.
It looks like there will be a second round of funding — Hopefully, the industry will have a chance to apply their lessons from the first go around.
Is your community bank or credit union looking for help with a digital rollout? Let us know.
Credit Unions Adjusting
70% of mid-size banks and CUs are seeing significant increase in calls to the call center. Organizations are struggling to respond while protecting their teams.
We’re staying in touch with our Credit Union clientele as yet another week of social distancing passes and wondered what measures are being taken industry-wide to respond to the problem.
After attending a Cornerstone Advisors’ webinar, we saw that thirty five percent of the organizations have been able to move all of their contact center agents to work from home, while an additional 40% have a hybrid model with some agents working remotely.
Along with supporting employees, supporting remote operations with digital tools will be imperative to maintaining resilience.
Fintech Firms Stepping In
This week, The Sociable had a nice summary of how fintech companies are supporting their clients and the industry during the crisis. Fintech firms will continue to play an increasingly key role in our financial lives.
As stated by Akarsh Sanghi:
“Consumers have been demanding superior user experiences with instinctive use and transparency which the incumbents have been slow to respond to, giving rise to new, more agile fintechs.”
Fintech companies will only grow as their chops in user experience are unmatched and supporting smaller businesses throughout the crisis will only lead to wider adoption.
We at Extractable have advocated for partnerships between fintech firms and legacy organizations for many years. The personal touch of a community bank with a leading class digital experience is a powerful force in a world beset by big bank fatigue.
That’s why we were delighted to see VyStar Credit Union partnering with Members Development Corp to roll out an RPA-based PPP application.
After all, Sanghi summed up a nagging issue for fintech firms in his piece, “But this pandemic might be the initiation of a new industry behavior where serving the needs of the community, rather than unhindered growth, becomes one of the top priorities.”
Why not both?
Looking Back to Move Forward: Learning from 2008
Many of us are discussing what world of financial services will look like post-crisis and can’t help but to look back at the Global Crisis of 2008.
IMF Economists Nicola Pierri and Yannick Timmer wrote about how crucial adoption of fintech was in recovery.
They noted that “banks that adopted IT more intensely before the Global Crisis were significantly more resilient when the shock hit.”
Timmer and Pierri wondered if the adoption of “up-to-date machine learning techniques” will reap similar results to current lenders.
Mary Meeker Releases Crisis Report
We were excited to see Bond Capital’s resident digital messiah, Mary Meeker, release a 28-page report examining the crisis and its impact.
- “We believe the Covid-19 environment creates a moment for the technology sector and its entrepreneurs to shine”
- Work-Life will be rebalanced, particularly for those lucky enough to be able to work remotely
- Digital transformation has been accelerated
We are preparing for the acceleration of digital transformation in financial services, and across industries more broadly. While it has been a long time coming, we never expected financial institutions would have their hands forced into the future so swiftly.
Our clients and prospects have never been more open-minded about cloud-based platforms. Financial services organizations were scared of the cloud. As they are being forced to stand-up systems that are natively remote, we see that view softening.
This view is also echoed by Rajashekara V. Maiya, VP, Global Head For Business Consulting at Infosys writing in BlockTribune:
“Banks, which had started to migrate their workloads to the cloud, are accelerating the transition to accommodate a workforce that operates from home, is spread across locations, works only part time or for short durations, and connects to enterprise servers remotely.”
“Cloud-based applications are a lot more flexible from a connectivity standpoint, and also cost effective compared to on-premise versions. With cloud providers ensuring data privacy and confidentiality, the cloud may just be what the doctor ordered to fight the Covid malaise.’
As laggards see that the options are to invest in digital or be acquired, we expect increases in digital investments and M&A activity.
Thinking about the future of financial services, we’re also encouraged by the growing use of AI, particularly Natural Language Processing (NLP) in financial services.
In our latest article, we note that NLP is “the latest technology that offers us the possibility of attaining a full picture of a customer’s relationship.” With NLP, financial services organizations may soon be able to deliver on the promise of truly knowing their customers — on every channel.
Let us know what you think of the Weekly Extract. Stay safe. And don’t forget to follow us on LinkedIn and on twitter.