Banks: sink or swim with FinTech players

November 30, 2015
/   Voices

Banking institutions must engage with emerging financial technology (FinTech) companies or risk being left behind by an industry that is currently undergoing one of the largest transformations ever seen.

Winning the Customer

November 27, 2015
/   Spotlight

It’s exhausting just trying to keep pace, let alone stay ahead. Every provider in every business feels the pinch.

Five ways payments will be different in 2024

November 24, 2015
/   Voices

Predicting the future of cash and card payment volumes is arguably a fool’s errand – but Payments UK, Britain’s new trade organisation for the industry, is in a good place to have a go...

Contactless cards: Opt-in or opt-out?

/   Voices

Australia is toying with the idea of creating an opt-in function for contactless cards, in a move that highlights the problems around coping with new payment technology and how fraud risks are handled.

Five EMV lessons for the US

/   Voices

The EMV liability shift has occurred in the US, so what can we expect to see happen in the coming months and years as a result of this change?

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

May 29, 2014
/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

Out on the campaign trail, Sen Bernie Sanders (D-VT), has fired up support with calls for higher taxes on the wealthy, raising the minimum wage, and breaking up Wall Street conglomerates. Those are explicitly political issues that deserve debate elsewhere, but one proposal of his is certainly worthy of consideration here: turning post offices into banks.

Actually, that’s a subject we explored on this blog nearly two years ago, long before it got attention in the presidential primaries. But in the weeks and months ahead, if the idea gains traction, it might be good to remain aware of the basic challenges and benefits involved.

It’s a potentially odd combination, to be sure. With all due respect to tradition, our business is on the cutting edge, which includes a steady stream of new tools and technologies. The U.S. Post Office, by contrast, exists primarily to deliver snail mail. As we noted earlier, even e-mail is rapidly falling behind other forms of communication via social channels, so a vast infrastructure designed mainly to carry paper around hardly seems like a good match.

And yet. . .

As Sen. Sanders points out, too many low-income people really have no access to conventional banks in their neighborhoods. So they resort to “payday lenders” and check-cashing facilities that sometimes become scams. That’s bad for them, and for the economy. Meanwhile, many of these areas actually do have government-funded post offices with resources to spare.

Now consider the landscape from our perspective. A new study from Business Insider’s BI Intelligence graphically illustrates the erosion in branch banking services. Focusing specifically on that evolving demographic known as millennials, the survey of 1,500 respondents aged 18-34 reveals that nearly three-quarters visit a branch once a month or less.  Fewer than 40% use physical banks to conduct any banking activities other than using an ATM, and only 6% visit a branch on a weekly basis.

In other words, banks aren’t drawing this key demographic, and that’s a bit change. Here’s one indicator of how this shift is playing out. In Britain, a much smaller market than the United States, banks closed 500 branches in the last year alone. That’s more than double the number from 2013, and the damage is far from done: the market is on track for at least 650 closures in 2015. As a result, according to the Campaign for Community Banking Services, 1,500 communities have lost all banks in their town, and more than 800 have only one left.

But there’s a different way to look at all this. In the past we always considered banks to be banks and nothing else, but that notion is being overhauled. We’ve covered here how some banks have become more welcoming with video game machines, community rooms and teller pods, and others that double as cocktail lounges and event spaces. So if banks can become other things, why can’t other things—like, say, the post office—become banks?

Again, we can consider trends developing overseas. On Oct. 22, German financial technology provider Number26 rolled out a new program to turn retail outlets into dual-purpose banking hubs. The plan is to have some 3,000 grocery stores and other familiar retailers throughout Germany offer services to customers who want to make deposits or withdrawals. It’s very much a digital play—to benefit from the service, individuals need to access the Cash26 feature in the Number26 app. But that still means providing a traditional banking service where a bank doesn’t exist.

It’s a safe bet that in the near future we’re going to see many more such innovations. So sure, the very idea of connecting Wall Street with the post office may seem far-fetched now, but as branches continue to disappear and more individuals lose access to regulated and trustworthy institutions, will it seem more viable?

From our perspective, the key question here is which constituency will be driving the change.  Will the government take it upon itself to create partnerships with facilities such as the post office? Or will our industry take the lead and come up with decent alternatives that ensure legitimate banking services to underserved communities?

Chances are, we’ll soon find out.


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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.