ABA Banking Journal - November/December 2016 - 11
Allow Banks to
Banks are innovating and partnering
with startups to help benefit their
customers, but smart policies are key
to facilitating a modern, high-tech
system, according to testimony earlier
this summer from ABA President and
CEO Rob Nichols.
Testifying before the House Financial
Services Subcommittee on Financial
Institutions and Consumer Credit,
Nichols noted that banks are
and very technology focused"
and emphasized banks' history of
embracing innovation to better serve
their customers-including important
advances such as the ATM, credit
cards, online banking and remote
check deposit. He stressed that
banks are actively looking to partner
with fintech startups to bring their
customers the latest technologies
through secure and trusted channels.
"When banks innovate and
partner with startups to deliver
new technologies their customers
win," Nichols said. "Banks have a
long history of serving customers'
needs and have established trusted
relationships. These relationships are
backed by a culture of compliance
and regulatory oversight that ensures
customers are protected. When
innovative products are delivered
ROB NICHOLS (CENTER) AND ABA EVP JAMES BALLENTINE (RIGHT)
GREET REP. ANDY BARR (R-KY.) PRIOR TO THE HEARING.
through bank channels, customers
get a great experience backed with a
relationship they can trust."
Nichols remarked that financial
technologies present tremendous
opportunities for customers and banks
alike, with the potential to promote
financial inclusion-the delivery
of financial services at affordable
costs to those who may not have
a banking relationship. These new
technologies also have the potential
to give customers better oversight of
their financial services accounts and
to extend credit to a wider swath of
creditworthy borrowers. He noted,
however, that while technology
is a valuable tool that helps drive
innovation, traditional banking is
a relationship business that is not
replicable by technology.
"Banks bring tremendous value to the
table that is not replicable by startups,
the most important being their role as
trusted custodians of their customers'
money and information," Nichols said.
"Banks have established a strong level
of trust with customers that is necessary
when handling someone's money. This
trust is backed by a strong culture of
compliance and a regulatory framework
designed to protect customers.
Establishing and growing customer
relationships is the largest challenge
for startups. Banks have stable deposit
funding which gives them resiliency to
offer innovative products throughout
shocks and credit cycles."
Nichols added that banks "remain
a visible presence, supporting their
local communities as they always
have through community outreach
and countless hours of volunteering-
something that cannot happen through
a key stroke or algorithm."
Read more about how banks are leading
the way on innovation in our Special
Report on Innovation and Technology,
beginning on page 20.
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