ABA Banking Journal - November/December 2016 - 20
SPECIAL REPORT > INNOVATION AND TECHNOLOGY
If banks partner with fintech companies, they will be positioned to
deliver leading solutions to their customers in a secure environment-
and become the universal financial services platforms of the future.
BY ROB MORGAN
intech is the intersection of banks and technology.
Global venture capital investment in fintech has
increased nearly fourfold in the last two years,
reaching $19.1 billion in 2015, according to KPMG.
This figure excludes bank investment in the area,
which is also tremendous. For example, J.P. Morgan Chase
recently announced that 40 percent of its $9 billion annual
IT budget would be spent on innovation.
Simply put, fintech is the process of leveraging technology
to deliver traditional financial services. Technology has
changed the way consumers interact with all products
and services, and banking is no different. Banks have
pioneered important innovations in banking, such as the
ATM, credit cards and online banking. More recently, a
new crop of innovators, enabled by mobile technology and
data availability, have begun offering innovative banking
services directly to customers. Most of these competitors are
customer-facing, origination-based and monoline-which
has significant implications for how they will shape the
bank-led financial services market.
Consumer technology has empowered a new generation of
startups to connect directly to customers, without the need
for a costly physical network. Sixty percent of Americans
own smartphones that allow them to engage with products
and services from the palm of their hand. What sets
technology startups apart from traditional players is their
superior user experience.
ABA BANKING JOURNAL | NOVEMBER/DECEMBER 2016
Banks and startups both have
a unique set of strengths.
When the two collaborate,
they are able to deliver their
PRODUCTS that are safe