Bryce VanDiver

Fin-tech competition driver of financial services change

Credit fin-techs with making today an interesting time to be involved in the financial services industry, Capco’s Bryce VanDiver said. We spoke about several interesting industry trends.

Bryce VanDiver

Mr. VanDiver, who serves as a partner in Capco’s payments division, said he’s seeing unprecedented levels of change as a financial services transition into more of a digital industry. The good side of that is that the attention is bringing investment and improvement to the industry. The bad is everything banks have historically done is rolled into the generic fin-tech umbrella when each sector, whether it be mortgages, lending or payments, leading some to lose sight of the challenges and opportunities unique to each niche.

A brand’s affiliation with the consumer will play a key role in its success, Mr. VanDiver explained. How is the overall experience? Has physical card use historically been a seamless experience?

Banks also have to be concerned with serving as a key connection point between a consumer and reward points, he said. As the whole points system (as we know it) becomes obsolete, how banks position themselves between customers and those evaporating points will be very important.

For those wondering why mobile contactless payments haven’t taken off in the United States, look to portable computers for a comparison, Mr. VanDiver said. Early efforts were poor and had compatibility issues while future attempts only made marginal gains.

Contactless payments have followed a similar trajectory, he explained. In 2005 Chase’s Blink was an early entrant, but it had its issues, leading consumers to avoid it in droves. Subsequent improvements have been incremental.

The smart phone is beginning to change that, Mr. VanDiver said. Apple Pay has done a good on integrations, while Android Pay and Samsung Pay have made some interesting tweaks but are no more than another payment and far from revolutionary, he believes.

Retailers do need to plan for the disappearance of checkout lines as in-store authentication becomes a reality, Mr. VanDiver advised. Once they authenticate the user and know their desired payment method, the customer can simply gather their items and leave the store.

In that environment banks should pay less attention to cash back and more on how to facilitate a richer customer experience, he advised. A good banking app could let customers see their current point balance while presenting them with offers based on the accumulated points.

“You’re incentivizing the consumer to buy and the bank becomes an intermediary point,” Mr. VanDiver said. “It’s a different model, more of a relational one.”

If many of their traditional touchpoints go away, it leaves banks to focus on more profitable areas such as high-volume clients or those with more risk, with both being highly profitable areas.

It can be argued that technology levels the playing field for community banks and credit unions, Mr. VanDiver suggested. The combination of more personal treatment common at those local institutions and properly chosen technology can produce a rich customer experience if properly managed.

Community institutions are best positioned to serve millennials and the underbanked, Mr. VanDiver said. Millennials are not enamoured with their parent’s banks, while such banks have little interest in reaching out to the underbanked.

While the financial services industry is working on leveraging big data and providing timely offers to consumers, current solutions have not been scaled yet, Mr. VanDiver said. Integrating pattern recognition into mobile banking apps and digital wallets that provide in-store or point-of-sale offers is coming soon.

“Whoever can crack the nut on offering things like a one-time lock screen offer at the mall will do well,” Mr. VanDiver said.

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