If I learned anything from this week’s Fintech MeetUp event in Las Vegas, it’s that thousands of fintech, banking, and payments professionals speed dating at hundreds of tables in a convention center with terrible acoustics creates a lot of noise. So much so that one is forced to yell to be heard, and must lean-in to hear what the other person is saying (so close in fact, that if the person you were speaking to had germs, they were sure to hitch a ride back with you to your hotel room). But, as always, to the discerning observer, in the noise there is signal, and one high-frequency wave that pulsed through the event came form the banking sector stampede toward digitalization, especially among smaller regional and community banks, and their credit union cousins.
For a conference noticeably light on Web3 and crypto, payment processors and point-of-sale, financial institutions were overly represented. The uniqueness of which can’t be overstated when typically, the only way to get that many bankers in the one room is to have a juicy loan opportunity or be on the receiving end of a workout session.
I digress…
The reason why the conference attracted so many financial institutions is the modern imperative to procure new digital products and services to grow and retain end-users, and enhance profitability and customer engagement. For the larger financial institutions with sizable B2B constituencies, much attention was focused on embedded finance and products facilitating the provisioning of credit, in addition to card issuing programs with spend management functionality, and more efficient B2B cross-border payment solutions. For the smaller FIs, much attention was focused on the user experience, with many seeking to lock-down the best UX provider to API into (in most cases) older, legacy banking cores, as well as bank card issuance programs, card user rewards and loyalty solutions, wealth tech/ investment services, and single-point APIs to facilitate frictionless connectivity to third party service providers, all (collectively) to increase the value proposition to consumers.
For the larger FIs, the strategy was to push new product and greater access to credit to further monetize their existing user base. For the smaller banks and credit unions, especially those with an emphasis on B2C, the strategy was to find products and services, that in combination, would help to retain/manage their existing user base (defensive strategy), and grow the same with a “my feature suite is better than yours” view to head-to-head competition. There was even another layer of nuance between the large and small relating to the nature of the deployment of new products and services, with smaller FIs actively seeking vendor relationships, and larger FIs more inclined toward partnerships, and in many cases, acquisitions.
Take note…
However you want to cut it, the strategies lay bare one fact: digitalization is an existential necessity. The impetus to survive, this existential imperative that’s driving the banking stampede for new technologies, is responsible for spurring the innovation, diversification, fundraising, mergers and acquisitions, and partnerships we continue to see across the fintech spectrum today.
