Looking for technology innovation in banking these days feels a bit like one of those "Where's Waldo" books - Waldo's definitely in there, but it can be a lot of work to ferret him out. BAI's anemic Retail Delivery show in November presented a microcosm of the problem: banks aren't spending or investing much in new retail banking technology, leaving the evolution of the industry to be driven by small tech vendors and other non-bank, consumer-focused companies.
To be sure, some compelling technology developments were unveiled at BAI, falling into three categories that currently comprise retail banking's innovation sweet spots: mobile banking, person-to-person payments and PFM tools.
The partial rundown: S1 and Fidelity will jump onto PayPal's global brandwagon, both announcing partnerships to offer PayPal-enabled P2P payments to consumers via client banks. S1's version of the deal makes the payments mobile; Fidelity's will take place through its online bill payment engine. Fiserv will also launch P2P functionality to billpay customers, but without a third-party provider.
In the mobile sphere, Visa announced a development and distribution deal with ClairMail that will make its mobile applications available to more banks. Digital Insight said its new mobile banking tech partner is Citigroup-backed Mobile Money Ventures, signaling DI's abandonment of its earlier deal with mFoundry (and adding intrigue given the Mint.com acquisition). Finally, Qualcomm-owned Firethorn announced a strategic relationship with CashEdge to market an integrated mobile P2P payments product for Firethorn's mobile wallet.
Outside the show, online PFM vendor Geezeo said it would no longer offer its free tools to new consumers, but instead will build its own PFM-like online banking application integrating bill-payment software from iPay Technologies LLC. And Intuit closed its $170-million deal to buy Mint.com.
These deals are evidence that there is innovation in banking, but most of the excitement originates outside banking proper.
Consider the implications of this as you read BTN's 8th Annual Innovators issue, our picks of the year's top financial services technology innovators and innovations. To be fair, there are great examples of bank-driven innovation to be found at places like US Bank, PNC, JP Morgan Chase and Wells Fargo, particularly on the corporate banking side. Nor is this an effort to downplay the thought leadership of this year's banking innovators, including Wells Fargo's Secil Watson, HSBC's Brendan Pickering, and ING's Denis-Martin Monty.
But the recent spate of events begs the question, are the banks that are "too big to fail" - along with some of the industry's largest technology vendors - also too big to innovate? And what are the long-term implications if all the best ideas are tied to non-banks like PayPal, Mint.com or ClairMail?