How Fintech Could Fumble: Silicon Valley has banks on their heels, but analyst Richard Magrann-Wells suggests that financial institutions may come out ahead in the end. His theory is that customers will continue to prefer banks as long as they can access checking accounts, business loans, mortgages, wealth management advice and other services all under one roof, rather than toggling among various fintech companies for each independent offering. Some commenters took exception to Magrann-Wells' logic: "Anyone who thinks banks and bank branches are more convenient than Internet-based services is living in a dissociative state divorced from reality," opined "Zoomlens." Another reader suggested that many of today's customers aren't actively making a choice between startups and banks; instead, they're forced into the former when banks turn them away, and then decide to stick around. "People get used to borrowing and capitalizing online," writes "FundAmerica." "Investors get used to funding these alternative platforms. Borrowing (and equity) costs go down for good credit risks, so they never need to give their banker a second chance the next time they need funds. Result is that banks get marginalized." Another fintech skeptic is Financial Supermarkets chief development officer Dave Martin, who writes that bankers should take the predictions of self-designated financial gurus and futurists with a grain of salt. "There is a difference between recognizing that new technologies will transform banking and believing that banking will simply become those technologies," he writes.

The Power Is Yours: Community banks often bemoan their regulatory burden, but banking advisor Peter L. Cherpack says they have the ability to reduce at least some of their workload. The secret is for banks to convince regulators that they pose little risk, thereby avoiding the supervisory spotlight. To achieve that goal, Cherpack recommends that small banks document their risk management practices for regulators' perusal. But Boston College Professor Edward Kane pointed out that all this documentation could wind up imposing an additional burden on banks: "How much new information must be produced and how will it be verified?" he wondered, adding that "it is difficult to persuade regulators of the sincerity with which any claim of best practices is put forth."

Also on the blog: Rep. Dennis A. Ross took a stand against the Justice Department initiative known as Operation Choke Point, condemning the investigation for targeting legal but politically unpopular businesses.

Rev. Tony Pierce argued that the Consumer Financial Protection Bureau's proposed reforms to payday lending are a necessary antidote to abusive practices.

Community banker Kevin Tynan recommended that small financial institutions take a cue from online nonbank lenders like Quicken and move their mortgage application and closing processes online.

Credit card networks like Visa and MasterCard will face an uphill battle capturing a portion of the Chinese card payments market, according to consultant Eric Grover.

Calls for housing finance reform have gone too far, according to former Ginne Mae president Joseph J. Murin. He says that kicking the government out of the housing market would come at a great cost to homeownership and to industries like construction, real estate, technology and market securities.

Banks have a case of Broken Culture Syndrome, opines community bank advisor Natalie Brooke. Luckily, there are ways to cure the problem: empower employees to make more decisions, show them that management truly values their contributions and encourage accountability by making the bank's financial performance across business lines transparent to all staff members.

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