I flew out to Orlando last week expecting the following themes to dominate American Banker's Retail Banking 2014 conference: Branches are effectively DOA. Digital banking is the only way forward. Customer trust remains of the utmost importance and, oh yeah, everyone needs to keep an eye on those pesky nonbank innovators.
These tenets certainly took up their fair share of conversation. (The word "customer-centric" and/or all its variations pretty much played on a steady loop.) But there were a few themes/nuances that cropped up during the conference that indicated the trends in retail banking are evolving. Here are few predications based off of them.
A positive spin around branches will proliferate. I wasn't surprised when Catherine Bessant, the global technology and operations executive at Bank of America, asserted, "there is a role for physical banking" during her keynote talk with American Banker Magazine's Heather Landy. (Her colleague Rob Aulebach indicated branches played a role in B of A's retail banking strategy in a BankThink op-ed that ran prior to his own appearance at the conference.) I also wasn't shocked when Citigroup's William Howle echoed this sentiment in a speech towards the conference's end. While expansion efforts may be tempered, a large, accessible branch network marks one-way a megabank can hold on to restless customers.
I was surprised, however, that Manolo Sanchez, chief executive of the increasingly tech-savvy BBVA Compass, and Bruce Van Saun, CEO of RBS Citizens Financial Group, which agreed to sell some of its branches in January, both endorsed brick-and-mortar banking in on-site interviews with American Banker's Maria Aspan. And, as a supporter of old-school banking, I was thrilled when Chris Skinner, author of "Digital Bank: Strategies to Succeed as a Digital Bank", reiterated in his own presentation that, while a move to digital services is vital, some banks do need branches. Taken together, these sentiments could change the negative connotations that have come to dominate the debate around branch banking and even inspire some of the more ardent fin-tech enthusiasts to adopt Skinner's other mantra: the bank branch isn't dead it's just resting.
Get ready for lots of talk about wearable tech. As part-time writer of American Banker's Morning Scan, I was similarly non-plused when it took all of two minutes for crypto currency and nonstop headline-maker Bitcoin to get name-dropped at Retail Banking 14 (courtesy of Source Media Group Editorial Director and conference co-chairman Richard Melville). My ears did perk up, however, about 10 minutes later when BBVA's Sanchez mentioned Her the Spike Jonze movie in which Joaquin Phoenix falls in love with an operating system since Wells Fargo's Armin Ajami was framing his forthcoming BankThink Live segment on wearable tech with the exact same reference. And when New Control's Jim Marous included Google Glass as a potential part of his digital banking nirvana during his own BankThink Live segment, I started to wonder if wearables were having a watershed moment.
It feels like a bit of a stretch to compare this type of tech to Bitcoin, because, I agree with Marous's ultimate assessment: current incarnations, Google Glass included, aren't exactly ready for primetime and appear nowhere near as disruptive. But I do think wearable technology, like Bitcoin back in early 2013, is poised to dominate more of the fin-tech conversation and will be equally as polarizing.
M&A will be big this year between banks and nonbanks. The big story out of Night One was that BBVA Compass was not planning to "mess with" Simple, the digital startup it purchased in February for $117 million. Then Thomas Brown, CEO of Second Curve Capital and conference co-chairman, kicked off Day Two by urging banks to look for opportunities to invest in nonbanks. Brown was referring not just to startups, but to smaller firms in general, such as mortgage servicers who could assist in underwriting efforts now that regulation has become more stringent.
Partnerships remained a recurring theme throughout the conference. (There was even an inordinate amount of talk of banks partnering with each other on various initiatives.) As such, I feel inclined to reiterate a prediction I made back in December. As we head into 2014 and beyond, expect more of them between successful-ish startups and traditional financial services providers. Or, in other words, get ready for more BBVAs-plus-Simples.