'Existential requirement for banks': Comments of week
July 7, 2017 8:30 AM
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Readers this week highlighted the need for banks to upgrade payments systems, debated a small bank’s decision to ditch its legacy core vendor, lamented populist initiatives of the GSEs, and more
David Ryder/Bloomberg
On a survey suggesting that small banks are particularly vulnerable in the face of changing payments technology:
"A number of studies have shown that the emerging generations of banking customers and customers-to-be have a distinct preference for a customer experience comparable to that which they have become accustomed to by providers such as Amazon. This would suggest that providing competitive payments mechanisms is an existential requirement for banks."
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Responding to comments that second-guessed a community bank’s decision to switch its core system from a legacy vendor to a cloud-based startup:
“Judging by the hostility and snarkiness of some of the comments to this article, it seems the cumulative efforts of Nymbus, Misys and other challenger cores to build awareness is starting to work. If they collectively accomplish nothing more than nudging FIS, FiServ and Jack Henry towards modernizing their technology and launching API-enabled versions of themselves (likely by buying these challengers!) community banks will be much the better for it.”
Related article:This tiny Florida bank says APIs could make it a national player
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On the risks of switching core vendors:
“In the end you have to trust your vendor due diligence process, the SOC-1 report , and perhaps be prepared to become an owner of the vendor if it comes down to it.”
Related article:This tiny Florida bank says APIs could make it a national player
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On the founding of a professional organization for the digital identity business (via <a href="https://twitter.com/idgorilla/status/882442681523240961" target="_blank">Twitter</a>)
“Professionalizing identity is an important transition to making trustworthy online identity take root.”
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On a lawmaker’s concern about the potentially discriminatory nature of artificial-intelligence algorithms that can make underwriting decisions:
“Doesn't this story make the point that community banks have been raising??? Customers do not fall easily into cookie cutter products. Community banks must be allowed to make loans and offer products to best serve their communities — Remember character loans?”
Related article:Is your AI racist? A lawmaker wants to know
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On how GSE reform could still preserve risks associated with the housing finance system:
“The sad fact is that neither the law nor charter have protected these agencies from the political risk of populist lending initiatives. Eliminating them is only a partial solution, as this risk is then shifted to the banking system. Politicians should no longer be promoting home ownership.”
Related article:GSE reform done right ensures a level playing field for all
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