An article from Bloomberg highlights bank investments in fintech companies; the article cites a report from Opimas noting that both Goldman Sachs and JP Morgan Chase are investing in companies that aim to disrupt banking; Goldman Sachs has invested in 15 fintech companies focusing on capital markets; JP Morgan Chase has invested in nine; the report states that banks and other companies will invest $1.7 billion in approximately 44 deals this year; this comes at a time when venture capitalists are shying away from the market. Source
Large banks are reporting excess capital of greater than $120 billion and in the current market environment are expected to increase buybacks and dividends for the benefit of shareholders; the increased capital is primarily the result of higher Federal Reserve capital requirements for banks following the financial crisis; the higher requirements have helped to increase banking capital ratios to more than 12% of risk weighted assets from 5.5% in 2009; under the new administration, capital ratios are likely to be lowered resulting in more capital returned to shareholders; the Fed's influence is also trending towards lower capital requirements specifically in their 2017 stress test guidelines and also following the resignation of the Fed's lead supervisor, Dan Tarullo. Source
With tech companies being seen as the better destination for the millennial workforce banks are starting to look at new ways to attract younger talent; helping employees pay down student debt has become one way for banks, who might not offer the same salary range, to stay competitive; as banks look to become more digitally savvy enlisting programs like this can help to go a long way in attracting the new generation of talent. Source.
Banks of all stripes have recently shown that a slowdown to the recovery might be coming; total loans and leases by banks and other insured institutions rose by just 3.7% from a year earlier at the end of June; this compared to 6.7% growth in total loans and leases last year; credit-card charge-offs, grew by 24.5% in the second quarter, marking the seventh straight quarterly increase; with the recovery being in its ninth year it isn't too surprising to see, FDIC Chairman Martin Gruenberg said in a statement; the 5,800 banks that the FDIC monitors are doing quite well though, their combined net profits in the second quarter were up 10.7% from a year earlier. Source
Robots have begun helping to take over menial tasks at banks and now there is talk that a full back office operation is not far away; "I think we're going to see it move from a few narrow functions to across the enterprise," said Alan McIntyre, the industry managing director for banking at Accenture; making these changes will help banks to cut costs and improve efficiency, at least when times get extremely busy; banks won't yet fully remove the human component but the trend is moving in the direction of more automation when running the back office. Source
After several years of tightening credit requirements for business loans over the last couple of years more banks have been...
Most significant banks have a mobile app with features that allow individuals to conduct close to their entire banking life on their phones; keeping up with the operating systems from Apple and Google is a challenge for the banks; banks are not as nimble as fintech startups and so there is a lot more detailed of a process to go through when making technology updates; banks have learned that 80% of users update operating systems within the first month of a new release, which puts pressure on the banks to act quickly; talking to American Banker about staying current, Alice Milligan, the chief customer and digital experience officer of Citi's global cards business, said, "This requires us to stay at the cutting edge of device and operating system developments in the industry."; prioritizing what features are most important is key, not everything can get done quickly and this forces banks to make difficult choices; as more people use technology in their financial lives, banks and fintech companies will need to make sure they try to stay ahead of the curve. Source
A survey released today by Promontory Interfinancial Network showed that 66% of 543 bank executives view payments and money transfer...
Tearsheet explores the trend of sub-branding offerings by banks including Goldman’s Marcus, JPMorgan Chase’s Finn and Wells Fargo’s Greenhouse. Source
Banks are coming under increasing pressure to update legacy systems and provide a more digitized experience to customers, automated bots are another tool beginning to be used; while most banks are still in pilot mode, some are beginning to have wider adoption as they have seen how technology in other areas of the bank have improved efficiency and experience; "The technology works and banks are starting to have more confidence in them," explained KPMG's Managing Director for Emerging Technology Risk Services Kiran Nagaraj, bots can help make interaction with customers more efficient and allow for high-volume, repetitive processes and tasks to be done a lot faster. Source