FINANCE

WHAT’S AHEAD

IN BANKING & FINTECH?

WRITTEN BY BETHANEY WALLACE

In the last decade, the personal finance industry has advanced by lightyears. From how quickly we can pay bills to how we transfer money to friends and families to the ability to have fun while doing it, industries like fintech—that’s financial tech—and digital banking have completely transformed. Those changes, says Josh Rowland, chief executive officer and vice chairman of Lead Bank, are partly consumer-led. “Consumers are driving the trends. They’re looking at the type of services they enjoy from companies. It’s raising their expectations about what banks should offer,” he explains. When consumers have instant access to other technologies such as streaming, social media, and more, those same expectations are put on their finances. That means mobile transfers and the ability to open a bank account—and spend funds—almost instantaneously. “Ten years ago there was no conception that consumers should demand a different payment system. Now it’s table stakes that they make cash transactions by phone,” Rowland says. Apps that incorporate aspects like emojis or gamification with one’s income make it more enjoyable for consumers to manage. However, with these apps there are also risks. Finance-based apps are often only that, meaning they are not backed by the federal government nor are they held to legal standards. “What people don’t understand is that essentially they’re relying on [apps] to follow through with the promise that the transaction goes through. In terms of trends, it’s a bit worrisome. There’s complacency about where their money resides, how they can access it, and whether or not it’s safe,” Rowland explains. In contrast, he says, banks are highly regulated and scrutinized. They have to make good on their financial transactions. Even if a

bank crashes, account holders’ funds are secured up to a certain amount—$250,000 per account holder— while apps and other fintech brands provide no such level of security. What if PayPal crashed? Cash App? Coinbase? What happens to your money in those accounts? What if a transaction simply doesn’t go through? Is there insurance that your funds will be returned or that they will end up with the intended party? No one knows. We simply use the apps with the utmost confidence and assume all is well.

In addition, big brands are blurring the lines of how consumers shop and spend. Think about Amazon, which now offers credit cards and cloud storage. No longer is it just a store, but a financial institution and online storage provider. With these blurred lines of innovation, people become complacent about who’s looking out for their money. Just because Rowland is a banker doesn’t mean he believes FDIC (Federal Deposit Insurance Corporation) is best, though. He explains that he simply wants people to be aware—and to demand more of their local banks.

First, he says, if you want an instant payment app, opt for Zelle. It’s bank-owned, and therefore more secure to transfer money. And when it comes to opening accounts, consider what your money is doing. While global brands exist in the Kansas City community, the money they earn from local accounts likely won’t be spent in KC. “Look at the community banks. Look at the offerings of those banks. Your dollars are staying in our community. That builds Kansas City,” Rowland says, adding that local should not mean a lesser digital or consumer experience. “Consumers should have high expectations for their bank. Digital, convenience—they’re totally reasonable and rational demands. That’s the market economy we live in. Demand that those banks meet the challenge of digital innovation,” he adds. As for what’s ahead, tech will continue to rise, as will ease of spending. After moving from in-person banking to online banking, we have moved to mobile banking. We have reduced the need for checks and ATMs, let alone having access on every corner. Now the transactions simply get faster, and if consumers have anything to say about it, it should be more fun. “Consumer behavior is really driving a different attitude and driving banks of all sizes to be more innovative with the kinds of experiences that consumers want. It’s forcing companies to really look at what the innovative strategies will be,” Rowland concludes.