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For years, community banks have tried, with varying degrees of success, to boost fee income through wealth management. Now, thanks to the robo-advisory trend, smaller banks can compete more effectively, even with larger, more established players according to a new article in ICBA’s Independent Banker Magazine,  Say Hello to Your New Employee.

 

The article highlights the experience of Cambridge Savings Bank and quotes David Kerstein, president of Peak Performance Consulting Group.

 

“A robo-advisor allows banks to have the potential for greater control over their services, and it allows them the opportunity to be able to service more of their customers and to manage it under their brand,” according to Kerstein.

 

“Conventional wisdom would say that robo-advisors would be more important to younger, more digitally savvy customers, but that’s not necessarily the case. For Cambridge Savings, the Connect Invest platform has gained widespread interest; its average user is 47-48 years old. ‘It’s not just millennials.’ says Kerstein, a consultant to the bank.”

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David Kerstein, president of Peak Performance Consulting Group, was interviewed by S&P Global (formerly SNL Financial) about FinTech and the whether they are competitors or partners. He said that digital disruption isn’t new, citing past developments like automated teller machines and automated call centers. The difference, he said, is that today’s developments are much more rapid.

 

Nonbank competition can be a sore subject among community bankers as the banking landscape — along with customer expectations — is continually changing. “If you think about it, banking and technology have been tied together for all of our lives,” Kerstein said. “These were developed not by the core banking providers, but by what we would now call fintech firms.”

 

Today, wealth management is one area where small banks and fintech companies are teaming up. He said he sees ample opportunities for robo-advisory companies to team up with community banks to simplify and standardize wealth management platforms, citing SigFig Wealth Management LLC’s partnership with Cambridge Savings Bank.

 

Fintech companies such as PayPal Inc. and LendingTree Inc. have put pressure on banks to up their digital game, and teaming up with fintech companies rather than competing with them is a sensible solution, Kerstein said.

 

“There’s a huge number of fintech initiatives that are really building their business propositions around providing services to financial institutions to make quicker loan decisions or provide more efficient investment advice,” he added. “Small-business processing has been complex for financial institutions. It’s been difficult to maintain the skill sets, just given the amount of training that it takes and the skills of loan officers.”

 

For more, see the full article.

 

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In a recent Banking Exchange article, David Kerstein, president of Peak Performance Consulting Group, observed that there is no needbanking-exchange-logo for banks, especially community banks, to sit on the digital sidelines.

 

“Partnership is a no-brainer,” Kerstein said. “Fintechs are happy to work with small banks.”

 

Kerstein observed that traditional companies that partner with fintechs quickly realize that they can apply agile—or lean—processes to other products, as well. They also begin to look for “friction” in various products and processes.

 

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Mark Hendrix, a 30-year banking industry veteran who currently acts as an advisor for Peak Performance Consulting Group, was quoted in Advertising Age on the changes in Bank of America’s brand strategy leadership and the potential implications for bank brand strategy.

 

Like many traditional banking competitors, Bank of America is dealing with an increasing number of digital rivals as it tries to improve its customer-centric approach.  Hendrix noted “There is an awful lot of disruptive change that is occurring in the marketplace and there is a change in consumer expectation that all banks are having to grapple with.”

 

He further noted, “Customers don’t really care about banks — they’re more interested in what banks can accomplish.” And this is causing banks to re-think their brand strategy and brand promise.

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The following article, quoting Peak Performance Consulting Group’s President David Kerstein, appeared in S&P Global Market Intelligence on August 8

 

By  Kate Garber and Kellsy Panno

 

Some of the largest U.S. banks hope to entice their customers with real-time, P2P payment capabilities like those offered by PayPal Holdings Inc. and other fintech companies.

 

As member banks go live on the clearXchange network, a unified payments channel, customers will be able to send and receive money in real time. So far, Bank of America Corp.Capital One Financial Corp.JPMorgan Chase & Co.U.S. Bancorp and Wells Fargo & Co. have the real-time payments capability up and running. Fellow network owners PNC Financial Services Group Inc. and BB&T Corp. have yet to go live on the network. An Early Warning spokesperson said that while all members are in the process of integrating the capability, go-live dates vary by bank.

 

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Digital Payments are growing, and financial institutions have high expectations for adoption. But with usage rates stalled, is this the right time for community and regional banks to invest, or should other options be considered first?

 

We just finished an analysis of Mobile Wallets and P2P payments. Here’s a few key points, but read the full article for more detail.

 

There is wide belief among financial services executives that mobile wallets and P2P payments will shortly become basic table stakes, similar to mobile banking. According to the 2016 Debit Issuer Study, commissioned by PULSE, almost three quarters of financial institutions expect at least 15% of debit transactions will migrate to mobile in the next 5 years, and nearly half believe the migration will be in excess of 25%. They have invested accordingly: issuer adoption of mobile payments has surged and 65% of debit cards are now eligible to be loaded into mobile wallets, up from 30% in 2014.

 

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