05/28/2015

Banker Panel at AFT Discuss: Why ApplePay is Worth the Effort, Millennials and Anxieties over Vendor Management

Getting candid views and opinions from the banks and credit union was an important goal of a panel discussion at the 2015 AFT Spring Summit at Bonita Springs, Fla. Honest and sincere feedback is exactly what the audience received.

Andy Grinstead, SVP, Fiserv served as moderator for a panel of financial institution executives including:

• Janak Amin, CEO, Sunshine Bank, Plant City, Fla.;
• Jill Castilla, President and CEO, Citizens Bank of Edmond, Okla.;
• April Clobes, EVP/CEO Michigan State University FCU, Lansing, Mich.; and
• Tom Hury, SVP/Chief Risk Officer, Intracoastal Bank, Palm Coast, Fla.

So what was on their minds?

Technology

Technology elicited a variety of responses.

One banker said when he arrived at his financial institution, many systems were outmoded but technology is now doing all the heavy lifting.

Another executive believes fintech vendors have done a great job of giving community banks and credit unions outstanding tools, which allow them to compete with the big financial institutions. It is expensive but it is not too expensive.

Yet another said their organization chose a different route. They custom built most of its technology because five years ago vendors did not offer what their financial institution needed. For that institution customization is extraordinarily important.

The questions of in-house versus outsourced came up with one panelist admitting they want a good partner that will take care of everything. Another warned that examiners are not comfortable letting the infrastructure out of the room.

As far as what technology they would like to see down the road. They asked for more intuitive help, better interfacing on the core side, smoother integration of all pieces; and more innovation.

Customer Engagement

There is some misconception about Millennials. One panelist said out of its 200,000 members, more than 73,000 are Gen Y. That presents unique challenges. While Millennials are tech savvy, they also crave engagement to help them with car loans are other financial decisions. They need a lot of handholding.

Being everywhere at any time makes omnichannel availability vital. Accountholders utilize all channels together and they are growing. All agreed that improvement in that relationship through technology has contributed to customer loyalty.

However, branches are not dead. More and more financial institutions use their branches as relationship centers. One executive said that 70% of its new accounts come from the branch.

Some banks become very involved socially to tell their story. Great social media they explained is not just great marketing, its great SEO.

Payments and Loans

Acquiring ApplePay is an intricate process but it is worth it. A panel member said their bank had to go through a core process conversion in order to enable the new payment system. In addition, they are at the mercy of Apple over the live release date.

However, they still believe Apple Pay is going to be a game changer even if it means giving up a sliver of interchange.

All financial institutions look for revenue growth and greater expense control. They are focusing on building loan growth and growing non-interest income. One competitive disadvantage is consumers buying a car and getting it funded by the dealer instead of the financial institution.

Risk and Compliance

Risk, fraud, regulation and compliance are definitely among their biggest concerns. Compliance issues also factor in to their anxieties over vendor management, which regulators are keeping a close eye on.

One panelist said their bank used an eight-page vendor management program to guide its financial institution. Another relies on implementing as much as they can from one vendor so they do not have to deal as much with the regulations.

© 2015 Association For Financial Technology (AFT)