Pub. 5 2016 Issue 2

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 16 BANK TECHNOLOGY CONFERENCE RECAP Fun was in the air around the CalTech booth at the tradeshow. Pictured from left to right are Trent Grissom, CalTech; Tami Molloy, Verus Bank, Derby; Rob Schuetz, CalTech; Kelly Mason, First National Bank of Pratt and Matthew Little, Great American Bank, Lawrence. Chris Gilbert and Mike Norris, both from Bankers’ Bank of Kansas, chat with Scott Nelson, Carson Bank, Mulvane. T HE KBABANK Technology Conference & Showcase was held at the Hyatt Regency Hotel in Wichita on February 8-9, 2016. The meeting space and showcase were bustling with over 300 people including attendees, vendors and speakers. David Peterson opened the conference with a general session focused on the big picture items driving branch transformation. He noted that the reason people come to a branch is changing and many banks are faced with the reality that the space is too large in this digital age and foot traffic is down. Peterson drove home the significance of customer engagement that provides the service they want rather than customer service that the company decided is important. “Stop creating an environment where we dictate what customer service is and forcing customers to do it and start creating an experience that customers value“, Peterson stated. “Great customer service is what your customer thinks it is. What is the compelling experience that makes people want to go to your branch?” As banks figure out what the compelling reason is for someone to visit their branch, many are finding that “consultative selling” works well with the virtual branch model. The primary purposes of the neighborhood branch remain strength, security and convenience, a smaller footprint that is friendly seems to fit current needs. Although it may seem threatening to a banker to teach the customer to use technology that creates independence from the physical branch, this personal touch helps customers in most generations embrace the conveniences and the bank. Peterson explained that, “Once people figure out what the benefit is to them, they will adopt new technology and good self-service trumps great customer service in the long run.” The speed and convenience of technology are a must for millennials but baby boomers are willing to change if it makes their lives easier. In a breakout session Peterson went on to explain that you can turn customers into advocates by changing our attitude about what happens inside the branch. He asked “what if your branch acted like an Apple store? What if customers could make an appointment and spend time to resolve an issue. What if you have a Genius Bar with various phones and tablets where customers can learn how to use bank technology on a demo site?” Lee Wetherington greeted attendees with high energy and a wicked laugh that Kansas bankers have come to know him by. He spoke about shadow banking, peer to peer lending and other fintech disrupters that banks have been worried about. A shadow bank provides financial services that a traditional financial institution would offer but the shadow bank is not subject to the same regulations. Wetherington believes that 2016 will be the year of API banking. API or Application Program Interface is a set of routines or protocols to build software applications. Some of the fintech innovations that are being rapidly developed and deployed out of Silicon Valley use API and live in a cloud environment to be easily accessed. Of the 29 fintech companies based in financial services, 13 are in payments and 11 in lending. The reason Wetherington believes this will be the year of API for banking is due to the investment cycle and bubble that will burst as venture capitalists start seeking a return on the billions of dollars invested into this market for several years. He believes that banks need fintechs to do things better, faster and in a more innovative way. At the same time fintechs will be desperate to pay venture capitalists and the great re- bundling of banking will take place. “2016 will be the year of API banking in the way you connect between systems in real time”, Wetherington exclaimed. He demonstrated his point with some examples to include MCX partnering with Chase to roll out ChasePay, a mobile wallet that is working with a bank. SIMPLE has been purchased by a bank and MOVEN is a debit card platform that isn’t a bank but needs bank rails to function. These mobile platform NEO banks are far from a significant share of the market so we should be inspired by them rather than threatened by them. Wetherington also spoke of the need to remove friction when risk is low. For example, pre-login balances viewed on an app or biometric sign-in makes it easy for consumers to monitor their accounts and detect fraud faster. Improved customer experience will work toward engagement. Engagement is taking a negative emotion and turning it into a positive one in all matters related to their money. Alternative lenders such as Prosper and Lending Tree simply match up lenders and borrowers outside the traditional financial services industry. Currently this makes up less than 1% of credit card debt but they are coming under new regulatory scrutiny and will most likely be up against stiff traditional FI competition in the near future. Wetherington believes we’ll have an opportunity to