Paymentgal Blog

fintech (6)

The Little Fintech Bank Charter that Could(n't)

For now, the OCC has lost its battle against the banking industry to establish a fintech bank charter in the U.S. and will need to regroup. Establishing a regulatory definition and operating rules for fintechs that are continuing to grow their account bases in this country does not seem like an illogical next step in our banking evolution. But that depends on where you're sitting. In a country that is intensely competitive, it is ironic how noncompetitive our markets really are.
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Have financial services finally come to their lifestyle branding moment? Or, are we simply confusing brand with eco-system? Recent happenings like MasterCards' new restaurant and Barclay Banks' device store and Apple's credit card are all fun to think about, but profits still lie in transactions. How financial services capture transactions is very different from what it has been. But elevating the user experience into a lifestyle brand is a big reach.
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Deconstructing the Core Banking Platform

Open Banking, by definition, is an environment where a third party is given permission to access a bank account or account-related data in order to provide services direct to the user. That's not where the real technical evolution in banking is going to take place. Instead, I look for technologists to begin figuring out how to desconstruct core banking systems into their individual account components and then deliver them through a integration portal that allows a financial services entity to pick and choose the ones relevant to their offering. We're seeing this in the new crop of API farms that banks are accessing to deliver new services to their customers, but this takes these concepts down to the core level and that's where real innovation in banking is going to take place.
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Organizations making business decisions regarding potential new vendors, technology investments or new partnerships have to invest a great deal of time and resources in the effort. Creating a set of meaningful Guiding Principles can support a more efficient and effective decision-making process.
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What's really hard about AI or any other fintech infrastructure play is defining an implementation path that makes good business sense and then investing in that vision. Many stakeholders view these technologies as competitive differentiators and so lock their learnings up in closed rooms. Increasing the tide of information about the real experience of integrating, testing, and implementing these technologies will serve to improve and strengthen the market as a whole.
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The new Apple credit card is an example of how that company has potentially put a product into market that could disrupt the credit card industry. Building on the concept of Customer Effort as a defining factor in disruption, I examine how this new way of evaluating technologies could be used to answer our questions about how the future of the payments industry.
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