This One-To-One we had a chance to speak with Doug Whiteman, Editor-in-chief of the consumer-focused personal finance website MoneyWise.com. We wanted to get his insights on where he sees the expanding fintech trend in the financial sector.
Geezeo: It seems that the big national banks are having a tougher time understanding the new neo-bank and fintech world, especially with the recent closure of Finn by JP Morgan Chase. Is this a start-up vs institutional mindset challenge or is there something really changing in the space that necessitates a new view of banking?
Doug: Neo-banking offerings from traditional institutions will miss the mark if they try to reach younger consumers through emojis and hipsterish references instead of uniqueness and convenience. Millennials are disappointed when an app doesn't do it all but forces you to go to an old-school bank branch for some transactions. I do think it's tough for the established financial institutions to play the same game as the startups. The big banks are going to have a hard time competing with the fintechs on price -- the word is spreading that "low overhead" means low-interest rates and low or no fees. But the national banks' face-to-face style of banking isn't going away, particularly since they're making the investment to open hundreds of new branches.
Geezeo: How will banking be different in the next 3 years?
Doug: I'm astonished when I go into a bank branch and still see teller windows taking up a huge chunk of the square footage. And often there's just one lonely teller back there, trying hard to keep busy. I have the same reaction that I do whenever I spot a pay phone: Wow, those are still around? Banks are due for a remodeling wave, and within three years we'll see more of the rows of teller windows replaced with one or two interactive teller machines, where customers who need to cash a check or take care of other routine banking transactions will be served by a teller on a video screen working from a remote location. Traditional banks will reclaim the unused space to add more of the personal bankers who are now offering customers a broader array of financial services, including investment and retirement accounts and college savings plans.
Geezeo: Which industry is moving faster toward transformation, insurers or banks?
Doug: I would give this to banks. When I recently shopped for a new car insurance policy, I found it's still very difficult to compare quotes and buy a policy online. I filled out a form on a portal and was expecting to immediately receive multiple quotes that I could look at side by side. Instead, I got just two prices online -- but my cellphone started ringing with calls from agents, one after another. I let at least a half-dozen go to voicemail because what I'd been hoping for was a much more convenient and efficient process. I wound up buying a policy via one of the online quotes. Separately, my homeowners' insurance policy had to be purchased entirely by phone. I don't understand why you can't shop for these products as easily as you can buy a plane ticket. Though many banking transactions are still too complex for the digital world (I'm looking at you, mortgages), you can open a new account without making a phone call and having to ask an agent to repeat numbers and the spelling of your name back to you.
Geezeo: Do local and regional banks have any advantages now over the big national banks? And if so, why would regional bank Regions apply for a national charter?
Doug: Local and regional banks don't carry that big-bank baggage, they're known to offer very competitive products (there's that "low overhead" thing again), and their smaller scale has allowed them to be nimbler. Regions has already embraced the model that I talked about earlier: They've been renovating their branches to introduce video tellers, and they've been replacing the traditional teller windows with desks where more bankers meet one-on-one with customers. Regions apparently believes its regional-bank approach and philosophy will work well beyond its traditional turf in the South. And we've certainly seen players in other types of businesses, like retail, successfully expand beyond their roots decades after their launch.
Doug Whiteman has spent a quarter-century following banking and other consumer financial topics, first as the consumer news editor and reporter for Associated Press Radio; later as an analyst and editor covering mortgages, banking, insurance and related topics for Bankrate; and now as editor-in-chief and analyst for Wise Publishing, Inc., and its flagship website MoneyWise.com. He has been quoted by The Wall Street Journal, USA Today and CNBC.com, and has appeared on ABC Radio, Fox Business and the syndicated TV show "First Business," among other outlets.