Levanto CEO Daniel Chen sat down with Jon Ogden, Director of Content Marketing at MX, to discuss current trends in the finance industry. Based in Provo, Utah, MX is a leader in digital money management and marketing solutions that enable financial institutions to win account holders from their competitors.
For the past 2 decades, technology advances in fintech have been focused on significantly improving convenience for the consumer. As consumer behavior and expectations for convenience and accessibility rapidly increase, established financial institutions are having difficulty keeping up. Smaller companies like MX and Levanto are rising to the occasion with cutting-edge technology, design, and delivery. In the following interview, Jon gives us insight into what the future has in store.
What are the top trends in banking that will shape the industry for consumers in the next 5 years?
The top trend in banking is that consumers increasingly demand digital convenience above all else. They look at traditional financial institutions and see little difference in security, rates, and customer service, and so they choose what is most convenient. Currently this means that consumers are flocking to the big banks because these banks have the budget to offer a better digital experience. Friendly tellers and customer service, which banks have long emphasized, are becoming increasingly less important as the companies who provide convenient digital experiences win out.
It makes me think of when I tried to set up a joint savings account with a local community bank. When I got to the branch, I found out that the bank wanted me to take a signature card back home, have my wife sign it, and then drive back to the branch so they could finish opening the account. So I went home, checked out some options from Capital One 360, and signed up for a joint savings account there instead — all within 30 seconds. The local bank had every reason to get my business, but Capital One 360 won because of convenience.
Who is leading innovation in the fintech industry?
BBVA is a respectable example of a large financial institution with leading innovation. They’ve switched to a real-time system, enabling customers to see immediate deposits and avoid the traditional 2-day posting lag. In addition, their acquisition of Simple was a smart move in terms of providing users with a better digital experience. I look forward to what comes from that acquisition.
I predict that we’ll see some big things from PayPal. Now that they are no longer part of eBay they’re positioned to fulfill the vision that Elon Musk originally had for X.com in terms of becoming a full-fledged digital bank. Square is also well positioned to be a big player, as evidenced by their expansion to small business lending earlier this year. Once these fintech companies perfect additional processes such as mortgage loan origination, the big banks will have tremendous cause to worry. It’s only a matter of time.
As MX continues to innovate, what are your thoughts about the millennial generation and how to engage them?
I agree with Ron Shevlin when he says that the need to appeal to millennials is overstated. If banks and fintech companies focus on improving convenience, they will automatically attract millennials as well as baby boomers and retirees too. Everyone wants convenience.
What are financial service providers doing to engage millennials? What are they doing right and wrong?
Banks and credit unions make a big mistake whenever they try to appeal to millennials with juvenile marketing. For example, adding a childish component to a banking app or using the latest social media hashtag isn’t appealing. Financial institutions should instead do what they are best at — offer legitimately useful financial advice. Older millennials are now in their early 30’s, and they are not looking for something childish. They want a more convenient experience and they want genuinely helpful guidance. That’s it.
What are some of the innovative things at MX you’re excited about right now?
We just launched WideNet, which allows a financial institution to offer a money management app to potential account holders. Consumers can download the app and start conveniently managing their money, even though they’ve never interacted with the institution before.
Once a potential account holder begins using the app, the financial institution can upsell within the app for services and products that are directly suited for the user’s needs. In addition, if a user wants full access to transfer money using the app, they’ll be prompted to sign up for a bank account with that institution. It’s the most convenient way I know of for someone to start a relationship with an institution.
Most of the cash deposited is covered by the top banks and that is shrinking. Where do you think the industry is moving?
I don’t think the big banks should get too cozy. When PayPal or Square or some other fintech provider acquires a banking license and offers an entire range of banking products along with their improved user experience, there’s going to be a huge fallout, and big banks will be in trouble.
The change will happen slowly and then all at once, the way the booming growth of Instagram and Slack seemed to happen over night. To be clear, it is far more difficult to scale quickly in the banking industry, with all of its tangled regulations, but once a Square or PayPal jumps over the remaining hurdles, I can see customers moving en masse to support the convenient full digital banking experience they will offer.
Even though tech has helped us on the convenience side, do you think it has helped us holistically? Consumer debt is at an all time high and people are delaying their retirement by 10+ years because they have not saved enough. Is there a correlation?
I don’t know if there is a strong correlation, but I do believe technology can make this problem better. I also believe that including a human component is crucial. Digital is important, but it is not all we need. It’s going to come down to companies like MX and Levanto that merge human instruction with a digital tool to help people manage their personal finances.