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Community banking Citi's (Silicon) Valley Girls Debby Hopkins' team brings fresh ideas to Citigroup by thinking and acting like tech entrepreneurs. Her Citi Ventures unit is an outlier in that its top four executives are women.
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Bank technology Wells Fargo Adopts Three Tech Startups from Outside Finance The San Francisco bank has added three more young technology firms to its accelerator program, which is aimed at adapting products from outside the financial services world for creative uses in banking.
By Mary Wisniewski
April 22
BEVERLY HILLS, Calif. Citigroup and other banks are increasingly looking to startups to help them compete in a world in which Google, Apple and other tech firms are rapidly becoming potential threats.
In a small and very crowded room at the Beverly Hilton at the
"The name of the game has to be speed," said Hopkins.
Like some of its rivals, Citi has been seeking out startups that can scale. It hosts hackathons a word some heavily regulated banks fear to say out loud around the world. And Citi has a fund to invest in disruptors like automated investment service Betterment.
"Partnering is very important," Hopkins said, because it can help banks extend their offerings and understand technologies that could take off.
To be sure, the titans have an uphill battle in nurturing Silicon Valley-like thinking into their decades-old companies that employ tens of thousands of employees. They also face significant regulatory hurdles that challenge innovation efforts.
Still, the need to modernize banking is vital. At the World Economic Forum in Davos,
But sandboxes, a software testing environment that isolates the testing from apps running in production, are seen as a way to
Arjan Schutte, founder and managing partner of Core Innovation Capital, said sandboxes are a powerful way to work with innovators as they "give front row seats to understand what's going on."
The
Pursuing the Underbanked
In banking, many institutions are more aggressively pursuing an audience who needs a different kind of banking: the underbanked.
People who live paycheck to paycheck often face heavy fees and overdraft charges.Schutte said ACH payments can take days to clear, which doesn't work for people who need to keep better track of their liquidity. Many use expensive products like payday loans or visit pawn shops to take care of an emergency instead of waiting for something that could cost less.
Some heavy hitters believe the potential to reimagine money for the underbanked is huge. Bill Gates
Better cash flow tools have been an area of interest among upstarts that are trying to design digital experiences with the promise of transparent fees (or no fees).
Phin Upham, principal at Thiel Capital, said some companies are already improving the ways they think about repeat business among the underserved. He cited LendUp, which can offer consumers lower rates over time, as an example of a startup trying to improve the relationship. Check-cashing shops have also been
But with all of this digitization of financial services come newer risks. Upham, for one, points out one very real concern: algorithms taking the narrative out of finance. Just as Google can serve up an ad based on a link for shoes a person clicked on by accident, an algorithm could include a false piece of data, he said. Sure, the tech can serve more people but it could also make a different kind of error.
He sees a future where banks could effectively disappear as they become more like utilities. Consumers may login to a dashboard and choose from various offers without necessarily being tied to any one brand, he said.
"Ten years from now, finance will be more like water," said Upham. "Turn on the tap and water comes out."
