The Role Of Regulation And Its Effect On The Consumer Economy Essays

The Role Of Regulation And Its Effect On The Consumer Economy Essays

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The role of regulation has been a large driver for the increase of Fintech companies / investment
Regulations are trying to strike a balance between innovation and protecting the consumer
Increased willingness for consumers to trust sensitive aspects of their lives to upstart companies
After years of increased regulation for banks, we expect the pendulum to swing to Fintech firms in the coming years
Select Fintech companies have experienced growth simply through regulatory and interest rate arbitrage

The banking industry has lagged on improving customer experience and has seen declining engagement through traditional channels
Reduced fees and improved access catalyzed through Fintech companies has stimulated innovation from banks and brought transparency to historically opaque segments
Disproportionate benefits have been seen on the consumer side relative to commercial lending
Commercial is more complex and requires more heavy lifting to cause meaningful disruption

This does not mean that banks need to cede control to mobile-first lending platforms or online only deposit aggregators such as Ally

It does mean that having a great consumer app is increasingly important and a way for community / regional banks to keep pace with larger banks

China has seen massive adoption of banking services provided from traditional technology companies (e.g. Alibaba, WePay) since they built their platforms as a great launching off point large-scale adoption

Mobile payments are another area where we have seen a massive shift towards mobile – only 10% of consumers used this method in 2014 and this is projected to increase to ~1/3 of consumers by 2019 (e.g., Adyen)

Looking at most downloaded financial apps, not only are consumers using mobile a...


... middle of paper ...


...te-labelling products and partnerships

Focus on offering additional products that are pain points for your customers (e.g., American Express offering working capital lines to its small business customers)

Optimize digital interface so transactions and products can be offered directly from the app rather than forcing customers to engage in these transaction in branches

Continue to optimize branch network – think of branches as sales centers vs. transaction centers

Offer cheaper / faster B2B payments – many inefficiencies with current paper-based system

Other Potential Ideas

Partnering with other banks to set up accounts receivable automation for small businesses

Mutualize back office systems (e.g. AML, KYC) with other banks performing same tasks similar to Markit and DTCC have done

Consumer mortgages – how can you make this process more efficient / less costly?

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