Fintech CEOs' Candid Advice, Bold Predictions for 2015

There Will Be More Branches, Not Fewer

Bank branches are "going to be using a lot more technology to deliver an omnichannel experience with higher convenience, and at the end of the day they're going to be smaller," said Andy Mattes, CEO of Diebold. "But our prediction is there will be more of them around, because the single-biggest driver of where people bank, all around the world, is proximity of the bank to my neighborhood."

Banks Should Treat Apple Pay as a Threat...

"There's a war going on at the point of sale, and Apple's foray to me was surprising not because Apple did it, but the enthusiasm the financial industry showed for this idea," said Jeff Yabuki, CEO of Fiserv. "The fact that issuers were excited to go in and pay Apple to facilitate that kind transaction is an interesting change in the balance of power.... The financial industry has to pay a lot of attention to who's driving the real economic value."

... and View It as an Ally At the Same Time

"What I like about Apple Pay is it's going to go a long way in training consumers to think of the mobile device as a personal payments hub," Yabuki sad. "I don't see Apple Pay as a sign of wallets going away. I think it's a sign of wallets to come" as it will prompt banks "to think about how they can create a unique, differentiated experience that lines up with the branch and omnichannel models."

Image: Bloomberg

ATMs Will Have a New Role

"More than 75% of the world population has cellphones, [and] less than half have bank accounts. ATMs will be an on-ramp to the digital superhighway," Mattes said. "ATMs were traditionally used for taking money out of a machine. Going forward, the use case will be putting money into the machine, transferring assets like physical cash into digital cash."

Banking Has to Get Easier

"One of the things I worry about is that we make banking hard," Yabuki said. "When you look at technologies like Venmo and Square, they're designed in a way that makes it easy for consumers to do what they want to do. We've all become spoiled by how easy it is to buy from Amazon. And we know we can rationalize amongst ourselves why it's hard because of [know-your-customer rules] and all the other things we have to deal with in the banking industry. That notwithstanding, we have got to make it easier for millennials and other customers to transact."

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Banks Must Move Beyond FICO

"The fact that we generally rely on FICO scores or a proxy of FICO scores to make [credit] decisions is an example of significantly underusing [social media and other] data that consumers are willing to volunteer in this new digital phase of the relationship," Yabuki said. "I think for many the notion of big data is overwhelming. But [try] to take it in bite-size chunks and realize that things as little as a change in a retail customer's life something happened, maybe they got a raise or a new job, [or] they got fired " can be very meaningful.

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Stop Navel Gazing

When a core system overhaul is out of the question, there are other options. "One thing we've seen banks enable is what we call an outside-in transformation," Syed said. "The value is in the customer-facing world the channels capability, being able to create a 360-degree view of the customer.

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If You Can't Operate in Real Time, Fake It

"Thousands of U.S. institutions are running on core systems that weren't designed to be real-time systems," Yabuki said. "Core banking itself is about 160 services. To the extent that you can make them available in different ways, you can approximate real time, at least the experience. The value is at the front end having consumers be able to access that, and the ability to run multiple batches so it feels like real time."