US banking: Just do something

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US banks have been notable for their reticence over consumer banking innovation for a number of years, and their silence is growing ever more obvious.

Beyond issuing press releases on their latest apps and mobile interfaces, US banks have offered little to their customers. Fees are higher, cheques are still widely used, payments are slow, and third parties are eating into their business lines. 

Will US banks comment on their plans for digital innovation? No, they still prefer not to right now.

Of course they prefer not to. They’re not doing anything. In fact they seem afraid of doing anything, and even more afraid to admit they’re not doing anything. 

It’s baffling. The move to digitization and innovation within consumer finance did not occur overnight. EMV (chip and pin) has been around since the 1990s. PayPal emerged in 1998. In 2008 countries outside the US began the shift to same-day payments. Lending Club and peer-to-peer lenders emerged around the same time. Google Wallet, the first of its kind, launched in 2011. The UK, Spain, Denmark, Australia, Norway, Singapore, France: the list goes on, of countries in which banks have adopted new technologies, and have teamed up with fintech start-ups. Not so in the US. 

All talk

What US banks have done instead is a lot of talking about what they could be doing internally. They’re hiring digital executives to lead these talks. They are spending a lot of time flying back and forth to the West Coast talking with fintech firms who are doing things. They are talking about the importance of innovation in their earnings calls. And now they’ve all joined the new Fed Task Force on Faster Payments to discuss what should be done based on what other countries did as far back as the last decade. 

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And this is the crux of the matter: US banks don’t seem to take any action. 

It won’t wash. Consumers, and even shareholders at this point, get the fact that 'doing’ may risk failure in the new world of innovation, but it also means you care about your business. Just invest some money and do something. Barclays, DBS Bank, and other non-US banks may see their mobile payments platforms fail when Apple Pay takes off – but at least those banks showed they cared about their customers enough to invest in the consumer experience. 

Sitting and waiting for Apple Pay, which is what US banks have done, rather than tackling mobile payments themselves, is not a strategy. Letting new entrants appear like Simple, which have no fees, without boldly adjusting one’s own fee structure, is poor strategy. Watching peer-to-peer lenders take your credit card business but refusing to lower rates is bad business. 

It’s time US retail banks started serving their customers by moving to the digital age. That would give them something truly worthwhile to talk about.

US faster payments: Banking’s technological backwater

US faster payments: Banking’s technological backwater

Euromoney October 2015

Fintech firms and foreign adoption of faster payments are revealing what many have long known – US consumer banks have resisted innovation in favour of profits. Now they face a death by a thousand cuts unless they embrace change.