Weekly Wrap: Big banks address Libra as challengers seek to lure customers

https://bankinnovation.net/allposts/operations/cap-fund/weekly-wrap-big-banks-address-libra-as-challengers-seek-to-lure-customers/

Welcome to the first episode of our new weekly wrap video series, for the week ending July 19, 2019. In this episode, Suman Bhattacharyya, deputy editor of Bank Innovation, discusses the following news developments:

  • How bank executives, including JPMorgan Chase and Citibank, are beginning to address Facebook’s planned digital currency Libra in their earnings calls
  • How challenger banks like Germany’s N26 and Varo are setting their sights on traditional U.S. banking consumers and raising more capital from eager investors

View the full video here:

https://bankinnovation.net/allposts/operations/cap-fund/weekly-wrap-big-banks-address-libra-as-challengers-seek-to-lure-customers/

EU payment providers grapple with two-factor authentication requirements

https://bankinnovation.net/allposts/operations/comp-reg/eu-payment-providers-grapple-with-two-factor-authentication-requirements/

Digital payments in the European Union will soon require an extra step to verify the identity of the purchaser, and banks are trying to figure out a way to not create too much of a burden for the consumer. Banks, merchants and payment providers need to comply with the EU’s new authentication requirements for e-commerce …Read More

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https://bankinnovation.net/allposts/operations/comp-reg/eu-payment-providers-grapple-with-two-factor-authentication-requirements/

Capital One: Pressure from non-banks is hurting commercial lending

https://bankinnovation.net/allposts/biz-lines/lending/capital-one-pressure-from-non-banks-is-hurting-commercial-lending/

Capital One‘s commercial lending business is facing price pressure from a saturated market of lenders, including non-banks, that are pushing interest rates down. 

“Increasing competition from non-banks continues to drive less favorable terms in the commercial lending marketplace,” CEO Richard Fairbank told investors on Thursday.

Capital One isn’t alone in facing this pressure in the commercial lending market. In effect, all large banks that lend to businesses face pressure because of heightened competition, said Aite Group senior analyst David O’Connell. “There are too many institutions and too much capital chasing too few borrowers that is driving interest rates down,” he added.

As online lenders like BlueVine, Kabbage and OnDeck grow their customer bases, banks are looking for new ways to to reach this market. Capital One is achieving this goal partly by way of acquisition. In June, the company acquired BlueTarp, a Portland, Oregon-based business-to-business credit company. BlueTarp provides clients instant decisions and lines of credit of up to $1 million. The acquisition was aimed at expanding Capital One’s commercial loan servicing capabilities and offerings, including risk management, technology and information security.

Capital One also lends to businesses through its commercial card business, including its line of Spark-branded small business credit cards. The bank recently told Bank Innovation that middle-market companies, or those between $10 million and $500 million in annual revenue, could be a $5 trillion business opportunity for Capital One. Raj Dutt, head of product strategy for commercial cards at Capital One, said the bank also was using data analytics tools to differentiate from competitors.

 Suman Bhattacharyya contributed to this report.

https://bankinnovation.net/allposts/biz-lines/lending/capital-one-pressure-from-non-banks-is-hurting-commercial-lending/

Truist, the combined BB&T-SunTrust bank, looks to defend its turf

https://bankinnovation.net/editorial/carousel/truist-the-combined-bbt-suntrust-bank-looks-to-defend-its-turf/

BB&T isn’t worried about losing market share during its pending merger with SunTrust Banks to form Truist Financial, nor is it worried about the combined bank’s name, which has come under no shortage of scrutiny. That’s according to BB&T CEO Kelly King, who will be CEO of Truist once launched.

Truist, which will be headquartered in Charlotte, will have about $440 billion in combined assets. Although it would be the largest bank merger since the Great Recession, King pointed out the combined bank still will be only about 20% of the size of each of the largest U.S. banks.

King is confident about Truist’s projected $1.6 billion of net cost synergies and savings after investments that the bank will make back in the business on technology and innovation. “We think we’ll be best-in-class in terms of efficiency,” he said in BB&T’s second-quarter earnings call Thursday. “We don’t want to project it because we’re very conservative, but there will be clear revenue synergies out of this, so this is going to be a really high-performance company.”

While King acknowledged some local and regional banks are vying for BB&T’s and SunTrust’s existing customers, he said he’s confident the two companies can hold onto their client base by retaining customer-facing employees. The banks also have touted plans to use cost savings from synergies to invest heavily in innovation.

Nonetheless, Truist faces competition. Minneapolis-based U.S. Bank, for example, is expanding into targeted communities — including Charlotte — with a “digital-first, branch-light” strategy to reach existing customers who already carry products from U.S. Bank in their wallets but lack a full banking relationship.

Similarly, Memphis-based First Horizon National is aiming for $50 million in cost savings in 2019, with $20 million to be reinvested in a customer experience transformation effort, according to that bank’s second-quarter earnings slides. Among First Horizon’s strategic objectives is “dominate Tennessee,” where BB&T and SunTrust both have a significant footprint.

Also see: BB&T-SunTrust Faces Daunting Tech Integration After $66 Billion Merger

According to King, the systems integration planning for Truist is on track. “Historically, when we’ve done small acquisitions, it’s kind of like a ‘one weekend big bang’ where you can do everything,” he said. “This likely won’t be that.” He predicted it will be up to an 18-month process, during which the combined bank will upgrade all of its systems state by state over the course of months or business by business across all states over the course of months.

King also took the opportunity to defend the name choice of Truist for the combined bank. “We wanted a name that speaks to the essence of the companies but reflects a go-forward mentality in terms of growing with our clients, helping our communities become better places and, of course, doing a really good job for our shareholders and our associates,” he said.

A hearing between the banks and the U.S. House Committee on Financial Services on the proposed merger is scheduled for July 24.

https://bankinnovation.net/editorial/carousel/truist-the-combined-bbt-suntrust-bank-looks-to-defend-its-turf/

Bankers prepare for GDPR-type regulations to take hold in the US

https://bankinnovation.net/allposts/operations/comp-reg/bankers-prepare-for-gdpr-type-regulations-to-take-hold-in-the-us/

The GDPR bogeyman is now preoccupying bankers in the U.S.

The EU’s General Data Protection Regulation (GDPR), which took effect in May of last year, gives customers the right to know what data institutions keep about them, the right to demand that institutions delete personal data and the right to be forgotten. So far, it’s only affecting U.S. banks that do business in the EU, but U.S. banks and financial services companies are coming to terms with the fact that similar regulations likely will take effect on their home turf.

“We have institutions and advisers having a debate about this,” said Bob Miller, vice chairman and CEO of Private Client Resources, a company that offers wealth aggregation and data management solutions for private banks, advisers and trust companies. “They are doing the right thing because of the inevitability of GDPR-like legislation here in the U.S.” Miller spoke as part of SourceMedia’s InVest event in New York this week.

A customer’s personal financial data is the cornerstone of any relationship a bank or financial company has with its clients. Bankers increasingly are looking to drive more revenue from customers through insights and product suggestions, but the use of personal data brings forth questions of how to use data in a transparent way and still hold the confidence of the customer.

For U.S. Bank, the customer’s need to know is crucial. “Monetizing data inherently is not a problem,” said Timothy Nagle, chief privacy officer and associate general counsel at U.S. Bank. “Basically, it is done to derive insight and understand trends so that we can develop products and services for customers to better anticipate their needs. Have we fully disclosed what we’re collecting and how we’re using it? Does the customer feel they have control over how we’re using that data and that we’re using that data responsibly?”

Essentially, customers need to know what happens to their data, said Philip Watson, head of the global investment lab and chief innovation officer at Citi Private Bank. “Clients want to be safe and understand how the company they’re operating with [is using the data], what are the controllers of the data and how processors of the data are going to use their data,” he added.

Despite customer concerns around data privacy, the unique aspect of financial services is that the quality and relevance of advice institutions offer customers is based how much data customers share with their financial services provider, explained Lowell Putnam, head of partnerships at Plaid. As a result, regulatory requirements like the GDPR can be seen as new lever to build trust with customers, he noted.

“Financial institutions touch the most intimate parts of our lives and yet basically have the lowest brand integrity,” Putnam said. “We can view privacy as an opportunity to try and build more trust and rebuild all of our brands.”

https://bankinnovation.net/allposts/operations/comp-reg/bankers-prepare-for-gdpr-type-regulations-to-take-hold-in-the-us/

INV Fintech accelerator signs up BMO Harris Bank

https://bankinnovation.net/editorial/carousel/inv-fintech-accelerator-signs-up-bmo-harris-bank/

INV Fintech has secured BMO Harris Bank as a member of its accelerator and technology innovation platform, INV announced today. INV Fintech, the sister accelerator to Bank Innovation, fosters innovation through information sharing, relationship building and collaborations between startups and financial institutions.

“We look forward to collaborating with BMO as we work with the next generation of innovators,” said Rodrigo Suarez, principal of INV Fintech. “The bank’s support for the program and its interest in collaborating with participants is perfectly aligned with our core objectives.”  

A Chicago-based subsidiary of Bank of Montreal, BMO Harris, the 27th-largest bank in the nation with $109 billion of assets, has been working with early and late-stage startups through partnerships with accelerators and direct relationships. It recently announced a small business-focused challenge with DMZ in Toronto and expanded its innovation program with Chicago’s 1871 Center for Technology and Entrepreneurship 

“We value fintech and big tech partnerships as a source of innovation, a catalyst for improving our customer experience and a pillar for open banking,” said Ben Schack, head of US digital partnerships at BMO. “We’re excited to join INV Fintech to broaden our reach and exposure to innovative startups. We hope to add value to the INV Fintech ecosystem by providing expertise and support to the companies that participate in the program.” 

Currently halfway through its seventh class, INV Fintech has helped more than 50 fintech startups grow their businesses and pursue partnership opportunities with financial institutions and technology companies. BMO joins Fiserv, TIAA, BB&T and other corporate members of INV Fintech’s accelerator program.

Click here for more on INV Fintech. Startups should apply here. 

https://bankinnovation.net/editorial/carousel/inv-fintech-accelerator-signs-up-bmo-harris-bank/

eBay accelerates payments push

https://bankinnovation.net/allposts/biz-lines/payments/ebay-accelerates-payments-push/

eBay is pushing forward with efforts to move payments in-house instead of relying on PayPal. The company is taking a staged approach to its payments product launch with the goal to reach full rollout by 2020, a move that will let the company take control of the user experience, grow revenue and reduce overhead costs …Read More

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https://bankinnovation.net/allposts/biz-lines/payments/ebay-accelerates-payments-push/

BNY Mellon to increase tech spend as cost savings materialize

https://bankinnovation.net/editorial/carousel/bny-mellon-to-increase-tech-spend-as-cost-savings-materialize/

Bank of New York Mellon expects to continue pouring money into technology in search of efficiencies for the foreseeable future, executives indicated during the bank’s second-quarter earnings call on Wednesday. In 2018, the bank increased what it spends on technology and product development from about $2.4 billion to $2.75 billion, and it is poised to spend about $3 billion this year, which is still far below the $11.5 billion JPMorgan Chase has consistently spent on technology in recent years.

BNY Mellon has focused its investments on hardware and software for new and existing infrastructure, which include building a new data center and improving existing data centers; consolidating custody platforms; redesigning the client portal to offer improved customer experiences across all devices; building a wealth management platform with self–service capabilities across investments and banking; and building and improving ETF servicing infrastructure.

Also see: What BNY Mellon Seeks in a Fintech Partner

Despite significantly increasing investment in technology, the bank’s overall expenses were down 4% quarter-over-quarter. “We’re being very judicious and ruthlessly prioritizing investments while also benefiting from our continued progress in increasing our underlying efficiency,” BNY Mellon CEO Charlie Scharf said. Meaningful opportunities to reduce expenses remain, he noted, adding that the bank already has reduced layers of management, trimmed down employee count and locations, and automated processes like clearing and settling transactions. He said the bank is expecting efficiencies to continue to offset expenses over at least the next couple of quarters, but stressed that the bank’s technological transformation will be a “multi-year journey.”

In his March 2019 letter to shareholders, Scharf wrote that automation “removes the possibility for human error and allows us to perform tasks on a much timelier basis and less expensively.” He said the same is true for management processes. “Removing unnecessary processes reduces our cost and generally will lead to better and more timely answers, which allow us to be more responsive to our clients,” he added. “There’s no doubt that the tech spend should become more efficient as time goes on.”

BNY Mellon’s market cap is $41.3 billion. Its stock was trading up around 2.7% as of 12:30 p.m. ET on Wednesday.

https://bankinnovation.net/editorial/carousel/bny-mellon-to-increase-tech-spend-as-cost-savings-materialize/

Varo files FDIC application, announces $100m Series C funding

https://bankinnovation.net/allposts/operations/cap-fund/varo-files-fdic-application-announces-100m-series-c-funding/

Varo Money, the 4-year-old digital banking startup with 750,000 users and $600 million in deposits, has applied for a banking license with the Federal Deposit Insurance Corporation (FDIC) this week. The company confirmed this development as part of a $100 million Series C fundraising round announced on Tuesday. This is Varo’s second application for an …Read More

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https://bankinnovation.net/allposts/operations/cap-fund/varo-files-fdic-application-announces-100m-series-c-funding/

BofA: Zelle peer-to-peer transaction volume grows by 79%

https://bankinnovation.net/allposts/biz-lines/payments/bofa-zelle-peer-to-peer-transaction-volume-grows-by-79/

Consumers who send money to family and friends are converting to digital peer-to-peer payments in droves, if Bank of America’s Zelle numbers are to be believed.

The bank-owned the peer-to-peer payments network, which launched as a brand in 2017, is growing in adoption, despite the continued popularity of third-party apps like PayPal-owned Venmo and Square’s Cash app. According to BofA’s second-quarter earnings report, customers made 69 million Zelle peer-to-peer transactions, with a payment volume of $18 billion, during the quarter — a 79% increase in payment volume year-over-year and a 260% increase since 2017.

BofA Zelle transactions, 2Q2019

Despite the uptick in peer-to-peer payments, whether Zelle numbers can be compared to third-party apps like Venmo or Cash is still the subject of debate. “A lot of BofA’s Zelle volume is simply a migration of existing account-to-account transfers to Zelle,” said Ron Shevlin, research director at Cornerstone Advisors. “I doubt any of this volume reflects a shift from Venmo or Square to Zelle.”

BofA’s Zelle payments push is one component of the bank’s bigger digital strategy, which is generating strong user growth. The bank has steadily moved transactions, which used to occur in branches, to its app with the help of intelligent assistant Erica and other features, including digital card issuance capabilities.

The bank’s active mobile and digital user numbers, which were part of the company’s second quarter earnings report, appear to indicate that consumers are responding positively. At 27.8 million, the bank’s active mobile banking user numbers grew 10% since the same period last year, while active digital banking customer numbers (which includes desktop mobile banking) grew more modestly by 4% to 37.3 million users.

With the shift to digital, however, BofA has been careful not to alienate customers who prefer to go to branches, and its customers have the ability to book in-person appointments through the app. “We have to be both high touch and high tech,” Lee McEntire, senior vice president of investor relations at the bank, told investors on Wednesday’s earnings call. “Customers want both physical and digital access.” By way of illustration, the bank highlighted that, in the second quarter, customers used digital channels (both desktop and mobile) to plan 583,000 in-person appointments in branches — up 10% year-over-year.

Looking ahead, BofA is leaning into its growing millennial customer segment, which it said now stands at 16 million. “Millennials are very important for our growth, and they hold nearly $200 billion in deposits and investments with us,” McEntire noted.

https://bankinnovation.net/allposts/biz-lines/payments/bofa-zelle-peer-to-peer-transaction-volume-grows-by-79/

Fintech Unfiltered: Huddl’s Corliss on his move from big finance to startup

https://bankinnovation.net/allposts/innovation/startups/no-hoodies-or-garages-huddls-corliss-on-his-move-from-big-finance-to-startup/

At first glance, Stephen Corliss, whose resume includes senior roles at Blackrock and UBS, seems an unlikely candidate to lead a startup. But Corliss, 50, wants to use his experience from the world of big finance to help solve problems for customers of more modest means.

Corliss’ first foray into the startup arena took shape in 2015, when he founded a cryptocurrency company called Koinify. His latest venture is a social investing platform called Huddl, which will launch in August.

Huddl, which took 10 months to develop, allows people to invest with family and friends in products typically available to the wealthy, such as private equity, real estate and hedge funds. Users can invest anonymously with other users, pooling their money to invest in these expensive products. Huddl also will partner with Radius Bank to feature a high-yield savings account.

In this episode of the Fintech Unfiltered podcast, Corliss talks about why he moved from a traditional finance background to consumer-facing fintech.

Listen to the full podcast with Corliss here:

https://bankinnovation.net/allposts/innovation/startups/no-hoodies-or-garages-huddls-corliss-on-his-move-from-big-finance-to-startup/

How Chinese ride-hailing app Didi is growing its financial services offering

https://bankinnovation.net/2019/07/how-chinese-ride-hailing-app-didi-is-growing-its-financial-services-offering/

Didi Chuxing, the China-based ride-hailing company with global reach, is offering bank accounts with prepaid debit cards to drivers in Brazil and Mexico. The company launched the offering on Wednesday in both countries as a means to build a financial services ecosystem for its drivers. Didi joins other ride-hailing services like Uber and Lyft that …Read More

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https://bankinnovation.net/2019/07/how-chinese-ride-hailing-app-didi-is-growing-its-financial-services-offering/

Goldman invests $28m in German savings and investments firm Raisin

https://bankinnovation.net/2019/07/goldman-invests-28m-in-german-savings-and-investments-firm-raisin/

Raisin executives (from left to right) Frank Freund, Tamaz Georgadze and Michael Stephan

Berlin-based savings and investment startup Raisin landed a $28 million investment from Goldman Sachs on Tuesday to fuel its expansion plans, product roadmap and acquisitions strategy. The funding is part of Raisin’s Series D round, bringing its total amount raised to $220 million. Frank Freund, the company’s chief financial officer, said the investment will help …Read More

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https://bankinnovation.net/2019/07/goldman-invests-28m-in-german-savings-and-investments-firm-raisin/

JPMorgan Chase’s Dimon: Finn app was not a failure

https://bankinnovation.net/2019/07/jpmorgan-chases-dimon-finn-app-was-not-a-failure/

JPMorgan Chase‘s now-defunct millennial-focused banking app, Finn, was not a failure, CEO Jamie Dimon said Tuesday during the bank’s second-quarter earnings call. The bank had pulled the plug on the digital-only offering in June, just a year after its launch, and rolled some of Finn’s most popular features into Chase’s main mobile banking app.

Specifically, Dimon said the bank learned how to conduct digital account openings through Finn and that the process was shaved down to just a few minutes. CFO Jennifer Piepszak added that 25% of new account openings at Chase are now digital signups rather than through a bank branch. The bank reported it has opened 2 million accounts digitally.

“We don’t look at those kinds of things like failures at all,” Dimon said. “That is how you learn. [Founder and CEO of Amazon] Jeff Bezos will tell you mistakes are good, mistakes are what make you smarter and better, and so I hope we make some really good mistakes that can teach us in all our businesses at some point.”

Despite shutting down Finn, the bank had 35.4 million active mobile users as of 2Q19, up 12% year-over-year, according to the earnings report.

Asked by an analyst whether the bank’s legacy platform is a hindrance to innovation or if the problem is overhyped, Dimon replied, “The hype has been around now for the better part of a decade, and we seem to be doing fine.” He acknowledged that legacy platforms often need to be fine-tuned — to become cloud-eligible, for example — in order to take advantage of efficiencies that reduce errors and bring down costs.

Dimon said the bank runs up to 7,000 applications with numerous digital platforms built around the legacy system and that the bank can now modify things in days and weeks versus the months and years it used to take. “Those numbers are factored into our tech spending,” he said, adding he expects spending to remain in the neighborhood of $11.5 billion next year, similar to previous years.

“We have to spend to win in this business,” Dimon said. “We have to continue investing in technology, and we’re going to do it regardless of the environment.” Piepszak added that the bank is still “in the early innings” in terms of artificial intelligence, machine learning and the cloud.

Also see: What Dimon’s Shareholder Letter Reveals About JPMorgan’s AI Approach

With regards to Facebook and its launch of Libra, Dimon said the social media giant’s digital currency is not a short-term concern. “We’re going to be talking about Libra three years from now,” he said. “I wouldn’t spend too much time on it.”

Regulators need to ensure a level playing field, where efforts like Libra will conform to the same anti-money laundering rules as traditional institutions, Dimon noted. The Senate Banking Committee was holding hearings on the proposed cryptocurrency on Tuesday.

While addressing Libra, Dimon said blockchain has been talked about for close to seven years, but “very little” has happened. Asked a follow-up question about JPM Coin, the bank’s digital coin that will allow for instant transfers of payments over a blockchain network, Dimon clarified, “We think blockchain is real.” He noted, however, there are barriers to adoption because of the complexity of the protocols and the amount of code involved in getting online. Still, he said the bank is “optimistic” about the technology’s potential.

On outreach to underbanked customers, Dimon pointed to the bank’s Secure Banking program, which launched in March and offers a low monthly fee and no overdraft fees, along with access to Chase branches, ATMs and digital tools. He also touted the benefits of the Zelle peer-to-peer payments service.

“Fintechs, of course, all these places try to eat your lunch,” Dimon said. “I think that’s good. That’s called American capitalism, and we have to stand on our toes to compete — and we are.”

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https://bankinnovation.net/2019/07/jpmorgan-chases-dimon-finn-app-was-not-a-failure/

VibePay wants to build a safer version of Venmo and Zelle for UK customers

https://bankinnovation.net/2019/07/vibepay-wants-to-build-a-safer-version-of-venmo-and-zelle-for-uk-customers/

Vibepay, a peer-to-peer payments app that recently received regulatory approval to operate in the U.K., wants to build a more secure version of popular P2P apps like Venmo and Zelle through additional checks. The app is slated to launch in September. Unlike popular U.S. peer-to-peer payment apps, Luke Massie, VibePay’s founder, said the company has …Read More

https://bankinnovation.net/2019/07/vibepay-wants-to-build-a-safer-version-of-venmo-and-zelle-for-uk-customers/

Amazon uses Prime Day to promote Amazon Pay on third-party sites

https://bankinnovation.net/2019/07/amazon-uses-prime-day-to-promote-amazon-pay-on-third-party-sites/

Amazon is using Prime Day to nudge more customers to use its own digital payment method on partner retailers’ websites, and it’s using juicy incentives of up to 30% cash back to do so.

Prime Day, Amazon’s annual discount event for Prime members, currently is underway through July 16. With an engaged audience eagerly seeking to spend money, the e-commerce behemoth is using the opportunity to promote the use of Amazon Pay. Amazon Pay lets customers use payment methods associated with their Amazon accounts for goods and services on third-party websites and apps, as well as through voice assistant Alexa.

Amazon did not respond to a request for comment, but industry observers argue the incentives are a vehicle to encourage more customers change their default payment behaviors on e-commerce platforms and think of Amazon Pay as a viable payment method. It also helps Amazon Pay get a leg up on competition.

“The incentives underline the fact that Amazon is much more than just a retailer and is using Prime Day to activate other parts of the business, including payments,” said Neil Saunders, managing director of consultancy GlobalData Retail. “The payments space is very crowded, and Amazon has to give consumers a positive reason to use [Amazon Pay].”

Once a customer makes a purchase on an eligible third-party e-commerce site, cashback incentives are made available through top-ups to customers’ Amazon gift card balances. The cashback incentives are offered on more than 35 e-commerce sites, including large brands like Vineyard Vines, Chico’s and Brooklinen. Cashback rewards are only available on retailers’ e-commerce sites and not on their Amazon.com storefronts, a move designed to help improve Amazon Pay’s brand recognition among customers.

“Attaching Amazon Pay to some better-known brands is a good way to provide an awareness boost to help drive adoption,” said Andrew Lipsman, retail and e-commerce analyst at eMarketer. “It also sends a message to other e-commerce retailers that integrating Amazon Pay could be a path to more conversions.”

Over the past year, Amazon Pay has been on a path to increase its reach beyond Amazon’s ecosystem. In March, the company entered into a partnership with Worldpay, a company that works with 1.1 million merchants across the U.S. It’s also noted in previous job postings that it has ambitions to position the payment tool alongside heavyweights like PayPal.

Since user adoption will continue to be a hurdle for Amazon Pay, rewards can help the payment tool acquire more users. “The incentives suggest the challenges of changing the habits of customers,” said David True, partner at Paygility Advisors. “If you shop often enough at a merchant that you have a card on file or if you use PayPal, there is no incremental benefit, so you need to provide one.”

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https://bankinnovation.net/2019/07/amazon-uses-prime-day-to-promote-amazon-pay-on-third-party-sites/

Mobile adoption jumps at Citi

https://bankinnovation.net/2019/07/mobile-adoption-jumps-at-citi/

Citibank is reporting strong mobile user growth.

Citi mobile app interface

In a second-quarter earnings call today, the bank reported active mobile users grew 12 percent year-over-year for North America customers (11.4 million users) and 39 percent for its international customers (8.9 million users). Meanwhile, online banking grew more modestly, with a 6% increase for North America customers (18.8 million users) and 21 percent for international customers (11.6 million users.)

Bob Meara, senior analyst at Celent, told Bank Innovation that Citi’s slower growth in online users is unsurprising, given the growth of mobile as a channel. “There is very little growth in online banking utilization because, after 20 years, most everyone who would adopt online banking already has,” he said. “Mobile’s growth gets diluted in active digital customer numbers.”

While increasing the number of mobile users is a top priority for Citi, the bank also needs to continue to engage existing mobile clients through added features like personal finance management and predictive analytics, Meara noted. In the U.S., Citi lags behind other large banks in mobile user numbers, with JPMorgan Chase last year reporting 33.3 million active mobile and Bank of America and Wells Fargo reporting 26 million and 22.8 million, respectively, for the same time period.

Citi reported quarterly revenues of $18.8 billion, up 2% year-over-year. Net income for the quarter was $4.8 billion, up 7% year-over-year.

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https://bankinnovation.net/2019/07/mobile-adoption-jumps-at-citi/

Chase launches digital investment solution to compete with robo-advisers

https://bankinnovation.net/2019/07/chase-launches-digital-investment-solution-to-compete-with-robo-advisers/

JPMorgan Chase has rolled out a digital investment product that will help grow its relationships with the 60 million-plus U.S. households it counts as customers.

You Invest Portfolios, which launched this week, is a mix of J.P. Morgan ETFs that balance risk and returns based on customer preferences. It’s aimed at digitally active customers who can use Chase’s website and app to set up their portfolios and manage them. According to Chase, differentiators include the ability to talk to humans at Chase branches and a transparent fee of 35 basis points, with all other associated fees waived. Customers must put down a minimum of $2,500.

You Invest Portfolios builds on You Invest Trade, a digital brokerage product that Chase launched last August. “What we found with You Invest Trade is that most of the customers who have opened accounts are some of our most digitally active customers across the Chase platform,” said Jed Laskowitz, CEO of You Invest at JPMorgan Chase. While You Invest Trade customers typically have some investing experience, You Invest Portfolios aims to reach customers who have another banking relationship with Chase and who are relatively new to investing, he explained.

Jed Laskowitz, CEO of You Invest

Chase wants to tap into a customer base that would consider You Invest Portfolios in part due to the ease of setting an account up and managing it through the bank’s app. Among customers who opened accounts on You Invest Trade, the bank found that 90 percent of them had never invested with Chase before. It’s evidence of an untapped opportunity for the bank to grow You Invest customer acquisition among its existing group of customers.

“With You Invest Portfolios, we’re really focused on customers who could be starters of any age,” Laskowitz said. “We’ve created content that helps support those types of investors in our learning and insights portal.”

After answering a questionnaire about risk tolerance, clients are placed in one of four model portfolios. Despite the self-service nature of the product, customers can seek additional help from Chase staff members at bank branches.

Chase joins other large banks that are competing with digital-only robo-advisers through added services and the active involvement of humans. It’s similar to Bank of America‘s approach to its recently launched human-digital financial advisory product. “We’re using technology to scale the delivery of our expertise, but our portfolios are very much managed and constructed by people,” Laskowitz noted.

JPMorgan Chase’s foray into managed digital investment advisory services is an important event for the industry, noted Alios Pirker, research director at Aite Group. “It’s a big event in the evolution of the robo space because of the size of JPMorgan Chase – it has a massive credit card portfolio, it has mortgages as well and it can reach a broad spectrum of consumers.”

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Standard Chartered adds mobile banking to social media platforms

https://bankinnovation.net/2019/07/standard-chartered-adds-mobile-banking-to-social-media-platforms/

Standard Chartered customers can now do their mobile banking through social media platforms. Starting this month, the London-based company is letting customers in Botswana, Zambia and Zimbabwe transfer money to friends, view account balances and pay bills through social media platforms, including Facebook Messenger and WhatsApp. In a move reminiscent of Chinese apps Alipay and …Read More

https://bankinnovation.net/2019/07/standard-chartered-adds-mobile-banking-to-social-media-platforms/