Banking Exchange sat down with industry leading CEO John Baird, head of Vouched, and discussed the future of the Banking Industry. This article is the first of a four-part series.
As a leading provider of AI-powered identity verification technology for the financial services industry, CEO of Vouched John Baird has seen major changes in banking and technology over the past couple of years - especially as the landscape of lending has changed. Baird said, “Certainly, we have seen a big switch: banks were very focused on providing loans for a long time and then, suddenly, the banks needed deposit revenue. The focus became much more about providing easier, more frictionless account opens. I think that will be an ongoing challenge, especially for traditional banks that expect users to continue to come into the bank. Physical locations aren’t going away, but the value of the branch is declining.”
Interest rates and lending is not the only major change. “Consumers today do not adhere to the traditional profile that banks and their businesses are accustomed to interacting with,” he said. “This is definitely a place where the fintechs and the neo banks have an edge because they have thought long and hard about how to provide an enjoyable user experience - to be able to serve that user quickly and with minimum friction. It becomes incumbent upon every bank to think this way because digital will continue to become more important.”
One of the big challenges he sees for banks is onboarding new customers. The onboarding process has been a struggle for every size bank, due in part to the ongoing risk of fraud measured against demand from consumers for a great user experience. Baird said, “The onboarding experience is often extremely onerous. We’ve seen banks with user completion rates that are as low as two percent. While that’s an extreme example, it’s fair to say that many banks push customers away. These are the people that want to do business with you. They are saying, ‘I want to sign up. I want to give you my money.’ But you're making them jump through so many hoops that they give up.”
Baird is actually quite bullish, however, on the potential upside for community banks when it comes to technology, not just for fraud prevention but to expand their businesses. He explained, “You have these amazing community banks with two to ten billion dollars of assets that have been around for decades. Rather than being threatened by digital banking, they can be leading it. They have the ability to be the next Paypal, elevating their local communities with jobs, talent and economic dynamism. It also benefits the entire country to have economic powerhouses distributed locally, rather than being concentrated on the coasts.”
“I grew up in a small town in Missouri, and it’s discouraging to read the news about dwindling small-town populations. Community banks can help reverse that trend.”
Baird strikes a far more optimistic tone than the mainstream reporting that focuses on the dangers of community banks becoming extinct. “Technology is much more nimble today than it was even a decade ago. The cost of implementation and use has gone down significantly and those costs will continue to fall. Community banks have the opportunity to become the leaders. Consumers are hungry for it.”
He emphasizes that there are powerful tools, like Vouched, that banks can begin using today that power better, safer onboarding. “When examining a user, one element that gets overlooked is the ability to have a multivariate evaluation of the consumer that is lightweight at the front door and then dynamically ratchets up as risk signals increase. We make this multivariate examination easy to use. Some of our banking customers have less than $500 million in assets. Any bank can do this.”
In the next article, John Baird, CEO of Vouched, will drill down into more specifics about fraud prevention, onboarding and leading technology for the banking industry.
Originally published on Banking Exchange. For more details, visit the source.