{ "version": "https://jsonfeed.org/version/1.1", "user_comment": "This feed allows you to read the posts from this site in any feed reader that supports the JSON Feed format. To add this feed to your reader, copy the following URL -- https://www.pymnts.com/category/digital-first-banking/feed/json/ -- and add it your reader.", "next_url": "https://www.pymnts.com/category/digital-first-banking/feed/json/?paged=2", "home_page_url": "https://www.pymnts.com/category/digital-first-banking/", "feed_url": "https://www.pymnts.com/category/digital-first-banking/feed/json/", "language": "en-US", "title": "Digital-First Banking Archives | PYMNTS.com", "description": "What's next in payments and commerce", "icon": "https://www.pymnts.com/wp-content/uploads/2022/11/cropped-PYMNTS-Icon-512x512-1.png", "items": [ { "id": "https://www.pymnts.com/?p=2065308", "url": "https://www.pymnts.com/digital-first-banking/2024/ncino-international-banks-lag-u-s-peers-in-digital-transformation/", "title": "nCino: International Banks Lag U.S. Peers in Digital Transformation", "content_html": "

Digital transformation can come even to industries where change happens slowly.

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As the financial services industry grapples with the rapid pace of digital transformation, cloud banking has emerged as an enabler of innovation, agility and cost efficiency. By leveraging cloud computing, financial institutions can streamline operations, enhance customer experiences and accelerate the development of new products and services.

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That\u2019s the space where software providers like nCino, which on Tuesday (Aug. 27) reported its second quarter 2025 earnings, play \u2014 giving them a unique insight into the banking sector\u2019s ongoing evolution.

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\u201cIn the U.S. it\u2019s a volume business; we don\u2019t see as many very large transformation initiatives as we did in the past \u2026 in the EU, it is lumpy. They are somewhat behind the U.S., and the pipeline is seeing bigger transformation deals,\u201d said Pierre Naud\u00e9, chairman and CEO at nCino.

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nCino sells to financial institutions, enterprise banks, regional banks, community banks and credit unions, and the majority of its revenue comes from the U.S.

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\u201cPlatform deals, where they buy everything from us, that moves the needle,\u201d Naud\u00e9 said. \u201cIn Europe, they prefer point solutions.\u201d

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nCino\u2019s total revenues for the second quarter were $132.4 million, a 13% increase from $117.2 million reported for the same quarter last year. Subscription revenues for the second quarter were $113.9 million, up from $99.9 million one year ago, an increase of 14%, per the company\u2019s financials.

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Still, nCino\u2019s share price slid by over 10% during after-hours trading, in part driven by its softer-than-expected third-quarter 2025 guidance.

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The company reported a loss of $11 million for the most recent quarter, compared to $15.9 million a year ago.

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Related reading: nCino Unveils AI-Powered Banking Advisor

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Demand for Cloud Banking and Artificial Intelligence \u00a0

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The cloud accelerates innovation by providing financial institutions with access to advanced technologies such as artificial intelligence (AI), machine learning (ML) and big data analytics. These tools enable banks to develop personalized customer experiences, improve risk management and optimize business processes.

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During the quarter, nCino expanded its partnership with ABN AMRO, a top 25 European bank, and also renewed its relationship with a Top 5 European bank for an additional three years. An institution with over $20 billion in assets also became the largest bank by asset size to expand their use of the nCino platform to include portfolio analytics for commercial real estate stress testing.

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\u201cWe are pleased to report that we again exceeded quarterly guidance for total and subscription revenues as well as non-GAAP operating income,\u201d Naud\u00e9 said. \u201cIn the second quarter, we saw particular strength in the U.S. across both the enterprise and community & regional segments, with increased demand for solutions that span the breadth of the nCino platform including consumer lending and deposit account opening, as well as our Generative AI offering, Banking Advisor. While some macro-economic challenges persist, particularly in the U.S. mortgage market and international markets, we have a positive outlook on the second half of the year.\u201d

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Read more: Payments Execs Debate Banking\u2019s Transformative Future

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PYMNTS Intelligence found that nearly 70% of consumers in the U.S. and Australia would like to have a single app that would allow them to manage their banking, investments and various shopping activities.

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As digital transformation becomes a strategic priority for financial institutions, the adoption of cloud banking is expected to accelerate. Cloud banking enables financial institutions to expand their operations into new markets by reducing the barriers to entry, such as the need for physical branches and local IT infrastructure. This is particularly relevant in emerging economies, where digital banking adoption is on the rise.

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\u201cThe community bank space is like a machine; it just rolls forward,\u201d Naud\u00e9 said.

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Data in the report\u00a0\u201dHow FinTechs Can Align With Credit Union Innovation Agendas,\u201d a\u00a0PYMNTS Intelligence\u00a0and\u00a0Velera (formerly PSCU/Co-op Solutions) collaboration, reveals that the pace of innovation across credit unions (CUs) has resulted in almost all FinTechs viewing CUs as collaborators more than competitors.

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Only 3% of FinTechs say CUs are more competitors than clients.

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For all PYMNTS digital transformation coverage, subscribe to the daily\u00a0Digital Transformation Newsletter.

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The post nCino: International Banks Lag U.S. Peers in Digital Transformation appeared first on PYMNTS.com.

\n", "content_text": "Digital transformation can come even to industries where change happens slowly.\nAs the financial services industry grapples with the rapid pace of digital transformation, cloud banking has emerged as an enabler of innovation, agility and cost efficiency. By leveraging cloud computing, financial institutions can streamline operations, enhance customer experiences and accelerate the development of new products and services.\nThat\u2019s the space where software providers like nCino, which on Tuesday (Aug. 27) reported its second quarter 2025 earnings, play \u2014 giving them a unique insight into the banking sector\u2019s ongoing evolution.\n\u201cIn the U.S. it\u2019s a volume business; we don\u2019t see as many very large transformation initiatives as we did in the past \u2026 in the EU, it is lumpy. They are somewhat behind the U.S., and the pipeline is seeing bigger transformation deals,\u201d said Pierre Naud\u00e9, chairman and CEO at nCino.\nnCino sells to financial institutions, enterprise banks, regional banks, community banks and credit unions, and the majority of its revenue comes from the U.S.\n\u201cPlatform deals, where they buy everything from us, that moves the needle,\u201d Naud\u00e9 said. \u201cIn Europe, they prefer point solutions.\u201d\nnCino\u2019s total revenues for the second quarter were $132.4 million, a 13% increase from $117.2 million reported for the same quarter last year. Subscription revenues for the second quarter were $113.9 million, up from $99.9 million one year ago, an increase of 14%, per the company\u2019s financials.\nStill, nCino\u2019s share price slid by over 10% during after-hours trading, in part driven by its softer-than-expected third-quarter 2025 guidance.\nThe company reported a loss of $11 million for the most recent quarter, compared to $15.9 million a year ago.\nRelated reading: nCino Unveils AI-Powered Banking Advisor\nDemand for Cloud Banking and Artificial Intelligence \u00a0\nThe cloud accelerates innovation by providing financial institutions with access to advanced technologies such as artificial intelligence (AI), machine learning (ML) and big data analytics. These tools enable banks to develop personalized customer experiences, improve risk management and optimize business processes.\nDuring the quarter, nCino expanded its partnership with ABN AMRO, a top 25 European bank, and also renewed its relationship with a Top 5 European bank for an additional three years. An institution with over $20 billion in assets also became the largest bank by asset size to expand their use of the nCino platform to include portfolio analytics for commercial real estate stress testing.\n\u201cWe are pleased to report that we again exceeded quarterly guidance for total and subscription revenues as well as non-GAAP operating income,\u201d Naud\u00e9 said. \u201cIn the second quarter, we saw particular strength in the U.S. across both the enterprise and community & regional segments, with increased demand for solutions that span the breadth of the nCino platform including consumer lending and deposit account opening, as well as our Generative AI offering, Banking Advisor. While some macro-economic challenges persist, particularly in the U.S. mortgage market and international markets, we have a positive outlook on the second half of the year.\u201d\nRead more: Payments Execs Debate Banking\u2019s Transformative Future\nPYMNTS Intelligence found that nearly 70% of consumers in the U.S. and Australia would like to have a single app that would allow them to manage their banking, investments and various shopping activities.\nAs digital transformation becomes a strategic priority for financial institutions, the adoption of cloud banking is expected to accelerate. Cloud banking enables financial institutions to expand their operations into new markets by reducing the barriers to entry, such as the need for physical branches and local IT infrastructure. This is particularly relevant in emerging economies, where digital banking adoption is on the rise.\n\u201cThe community bank space is like a machine; it just rolls forward,\u201d Naud\u00e9 said.\nData in the report\u00a0\u201dHow FinTechs Can Align With Credit Union Innovation Agendas,\u201d a\u00a0PYMNTS Intelligence\u00a0and\u00a0Velera (formerly PSCU/Co-op Solutions) collaboration, reveals that the pace of innovation across credit unions (CUs) has resulted in almost all FinTechs viewing CUs as collaborators more than competitors.\nOnly 3% of FinTechs say CUs are more competitors than clients.\nFor all PYMNTS digital transformation coverage, subscribe to the daily\u00a0Digital Transformation Newsletter.\nThe post nCino: International Banks Lag U.S. Peers in Digital Transformation appeared first on PYMNTS.com.", "date_published": "2024-08-27T19:20:59-04:00", "date_modified": "2024-08-27T19:20:59-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/08/nCino-banking-digital-transformation.jpg", "tags": [ "AI", "artificial intelligence", "banking", "cloud banking", "credit unions", "Digital Banking", "digital transformation", "Earnings", "financial institutions", "machine learning", "nCino", "News", "Pierre Naud\u00e9", "PYMNTS Intelligence", "PYMNTS News", "Digital-First Banking" ] }, { "id": "https://www.pymnts.com/?p=2063457", "url": "https://www.pymnts.com/digital-first-banking/2024/prize-linked-neobank-prizepool-shutters-app-ahead-of-acquisition/", "title": "Prize-Linked Neobank PrizePool Shutters App Ahead of Acquisition", "content_html": "

\u00a0Neobank PrizePool is reportedly shutting down its consumer app amid an acquisition.

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\u00a0That\u2019s according to a report Sunday (Aug. 25) by Fintech Business Weekly, which says that winding down a startup such as PrizePool can be disruptive to customers who have grown to depend on it for important banking tasks like direct deposits and bill pay.\u00a0

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PrizePool has told customers they have until Sept. 19 to move their funds to an outside bank account, the report said, citing an email sent to users. PYMNTS has contacted PrizePool for comment but has not yet gotten a reply.\u00a0

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The report also points out that the prize-linked banking startup had also worked with the \u201ctroubled\u201d Evolve Bank & Trust.

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\u201cThankfully, PrizePool works directly with Evolve and does not appear to have relied on an intermediary platform to support critical tasks like ledgering \u2014 though it is unclear if Evolve\u2019s direct partners suffer from the same kinds of reconciliation challenges exposed by the ongoing meltdown of Synapse,\u201d writes Fintech Business Weekly\u2019s Jason Mikula.

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As PYMNTS has written, Synapse\u2019s troubles began when its company\u2019s largest client, Mercury, chose to work directly with Evolve, Synapse\u2019s core banking partner, thereby removing the need for Synapse as a middleman.

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\u201cThat set off a chain of events, few of them good, for Synapse\u2019s other clients who relied on the FinTech provider as their connective tissue,\u201d that report said.

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Synapse sought bankruptcy protection and, in April, agreed to be acquired by TabaPay, though that deal soon fell apart, leaving thousands of customers from its FinTech partners locked out of their accounts.

\n

Meanwhile, PYMNTS explored the concept of prize-linked savings accounts in a 2023 conversation with Owen Monagan and Oisin Tiernan, co-founders and CEO and CTO respectively of Layup, a challenger bank offering these accounts for sports fans. Tiernan explained it\u2019s a concept that has been around for some time.

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\u201cIt exists in Australia, in South Africa. Over a third of the U.K. population has a premium bond account, which is the prize-linked savings mechanism there,\u201d he said.

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PLSAs came to America 10 years ago with the passage of the American Savings Promotion Act. The variable rate of return of PLSAs has been shown to help low- to middle-income earners save more money while lowering their spending on lottery tickets and other types of gambling.

\n

\u201cLeveraging digital gamification to reinforce positive behaviors, like saving money or not gambling on sports, can do a lot to accelerate the adoption of new behavioral patterns \u2014 including making smarter financial choices,\u201d PYMNTS wrote.

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The post Prize-Linked Neobank PrizePool Shutters App Ahead of Acquisition appeared first on PYMNTS.com.

\n", "content_text": "\u00a0Neobank PrizePool is reportedly shutting down its consumer app amid an acquisition.\n\u00a0That\u2019s according to a report Sunday (Aug. 25) by Fintech Business Weekly, which says that winding down a startup such as PrizePool can be disruptive to customers who have grown to depend on it for important banking tasks like direct deposits and bill pay.\u00a0\nPrizePool has told customers they have until Sept. 19 to move their funds to an outside bank account, the report said, citing an email sent to users. PYMNTS has contacted PrizePool for comment but has not yet gotten a reply.\u00a0\nThe report also points out that the prize-linked banking startup had also worked with the \u201ctroubled\u201d Evolve Bank & Trust.\n\u201cThankfully, PrizePool works directly with Evolve and does not appear to have relied on an intermediary platform to support critical tasks like ledgering \u2014 though it is unclear if Evolve\u2019s direct partners suffer from the same kinds of reconciliation challenges exposed by the ongoing meltdown of Synapse,\u201d writes Fintech Business Weekly\u2019s Jason Mikula.\nAs PYMNTS has written, Synapse\u2019s troubles began when its company\u2019s largest client, Mercury, chose to work directly with Evolve, Synapse\u2019s core banking partner, thereby removing the need for Synapse as a middleman.\n\u201cThat set off a chain of events, few of them good, for Synapse\u2019s other clients who relied on the FinTech provider as their connective tissue,\u201d that report said.\nSynapse sought bankruptcy protection and, in April, agreed to be acquired by TabaPay, though that deal soon fell apart, leaving thousands of customers from its FinTech partners locked out of their accounts.\nMeanwhile, PYMNTS explored the concept of prize-linked savings accounts in a 2023 conversation with Owen Monagan and Oisin Tiernan, co-founders and CEO and CTO respectively of Layup, a challenger bank offering these accounts for sports fans. Tiernan explained it\u2019s a concept that has been around for some time.\n\u201cIt exists in Australia, in South Africa. Over a third of the U.K. population has a premium bond account, which is the prize-linked savings mechanism there,\u201d he said.\nPLSAs came to America 10 years ago with the passage of the American Savings Promotion Act. The variable rate of return of PLSAs has been shown to help low- to middle-income earners save more money while lowering their spending on lottery tickets and other types of gambling.\n\u201cLeveraging digital gamification to reinforce positive behaviors, like saving money or not gambling on sports, can do a lot to accelerate the adoption of new behavioral patterns \u2014 including making smarter financial choices,\u201d PYMNTS wrote.\nThe post Prize-Linked Neobank PrizePool Shutters App Ahead of Acquisition appeared first on PYMNTS.com.", "date_published": "2024-08-25T15:20:39-04:00", "date_modified": "2024-08-25T15:20:39-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/08/Prizepool-logo.jpg", "tags": [ "banking apps", "Connected Economy", "Evolve Bank", "Evolve Bank and Trust", "neobank", "Neobanks", "News", "PLSA", "Prize-linked Savings Accounts", "PrizePool", "PYMNTS News", "Synapse", "What's Hot", "Digital-First Banking" ] }, { "id": "https://www.pymnts.com/?p=2053718", "url": "https://www.pymnts.com/digital-first-banking/2024/exclusive-mercado-pago-ceo-on-building-brazils-biggest-digital-bank/", "title": "Exclusive: Mercado Pago CEO on Building Brazil\u2019s Biggest Digital Bank", "content_html": "

Most countries measure banking activity in terms of where and how it happens. Hence distinctions such as in-branch, ATMs, online and mobile. But in Latin America, for all intents and purposes, there\u2019s only one kind of banking: digital.

\n

It\u2019s reflected in PYMNTS recent \u201cHow The World Does Digital\u201d report that showed Brazil had the highest digital engagement out of the 11 countries surveyed, with mobile banking engaged at least weekly by 63.2% of respondents, with online banking at 59.4%. The rest of the world checked in at 46.8% and 42.4% accordingly.

\n

All of which is music to the ears of Osvaldo Gim\u00e9nez, President-Fintech, MercadoLibre, and CEO of Mercado Pago, Mercado Libre\u2019s financial services unit, accounting for 50 million active users and $50 billion in transaction volume, where he oversees the business strategy, including product development and promotion.

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\n

Mercado Libre is the largest eCommerce and payments ecosystem in Latin America, operating a diversified business model in 18 Latin American countries across financial services, advertising, credit and shipping logistics.

\n

Gim\u00e9nez joined Mercado Pago in 2004 and became president in 2020 after serving as country manager for Mercado Libre in Argentina and launching in Chile, Uruguay and Peru.

\n

\u201cI think that what has happened in Brazil has been amazing,\u201d he told Karen Webster recently. \u201cThe central bank has taken an approach that says, \u2018I\u2019m OK with innovation, and I want to increase competition.\u2019\u00a0In some countries you see that there\u2019s a strong lobby from traditional banks to prevent competition. In Brazil everyone wants a level playing field. They want innovation to happen.\u201d

\n

And Mercado Libre, as well as Mercado Pago, is ready to test that innovative spirit outside of Brazil. The company has bold expansion plans as it looks to become the dominant digital bank in Latin America, including its recent application of a digital banking license in Mexico. What began as an eCommerce platform akin to eBay now challenges traditional banks and drives\u00a0financial inclusion across the continent.

\n

\u201cIf we were to look probably 10 years back and look at how the financial system worked in every country in Latin America, typically you had a very high concentration among five or six banks per country,\u201d Gim\u00e9nez said. This concentration, he argued, led to underserved populations and high margins for banks.

\n

The rise of FinTech companies like Mercado Pago has disrupted this status quo. By leveraging technology, these new players offer competitive products at lower costs, bringing millions of previously unbanked or underbanked individuals into the formal financial system. The transformation is particularly evident in Brazil, where regulatory changes have fostered innovation and competition.

\n

Gim\u00e9nez highlights the impact: \u201cOne statistic that I saw recently was a survey of where financial transactions are initiated in Latin America. Ten years ago, two-thirds of transactions were initiated in financial branches. Right before COVID, in 2019, 50% of transactions were initiated in financial branches. And nowadays it\u2019s single digits.\u201d

\n

This shift toward digital banking is not just about convenience; it\u2019s reshaping the entire financial ecosystem. Mercado Pago, which started as a payment solution for Mercado Libre\u2019s eCommerce platform, has expanded its offerings to include a suite of financial products. From digital wallets and QR code payments to credit services and investment options, the company has become a one-stop shop for financial services.

\n

The evolution of Mercado Pago mirrors the changing landscape of FinTech in Latin America.

\n

\u201cWe started Mercado Libre 25 years ago,\u201d Gim\u00e9nez said. \u201cInitially we wanted to become the eBay of Latin America. We turned into the Amazon of Latin America because we soon realized that new items were more important. And that shipping and payments had to be a significant part of what we offered.\u201d

\n

As smartphones became ubiquitous, Mercado Pago expanded beyond online payments to offline transactions, introducing point-of-sale solutions similar to Square. The company then launched digital wallets and QR code payments, inspired by developments in Asia. The success of this model is evident in the numbers. As Gim\u00e9nez pointed out, over three-quarters of Mercado Pago\u2019s total payment volume now comes from outside Mercado Libre\u2019s eCommerce platform, underscoring its success as a standalone financial services provider.

\n

Central to Mercado Pago\u2019s growth strategy is its ability to offer innovative solutions tailored to local markets. In Brazil, for instance, the company has embraced Pix, the instant payment system introduced by the central bank. Gim\u00e9nez explained, \u201cPix basically is a very easy and convenient way to send money to anyone in Brazil for free. And the growth has been huge.\u201d

\n

The company\u2019s ambitions extend beyond its current offerings. Mercado Pago is now seeking a banking license in Mexico, a move that Gim\u00e9nez says will allow it to \u201ccompete head-on and become the largest digital bank in the region.\u201d This license would enable the company to offer a broader range of services, including salary accounts and deposit-funded lending.

\n

Looking ahead, Mercado Pago has set its sights on expansion across Latin America. While Brazil, Mexico, and Argentina remain its largest markets, the company is making inroads in Chile and has plans for Colombia, Peru, and Uruguay.

\n

\u201cThe way we realize it works is basically pick one of these countries and launch the full suite of products there. And that typically takes a couple of years,\u201d Gim\u00e9nez said.

\n

The post Exclusive: Mercado Pago CEO on Building Brazil\u2019s Biggest Digital Bank appeared first on PYMNTS.com.

\n", "content_text": "Most countries measure banking activity in terms of where and how it happens. Hence distinctions such as in-branch, ATMs, online and mobile. But in Latin America, for all intents and purposes, there\u2019s only one kind of banking: digital. \nIt\u2019s reflected in PYMNTS recent \u201cHow The World Does Digital\u201d report that showed Brazil had the highest digital engagement out of the 11 countries surveyed, with mobile banking engaged at least weekly by 63.2% of respondents, with online banking at 59.4%. The rest of the world checked in at 46.8% and 42.4% accordingly. \nAll of which is music to the ears of Osvaldo Gim\u00e9nez, President-Fintech, MercadoLibre, and CEO of Mercado Pago, Mercado Libre\u2019s financial services unit, accounting for 50 million active users and $50 billion in transaction volume, where he oversees the business strategy, including product development and promotion. \n\nMercado Libre is the largest eCommerce and payments ecosystem in Latin America, operating a diversified business model in 18 Latin American countries across financial services, advertising, credit and shipping logistics. \nGim\u00e9nez joined Mercado Pago in 2004 and became president in 2020 after serving as country manager for Mercado Libre in Argentina and launching in Chile, Uruguay and Peru.\n\u201cI think that what has happened in Brazil has been amazing,\u201d he told Karen Webster recently. \u201cThe central bank has taken an approach that says, \u2018I\u2019m OK with innovation, and I want to increase competition.\u2019\u00a0In some countries you see that there\u2019s a strong lobby from traditional banks to prevent competition. In Brazil everyone wants a level playing field. They want innovation to happen.\u201d\nAnd Mercado Libre, as well as Mercado Pago, is ready to test that innovative spirit outside of Brazil. The company has bold expansion plans as it looks to become the dominant digital bank in Latin America, including its recent application of a digital banking license in Mexico. What began as an eCommerce platform akin to eBay now challenges traditional banks and drives\u00a0financial inclusion across the continent.\n\u201cIf we were to look probably 10 years back and look at how the financial system worked in every country in Latin America, typically you had a very high concentration among five or six banks per country,\u201d Gim\u00e9nez said. This concentration, he argued, led to underserved populations and high margins for banks.\nThe rise of FinTech companies like Mercado Pago has disrupted this status quo. By leveraging technology, these new players offer competitive products at lower costs, bringing millions of previously unbanked or underbanked individuals into the formal financial system. The transformation is particularly evident in Brazil, where regulatory changes have fostered innovation and competition.\n Gim\u00e9nez highlights the impact: \u201cOne statistic that I saw recently was a survey of where financial transactions are initiated in Latin America. Ten years ago, two-thirds of transactions were initiated in financial branches. Right before COVID, in 2019, 50% of transactions were initiated in financial branches. And nowadays it\u2019s single digits.\u201d\nThis shift toward digital banking is not just about convenience; it\u2019s reshaping the entire financial ecosystem. Mercado Pago, which started as a payment solution for Mercado Libre\u2019s eCommerce platform, has expanded its offerings to include a suite of financial products. From digital wallets and QR code payments to credit services and investment options, the company has become a one-stop shop for financial services.\nThe evolution of Mercado Pago mirrors the changing landscape of FinTech in Latin America.\n\u201cWe started Mercado Libre 25 years ago,\u201d Gim\u00e9nez said. \u201cInitially we wanted to become the eBay of Latin America. We turned into the Amazon of Latin America because we soon realized that new items were more important. And that shipping and payments had to be a significant part of what we offered.\u201d\nAs smartphones became ubiquitous, Mercado Pago expanded beyond online payments to offline transactions, introducing point-of-sale solutions similar to Square. The company then launched digital wallets and QR code payments, inspired by developments in Asia. The success of this model is evident in the numbers. As Gim\u00e9nez pointed out, over three-quarters of Mercado Pago\u2019s total payment volume now comes from outside Mercado Libre\u2019s eCommerce platform, underscoring its success as a standalone financial services provider.\nCentral to Mercado Pago\u2019s growth strategy is its ability to offer innovative solutions tailored to local markets. In Brazil, for instance, the company has embraced Pix, the instant payment system introduced by the central bank. Gim\u00e9nez explained, \u201cPix basically is a very easy and convenient way to send money to anyone in Brazil for free. And the growth has been huge.\u201d\nThe company\u2019s ambitions extend beyond its current offerings. Mercado Pago is now seeking a banking license in Mexico, a move that Gim\u00e9nez says will allow it to \u201ccompete head-on and become the largest digital bank in the region.\u201d This license would enable the company to offer a broader range of services, including salary accounts and deposit-funded lending.\nLooking ahead, Mercado Pago has set its sights on expansion across Latin America. While Brazil, Mexico, and Argentina remain its largest markets, the company is making inroads in Chile and has plans for Colombia, Peru, and Uruguay. \n\u201cThe way we realize it works is basically pick one of these countries and launch the full suite of products there. And that typically takes a couple of years,\u201d Gim\u00e9nez said. \nThe post Exclusive: Mercado Pago CEO on Building Brazil\u2019s Biggest Digital Bank appeared first on PYMNTS.com.", "date_published": "2024-08-16T04:03:34-04:00", "date_modified": "2024-08-15T23:06:41-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/08/Mercado-Pago-pymnts-tv.jpg", "tags": [ "brazil", "Digital Banking", "Digital-First Banking", "ecommerce", "Featured News", "financial inclusion", "FinTech", "Latin America", "Mercado Libre", "Mercado Pago", "mobile banking", "News", "Osvaldo Gim\u00e9nez", "PIX", "PYMNTS News", "pymnts tv", "video" ] }, { "id": "https://www.pymnts.com/?post_type=tracker_posts&p=2050291", "url": "https://www.pymnts.com/tracker_posts/local-roots-how-community-fis-can-win-the-digital-first-generation/", "title": "Local Roots: How Community FIs Can Win the Digital-First Generation", "content_html": "

As digital banking continues to make inroads, community banks and credit unions (CUs) stand to capture an unexpected demographic: young, digital-first consumers. In a challenge to the conventional wisdom, Generation Z and millennial customers are increasingly drawn to these smaller financial institutions (FIs). The reason? Their potential to offer personalized service \u2014 a key differentiator that large banks often struggle to replicate. This trend hints at a future banking landscape in which competitive advantage stems less from FIs\u2019 global reach and more from the strength of their local roots and ability to nurture individual dreams. For community banks and CUs, this moment brims with potential, calling for next-level innovation that honors their mission of personal connection.

\n\n

Younger Consumers Jolt the Banking Status Quo

\n

Young retail banking customers are keeping an eye on the exits at their current FIs. These digital natives want more than just slick apps at a time when banks risk forgetting that quality service still reigns supreme.

\n
\n
\n
\n

Young consumers want digital-first banking with a smile \u2014 and a goalpost.

\n

While most Gen Z and millennial consumers currently use large institutions as their primary banks, an undercurrent of revolt is brewing. Fifty-two percent of these lucrative customers are considering community banks as an alternative, with CUs close behind, at 47%. The familiar narrative is that expectations for modern digital banking experiences are driving a youthful openness to switching FIs. Indeed, 31% of Gen Z customers are threatening to walk away if their current banks fail to offer cutting-edge banking tools.

\n
\n
\n

1/2

\n

of millennial and Generation Z consumers are open to switching their current primary banks for community banks or CUs.

\n
\n
\n
\n

Digital capabilities alone, however, are proving insufficient to retain digital natives as the latter increasingly demand personalized, goal-oriented support. A new study finds that nearly half of Gen Z consumers are willing to switch to a banking competitor for tailored financial guidance and spend management tools. This puts a new twist on the demand for technology, with personalization becoming the goalpost of sophisticated, feature-rich banking.

\n

Service quality no longer matters \u2014 or does it?

\n

Although digital transformation is dominating the banking industry\u2019s focus, memorable customer service remains a critical factor in retaining account holders. A striking 21% of retail banking consumers who have closed accounts cite poor customer service as the primary reason. This contrasts with less than 5% who did so because of dissatisfaction with the mobile experience.

\n

The importance of service quality is top of mind for many consumers who are considering a switch: 26% who are likely to change FIs blame unsatisfactory service. This finding serves as a stark reminder that while digital innovation is crucial, even the most elaborate digital interface cannot compensate for subpar service. As banks and FIs prioritize digital transformation, they must ensure that their focus on technology does not come at the expense of quality service.

\n

From Big Data to Big Impact, Banking Needs to Get Personal

\n

Retail banking customers are done with one-size-fits-all. These days, they demand financial advice nearly as unique as their fingerprints. Can FIs deliver a win-win? The prize is no less than customer loyalty.

\n

Banking customers yearn for wisdom and convenience, packaged just for them.

\n
\n
\n
\n

97%

\n

of financial services providers across all major global regions migrated at least one application to a different IT infrastructure in the last year.

\n
\n
\n

Personalized financial advice is proving to be a powerful tool for customer engagement. Fifty-four percent of retail banking customers expect their banks or FIs to understand them and leverage their existing data to personalize their banking experiences. This sentiment is not simply wishful thinking: When banks rise to the challenge, consumers respond. In 2024, 42% of banking customers recall receiving personalized financial advice from their banks, and a remarkable 76% acted on these recommendations. Simply put, customers are not merely receptive to personalized guidance: They are eager for it.

\n
\n
\n
\n

FIs are sporting the latest technology to unlock the potential of personalization.

\n

FIs globally are adapting their technology infrastructure to meet the demand for personalized, digital-first banking ecosystems. An overwhelming 97% of financial services providers across every major global region have migrated at least one application to a different technology stack in the past year. Driving this trend is the need to improve data access speeds (42%), strengthen security (41%) and integrate cloud-native services such as artificial intelligence (AI) and machine learning (ML) (39%) \u2014 all critical ingredients of digital banking personalization. For community banks and CUs, which often excel in customer service, this presents both a challenge and an opportunity. By adopting modern, agile technology architectures, these smaller institutions can combine their service strengths with advanced personalization capabilities. This combination could allow them to leapfrog larger competitors in delivering integrated, personalized banking experiences.

\n

Balancing Protection and Personalization in Banking

\n

Data is banking\u2019s new gold mine, but just one data breach could be catastrophic. Savvy FIs are not hiding behind walls. They are making security a competitive edge to win hearts and accounts.

\n
\n
\n
\n

Personalization is in demand, but it comes at a price.

\n

While 48% of retail banking consumers are willing to share additional personal data for tailored experiences, the vast pools of data that allow for personalization also amplify the risks associated with data breaches. Recent years have seen 69% of banks in the United States affected by data breaches, with 55% of affected FIs reporting costs between $5 million and $10 million per breach. Consumers feel the pain too: 45% of U.S. banking customers report experiencing security or privacy issues with their FIs, underscoring the critical need for banks and CUs to make robust data protection central to their value propositions.

\n
\n
\n

48%

\n

of retail banking customers are willing to share additional personal data in exchange for more personalized banking experiences.

\n
\n
\n
\n

A single security misstep can bankrupt customer trust.

\n

Security is a top priority for 91% of retail banking consumers when choosing an FI. From Gen Z to baby boomers, the message is clear: Protect my data. Indeed, inadequate security measures could cost banks more than financial losses, with 75% of banking customers ready to switch to a competitor if their sensitive personal data is compromised. The takeaway? Personalize, but make ironclad security a cornerstone of that personalized experience.

\n

Banks can turn security fears into customer empowerment.

\n

More than 9 in 10 U.S. retail banking customers rank the protection of sensitive personal data as a bank\u2019s most critical capability. However, with nearly half having experienced a banking security concern firsthand, there has been an erosion of trust: 67% of consumers now doubt their bank\u2019s ability to counter sophisticated threats such as deepfake fraud. This gap between expectation and reality presents yet another opportunity for community banks and CUs. By incorporating personalized services with robust, transparent security measures, these smaller FIs can rewrite the security narrative, turning it from a worry into a value-added service.

\n

Next Steps: Leveraging Data for Local Banking Success

\n

Gen Z and millennial consumers\u2019 preference for digital-first banking plus tailored financial guidance is a trend that continues to gain momentum. The race to capture these valuable customers will determine the leaders of tomorrow\u2019s financial industry. By leveraging data-driven insights to deepen community connections, smaller FIs can differentiate themselves in an increasingly homogeneous market. Community banks and credit unions are in a position of strength \u2014 if they seize the moment.

\n

PYMNTS Intelligence offers the following actionable roadmap for community FIs looking to gain \u2014 and keep \u2014 primary banking status with their customers:

\n\n

An institution\u2019s community roots are its superpower. FIs that build this connection into every data-driven interaction will offer a banking experience that is not simply convenient but also memorable \u2014 a winning differentiator in today\u2019s financial landscape.

\n

The post Local Roots: How Community FIs Can Win the Digital-First Generation appeared first on PYMNTS.com.

\n", "content_text": "As digital banking continues to make inroads, community banks and credit unions (CUs) stand to capture an unexpected demographic: young, digital-first consumers. In a challenge to the conventional wisdom, Generation Z and millennial customers are increasingly drawn to these smaller financial institutions (FIs). The reason? Their potential to offer personalized service \u2014 a key differentiator that large banks often struggle to replicate. This trend hints at a future banking landscape in which competitive advantage stems less from FIs\u2019 global reach and more from the strength of their local roots and ability to nurture individual dreams. For community banks and CUs, this moment brims with potential, calling for next-level innovation that honors their mission of personal connection.\n\n Younger Consumers Jolt the Banking Status Quo\n From Big Data to Big Impact, Banking Needs to Get Personal\n Balancing Protection and Personalization in Banking\n Next Steps: Leveraging Data for Local Banking Success\n\nYounger Consumers Jolt the Banking Status Quo\nYoung retail banking customers are keeping an eye on the exits at their current FIs. These digital natives want more than just slick apps at a time when banks risk forgetting that quality service still reigns supreme.\n\n\n\nYoung consumers want digital-first banking with a smile \u2014 and a goalpost.\nWhile most Gen Z and millennial consumers currently use large institutions as their primary banks, an undercurrent of revolt is brewing. Fifty-two percent of these lucrative customers are considering community banks as an alternative, with CUs close behind, at 47%. The familiar narrative is that expectations for modern digital banking experiences are driving a youthful openness to switching FIs. Indeed, 31% of Gen Z customers are threatening to walk away if their current banks fail to offer cutting-edge banking tools.\n\n\n1/2\nof millennial and Generation Z consumers are open to switching their current primary banks for community banks or CUs.\n\n\n\nDigital capabilities alone, however, are proving insufficient to retain digital natives as the latter increasingly demand personalized, goal-oriented support. A new study finds that nearly half of Gen Z consumers are willing to switch to a banking competitor for tailored financial guidance and spend management tools. This puts a new twist on the demand for technology, with personalization becoming the goalpost of sophisticated, feature-rich banking.\nService quality no longer matters \u2014 or does it?\nAlthough digital transformation is dominating the banking industry\u2019s focus, memorable customer service remains a critical factor in retaining account holders. A striking 21% of retail banking consumers who have closed accounts cite poor customer service as the primary reason. This contrasts with less than 5% who did so because of dissatisfaction with the mobile experience.\nThe importance of service quality is top of mind for many consumers who are considering a switch: 26% who are likely to change FIs blame unsatisfactory service. This finding serves as a stark reminder that while digital innovation is crucial, even the most elaborate digital interface cannot compensate for subpar service. As banks and FIs prioritize digital transformation, they must ensure that their focus on technology does not come at the expense of quality service.\nFrom Big Data to Big Impact, Banking Needs to Get Personal\nRetail banking customers are done with one-size-fits-all. These days, they demand financial advice nearly as unique as their fingerprints. Can FIs deliver a win-win? The prize is no less than customer loyalty.\nBanking customers yearn for wisdom and convenience, packaged just for them.\n\n\n\n97%\nof financial services providers across all major global regions migrated at least one application to a different IT infrastructure in the last year.\n\n\nPersonalized financial advice is proving to be a powerful tool for customer engagement. Fifty-four percent of retail banking customers expect their banks or FIs to understand them and leverage their existing data to personalize their banking experiences. This sentiment is not simply wishful thinking: When banks rise to the challenge, consumers respond. In 2024, 42% of banking customers recall receiving personalized financial advice from their banks, and a remarkable 76% acted on these recommendations. Simply put, customers are not merely receptive to personalized guidance: They are eager for it.\n\n\n\nFIs are sporting the latest technology to unlock the potential of personalization.\nFIs globally are adapting their technology infrastructure to meet the demand for personalized, digital-first banking ecosystems. An overwhelming 97% of financial services providers across every major global region have migrated at least one application to a different technology stack in the past year. Driving this trend is the need to improve data access speeds (42%), strengthen security (41%) and integrate cloud-native services such as artificial intelligence (AI) and machine learning (ML) (39%) \u2014 all critical ingredients of digital banking personalization. For community banks and CUs, which often excel in customer service, this presents both a challenge and an opportunity. By adopting modern, agile technology architectures, these smaller institutions can combine their service strengths with advanced personalization capabilities. This combination could allow them to leapfrog larger competitors in delivering integrated, personalized banking experiences.\nBalancing Protection and Personalization in Banking\nData is banking\u2019s new gold mine, but just one data breach could be catastrophic. Savvy FIs are not hiding behind walls. They are making security a competitive edge to win hearts and accounts.\n\n\n\nPersonalization is in demand, but it comes at a price.\nWhile 48% of retail banking consumers are willing to share additional personal data for tailored experiences, the vast pools of data that allow for personalization also amplify the risks associated with data breaches. Recent years have seen 69% of banks in the United States affected by data breaches, with 55% of affected FIs reporting costs between $5 million and $10 million per breach. Consumers feel the pain too: 45% of U.S. banking customers report experiencing security or privacy issues with their FIs, underscoring the critical need for banks and CUs to make robust data protection central to their value propositions.\n\n\n48%\nof retail banking customers are willing to share additional personal data in exchange for more personalized banking experiences.\n\n\n\nA single security misstep can bankrupt customer trust.\nSecurity is a top priority for 91% of retail banking consumers when choosing an FI. From Gen Z to baby boomers, the message is clear: Protect my data. Indeed, inadequate security measures could cost banks more than financial losses, with 75% of banking customers ready to switch to a competitor if their sensitive personal data is compromised. The takeaway? Personalize, but make ironclad security a cornerstone of that personalized experience.\nBanks can turn security fears into customer empowerment.\nMore than 9 in 10 U.S. retail banking customers rank the protection of sensitive personal data as a bank\u2019s most critical capability. However, with nearly half having experienced a banking security concern firsthand, there has been an erosion of trust: 67% of consumers now doubt their bank\u2019s ability to counter sophisticated threats such as deepfake fraud. This gap between expectation and reality presents yet another opportunity for community banks and CUs. By incorporating personalized services with robust, transparent security measures, these smaller FIs can rewrite the security narrative, turning it from a worry into a value-added service.\nNext Steps: Leveraging Data for Local Banking Success\nGen Z and millennial consumers\u2019 preference for digital-first banking plus tailored financial guidance is a trend that continues to gain momentum. The race to capture these valuable customers will determine the leaders of tomorrow\u2019s financial industry. By leveraging data-driven insights to deepen community connections, smaller FIs can differentiate themselves in an increasingly homogeneous market. Community banks and credit unions are in a position of strength \u2014 if they seize the moment.\nPYMNTS Intelligence offers the following actionable roadmap for community FIs looking to gain \u2014 and keep \u2014 primary banking status with their customers:\n\nImplement a data-driven personalization ecosystem. Deploy advanced analytics to aggregate and parse customer data, leveraging AI-powered insights to offer tailored experiences across all touch points. Implement modular financial planning tools that allow consumers to customize strategies aligned with their life stages and financial objectives, and utilize predictive modeling to generate hyper-targeted product offerings and proactive financial guidance.\nArchitect an omnichannel customer service model. Integrate AI-driven automation with high-touch human expertise. Pilot conversational generative AI chatbots for routine inquiries and preliminary financial guidance, but ensure that frictionless escalation to human advisers is easily accessible. Equip staff with real-time, data-enriched customer profiles to facilitate personalized consultations and product recommendations tailored to individual financial journeys.\nEnhance cybersecurity posture with multifactor authentication (MFA) and contextual risk analysis. Implement ML-driven predictive analytics to identify potential fraud and dynamically adjust authentication protocols. Integrate behavioral biometrics, such as keystroke dynamics or mouse-movement analysis, for continuous authentication, and provide a user-friendly security dashboard to empower customers with insights into their account activity and security measures.\nPartner with FinTechs. Prioritize partnerships that enhance personalization and improve back-end efficiency. Collaborating can dramatically accelerate implementation timelines and provide access to ongoing specialized support, enabling smaller institutions to rapidly deploy advanced technologies while maintaining their community-focused approach.\n\nAn institution\u2019s community roots are its superpower. FIs that build this connection into every data-driven interaction will offer a banking experience that is not simply convenient but also memorable \u2014 a winning differentiator in today\u2019s financial landscape.\nThe post Local Roots: How Community FIs Can Win the Digital-First Generation appeared first on PYMNTS.com.", "date_published": "2024-08-13T04:02:05-04:00", "date_modified": "2024-08-12T19:02:38-04:00", "authors": [ { "name": "Ashley McLeod", "url": "https://www.pymnts.com/author/amcleod/", "avatar": "https://secure.gravatar.com/avatar/5fcbfee0fc4dc81613187d709d661036?s=512&d=blank&r=g" } ], "author": { "name": "Ashley McLeod", "url": "https://www.pymnts.com/author/amcleod/", "avatar": "https://secure.gravatar.com/avatar/5fcbfee0fc4dc81613187d709d661036?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/08/digital-first-banking-gen-z-millennials.jpg", "tags": [ "banking", "banking innovation", "Banks", "community banks", "consumer banking", "credit unions", "Digital Banking", "Digital-First Banking", "Featured News", "NCR Voyix", "personalization", "PYMNTS Intelligence", "PYMNTS News", "Tracker Series" ] }, { "id": "https://www.pymnts.com/?p=2025759", "url": "https://www.pymnts.com/digital-first-banking/2024/moneylion-continues-to-play-winning-hand-with-paycheck-to-paycheck-consumers/", "title": "MoneyLion Continues to Play Winning Hand With Middle-Income Americans", "content_html": "

The MoneyLion business model pivot continues. A year after posting substantial losses as a neobank, the financial services portal rode its new business model to a second straight profitable quarter as it announced its Q2 earnings Tuesday (Aug. 6).

\n

As CEO Dee Choubey told Karen Webster, the middle-income, paycheck-to-paycheck consumer is fueling the company\u2019s growth.

\n

\u201cOur clients on the consumer side are mostly middle income,\u201d Choubey said. \u201cThey\u2019re the firemen, the teachers, the cops, the gig economy workers. We are not as yet seeing a lot of job displacement in that segment. This is probably going to be the first white collar recession, and that\u2019s going to potentially impact existing credit card books. But our risk selection technology is good and the demand from the essential workforce for our products is going up.\u201d

\n

MoneyLion is enjoying a successful pivot from a neobank to what is essentially a consumer and business financial services portal and shopping mall. Among the products its \u201cessential\u201d consumers are buying more of from the site and app: buy now, pay later, income advances, earned wage access, secured card products and short-term installment loans. What\u2019s not moving yet: mortgages. However, Choubey expects business to increase if the Fed cuts prime rates as expected in September.

\n

Q2 Earnings

\n

Whatever Choubey and his team are doing is working. By the numbers, total revenues, net increased 23% to $130.8 million for the second quarter of 2024 compared to the second quarter of 2023, with a net income of $3.1 million for Q2 coming in the second versus a net loss of $27.7 million in the second quarter of 2023. Adjusted EBITDA was $18.5 million for the second quarter of 2024 versus $9.2 million in the second quarter of 2023.

\n

Total customers grew 73% year-over-year to 17 million and total originations grew 40% to $770 million. The growth comes not only from the middle-income consumers Choubey referenced but from the ecosystem strategy that the company embarked on in mid-2023. That ecosystem will expand, he said. The company has launched a search tool on its site and is working on its checkout solution.

\n

And speaking of search, one of the most interesting points of the conversation with Webster occurred when she asked Choubey if the Google antitrust decision could open some opportunities for his company as a customer acquisition and marketplace solution.

\n

\u201cWe\u2019re now building these web tools for any CMO that runs a financial institution, a bank, a lender … to actually think of MoneyLion as a channel,\u201d he told Webster. \u201cJust like they think of Google SEO as a channel.\u201d He emphasized that the company\u2019s teams are now optimizing bidding strategies and audience building on MoneyLion\u2019s channel, similar to how they approach other major platforms.

\n

Choubey also highlighted the company\u2019s acquisition of Even Financial as a key component of this strategy, allowing MoneyLion to operate its own \u201cwalled garden\u201d in the financial services ecosystem. This approach aims to provide a more precise and personalized experience for consumers seeking financial products, moving away from the \u201cflea market\u201d approach common in the industry.

\n

Growth Drivers

\n

Choubey outlined three main growth drivers for MoneyLion: increasing the number of suppliers (lead sources), expanding the consumer base, and broadening the range of financial product options available on the platform. The company reported that third-party products have eclipsed MoneyLion\u2019s own offerings, accounting for 51% of products taken on their marketplace to date.

\n

\u201cWe measure success by how many decisions a consumer\u2019s making on our platform in a recurring manner over time,\u201d Choubey stated, emphasizing the importance of user engagement and trust in the ecosystem.

\n

Regarding MoneyLion\u2019s banking strategy, Choubey presented a nuanced approach. \u201cWe don\u2019t believe that we are the best banking solution for every American out there,\u201d he said. Instead, MoneyLion positions itself as an \u201cinterface layer,\u201d complementing existing banking relationships while serving as an first bank account for certain segments of the population.

\n

The company is also making strides in implementing AI capabilities despite the challenges in the financial services sector. \u201cIt\u2019s really hard to build GenAI capabilities in financial services,\u201d Choubey noted, highlighting the importance of accuracy when dealing with people\u2019s money. MoneyLion is working on integrating AI to provide personalized insights and recommendations based on users\u2019 financial data.

\n

Looking ahead, Choubey expressed confidence in MoneyLion\u2019s long-term prospects, despite short-term stock market reactions that resulted in MoneyLion stock price taking a hit despite its successful earnings.

\n

\u201cOur team is doing such great work to ultimately get the essential workforce access to premium capabilities and insights that no one else is really creating for that universe,\u201d he said. \u201cIt\u2019s an important thing that we\u2019re doing. And I think in the long run. I tweeted this today: In the short run, it\u2019s a voting machine; in the long run it\u2019s a weighing machine. I think we\u2019re in a way pretty heavy in the long run.\u201d

\n

The post MoneyLion Continues to Play Winning Hand With Middle-Income Americans appeared first on PYMNTS.com.

\n", "content_text": "The MoneyLion business model pivot continues. A year after posting substantial losses as a neobank, the financial services portal rode its new business model to a second straight profitable quarter as it announced its Q2 earnings Tuesday (Aug. 6). \nAs CEO Dee Choubey told Karen Webster, the middle-income, paycheck-to-paycheck consumer is fueling the company\u2019s growth. \n\u201cOur clients on the consumer side are mostly middle income,\u201d Choubey said. \u201cThey\u2019re the firemen, the teachers, the cops, the gig economy workers. We are not as yet seeing a lot of job displacement in that segment. This is probably going to be the first white collar recession, and that\u2019s going to potentially impact existing credit card books. But our risk selection technology is good and the demand from the essential workforce for our products is going up.\u201d \nMoneyLion is enjoying a successful pivot from a neobank to what is essentially a consumer and business financial services portal and shopping mall. Among the products its \u201cessential\u201d consumers are buying more of from the site and app: buy now, pay later, income advances, earned wage access, secured card products and short-term installment loans. What\u2019s not moving yet: mortgages. However, Choubey expects business to increase if the Fed cuts prime rates as expected in September.\nQ2 Earnings\nWhatever Choubey and his team are doing is working. By the numbers, total revenues, net increased 23% to $130.8 million for the second quarter of 2024 compared to the second quarter of 2023, with a net income of $3.1 million for Q2 coming in the second versus a net loss of $27.7 million in the second quarter of 2023. Adjusted EBITDA was $18.5 million for the second quarter of 2024 versus $9.2 million in the second quarter of 2023. \nTotal customers grew 73% year-over-year to 17 million and total originations grew 40% to $770 million. The growth comes not only from the middle-income consumers Choubey referenced but from the ecosystem strategy that the company embarked on in mid-2023. That ecosystem will expand, he said. The company has launched a search tool on its site and is working on its checkout solution.\nAnd speaking of search, one of the most interesting points of the conversation with Webster occurred when she asked Choubey if the Google antitrust decision could open some opportunities for his company as a customer acquisition and marketplace solution. \n\u201cWe\u2019re now building these web tools for any CMO that runs a financial institution, a bank, a lender … to actually think of MoneyLion as a channel,\u201d he told Webster. \u201cJust like they think of Google SEO as a channel.\u201d He emphasized that the company\u2019s teams are now optimizing bidding strategies and audience building on MoneyLion\u2019s channel, similar to how they approach other major platforms.\nChoubey also highlighted the company\u2019s acquisition of Even Financial as a key component of this strategy, allowing MoneyLion to operate its own \u201cwalled garden\u201d in the financial services ecosystem. This approach aims to provide a more precise and personalized experience for consumers seeking financial products, moving away from the \u201cflea market\u201d approach common in the industry.\nGrowth Drivers\nChoubey outlined three main growth drivers for MoneyLion: increasing the number of suppliers (lead sources), expanding the consumer base, and broadening the range of financial product options available on the platform. The company reported that third-party products have eclipsed MoneyLion\u2019s own offerings, accounting for 51% of products taken on their marketplace to date.\n\u201cWe measure success by how many decisions a consumer\u2019s making on our platform in a recurring manner over time,\u201d Choubey stated, emphasizing the importance of user engagement and trust in the ecosystem.\nRegarding MoneyLion\u2019s banking strategy, Choubey presented a nuanced approach. \u201cWe don\u2019t believe that we are the best banking solution for every American out there,\u201d he said. Instead, MoneyLion positions itself as an \u201cinterface layer,\u201d complementing existing banking relationships while serving as an first bank account for certain segments of the population.\nThe company is also making strides in implementing AI capabilities despite the challenges in the financial services sector. \u201cIt\u2019s really hard to build GenAI capabilities in financial services,\u201d Choubey noted, highlighting the importance of accuracy when dealing with people\u2019s money. MoneyLion is working on integrating AI to provide personalized insights and recommendations based on users\u2019 financial data.\nLooking ahead, Choubey expressed confidence in MoneyLion\u2019s long-term prospects, despite short-term stock market reactions that resulted in MoneyLion stock price taking a hit despite its successful earnings.\n\u201cOur team is doing such great work to ultimately get the essential workforce access to premium capabilities and insights that no one else is really creating for that universe,\u201d he said. \u201cIt\u2019s an important thing that we\u2019re doing. And I think in the long run. I tweeted this today: In the short run, it\u2019s a voting machine; in the long run it\u2019s a weighing machine. I think we\u2019re in a way pretty heavy in the long run.\u201d\nThe post MoneyLion Continues to Play Winning Hand With Middle-Income Americans appeared first on PYMNTS.com.", "date_published": "2024-08-07T04:01:14-04:00", "date_modified": "2024-08-07T10:44:03-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/08/MoneyLion-gig-workers-paycheck-to-paycheck.jpg", "tags": [ "Dee Choubey", "Digital-First Banking", "Earnings", "Featured News", "financial services", "MoneyLion", "News", "PYMNTS News" ] }, { "id": "https://www.pymnts.com/?p=2021799", "url": "https://www.pymnts.com/digital-first-banking/2024/three-quarters-of-banks-face-digital-banking-infrastructure-issues/", "title": "Three-Quarters of Banks Face Digital Banking Infrastructure Issues", "content_html": "

The banking industry is experiencing a seismic shift as agile, digital-native FinTechs capture an ever-growing share of the market. Burdened by outdated technology, traditional financial institutions face mounting challenges in delivering modern digital services. The growing dominance of FinTechs \u2014 securing nearly half of all new account openings \u2014 highlights the urgency for banks to modernize their infrastructure.

\n

With consumer expectations rapidly evolving toward seamless digital experiences, banks must navigate the high costs and complexities of updating their core systems. Exploring incremental modernization through application programming interfaces (APIs) may offer a viable path forward, enabling banks to enhance their digital capabilities and remain relevant in an increasingly competitive landscape.

\n

\"\"A recent PYMNTS Intelligence Report, \u201cCore Strength: FIs Must Modernize to Meet the FinTech Challenge,\u201d in collaboration with Galileo, highlights the urgent need for traditional financial institutions to overhaul their outdated systems to keep pace with digital-native competitors. The report reveals that 75% of banks struggle with implementing new digital solutions due to their legacy infrastructure, underscoring the critical nature of modernization efforts. As FinTechs continue to capture a growing market share, banks face mounting pressure to adopt agile technologies and innovative approaches.

\n

FinTechs Are Outpacing Traditional Banks

\n

FinTechs and digital banks have captured 47% of new account openings in the first half of 2023, a notable increase from 36% in 2020. This surge highlights their growing dominance in the market. A sizable portion of these customers \u2014 41% \u2014 use digital-only banks for their primary banking and credit card needs, signaling a shift away from traditional financial institutions. The swift growth of FinTechs underlines the urgent need for banks to enhance their digital offerings to avoid losing more customers.

\n

Legacy Systems Are a Major Barrier

\n

Legacy core banking systems hinder traditional banks\u2019 delivery of modern digital services. According to the report, 75% of banks struggle to implement new payment solutions due to outdated infrastructure. Additionally, 59% of bankers see their legacy systems as a major business challenge, describing them as a \u201cspaghetti\u201d of interconnected but antiquated technologies. This complexity and obsolescence make system upgrades costly and difficult.

\n

APIs Offer a Solution for Incremental Modernization

\n

APIs are emerging as a practical solution for modernizing banking infrastructure without complete overhauls. Nearly 47% of financial institutions are pursuing incremental core upgrades using APIs, which allow for gradual improvements and integration of new functionalities.

\n

This method contrasts with the 13% of banks opting for full-core system replacements, highlighting the more manageable and less risky nature of API-driven updates. For instance, Deutsche Bank\u2019s implementation of an API-accessible payments orchestration layer illustrates how such upgrades can streamline operations and enhance digital service offerings.

\n

As FinTechs continue to disrupt the banking sector, traditional financial institutions must prioritize updating their core systems. By adopting incremental modernization through APIs, banks can improve their digital capabilities and remain competitive in a rapidly evolving landscape.

\n

The post Three-Quarters of Banks Face Digital Banking Infrastructure Issues appeared first on PYMNTS.com.

\n", "content_text": "The banking industry is experiencing a seismic shift as agile, digital-native FinTechs capture an ever-growing share of the market. Burdened by outdated technology, traditional financial institutions face mounting challenges in delivering modern digital services. The growing dominance of FinTechs \u2014 securing nearly half of all new account openings \u2014 highlights the urgency for banks to modernize their infrastructure. \nWith consumer expectations rapidly evolving toward seamless digital experiences, banks must navigate the high costs and complexities of updating their core systems. Exploring incremental modernization through application programming interfaces (APIs) may offer a viable path forward, enabling banks to enhance their digital capabilities and remain relevant in an increasingly competitive landscape. \nA recent PYMNTS Intelligence Report, \u201cCore Strength: FIs Must Modernize to Meet the FinTech Challenge,\u201d in collaboration with Galileo, highlights the urgent need for traditional financial institutions to overhaul their outdated systems to keep pace with digital-native competitors. The report reveals that 75% of banks struggle with implementing new digital solutions due to their legacy infrastructure, underscoring the critical nature of modernization efforts. As FinTechs continue to capture a growing market share, banks face mounting pressure to adopt agile technologies and innovative approaches.\nFinTechs Are Outpacing Traditional Banks\nFinTechs and digital banks have captured 47% of new account openings in the first half of 2023, a notable increase from 36% in 2020. This surge highlights their growing dominance in the market. A sizable portion of these customers \u2014 41% \u2014 use digital-only banks for their primary banking and credit card needs, signaling a shift away from traditional financial institutions. The swift growth of FinTechs underlines the urgent need for banks to enhance their digital offerings to avoid losing more customers.\nLegacy Systems Are a Major Barrier\nLegacy core banking systems hinder traditional banks\u2019 delivery of modern digital services. According to the report, 75% of banks struggle to implement new payment solutions due to outdated infrastructure. Additionally, 59% of bankers see their legacy systems as a major business challenge, describing them as a \u201cspaghetti\u201d of interconnected but antiquated technologies. This complexity and obsolescence make system upgrades costly and difficult.\nAPIs Offer a Solution for Incremental Modernization\nAPIs are emerging as a practical solution for modernizing banking infrastructure without complete overhauls. Nearly 47% of financial institutions are pursuing incremental core upgrades using APIs, which allow for gradual improvements and integration of new functionalities. \nThis method contrasts with the 13% of banks opting for full-core system replacements, highlighting the more manageable and less risky nature of API-driven updates. For instance, Deutsche Bank\u2019s implementation of an API-accessible payments orchestration layer illustrates how such upgrades can streamline operations and enhance digital service offerings.\nAs FinTechs continue to disrupt the banking sector, traditional financial institutions must prioritize updating their core systems. By adopting incremental modernization through APIs, banks can improve their digital capabilities and remain competitive in a rapidly evolving landscape.\nThe post Three-Quarters of Banks Face Digital Banking Infrastructure Issues appeared first on PYMNTS.com.", "date_published": "2024-08-05T04:00:54-04:00", "date_modified": "2024-08-04T21:19:47-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/08/Banking-fintechs-digital.jpg", "tags": [ "APIs", "banking", "Digital-First Banking", "Featured News", "FinTechs", "legacy systems", "News", "PYMNTS Intelligence", "PYMNTS News", "The Data Point", "traditional banks" ] }, { "id": "https://www.pymnts.com/?p=2018682", "url": "https://www.pymnts.com/digital-first-banking/2024/46-percent-of-us-consumers-say-theyre-ready-for-open-banking/", "title": "46% of US Consumers Say They\u2019re Ready for Open Banking", "content_html": "

As younger and affluent consumers drive the trend, open banking payments stand on the verge of widespread acceptance. This payment method, which allows users to complete transactions directly from their bank accounts using familiar online banking credentials, offers a streamlined alternative to traditional methods by bypassing credit card details.

\n

Yet, despite its advantages, only 11% of U.S. adults have used open banking payments in the past year, even though nearly 46% express strong interest. To unlock this potential, providers must address key barriers such as security concerns, enhance awareness and implement compelling incentives.

\n

The PYMNTS Intelligence report, \u201cConsumer Sentiment About Open Banking Payments,\u201d done in collaboration with Trustly, sheds light on this gap between high interest and low adoption. This gap is primarily due to limited awareness and security concerns, highlighting a significant opportunity for growth if these challenges are addressed.

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Gen Z and Millennials Lead the Charge

\n

According to PYMNTS Intelligence, 72% of Generation Z and 66% of millennials show high enthusiasm for using open banking payments, significantly outpacing older generations. In contrast, only 42% of Generation X and 22% of baby boomers exhibit similar willingness.

\n

\"open

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This generational disparity suggests that open banking providers should focus their marketing efforts on younger demographics, who are more inclined to integrate this payment method into their routine transactions. Additionally, high-income individuals are more likely to adopt open banking payments, with 50% of those earning over $100,000 annually expressing interest, compared to 42% among those with lower incomes.

\n

Security and Trust Are Primary Obstacles

\n

The report reveals that 56% of non-users cite trust issues as a significant barrier, while 44% are unfamiliar with the concept of open banking payments. Security concerns are particularly prevalent among older consumers, with 64% of baby boomers and seniors highlighting this issue, compared to 44% of Gen Z and millennials.

\n

To address these barriers, open banking providers must focus on enhancing security measures, improving transparency and increasing consumer education. Partnering with established financial institutions could also help build trust and credibility.

\n

Discounts, Loyalty Programs Can Elevate Open Banking Adoption Rates

\n

According to the report, 38% of consumers would be more inclined to use open banking payments if offered discounts, with this figure rising to 52% among millennials and Gen Z. Similarly, 37% of consumers are influenced by loyalty programs, with a stronger preference among younger generations.

\n

By integrating these incentives into their offerings, open banking providers can enhance appeal and encourage wider adoption. As consumers become more familiar with the benefits of open banking, their satisfaction levels rise, particularly among frequent users, with 82% of those using the payment method more than 15 times in the past year expressing high satisfaction.

\n

As a result, this satisfaction increases their likelihood of switching to businesses that support open banking payments, further emphasizing the need for providers to create compelling incentives to drive usage.

\n

To capitalize on the high interest but low current use of open banking payments, providers should focus on increasing awareness and trust while leveraging incentives. Tailoring strategies to highlight the benefits of open banking payments for routine transactions, addressing security concerns transparently and offering attractive incentives will be crucial in bridging the gap between consumer interest and actual adoption.

\n

With the right approach, open banking payments have the potential to become a mainstream payment option, especially among younger and higher income consumers who show the strongest interest and willingness to integrate this innovative payment method into their financial routines.

\n

The post 46% of US Consumers Say They\u2019re Ready for Open Banking appeared first on PYMNTS.com.

\n", "content_text": "As younger and affluent consumers drive the trend, open banking payments stand on the verge of widespread acceptance. This payment method, which allows users to complete transactions directly from their bank accounts using familiar online banking credentials, offers a streamlined alternative to traditional methods by bypassing credit card details.\nYet, despite its advantages, only 11% of U.S. adults have used open banking payments in the past year, even though nearly 46% express strong interest. To unlock this potential, providers must address key barriers such as security concerns, enhance awareness and implement compelling incentives.\nThe PYMNTS Intelligence report, \u201cConsumer Sentiment About Open Banking Payments,\u201d done in collaboration with Trustly, sheds light on this gap between high interest and low adoption. This gap is primarily due to limited awareness and security concerns, highlighting a significant opportunity for growth if these challenges are addressed.\nGen Z and Millennials Lead the Charge\nAccording to PYMNTS Intelligence, 72% of Generation Z and 66% of millennials show high enthusiasm for using open banking payments, significantly outpacing older generations. In contrast, only 42% of Generation X and 22% of baby boomers exhibit similar willingness.\n\nThis generational disparity suggests that open banking providers should focus their marketing efforts on younger demographics, who are more inclined to integrate this payment method into their routine transactions. Additionally, high-income individuals are more likely to adopt open banking payments, with 50% of those earning over $100,000 annually expressing interest, compared to 42% among those with lower incomes.\nSecurity and Trust Are Primary Obstacles\nThe report reveals that 56% of non-users cite trust issues as a significant barrier, while 44% are unfamiliar with the concept of open banking payments. Security concerns are particularly prevalent among older consumers, with 64% of baby boomers and seniors highlighting this issue, compared to 44% of Gen Z and millennials.\nTo address these barriers, open banking providers must focus on enhancing security measures, improving transparency and increasing consumer education. Partnering with established financial institutions could also help build trust and credibility.\nDiscounts, Loyalty Programs Can Elevate Open Banking Adoption Rates\nAccording to the report, 38% of consumers would be more inclined to use open banking payments if offered discounts, with this figure rising to 52% among millennials and Gen Z. Similarly, 37% of consumers are influenced by loyalty programs, with a stronger preference among younger generations.\nBy integrating these incentives into their offerings, open banking providers can enhance appeal and encourage wider adoption. As consumers become more familiar with the benefits of open banking, their satisfaction levels rise, particularly among frequent users, with 82% of those using the payment method more than 15 times in the past year expressing high satisfaction.\nAs a result, this satisfaction increases their likelihood of switching to businesses that support open banking payments, further emphasizing the need for providers to create compelling incentives to drive usage.\nTo capitalize on the high interest but low current use of open banking payments, providers should focus on increasing awareness and trust while leveraging incentives. Tailoring strategies to highlight the benefits of open banking payments for routine transactions, addressing security concerns transparently and offering attractive incentives will be crucial in bridging the gap between consumer interest and actual adoption.\nWith the right approach, open banking payments have the potential to become a mainstream payment option, especially among younger and higher income consumers who show the strongest interest and willingness to integrate this innovative payment method into their financial routines.\nThe post 46% of US Consumers Say They\u2019re Ready for Open Banking appeared first on PYMNTS.com.", "date_published": "2024-07-30T04:00:26-04:00", "date_modified": "2024-08-06T12:09:23-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/open-banking-image.jpg", "tags": [ "Baby Boomers", "banking", "consumer insights", "Consumer Sentiment About Open Banking Payments", "Digital Banking", "Digital-First Banking", "digital transformation", "Featured News", "Gen X", "Gen Z", "Generation X", "Generation Z", "Millennials", "News", "Open Banking", "Payment Methods", "PYMNTS Intelligence", "PYMNTS News" ] }, { "id": "https://www.pymnts.com/?post_type=tracker_posts&p=2014655", "url": "https://www.pymnts.com/tracker_posts/the-150b-question-can-community-fis-capture-the-smb-digital-banking-opportunity/", "title": "The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity?", "content_html": "

Small to mid-sized businesses (SMBs) are the beating heart of the economy, but four years into the pandemic\u2019s digital transformation, many are still fighting to gain a clean bill of financial health. Outdated manual accounting processes and paper payments continue to waste precious time as cash flow falters and inflation erodes margins. Smaller banks and credit unions have their finger on the pulse of their communities\u2019 needs and can set SMB clients on a path to success with modern digital banking and financial management tools. However, amid continued struggles, many small businesses are seeking alternatives to their existing banking relationships. Can community financial institutions (FIs) rise to the challenge of keeping their SMB customers loyal? Helping them get on their financial feet is the first step.

\n\n

Financial Shortfalls Continue to Plague SMBs

\n

Late payments, inflation and outdated payment processes create a triple threat of blocked cash flow, inefficiency and impaired decision-making for small businesses.

\n
\n
\n
\n

Late payments remain a stubborn impediment to SMBs\u2019 cash flow.

\n

Delayed payments continue to hamper small businesses\u2019 operations. In the final quarter of the 2023 calendar year, SMBs waited 29.1 days on average to receive payment, a nerve-racking average of 9.6 days late \u2014 both up from the previous quarter. For small businesses, timely payments are not just nice-to-haves but essentials for survival and growth.

\n
\n
\n

71%

\n

of SMBs are experiencing cash shortfalls.

\n
\n
\n
\n

Inflation is stretching small businesses to their limits.

\n

Seventy-six percent of SMBs with revenues under $10 million say they are suffering under the economy\u2019s prolonged inflationary conditions, with a staggering 71% still experiencing cash shortfalls. Conditions have reached desperate levels for many, with 35% of SMB owners dipping into personal savings, 31% forgoing their own paychecks and 19% filling cash gaps with personal loans to keep their businesses afloat. This unrelenting pressure calls for smarter money-management tools tailored to SMBs\u2019 needs.

\n

Manual accounting processes exacerbate macroeconomic distress.

\n

In an era of advanced technology, legacy accounting processes nevertheless maintain their choke hold over many business operations. An astonishing 36% of mid-sized firms are still using costly paper payments in accounts payable (AP), while 35% are wrangling accounts receivable (AR) manually. Smaller SMBs, particularly those generating less than $100,000 annually, are bearing the brunt of this inefficiency, with these work tools contributing to already highly unpredictable payment cycles.

\n

SMBs Seek Digital Remedies for Cash Flow Pain

\n

SMBs are aware of the need to digitalize and are actively seeking banking partnerships that can help them do so. They are also frustrated with \u2014 and ready to jettison \u2014 those that do not.

\n

SMBs are frustrated with their current financial management and banking processes.

\n
\n
\n
\n

70%

\n

of SMBs express interest in comprehensive cash management services from their primary FIs.

\n
\n
\n

For SMBs, particularly those without dedicated accounting teams, financial management can be a daunting and time-consuming task. More than two-thirds (68%) of small business owners in a recent American Express survey expressed a longing for more time to focus on their core products and services instead of managing their businesses\u2019 finances. In the United Kingdom, 74% of SMBs lament the marathon treks to deposit cash at rapidly vanishing local bank branches. In the United States, 34% of SMBs are burning a full workweek every year on in-branch banking activities, a situation so frustrating that 32% have already adopted new primary banks with a more digital focus. Clearly, the time for a digital switch is long past due.

\n
\n
\n
\n

SMBs have a fast-growing appetite for digital banking solutions.

\n

Going digital is more efficient, and 78% of SMBs prefer to pay employees with a click, not a check. An even greater share, at 90%, are demanding the same push-button ease for vendor payments. Nearly seven in 10 SMBs want comprehensive cash flow management tools from their primary banks. With $150 billion in annual SMB banking revenue at stake, FIs that cannot deliver on these digital demands risk both client churn and a potential share of the valuable SMB market.

\n

SMBs are actively pursuing new banking relationships to upgrade their digital capabilities.

\n

Small business clients discontented with current banking partners are voting with their feet. In the U.K., 25% of SMBs plan to sever ties with their primary banks within the year, while 41% of U.S. SMBs are threatening to do the same, similarly motivated by lower barriers to credit (39%), better support (33%) and more impressive digital banking experiences (32%) elsewhere. These findings suggest that banks and CUs not offering robust digital solutions could face an exodus of their SMB clients to competitors.

\n

From Traditional Banks to Trusted Advisers

\n

By offering digital solutions that include predictive tools, seamless integrations and tailored guidance, community banks and CUs can position themselves as strong financial management partners in their SMB clients\u2019 success.

\n
\n
\n
\n

SMBs want bankers to speak fluent \u2018digital\u2019 \u2014 and be financial gurus as well.

\n

With nearly half of SMBs less than confident that their banks comprehend their cash flow struggles, many are moving away from traditional banking. Already, 42% of SMBs select their primary banks based on the latter\u2019s sophisticated online and mobile offerings, while 35% prioritize digital banking experiences and seamless integration with their business software. Although 62% of SMBs still seek exceptional customer service, there is also a strong demand for technologies that turn financial management challenges into victories.

\n
\n
\n

42%

\n

of SMBs now choose their primary FIs based on the availability of online and mobile banking offerings.

\n
\n
\n
\n

To become better partners to their clients, banks can partner in turn \u2014 with technology providers.

\n

Community banks and CUs might find themselves coveting the digital arsenals of bigger banks \u2014 such as Citizens, which can now offer SMBs a 12-month glimpse into their fiscal futures with its new cash flow forecasting tool. However, FIs do not need to be megabanks to check all the boxes on SMBs\u2019 digital wish lists. Partnerships with the right FinTechs and other payments providers can turn community banks and CUs into digital dynamos that are second to none. Golden 1 Credit Union has taken note of this, partnering with NCR Voyix to develop an adaptable digital banking platform that caters to SMBs\u2019 evolving needs.

\n

Writing the Digital Prescription for SMB Client Success

\n

The traditional banking model is simply no longer enough. SMBs are demanding comprehensive digital banking solutions, but these pleas are rooted in genuine needs that reflect a rapidly digitalizing economy. As SMBs increasingly search for intuitive, integrated and insightful banking solutions, FIs \u2014 especially community banks and CUs \u2014 face an extraordinary market opportunity to redefine their roles from mere banking service providers to strategic growth partners.

\n

PYMNTS Intelligence recommends that community banks and credit unions consider partnering with FinTechs to offer digital services to small businesses, especially if they lack these offerings in-house. This approach can be mutually beneficial to FIs and their SMB clients by doing the following:

\n
    \n
  1. Expanding product offerings: Partnerships with FinTech firms enable community banks to integrate third-party solutions, offering a more comprehensive range of financial products to small businesses. This allows banks to provide innovative digital services without having to develop them from scratch.
    2. \n
  2. Accelerating innovation: The ease of integrating FinTech solutions allows community banks to implement them quickly, reducing the time to market. This is particularly valuable for small banks that may not have large research and development budgets.
    3. \n
  3. Enhancing customer experience: Collaborating with FinTechs can give banks access to cutting-edge technology, enabling seamless digital experiences and personalized services for small business customers. For example, SF Fire Credit Union partnered with a FinTech to create personalized digital experiences, resulting in significantly improved application completion rates.
    4. \n
  4. Addressing specific needs: Partnering with FinTechs can allow FIs to tailor solutions to the unique needs of their small business clients for greater satisfaction and loyalty. For instance, The Cooperative Bank partnered with a FinTech to provide advanced artificial intelligence (AI) technology for protecting elderly customers from scams.
    5. \n
\n

By offering both seamless digital technology and personalized financial expertise, community FIs can forge lasting relationships with their SMB clients \u2014 and make a serious play for the gold ring of SMB digital-first banking business.

\n

The post The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity? appeared first on PYMNTS.com.

\n", "content_text": "Small to mid-sized businesses (SMBs) are the beating heart of the economy, but four years into the pandemic\u2019s digital transformation, many are still fighting to gain a clean bill of financial health. Outdated manual accounting processes and paper payments continue to waste precious time as cash flow falters and inflation erodes margins. Smaller banks and credit unions have their finger on the pulse of their communities\u2019 needs and can set SMB clients on a path to success with modern digital banking and financial management tools. However, amid continued struggles, many small businesses are seeking alternatives to their existing banking relationships. Can community financial institutions (FIs) rise to the challenge of keeping their SMB customers loyal? Helping them get on their financial feet is the first step.\n\n Financial Shortfalls Continue to Plague SMBs\n SMBs Seek Digital Remedies for Cash Flow Pain\n From Traditional Banks to Trusted Advisers\n Writing the Digital Prescription for SMB Client Success\n\nFinancial Shortfalls Continue to Plague SMBs\nLate payments, inflation and outdated payment processes create a triple threat of blocked cash flow, inefficiency and impaired decision-making for small businesses.\n\n\n\nLate payments remain a stubborn impediment to SMBs\u2019 cash flow.\nDelayed payments continue to hamper small businesses\u2019 operations. In the final quarter of the 2023 calendar year, SMBs waited 29.1 days on average to receive payment, a nerve-racking average of 9.6 days late \u2014 both up from the previous quarter. For small businesses, timely payments are not just nice-to-haves but essentials for survival and growth.\n\n\n71%\nof SMBs are experiencing cash shortfalls.\n\n\n\nInflation is stretching small businesses to their limits.\nSeventy-six percent of SMBs with revenues under $10 million say they are suffering under the economy\u2019s prolonged inflationary conditions, with a staggering 71% still experiencing cash shortfalls. Conditions have reached desperate levels for many, with 35% of SMB owners dipping into personal savings, 31% forgoing their own paychecks and 19% filling cash gaps with personal loans to keep their businesses afloat. This unrelenting pressure calls for smarter money-management tools tailored to SMBs\u2019 needs.\nManual accounting processes exacerbate macroeconomic distress.\nIn an era of advanced technology, legacy accounting processes nevertheless maintain their choke hold over many business operations. An astonishing 36% of mid-sized firms are still using costly paper payments in accounts payable (AP), while 35% are wrangling accounts receivable (AR) manually. Smaller SMBs, particularly those generating less than $100,000 annually, are bearing the brunt of this inefficiency, with these work tools contributing to already highly unpredictable payment cycles.\nSMBs Seek Digital Remedies for Cash Flow Pain\nSMBs are aware of the need to digitalize and are actively seeking banking partnerships that can help them do so. They are also frustrated with \u2014 and ready to jettison \u2014 those that do not.\nSMBs are frustrated with their current financial management and banking processes.\n\n\n\n70%\nof SMBs express interest in comprehensive cash management services from their primary FIs.\n\n\nFor SMBs, particularly those without dedicated accounting teams, financial management can be a daunting and time-consuming task. More than two-thirds (68%) of small business owners in a recent American Express survey expressed a longing for more time to focus on their core products and services instead of managing their businesses\u2019 finances. In the United Kingdom, 74% of SMBs lament the marathon treks to deposit cash at rapidly vanishing local bank branches. In the United States, 34% of SMBs are burning a full workweek every year on in-branch banking activities, a situation so frustrating that 32% have already adopted new primary banks with a more digital focus. Clearly, the time for a digital switch is long past due.\n\n\n\nSMBs have a fast-growing appetite for digital banking solutions.\nGoing digital is more efficient, and 78% of SMBs prefer to pay employees with a click, not a check. An even greater share, at 90%, are demanding the same push-button ease for vendor payments. Nearly seven in 10 SMBs want comprehensive cash flow management tools from their primary banks. With $150 billion in annual SMB banking revenue at stake, FIs that cannot deliver on these digital demands risk both client churn and a potential share of the valuable SMB market.\nSMBs are actively pursuing new banking relationships to upgrade their digital capabilities.\nSmall business clients discontented with current banking partners are voting with their feet. In the U.K., 25% of SMBs plan to sever ties with their primary banks within the year, while 41% of U.S. SMBs are threatening to do the same, similarly motivated by lower barriers to credit (39%), better support (33%) and more impressive digital banking experiences (32%) elsewhere. These findings suggest that banks and CUs not offering robust digital solutions could face an exodus of their SMB clients to competitors.\nFrom Traditional Banks to Trusted Advisers\nBy offering digital solutions that include predictive tools, seamless integrations and tailored guidance, community banks and CUs can position themselves as strong financial management partners in their SMB clients\u2019 success.\n\n\n\nSMBs want bankers to speak fluent \u2018digital\u2019 \u2014 and be financial gurus as well.\nWith nearly half of SMBs less than confident that their banks comprehend their cash flow struggles, many are moving away from traditional banking. Already, 42% of SMBs select their primary banks based on the latter\u2019s sophisticated online and mobile offerings, while 35% prioritize digital banking experiences and seamless integration with their business software. Although 62% of SMBs still seek exceptional customer service, there is also a strong demand for technologies that turn financial management challenges into victories.\n\n\n42%\nof SMBs now choose their primary FIs based on the availability of online and mobile banking offerings.\n\n\n\nTo become better partners to their clients, banks can partner in turn \u2014 with technology providers.\nCommunity banks and CUs might find themselves coveting the digital arsenals of bigger banks \u2014 such as Citizens, which can now offer SMBs a 12-month glimpse into their fiscal futures with its new cash flow forecasting tool. However, FIs do not need to be megabanks to check all the boxes on SMBs\u2019 digital wish lists. Partnerships with the right FinTechs and other payments providers can turn community banks and CUs into digital dynamos that are second to none. Golden 1 Credit Union has taken note of this, partnering with NCR Voyix to develop an adaptable digital banking platform that caters to SMBs\u2019 evolving needs.\nWriting the Digital Prescription for SMB Client Success\nThe traditional banking model is simply no longer enough. SMBs are demanding comprehensive digital banking solutions, but these pleas are rooted in genuine needs that reflect a rapidly digitalizing economy. As SMBs increasingly search for intuitive, integrated and insightful banking solutions, FIs \u2014 especially community banks and CUs \u2014 face an extraordinary market opportunity to redefine their roles from mere banking service providers to strategic growth partners.\nPYMNTS Intelligence recommends that community banks and credit unions consider partnering with FinTechs to offer digital services to small businesses, especially if they lack these offerings in-house. This approach can be mutually beneficial to FIs and their SMB clients by doing the following:\n\nExpanding product offerings: Partnerships with FinTech firms enable community banks to integrate third-party solutions, offering a more comprehensive range of financial products to small businesses. This allows banks to provide innovative digital services without having to develop them from scratch.\nAccelerating innovation: The ease of integrating FinTech solutions allows community banks to implement them quickly, reducing the time to market. This is particularly valuable for small banks that may not have large research and development budgets.\nEnhancing customer experience: Collaborating with FinTechs can give banks access to cutting-edge technology, enabling seamless digital experiences and personalized services for small business customers. For example, SF Fire Credit Union partnered with a FinTech to create personalized digital experiences, resulting in significantly improved application completion rates.\nAddressing specific needs: Partnering with FinTechs can allow FIs to tailor solutions to the unique needs of their small business clients for greater satisfaction and loyalty. For instance, The Cooperative Bank partnered with a FinTech to provide advanced artificial intelligence (AI) technology for protecting elderly customers from scams.\n\nBy offering both seamless digital technology and personalized financial expertise, community FIs can forge lasting relationships with their SMB clients \u2014 and make a serious play for the gold ring of SMB digital-first banking business.\nThe post The $150B Question: Can Community FIs Capture the SMB Digital Banking Opportunity? appeared first on PYMNTS.com.", "date_published": "2024-07-29T04:03:29-04:00", "date_modified": "2024-07-30T22:27:05-04:00", "authors": [ { "name": "Ashley McLeod", "url": "https://www.pymnts.com/author/amcleod/", "avatar": "https://secure.gravatar.com/avatar/5fcbfee0fc4dc81613187d709d661036?s=512&d=blank&r=g" } ], "author": { "name": "Ashley McLeod", "url": "https://www.pymnts.com/author/amcleod/", "avatar": "https://secure.gravatar.com/avatar/5fcbfee0fc4dc81613187d709d661036?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/smb-digital-first-banking.jpg", "tags": [ "B2B", "B2B Payments", "banking", "commercial payments", "credit unions", "Digital Banking", "Digital-First Banking", "Featured News", "Financial Apps", "Mobile Payments", "NCR Voyix", "News", "payments innovation", "PYMNTS Intelligence", "PYMNTS News", "SMBs", "spend management", "Tracker Series" ] }, { "id": "https://www.pymnts.com/?p=2012270", "url": "https://www.pymnts.com/digital-first-banking/2024/monzo-debuts-digital-bank-accounts-for-kids-under-16/", "title": "Monzo Debuts Digital Bank Accounts for Kids Under 16", "content_html": "

\u00a0British digital bank Monzo is launching a free account for children under 16.

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The bank on Wednesday announced the waitlist for Monzo for Under 16s, designed to offer money management tools to kids between the ages of 6 and 15.\u00a0

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\u201cThe account gives children the opportunity to experience magic money firsts like saving, budgeting, receiving pocket money or using a card to pay in a shop, all while giving parents or guardians complete control and visibility to ensure they\u2019re managing their money safely,\u201d Monzo said in a news release.

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According to the release, the program lets kids sign up without paying fees for top-ups, subscriptions or spending abroad. Children can set savings goals and receive scheduled pocket money, while their parents can have these accounts linked to their own to control spending, online payments and cash withdrawals.

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Monzo says the Under 16s accounts also offer guidance on things like saving, budgeting and spending safely online and allow children to move up to a 16-17s account and again to a full Monzo account upon reaching adulthood.

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Monzo\u2019s efforts to help educate younger customers come at a time when many teenagers in more prosperous countries \u2014 such as the UK and U.S. \u2014 are behind in financial literacy.

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Although more than two-thirds of students regularly use financial products and services, levels of financial literacy are too low to make sure they can escape financial risks, the Organization for Economic Cooperation and Development (OECD) said last month after releasing the latest volume of its financial literacy assessment.

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That study examined the financial skills of 15-year-olds in 14 OECD and six partner countries and economies and determined that many of them engage in basic financial activities from a young age.\u00a0

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\u201cHowever, many still lack the skills and knowledge needed to make sound financial decisions: nearly one out of five students on average in participating OECD countries and economies, did not achieve baseline proficiency levels in financial literacy,\u201d the organization said.

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Meanwhile, research by PYMNTS Intelligence has found that many consumers want more financial expertise, and often look to financial institutions (FIs) for guidance, with many younger consumers being unaware of things like their credit scores.

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\u201cThis may not be surprising, considering that 79% of Gen Z and millennials say they get their financial advice through social media,\u201d PYMNTS wrote recently. \u201cOnly 11% say they use financial advisers to get the direction they need.\u201d

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The post Monzo Debuts Digital Bank Accounts for Kids Under 16 appeared first on PYMNTS.com.

\n", "content_text": "\u00a0British digital bank Monzo is launching a free account for children under 16.\nThe bank on Wednesday announced the waitlist for Monzo for Under 16s, designed to offer money management tools to kids between the ages of 6 and 15.\u00a0\n\u201cThe account gives children the opportunity to experience magic money firsts like saving, budgeting, receiving pocket money or using a card to pay in a shop, all while giving parents or guardians complete control and visibility to ensure they\u2019re managing their money safely,\u201d Monzo said in a news release.\nAccording to the release, the program lets kids sign up without paying fees for top-ups, subscriptions or spending abroad. Children can set savings goals and receive scheduled pocket money, while their parents can have these accounts linked to their own to control spending, online payments and cash withdrawals.\nMonzo says the Under 16s accounts also offer guidance on things like saving, budgeting and spending safely online and allow children to move up to a 16-17s account and again to a full Monzo account upon reaching adulthood.\nMonzo\u2019s efforts to help educate younger customers come at a time when many teenagers in more prosperous countries \u2014 such as the UK and U.S. \u2014 are behind in financial literacy.\nAlthough more than two-thirds of students regularly use financial products and services, levels of financial literacy are too low to make sure they can escape financial risks, the Organization for Economic Cooperation and Development (OECD) said last month after releasing the latest volume of its financial literacy assessment.\nThat study examined the financial skills of 15-year-olds in 14 OECD and six partner countries and economies and determined that many of them engage in basic financial activities from a young age.\u00a0\n\u201cHowever, many still lack the skills and knowledge needed to make sound financial decisions: nearly one out of five students on average in participating OECD countries and economies, did not achieve baseline proficiency levels in financial literacy,\u201d the organization said.\nMeanwhile, research by PYMNTS Intelligence has found that many consumers want more financial expertise, and often look to financial institutions (FIs) for guidance, with many younger consumers being unaware of things like their credit scores.\n\u201cThis may not be surprising, considering that 79% of Gen Z and millennials say they get their financial advice through social media,\u201d PYMNTS wrote recently. \u201cOnly 11% say they use financial advisers to get the direction they need.\u201d\nThe post Monzo Debuts Digital Bank Accounts for Kids Under 16 appeared first on PYMNTS.com.", "date_published": "2024-07-17T12:56:41-04:00", "date_modified": "2024-07-17T21:19:23-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/Monzo-teen-cards.jpg", "tags": [ "Digital Banking", "digital banks", "digital transformation", "financial education", "Financial Literacy", "Monzo", "News", "PYMNTS News", "What's Hot", "Digital-First Banking" ] }, { "id": "https://www.pymnts.com/?p=2012231", "url": "https://www.pymnts.com/digital-first-banking/2024/matera-gets-100million-to-expand-banking-software-footprint/", "title": "Matera Gets $100 Million to Expand Banking Software Footprint", "content_html": "

Banking software provider Matera has landed a $100 million investment from growth investor Warburg Pincus.\u00a0

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The new funding, announced in a news release Wednesday (July 17), will help finance Matera\u2019s continued expansion into North America and fuel product development.\u00a0

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Matera has its roots in Brazil, a country that \u2014 per the release \u2014 \u201cis a global standard when it comes to payments infrastructure, led by a long-standing innovative central bank agenda.\u201d

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Payments through the Brazilian central bank\u2019s Pix system account for more than 40% of all electronic transactions in the country. Matera\u2019s solution, meanwhile, processes more than 5 billion transactions a year, almost half of which are initiated by scanning a QR Code.

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\u201cPix set the standard for the digital finance revolution,\u201d Carlos Netto, co-founder and CEO of Matera, said in the release.

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\u201cAt Matera, we know first-hand the pressure for banks to modernize their infrastructure to keep up with innovative new payment methods such as instant payments and pay-by-bank.\u00a0

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We\u2019re honored to leverage our PIX expertise with proven solutions to help financial institutions across North America keep pace with their customers\u2019 digital demands.\u201d\u00a0

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Matera announced plans to expand into North America in late 2022 and last year introduced its flagship offering for the region, known as Digital Twin.

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As PYMNTS reported at the time, this is a cloud-native software designed to sit on top of a financial institution\u2019s core banking platform, allowing for real-time transaction authorizations and balance updates 24/7 for various financial accounts.

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Digital Twin is designed to allow banks and credit unions to speed their digital transformation while reducing operational costs, the company said.

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Meanwhile, research from the PYMNTS Intelligence report \u201cHow The World Does Digital\u201d backs up Matera\u2019s statement about Brazil\u2019s attitude toward payments, with that study showing that the country had the highest level of digital engagement of the 11 nations studied.

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And Pix\u2019s launch was a force that \u201clit up\u201d Brazil, Ruben Salazar Genovez, president of cross-border payment enabler TerraPay, said during a recent PYMNTS panel discussion.

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\u201cIn many ways, Pix is the enabler for this impressive digital adoption in Brazil,\u201d he said. \u201cThe gig economy, content creators, gaming, streaming services like Netflix or marketplaces like Mercado Libre, all of them need efficient payment infrastructure. So Pix is the backbone of this digital adoption in Brazil today.\u201d

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Pix, said Genovez, also helped businesses and consumers to engage across digital marketplaces, while setting the stage for FinTechs and other digital-only innovators \u2014 to the point that the country has been the source of 45% of FinTech revenues in the region as neobanks such as Nubank have gained ground.

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The post Matera Gets $100 Million to Expand Banking Software Footprint appeared first on PYMNTS.com.

\n", "content_text": "Banking software provider Matera has landed a $100 million investment from growth investor Warburg Pincus.\u00a0\nThe new funding, announced in a news release Wednesday (July 17), will help finance Matera\u2019s continued expansion into North America and fuel product development.\u00a0\nMatera has its roots in Brazil, a country that \u2014 per the release \u2014 \u201cis a global standard when it comes to payments infrastructure, led by a long-standing innovative central bank agenda.\u201d\nPayments through the Brazilian central bank\u2019s Pix system account for more than 40% of all electronic transactions in the country. Matera\u2019s solution, meanwhile, processes more than 5 billion transactions a year, almost half of which are initiated by scanning a QR Code.\n\u201cPix set the standard for the digital finance revolution,\u201d Carlos Netto, co-founder and CEO of Matera, said in the release.\n\u201cAt Matera, we know first-hand the pressure for banks to modernize their infrastructure to keep up with innovative new payment methods such as instant payments and pay-by-bank.\u00a0\nWe\u2019re honored to leverage our PIX expertise with proven solutions to help financial institutions across North America keep pace with their customers\u2019 digital demands.\u201d\u00a0\nMatera announced plans to expand into North America in late 2022 and last year introduced its flagship offering for the region, known as Digital Twin.\nAs PYMNTS reported at the time, this is a cloud-native software designed to sit on top of a financial institution\u2019s core banking platform, allowing for real-time transaction authorizations and balance updates 24/7 for various financial accounts.\nDigital Twin is designed to allow banks and credit unions to speed their digital transformation while reducing operational costs, the company said.\nMeanwhile, research from the PYMNTS Intelligence report \u201cHow The World Does Digital\u201d backs up Matera\u2019s statement about Brazil\u2019s attitude toward payments, with that study showing that the country had the highest level of digital engagement of the 11 nations studied.\nAnd Pix\u2019s launch was a force that \u201clit up\u201d Brazil, Ruben Salazar Genovez, president of cross-border payment enabler TerraPay, said during a recent PYMNTS panel discussion.\n\u201cIn many ways, Pix is the enabler for this impressive digital adoption in Brazil,\u201d he said. \u201cThe gig economy, content creators, gaming, streaming services like Netflix or marketplaces like Mercado Libre, all of them need efficient payment infrastructure. So Pix is the backbone of this digital adoption in Brazil today.\u201d\nPix, said Genovez, also helped businesses and consumers to engage across digital marketplaces, while setting the stage for FinTechs and other digital-only innovators \u2014 to the point that the country has been the source of 45% of FinTech revenues in the region as neobanks such as Nubank have gained ground.\nThe post Matera Gets $100 Million to Expand Banking Software Footprint appeared first on PYMNTS.com.", "date_published": "2024-07-17T11:26:38-04:00", "date_modified": "2024-07-17T11:26:38-04:00", "authors": [ { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" } ], "author": { "name": "PYMNTS", "url": "https://www.pymnts.com/author/pymnts/", "avatar": "https://secure.gravatar.com/avatar/f05cc0fdcc9e387e4f3570c17158c503?s=512&d=blank&r=g" }, "image": "https://www.pymnts.com/wp-content/uploads/2024/07/Matera.jpg", "tags": [ "Banking Software", "brazil", "digital twin", "funding", "instant payments", "Matera", "News", "PIX", "PYMNTS News", "What's Hot", "Digital-First Banking" ] } ] }