Spare Change


“If the current financial industry is to remain relevant, it must brace for a FinTech-tonic shift of unprecedented proportions,” writes Jim Marous in the Financial Brand. “FinTech carries awesome potential for creative disruption, and the financial industry—the very creators of money—must manage this global dash towards both disintermediation and demonetization.”

You’ll see that global dash reflected in this week’s links. The Bank of England agrees while roboadvisory technology in the wealth management sector grows. Bitcoin investment prices continue to gyrate, as cash-use increased when it comes to paying for things.

It looks like incumbent financial institutions in the United States are in for a tax-break windfall. Whether that spare change be used to fix pressing infrastructure problems remains to be seen.

What’s next? Predictions for the banking industry in 2018

The ongoing reliance on legacy systems combined with external threats and internal inertia will make 2018 a challenging year for incumbent financial services organizations, according to the analysts at Forrester Research. “While 2018 will undoubtedly bring more digital developments, few financial institutions will do enough to truly differentiate their brands and remain relevant to customers,” writes Jim Marous in the Financial Brand.

Anyone who uses the systems of most incumbent banks, insurers, and wealth managers knows this. I have been frustrated with the systems of a large health insurer for weeks, and my understanding of the challenges the company faces with digital systems does not ease my pain. As Marous warns, “Stop-gap solutions will no longer suffice. Significant investments in infrastructure and an internal shift from a legacy culture is needed.”


If you’re in Chicago next Wednesday, join me for the Chicago Payments Forum, where we will look at the trends that will shape the industry in 2018:

BoE says banks may be underestimating FinTech threat

“Britain’s banks may be overstating their ability to stop FinTech firms stealing customers and eating into profits, Reuters reports. The Bank of England (BoE) for the first time, included an “exploratory” scenario on how lenders would cope with a seven-year downturn and competition from FinTech firms. Although FinTech is creating opportunities for customers and businesses, “it could also have profound consequences for the business models of incumbent banks,” BoE Governor Mark Carney said.

What’s next? Predictions for the banking industry in 2018

The San Francisco Fed, which tracks cash levels and use, notes that even in the world of Apple Pay, bitcoin, and Square, “more payments are being made with a click, a tap, or a swipe, and it feels like we’re carrying fewer notes and coins than ever before.”

Yet cash in circulation (CIC) grew faster than GDP in most countries over the past 10 years, reports the San Francisco Fed. Why? “Presumably, very low interest rates in many countries over the past decade has been one factor boosting the demand for cash, as well as uncertainty following the global financial crisis.” The worldwide color-coded graphic tells the story.

The evolution of digital wealth management: roboadvisory, digital advisors and financial planning

The evolution of the wealth-management segment of the FinTech industry in one impressive graphic from Thomas Brand, a management consultant at Accenture.