Market Notes – XpertSavers

White Paper: Why Banks Need a Digital Account Opening Channel to Grow

As consumers become increasingly accustomed to seamless digital online processes in almost every industry, the pressure is on for financial services to meet the high expectations of today’s consumers. It is no longer acceptable to simply check balances and transfer funds online — today’s consumers want to truly manage their funds online — open an account, pay bills, deposit a check – as if they were sitting across from their banker. The circumstances surrounding the COVID-19 pandemic have only accelerated the already pressing demand for banks to eliminate the branch-centric model and adopt an end-to-end digital-first strategy. Click on PDF to read the current research on the impact of digitization.

Whitepaper- Why banks need a digital account opening channel to grow

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An Insightful Leader: CEO of XpertSavers, Jennifer Armstrong, Interviewed in Analytics Insights Magazine

Fintech start-ups with new business models and highly targeted apps have resulted in significant disruption to financial services. Which is why Jennifer Armstrong, CEO of XpertSavers, is so passionate about helping local banks embrace the idea of becoming ‘digital first’. Before founding XpertSavers Jennifer spent a good portion of her career at Citibank and CIT. She founded XpertSavers, a technology consulting firm with deep knowledge of banking, because she was concerned that many community banks were falling behind and needed help to transform. Click on link to article to read more.

Analytics Insights The 10 Most Influential Women in Technology 2020

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Some Notable Takeaways From Cyber Banks

2Q - 2018 Ally's retail deposits grew 15% year-over-year. They have an average balance of approximately $54,000. Millennials continue to comprise the largest generation segment of new customers at 56%. In addition, customer retention remains strong at 96% in 2018. CIT's strategy to reduce deposit costs relative to the index shift origination to lower cost non-maturity deposits and lower balance amounts. As a result, savings balances grew by over 23% from $6.4 Billion to $7.9 Billion driving total on-line deposit growth from $12.4 Billion to $13.9 Billion from Q1 to Q2. 1Q - 2018 PurePoint Bank which launched in early 2017 by MUFG Union Bank has generated about $3 Billion in deposits. Marcus has almost doubled their balances since Goldman bought the GE Capital Bank platform in April 2016. 4Q -2017 Synchrony had an 87% retention rate on certificates of deposit balances up for renewal for the year ended December 31, 2017.

Sources: Company Annual and Quarterly Reports and Press Releases

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Fintechs are banking's Transformers. And banks aren’t ready.

Until very recently, banks grew by building new branches and marketing to people in the immediate vicinity. In New York, that's given rise to "four-corner banking," a branch on each corner of an intersection. The big banks will spend the next decade deconstructing what it took many decades to construct. Visits to retail bank branches are set to drop 36% between 2017 and 2022, while mobile transactions will rise by 121%, says CACI. It also predicts that 88% of all interactions will be mobile by 2022. Everyone with a mobile phone, not just millennials, demand instant information and immediate transactions. Too many banks are hobbled by decades-old batch systems. Meanwhile, Silicon Valley has forgotten how to spell the word "batch." Citibank's 2018 mobile banking study found that 91% of mobile banking users said they prefer using their app than visiting a branch, and 68% "of millennials who mobile bank see their smartphones replacing their physical wallets."

https://www.americanbanker.com/opinion/fintechs-are-bankings-transformers-and-banks-arent-ready

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Banks find a cheat code to catch up on digital: Merging

The proposed merger of South State and CenterState Bank presents more evidence that small regional banks are looking for ways to build scale, expand their geographic reach and free up funds to invest in digital channels. Large-scale M&A, including the $3.2 billion combination announced on Monday, is quickly becoming a popular way to achieve those goals. The deal will create a $34 billion-asset regional with operations in six Southeastern states. A substantially larger balance sheet and cost-cutting plans should help the combined company become more efficient. It should also be able to spread tech investments across a broader base, allowing the bank to compete more effectively with companies such as Bank of America that have gotten strong digital traction. "Clearly, digital is the future," John Corbett, CenterState's president and CEO, said during a conference call to discuss the deal.

https://www.americanbanker.com/news/banks-find-a-cheat-code-to-catch-up-on-digital-merging

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10 Strategies for Delivering an Exceptional Experience in a Digital World

How to foster an innovative and proactive approach to digital engagement that educates and guides members while minimizing friction. Whether it's the advertisements that appear on their social media page or suggestions for movies based on their streaming habits, today's consumers have become accustomed to receiving relevant content from the companies they do business with. Consumers increasingly expect that companies will anticipate their needs and offer proactive guidance at the right time. One firm that illustrates this type of exceptional digital engagement is USAA. Brent Hartman, Director, P&C Digital Product Management for USAA, shares ten strategies for using proactive digital engagement tools to deliver guidance at scale. Strategy #1 - Define Your Overall Mission, Strategy #2 - Understand Your Demographics, Strategy #3 - Focus on Both the Financial Services and Digital Experience, Strategy #4 - Replicate a High-Touch Experience in a Digital World, Strategy #5 - Know Your Data, Strategy #6 - Iterate and Improve, Strategy #7 - Test, Test and Test Again, Strategy #8 - Communicate Proactively, Strategy #9 - Focus on Education, Strategy #10 - Get Started Now.

https://www.americanbanker.com/whitepaper/10-strategies-for-delivering-an-exceptional-experience-in-a-digital-world

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Liquidity Concerns Force Banks to get Creative with Deposit Gathering

Low rates, increased competition and a need to court younger clients are forcing small banks to rethink their approach to gathering deposits. Several surveys, including a late 2018 polling of 305 senior-level bank and credit union executives by Cornerstone Advisors and a spring assessment of 571 community bankers conducted by the Conference of State Bank Supervisors, found that deposits and liquidity are among the industry's biggest concerns. Financial institutions are starting to lose more funds to alternative accounts such as Venmo and Square Cash, and savings tools such as Acorns and Stash, said Ron Shevlin, Cornerstone's director of research. As a result, community banks are increasingly going digital and changing their views on what constitutes a core deposit relationship.

https://www.americanbanker.com/news/liquidity-concerns-force-banks-to-get-creative-with-deposit-gathering

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Digitization Will Make Most Heritage Financial Firms Irrelevant

By 2030, 80% of heritage financial firms will go out of business, become commoditized or exist only formally. Financial services CIOs should push their organizations for a more coherent response to digital business. Impacts - Digital disruptors will force CIOs in financial services firms to accelerate digital transformation. - Digital ecosystem partnerships will enable disruptors to rapidly scale, and to offer more diversified services to challenge incumbents.

https://www.gartner.com/en/doc/337197-innovation-insight-for-insurance-cios-analyzing-the-digital-maturity-of-insurtechs

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