Pub. 15 2018 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 16 F inancial technology, or fin - tech as it is more commonly known, at its most basic means using technology to de - liver better financial products and services. In many ways, the fintech revolution has already taken place. Bank customers can use their smart phone devices to check their account status, pay bills, and deposit funds. In fact, because of technology, individuals almost never need to visit their bank branch for routine transactions. Fintech also refers to the hundreds of companies that emerged in recent years, from marketplace lenders to pure technology plays. Fintechs burst on the scene in the wake of the financial crisis as an alternative to traditional banking— raising expectations that they, rather than conventional banks, would drive the industry’s future. Now some of the same companies that just a few years ago were celebrated as the future of banking are struggling to withstand credit, business, and econom - ic cycles and to secure the funding they need to grow. And a few even face more serious problems, as well as manage - ment turnover. As a result, many fintech leaders are rethinking their strategies. Some for ward-thinking fintechs are now part- nering with banks, instead of competing with them, or turning to time-honored banking tools like deposit-based funding of loans. Still others are pursuing a once-un - thinkable strategy—acquiring bank char - ters through ILC applications—in other words, becoming banks themselves. The overall situation remains murky. Are fintechs prepared to navigate the reg - ulatory environment? Will doing so erode their cost advantages? Can traditional banks fully rely on new fintech partners? When fintechs recover from their recent stumbles, will they resume their competi - tion with the banking industry. Fintech for Banks Partnering with Banks is Key to Fintech’s Future Glenn Martin, Promontory Interfinancial Network, Arlington, VA