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The Future Of Payments And Banking: Moving Beyond The Branch Experience

In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Scott Sanborn, CEO of LendingClub, explains why the future of banking will no longer be defined as a place where people go, but by what they can do— whether that’s borrowing, spending, saving or investing.

Read the entire eBook here.

The last year has been a FinTech Darwinian evolution, as digital-first banks and big banks picked up customers while midsized, community and regional banks faltered, due in part to a significant lack of investment in technology.

Before the pandemic, a convenient banking experience focused on having a branch close to home, but that’s not the case anymore.

The pandemic accelerated the move to digital banking, and I believe it’s permanent. A digital-first solution is now table stakes to survive. FinTechs have been a key driver in reshaping what banking looks like today, making it more personal, accessible and transparent. They have been attacking profit centers and underserved customers. This has impacted consumers’ expectations about the feature set and the experiences they receive from banks, a trend that will only accelerate. Consumers want access to their money from a partner that treats them fairly and doesn’t take them by surprise. No more overdraft fees and late fees. Early access to direct-deposit paychecks is now becoming the standard price of entry. That’s not going to change.

Two other areas of potentially permanent change are the role the government takes in cushioning the impact of future recessions by directly injecting money into the hands of businesses and consumers, as well as the role that lenders take in providing relief to their customers during difficult times.

The willingness of banks and the government to intervene has fundamentally shifted people’s expectations of what companies will do for them, potentially creating a new social contract. When faced with future disasters, people may expect more because companies have shown they can do more. In the future, if an institution is not willing to provide relief and find ways to bridge people’s finances, customers could go elsewhere. Conversely, institutions that align themselves with the success of their customers will win.

Right now, the future looks bright. Capital is cheap and plentiful, and credit is good, which should drive a resurgence in lending to support the recovery. However, the music won’t last forever – and when it stops, the strength of many FinTech business models will be tested, valuations will compress, and weaker companies will fold or be consolidated. To prepare for this inevitable future, many FinTechs will continue to try to find their way into the banking system to increase the resiliency and profitability of their models.

In the coming years, I expect financial services to move toward a future where banks’ profits align with the success of their customers while they optimize the way consumers borrow, spend, save and invest.

The future of banking will no longer be defined as a place where people go, but by what they can do.

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