Nichols says trusted customer relationships are paramount to success
WASHINGTON — Banks are innovating and partnering with startups to help benefit their customers, but smart policies are key to facilitating a modern, high-tech system, according to testimony from American Bankers Association president and CEO Rob Nichols before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit today.
Nichols noted that banks are “pro-innovation, pro-consumer and very technology focused” and emphasized banks’ history of embracing innovation to better serve their customers—including important advances such as the ATM, credit cards, online banking and remote check deposit. He stressed that banks are actively looking to partner with fintech startups to bring their customers the latest technologies through secure and trusted channels.
“When banks innovate and partner with startups to deliver new technologies their customers win,” Nichols said. “Banks have a long history of serving customers needs and have established trusted relationships. These relationships are backed by a culture of compliance and regulatory oversight that ensures customers are protected. When innovative products are delivered through bank channels, customers get a great experience backed with a relationship they can trust.”
Nichols remarked that financial technologies present tremendous opportunities for customers and banks alike, with the potential to promote financial inclusion—the delivery of financial services at affordable costs to those who may not have a banking relationship. These new technologies also have the potential to give customers better oversight of their financial services accounts and to extend credit to a wider swath of creditworthy borrowers. He noted, however, that while technology is a valuable tool that helps drive innovation, traditional banking is a relationship business that is not replicable by technology.
“Banks bring tremendous value to the table that is not replicable by startups, the most important being their role as trusted custodians of their customers’ money and information,” Nichols said. “Banks have established a strong level of trust with customers that is necessary when handling someone’s money. This trust is backed by a strong culture of compliance and a regulatory framework designed to protect customers. Establishing and growing customer relationships is the largest challenge for startups. Banks have stable deposit funding which gives them resiliency to offer innovative products throughout shocks and credit cycles.”
Nichols remarked that banks “remain a visible presence, supporting their local communities as they always have through community outreach and countless hours of volunteering – something that cannot happen through a key stroke or algorithm.”
For a copy of Nichols’ full testimony, please click here.