Long before he was a Broadway star, Alexander Hamilton was a formidable presence on another stage – in this case, the development of America’s financial system.
He advocated in the late 18th century for sweeping changes, arguing for a cohesive banking system and the availability of credit.
Fast forward a few centuries and it’s time to make some changes again, according to Mark Vermeersch, platform manager at Treasury Prime. Banking-as-a-Service (BaaS), he told PYMNTS, has the potential to modernize America’s banking system and bring anywhere, anytime functionality to consumers and business customers.
From Hamilton’s time, Vermeersch said, “The largest economy in the world has also given rise to a very fragmented banking system.”
A fragmented system
There are over 10,000 depository institutions, spanning banks, credit unions, and other providers. All, Vermeersch said, are grappling with an ongoing shift in the way banking is done and a shift in how consumers and businesses want to bank.
An increasing part of everyday financial life is conducted on mobile devices and tablets – and apps too, of course. The pandemic has given a tailwind to change itself. With Apple Pay, contactless payment options and digital wallets may have been new and innovative a few years ago, but they’re commonplace now.
The Invisible Layer
“The bank becomes an invisible layer — like, you step out of your Lyft,” he said, “and you don’t even think about the transaction” to pay for the ride because it’s happening in the background.
To meet these consumer expectations, Vermeersch said, creating a seamless end-user experience is key with the goal of enabling multichannel and multifaceted touchpoints. Banks are increasingly willing to partner with FinTechs and use providers such as Treasury Prime, which offer BaaS technology that removes a number of friction points.
Treasury Prime, he said, facilitates relationships between banks on one side of its platform and integrated FinTechs/finance companies on the other, with support on how to set up protocols appropriate to address compliance and regulatory issues (and in the meantime, a network of banks is taking shape).
The ultimate goal, he said, is to help businesses deliver a good user experience and add value through financial products – without getting bogged down in the technical hurdle of integrating directly with banks and the connection of different channels to facilitate payments.
The evolution of omnichannel banking, he said, does not necessarily exclude branch banking. Just as physical stores are important in retail, banks must also have physical options, even if the number of branches may decrease. Cash still has a role to play, as some consumers (and merchants) prefer this payment option.
“We need banking experiences that consider all of these things,” he said, “where banking is integrated into day-to-day operations.”
Asked by PYMNTS how he himself would change the banking system, Vermeersch said regulators would do a lot to modernize financial services by creating executives who invest in companies (Plaid comes to mind) that seek to digitize the bank and introduce continuums of products and services. .
Along the way, challenger banks can compete for this funding, resulting in top-notch innovation.
As he told PYMNTS, “the biggest economy in the world should also have the best banking technology in the world.”