At the Plug and Play Retail and FinTech Expo on October 22nd, I had the opportunity to interview Dominic Venturo, CIO of U.S. Bank, on his views of the future of fintech and the role of the traditional bank in the new age cloud and increasingly mobile-first landscape. While its invigorating to cover the fintech newcos, they hardly have the monopoly on innovation. And, in the words of the legendary and enduring Grandmaster Flash, “You have to know where you came from to understand where you are going.” Partnering with the banking establishment can provide insight (and resources) that may save newcos time and iterations later.
Why choose to spotlight U.S. Bank? First, it has what Venturo calls a “wide lens” or breadth of business in that it runs a large payments business, is both an issuer and an acquirer, and also has a large retail bank. But mostly I find the U.S.’s fifth largest commercial bank interesting in that it makes innovation a core component of its culture. Aside from the sending of a C-level executive to speak at an accelerator/incubator micro-conference despite not having a venture wing, the company strives to support and to work with innovative partners including start-ups. States Andy Cecere, chief operating officer for U.S. Bancorp, “Innovation is part of our culture and it is how we view the development of new products and services. By anticipating what our customers will want or need in the future, we can better prepare our customers and company for whatever is ahead, capturing opportunities and avoiding pitfalls along the way.” Recent examples of innovation from U.S. Bank include advances in mobile payments, voice biometrics, tokenization and integrated mobile and web commerce solutions.
But what I really like about U.S. Bank is that it is willing to be a banking industry contrarian — and successfully so. One notable example is that while the majority of banks have cut back on small business lending (sub $1 million) over the past few years, U.S. Bank has increased its commitment to SMBs. In its fiscal year ended September 30th, the bank stepped up the overall dollar value of its SMB lending by 15.4% over 2014, while spreading its lending over an 18% greater number of loan recipients. The bank lent $776 million via 3977 loans in its fiscal year 2015 — a modest size loan average of $195,122 per business. Yet U.S. Bank reported an overall full year record performance in 2014 with net income of $5.85 billion.
But back to my interview with Dominic Venturo. Pardon the video quality — impromptu interviews necessitate the occasional shaky frame whilst one adjusts her grip on the cell phone… Thankfully the post-production team has added a little more pizzazz by posting each of my questions on-screen prior to Dominic’s answer.
Some interesting takeaways:
- It’s not so much the cloud now, it’s mobile.
- He sees the greatest fintech innovation happening in the minutiae of the payment life cycle — making in-app payments seamless, simplifying mobile payments.
- Passwords are going away for both internal use as well as consumer multi-factor authentication, with mobile phone-based biometrics being an area that U.S. Bank is focused on.
- Hardward tokens are not necessarily making a full-out comeback (for authentication) but there is a marked increase in their use — U.S. Bank uses them internally.