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TheMobileBuzz
Banks ripe for Seeds of innovation
disruption
Shilkin said there is a trend toward digital banking at
B anks struggling to gain new accountholders the macro level. "This is not an overnight process, but in
have begun to explore new business models. three to 10 years we believe that we're going to see some
Indeed, according to Open Mobile Media, meaningful movement from what we would refer to as
83 percent of financial institutions surveyed traditional banks towards digital banking," he said.
expect mobile to be their main channel focus this year. But
will this help banks retain market share? And will they be Less entrenched nonbank players could facilitate digital
able to reach the many households that cannot afford, or channels must faster than banks. The concept itself is not
do not want to maintain, the high daily account balances new. In fact, as a young child, Shilkin said to his father,
and/or minimum monthly deposits financial institutions "One day we're going to have all of our cash and cards
typically require, in addition to the $10 to $20 monthly on our wristwatches, and we're going to zap each other
account fees some banks charge? money from our wristwatches." Years later, he pilot tested
the ChimpChange app using a Pebble smartwatch from
Typically, individuals priced out of mainstream financial the comfort of his living room. Currently, the app runs on
services join the ranks of the unbanked or underbanked. smartphones.
Also, traditional alternatives to banks like payday lenders
or check cashing services can charge fees that vary widely Shilkin also pointed out that his company is not trying to
and trap consumers in continual cycles of indebtedness. reinvent the banking network system. "We are working
The millennial and underbanked segments often pay the within the current regulation and framework of banking,
highest fees. so we've partnered with a sponsor bank, who has invested
in their back-end systems to focus on supporting partners
"I think you've got an industry, which is one of the last to like us," he said. "Our product is FDIC insured, and our
be disrupted, which hasn't innovated, which has a high cards are covered by the Mastercard zero-fraud liability
fee environment," said Ash Shilkin, founder and Chief protection policy."
Executive Officer of ChimpChange, a company that offers
digital banking. "It really is ripe for disruption by people Four months after launch in August 2015, ChimpChange
like us, and some of our peers in the space, to come in and had approximately 80,000 accountholders using its
offer a lower cost and better performing product." platform. "What we have been doing is building out the
basics of the bank account so that customers can check
With advancing technology, companies like ChimpChange account history, deposit their pay, load checks and send
can deliver the same features and functionality of a bank money to friends, which is just a starting point for us."
account, global use of a debit card, ability to make direct
deposits, fees clearly stated and no account minimums, The company's technical team of 20 is now focused
he said. "If you look at a traditional bank's transactional on how to better serve its growing customer base
account product offering, it looks pretty similar to how it comprising millennials, at 67 percent, and the remainder
looked in the early 1990s; really there hasn't been a lot of underbanked, which are both markets Shilkin intended to
innovation." directly target.
14 "I don't think the banking industry is going to disappear,
but you can see the power that innovation can have on
growth," Shilkin said. "I don't think status quo will do.
The value in partnering with somebody like us is that
accelerated growth in customer numbers." This is where
forward-thinking banks can retain a competitive edge
moving forward.
He said his company will continue to manage customer
communications and build software to simplify money
management. But to win over new customers, he believes,
fintech innovators must consider the convenience of
opening an account digitally, sending money with a video
or text explanation for recipients, tracking how money
is spent across all accounts for budgeting purposes and
other customer-centric features.
