Name: Fintech evolution: BaaS, Gen Z, and financial services media platforms
Uploaded: 2024-06-13T16:00:06.960Z
Duration: 366.5

FSPR.ED.04_Tiffani Montez_converted.mp4

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English

{{00:00:05}}
Hello, everyone, and
thank you for joining us.

{{00:00:07}}
My name is Julie Muhn.

{{00:00:09}}
I'm Senior Research Analyst with
Finovate and today I'm joined by Tiffani

{{00:00:12}}
Montez, Principal Analyst at EMARKETER.

{{00:00:16}}
Tiffani, thank you so
much for joining us today.

{{00:00:18}}
Thank you so much for inviting me.

{{00:00:18}}
It's good to be back.

{{00:00:19}}
Yeah, so today we get to
talk about a few topics.

{{00:00:23}}
The only thing that really relates them is
fintech itself, but I'm excited to dig in.

{{00:00:27}}
So first I want to talk to you
about banking as a service or as

{{00:00:31}}
what some people refer to as BaaS.

{{00:00:34}}
There's been a lot going
on with BaaS right now.

{{00:00:37}}
can you tell us a little bit about BaaS?

{{00:00:38}}
Why BaaS is important specifically
for smaller financial institutions?

{{00:00:43}}
And then, tell us, why BaaS is under
threat a little bit from the regulators

{{00:00:49}}
and then what your take is on that.

{{00:00:51}}
Yeah, absolutely.

{{00:00:52}}
So I think the first reason smaller
institutions want to use banking as

{{00:00:55}}
a service is because it gives them
an opportunity to  grow outside of

{{00:01:01}}
their own physical and digital assets.

{{00:01:02}}
And for many of them, they may
have a very localized approach, and

{{00:01:05}}
this is a way for them to extend
their reach into new ecosystems.

{{00:01:10}}
Yeah.

{{00:01:10}}
And so a lot of banks using
BaaS have received these

{{00:01:15}}
consent orders from regulators.

{{00:01:17}}
Are you worried at all that's going to
prevent interest in BaaS from community

{{00:01:22}}
FIs?Or  will they still be able to
continue to use BaaS in the future?

{{00:01:27}}
I'm glad you asked that question.

{{00:01:28}}
So one of the things that we wrote
about at the end of last year is that

{{00:01:31}}
we said that risky banking as a service
partnerships, We're going to kickstart

{{00:01:36}}
a Milli Vanilli moment in banking,
and are you familiar with who Milli

{{00:01:39}}
Vanilli is in the backstory there?

{{00:01:41}}
Okay, so for everyone else, Milli
Vanilli is an R& B act that sold

{{00:01:46}}
about 30 million records worldwide.

{{00:01:48}}
They had numerous number one hits.

{{00:01:51}}
Shortly after their success, it found out
that they were in a lip syncing scandal.

{{00:01:55}}
Apparently, none of the vocals
on any of their albums were

{{00:01:59}}
actually performed by them.

{{00:02:00}}
And so there was major public backlash.

{{00:02:03}}
Fans were burning their
records in the street.

{{00:02:06}}
Their Grammys got revoked.

{{00:02:07}}
A ton of things happened.

{{00:02:09}}
And so I feel like banking as a service
is going through something very similar.

{{00:02:13}}
Banks that are using this type of
model are just one link in an intricate

{{00:02:17}}
chain that weaves together numerous
partners from a fintech perspective.

{{00:02:21}}
And once you start to peel back those
layers, as we're seeing now, it exposes

{{00:02:26}}
the ugly underbelly of this model.

{{00:02:29}}
And that is why we're
seeing consent orders.

{{00:02:31}}
and we're seeing stories that
are rooted in fraud, deception,

{{00:02:35}}
finger pointing, you name it.

{{00:02:37}}
So it is a worrying sign and we do
expect that two things will happen.

{{00:02:41}}
It probably will slow
partnerships, number one.

{{00:02:44}}
And then two, we do expect
that some banking as a service

{{00:02:47}}
partners are going to fold.

{{00:02:49}}
Interesting.

{{00:02:50}}
Yeah.

{{00:02:50}}
Time will tell.

{{00:02:51}}
And we're both here to follow the story.

{{00:02:54}}
Great.

{{00:02:54}}
The second point I wanted to
talk to you about is Gen Z

{{00:02:57}}
or the zillennial generation.

{{00:02:59}}
Now you've done a lot of research on that.

{{00:03:00}}
What's your take on how FIs can
reach out to that new generation?

{{00:03:05}}
What are they looking for?

{{00:03:06}}
And how do they market to them?

{{00:03:07}}
Yeah, so Gen Z is interesting from
the perspective that it is banks'

{{00:03:11}}
biggest addressable market right now.

{{00:03:14}}
And but if you actually look at how
equipped banks are, they're actually not

{{00:03:17}}
equipped to capture or to even be able
to grow Gen Z's wealth in the future

{{00:03:23}}
because Gen Z's are very different.

{{00:03:24}}
They have less trust in traditional
financial institutions, although

{{00:03:28}}
they still do trust them the most.

{{00:03:31}}
They get most of their content from
social media sites or even influencers.

{{00:03:36}}
and they have very different
views of money than we do.

{{00:03:40}}
Part of them quite honestly are delusional
about finances and where they are.

{{00:03:44}}
And so really the opportunity for banks
here is to not only step in and provide

{{00:03:49}}
the right products, and the right
financial education, but you have to do

{{00:03:54}}
it in a way that captures their attention.

{{00:03:56}}
And that's going to mean that
you start to use new media

{{00:03:59}}
formats  to engage with them.

{{00:04:02}}
And that is going to mean that you
have to dive into the waters of

{{00:04:04}}
social media to be able to do that.

{{00:04:06}}
Yeah.

{{00:04:07}}
Interesting.

{{00:04:08}}
Yeah.

{{00:04:08}}
Great.

{{00:04:09}}
So the next the last thing I want
to talk to you about are these

{{00:04:11}}
digital marketing platforms.

{{00:04:13}}
Talk to us about what Chase came out with
at the beginning of the year and how you

{{00:04:16}}
see that developing and evolving and how
it will impact different stakeholders.

{{00:04:20}}
Yeah, absolutely.

{{00:04:21}}
Chase rolled out what we are calling
financial services media networks.

{{00:04:26}}
So if you think about that under
the context of retail media, it is

{{00:04:29}}
a marketplace where providers can
get at or deliver targeted ads to

{{00:04:34}}
consumers using the data that they
have about them in an actual, we'll

{{00:04:38}}
call it a walled garden ecosystem.

{{00:04:40}}
So chase is doing something similar
where they are creating a platform

{{00:04:44}}
that can allow people to deliver
targeted ads in mobile banking.

{{00:04:48}}
There are also other
players that are doing it.

{{00:04:50}}
There's neo banks, there's payment
providers that are all jumping in.

{{00:04:54}}
And the reason that is happening
is that number one, this is like

{{00:04:57}}
version two of merchant funded reward.

{{00:05:00}}
So version one was merchant
funder rewards version two is

{{00:05:04}}
financial services media networks.

{{00:05:06}}
And so it's a different way to monetize
data, but get to a point where you

{{00:05:10}}
actually use the data so that the thing
about banks is if they build these,

{{00:05:15}}
they have the complete interaction
from searching for something to the

{{00:05:21}}
conversion of buying it, to paying for it.

{{00:05:23}}
And so now you have a complete loop
of  consumer purchase activity.

{{00:05:28}}
And so you can better target under
those situations, because not only

{{00:05:31}}
do you know where they bought things
from, but you know what they bought,

{{00:05:34}}
and you can be able to predict the
next product that is best for them.

{{00:05:38}}
And so we do expect that more incumbents,
because they have troves of data are going

{{00:05:42}}
to jump into that game, as well as we're
going to continue to see more interest

{{00:05:46}}
from neobanks and payment providers.

{{00:05:49}}
Interesting.

{{00:05:50}}
Yeah.

{{00:05:50}}


{{00:05:50}}
There's a lot of value in that data.

{{00:05:52}}
So that's great.

{{00:05:53}}
All right.

{{00:05:53}}
Tiffani, thank you so much.

{{00:05:54}}
Thank you.

{{00:05:55}}
Yeah.

{{00:05:56}}
This has been Tiffani Montez,
Principal Analyst with EMARKETER.

{{00:05:59}}
Thanks everyone.

Hello, everyone, and
thank you for joining us.

I'm Senior Research Analyst with
Finovate and today I'm joined by Tiffani

Tiffani, thank you so
much for joining us today.

Yeah, so today we get to
talk about a few topics.

The only thing that really relates them is
fintech itself, but I'm excited to dig in.

So first I want to talk to you
about banking as a service or as

There's been a lot going
on with BaaS right now.

Why BaaS is important specifically
for smaller financial institutions?

And then, tell us, why BaaS is under
threat a little bit from the regulators

So I think the first reason smaller
institutions want to use banking as

a service is because it gives them
an opportunity to  grow outside of

And for many of them, they may
have a very localized approach, and

this is a way for them to extend
their reach into new ecosystems.

And so a lot of banks using
BaaS have received these

Are you worried at all that's going to
prevent interest in BaaS from community

FIs?Or  will they still be able to
continue to use BaaS in the future?

So one of the things that we wrote
about at the end of last year is that

we said that risky banking as a service
partnerships, We're going to kickstart

a Milli Vanilli moment in banking,
and are you familiar with who Milli

Okay, so for everyone else, Milli
Vanilli is an R& B act that sold

Shortly after their success, it found out
that they were in a lip syncing scandal.

Apparently, none of the vocals
on any of their albums were

Fans were burning their
records in the street.

And so I feel like banking as a service
is going through something very similar.

Banks that are using this type of
model are just one link in an intricate

chain that weaves together numerous
partners from a fintech perspective.

And once you start to peel back those
layers, as we're seeing now, it exposes

And that is why we're
seeing consent orders.

and we're seeing stories that
are rooted in fraud, deception,

So it is a worrying sign and we do
expect that two things will happen.

It probably will slow
partnerships, number one.

And then two, we do expect
that some banking as a service

The second point I wanted to
talk to you about is Gen Z

Now you've done a lot of research on that.

What's your take on how FIs can
reach out to that new generation?

Yeah, so Gen Z is interesting from
the perspective that it is banks'

And but if you actually look at how
equipped banks are, they're actually not

equipped to capture or to even be able
to grow Gen Z's wealth in the future

They have less trust in traditional
financial institutions, although

They get most of their content from
social media sites or even influencers.

and they have very different
views of money than we do.

Part of them quite honestly are delusional
about finances and where they are.

And so really the opportunity for banks
here is to not only step in and provide

the right products, and the right
financial education, but you have to do

it in a way that captures their attention.

And that's going to mean that
you start to use new media

And that is going to mean that you
have to dive into the waters of

So the next the last thing I want
to talk to you about are these

Talk to us about what Chase came out with
at the beginning of the year and how you

see that developing and evolving and how
it will impact different stakeholders.

Chase rolled out what we are calling
financial services media networks.

So if you think about that under
the context of retail media, it is

a marketplace where providers can
get at or deliver targeted ads to

consumers using the data that they
have about them in an actual, we'll

So chase is doing something similar
where they are creating a platform

that can allow people to deliver
targeted ads in mobile banking.

There are also other
players that are doing it.

There's neo banks, there's payment
providers that are all jumping in.

FinovateSpring

Expert Insight

Tiffani Montez, Principal Analyst for EMARKETER, delves into the significance of Banking as a Service (BaaS) for smaller financial institutions and the regulatory challenges it faces. The interview also covers strategies for reaching the Gen Z demographic, highlighting their unique financial perspectives and the importance of social media engagement. Lastly, they explore digital marketing platforms, focusing on Chase's financial services media networks.