Over the last several weeks people have been moving deposits from first and second-tier banks into community banks to avoid the consequences of risky lending practices, says Thomas Knapp, senior vice president and chief technology officer of Fiserv VISION, a provider of integrated account processing services for financial institutions.
Knapp advises community banks to take advantage of this trend and publicize any information from audits and reviews that validates their own financial stability. “I think community banks have an opportunity in this market to establish themselves as less risky kinds of institutions that have followed better banking practices and are more attractive for individuals who want to secure banking relationships with longterm and more stable institutions,” says Knapp.
At the same time Knapp urges community banks to reach out to new markets. For example, people who prefer to deal with financial institutions strictly through network-based connections, whether mobile devices or online banking tools. The critical question with these electronic customers is how to offer them the “high-touch” environment typical of a community bank when the bankers do not meet their customers face to face.
Knapp will present the “Future of Banking Technology” at NJ Bankers’ BankHorizons 2008 conference on Friday, October 24, at 8:30 a.m. at the Forsgate Country Club in Monroe. The event also includes sessions on cyber security, aligning information technology with business strategy, “red flags” about the Fair and Accurate Credit Transactions Act of 2003, and the future of deposit growth. Cost: $85. For information or to register, contact Jenn Zorn at 908-272-8500, ext. 611, or at firstname.lastname@example.org.
Whereas online banking services — termed “retail Internet banking channels” by the industry — are widely offered and used, Knapp suggests other technologies that community banks should be considering:
Banking through social-networking sites. “One thing financial institutions are looking to do is reach out and touch this generation right where they operate,” says Knapp. And indeed technology is already on the market that enables online banking through FaceBook, a popular site where many young people interact daily with friends and associates.
Mass customization of banking products. “One of the technologies that has been in the banking industry, but not fully developed or explored, that will be in the next few years is business intelligence,” says Knapp. These systems, which have been used in the direct marketing business for 15 years, identify characteristics of a customer’s lifestyle and financial situation, and predict what the person’s next relationship with the bank is likely to be. The bank can use this knowledge to promote customized banking services.
This technology, for example, may highlight one customer who falls into the home-buying demographic and another who has paid down a mortgage and might be able to use a home-equity line of credit.
But Knapp warns banks that as they follow up on suggestions from this software, they must ensure that a customer is prequalified before promoting products like a platinum credit card or a line of credit. “The worse thing you can do is promote a product, and they say, ‘I’m interested,’ and then you say they don’t qualify,” he says.
Mobile banking. Cell phones and cable televisions are rapidly expanding their consumer-based applications, and technology to support mobile phone banking is already at an early stage of product development. This technology will offer banking customers the same kinds of capabilities currently available through a retail Internet banking channel. Similarly, cable connections are expanding the functions available on a television set and will eventually support banking transactions.
An additional advantage of mobile bankingis the capability of generating additional fee income by selling advertising that will be displayed on the cell phone.
Knapp’s father was a bank examiner early in his career but ended up as an accountant and CFO for a cement manufacturing company in Iowa. Knapp wonders whether his own interest in business and possibly banking was “a little bit of the seed he planted.” Knapp’s mother had a teaching degree but mostly stayed at home with her children.
Knapp earned a bachelor of arts in economics at Loras College in Dubuque, Iowa, in 1972, and later an MBA at the University of St. Thomas in St. Paul, Minnesota.
Starting his career as a programmer for Control Data Corporation, Knapp then spent 15 years at two management consulting firms, Price Waterhouse and then Deloitte & Touche, where he focused primarily on technology.
In 1993 he moved to Blue Cross & Blue Shield of Wisconsin, where he served for over four years as vice president and chief information officer.
Next he became chief information officer at ProVantage Health Services, a startup pharmacy benefit management company. After ProVantage was acquired by Merck-Medco in 2000, Knapp served as vice president of integrated health information systems for Medco Health Solutions.
At Fiserv VISION Knapp is responsible for the development, operations, and customer support of deposit, loan, teller, data warehouse, and financial reporting.
“My primary interest is taking my knowledge of how to develop systems and utilize technology and apply that to the banking arena,” he says. “How do you match up technology coming on the market with the business needs and financial strategies of our clients?”