EXCLUSIVE: “State of the Unions’ – Paul Provenzano, eBankIT in ‘The Fintech Magazine’

Portuguese fintech explorer ebankIT has set sail for the US. Paul Provenzano tells us what it can bring to the new world of ‘old’ banking

The US started a global payments revolution with the invention of the credit card (Diners’ Club) almost three-quarters of a century ago. But, as the rest of the world moved to digital payment systems, eliminating – or almost eliminating – traditional methods, such as paper cheques, the country became something of a laggard.

Indeed, a recent survey revealed that 55 per cent of adult Americans had written at least one cheque in 2022. Cheques are also still commonly used for business-to-business transactions in the US, despite being both expensive and time-consuming to process.

But landmark changes are now afoot.

Most recent was the launch of the Federal Reserve’s instant payments network FedNow, which went live in mid-2023 and within weeks was being used by more than 100 institutions to send and receive payments.

There is also the increasing adoption of data-rich ISO 20022 payments messaging – hugely helped, of course, by global payments provider Swift insisting its customers use it. And then there is the influence of the COVID-19 pandemic, which changed the habits of several generations and saw the use of digital payments, including mobile, soar.

All this has made the States an appealing destination for innovative fintechs – and among them is Portugal’s ebankIT, which is moving into the US market with its Omnichannel Digital Banking Platform. ebankIT was founded in 2014 with headquarters in Porto and went on to establish offices in London, Vancouver and now Atlanta.

“Financial institutions are keen to hear about our experience globally, because there is some expertise we can bring that’s uniquely valuable to the US”

It says its open API-based, low/no-code platform can be integrated into any core system to provide an interactive digital experience. It is already licensed to financial institutions across 11 countries in Europe and Africa, as well as Canada, serving millions of customers.

The company’s strategy has been to develop partnerships with some of the best-known digital providers, which include blue-chip firms such as Microsoft and IBM, to create an ecosystem that’s able to explore and deliver new banking solutions.

One of its most recent collaborations has been with MX, whose insights and personal financial management tools have been integrated into the ebankIT banking
platform, allowing financial institutions to provide a combination of predictive financial guidance and financial wellness capabilities to their customers.

Paul Provenzano, ebankIT’s VP of market development in the US, believes this integrated partnership approach – with what some might see as being competitors – helps set the company apart.

“There’s competition going on between fintechs and banks but, at the same time, there’s an opportunity to leverage technology,” he explains. “What we do is enable financial institutions to pick the winners that are going to serve them and their customers best, and then, through our open API framework, integrate those into the different use cases, so it creates a much cleaner and simpler user experience, without having to worrying about settlement, fraud, nor any of the other obstacles or friction that might come up along the way.”

The open API approach was deliberately architected into the ebankIT platform.

“We’re agnostic to third parties,” says Provenzano, “because we believe that the financial institution that we partner with should be able to enable whatever it wants for its customers, based on whether they’re a consumer, a business, or a commercial account.”

Provenzano says ebankIT has received a lot of ‘strong interest’ in what it can bring to the party from US financial institutions.

“They are keen to hear about our experience globally, because there is some expertise that we can bring, that’s uniquely valuable to the US,” he says.

Specifically, that’s ebankIT’s previous work in Canada with credit unions. A distinct feature of North American banking, there are slightly under 5,000 in the US that collectively serve 135 million customers. ebankIT won a contract back in 2017 to provide its digital platform to Canada’s largest credit union, Coast Capital, which serves almost 600,000 members through its network of 50 branches that stretch from coast to coast. Within four years, ebankIT’s platform was licensed to financial institutions representing 35 per cent of total end-users of the top 100 credit unions in the country, excluding those in Quebec.

COMMUNITY SERVICE

A recent report by consultancy Cornerstone, which surveyed the digital investment programmes of 87 US credit unions and banks, found those with an average size of $4.4billion had more than doubled their digital transformation spend from 2021 to 2022 to $425,000 per $1billion in assets.

But, despite the growing focus on mobile channels, the overall percentage of checking account holders who were active mobile banking users increased by only two per cent over the same period.

Perhaps that’s because in a country where credit unions once represented a distinctly different way of banking, digitisation has made it harder for them to distinguish the customer experience from that offered by mainstream banks and fintech challengers.

The report also noted that only half of credit unions that expected to deploy a new digital account opening system in 2022 actually did so, which might be a reflection of the limited in-house resources these small and mid-sized organisations have, compared to their rivals.

“Too many institutions think a new system will magically drive new account applications and deposit gathering,” states the report. “The reality is that deploying a new system changes – or at least, should change – a lot of processes throughout the organisation related to account opening, onboarding, marketing, risk management and know your customer. Redesigning those processes to improve speed and efficiency is a significant effort.”

What the Cornerstone report did find, though, was a clear correlation between institutions that had improved their digital performance and those that had improved their overall business performance. And it would be wrong to paint credit unions as backward when it comes to technology. Alliant, for instance, one of the biggest in the US, has won several awards for the quality of its digital banking experience. Provenzano believes ebankIT’s platform could give many more a chance to catch up.

“There is an opportunity to help extend the types of services that credit unions enable for the breadth of business lines that they cover”

“There is an opportunity to help extend the types of services that credit unions enable for the breadth of business lines that they cover, whether it’s a consumer, a small business, or a more specialised commercial segment such as agriculture,” he says. “These business lines are already starting to require and demand more personalised or specific capabilities. And personalisation, for us, is an area of focus.”

That chimes with credit unions’ ethos. Often based exclusively in the communities where they were founded, they are defined by their deep and long-standing relationship with local customers. Digital payments are a specific area where Provenzano believes ebankIT’s global experience can help add value.

“In the US there’s still a lot of paper cheques being facilitated, especially in business, so I know that business banking is eager to deploy more and more use cases around the FedNow rails,” says Provenzano. “I think there are still a lot of use cases to be deployed, which is exciting. But then there are other payment transaction methods that are continuing to evolve around P2P.

“What’s interesting about the US market is the fragmentation. There are a lot of payment rails, so what I think what we’ll see over the next one to three years is some level of consolidation.

“There are things we’re learning globally that we can introduce to the US as best practice – interesting use cases around how you make a domestic payment experience frictionless and more simple, and then how you start to enable international money movement – international wires, for example, can be very complex.

“At the end of the day, whether it’s a consumer or a business, they just want the money to get where it’s supposed to go, efficiently, and on time.

“That’s definitely an example of how we can take our global expertise and bring it to the US market to create much more simple and seamless experiences.”

Five hundred years ago, Portuguese colonisers were locked out of North America in a political land battle with their Spanish neighbours… Perhaps ebankIT will plant a new, digital flag.

This article was published in The Fintech Magazine Issue 30, Page 77-78