After all, Big Tech’s role across all facets of everyday life is pervasive, touching on everything from commerce to search to social media to the actual devices in one’s hand (think Android and Apple) where banking services and products can be delivered.

In the report “How Top-Performing Credit Unions Innovate to Stay Competitive,” a collaboration between PYMNTS Intelligence and Velera, we found that even among top-performing credit unions (CUs), who have relatively high scores on membership satisfaction, a majority (at 56%) view Big Tech firms as key competitors. Overall, 28% of CUs say they compete with Big Tech companies.

Digital Wallets and Big Tech Supervision

There are, of course, signs that the competitive landscape will only get more competitive. As has been seen through the past several months, and as noted here, last year the Consumer Financial Protection Bureau (CFPB) sought to extend the same supervision to Big Tech firms that already is in place for banks and credit unions. The supervision would apply to companies that see volumes of more than 5 million transactions annually, which of course covers everyone from Apple to Amazon to Meta’s financial ambitions. All told, the CFPB’s rule-making would add 17 new entities to its purview, companies that facilitated about 12.8 billion transactions in 2021, with an estimated value of about $1.7 trillion, covering 88% of known transactions in the nonbank sector.

The tech firms have the critical mass that would seme to put the CUs at a disadvantage, particularly given the user level data — rendered in real time — that they possess.

If data is the gold, the oil, the … well, you name the precious commodity as metaphor here … underpinning banking services, it should be noted that last year we found 57% of consumers said they trusted banks to keep their credentials secure, edging out Big Tech players.

Some of the Advantages

The traditional financial institutions (FIs) already are regulated, and have been regulated for decades, as they’ve sought to innovate, funding those innovations with the deposits already on the books. But for forwarding-thinking banks, specifically for credit unions, we’ve found in playbooks and interviews that two-thirds of CU members want more payment capabilities. The CUs that are putting time and effort into digital/omnichannel initiatives invest 13% more in payments innovation than bottom performers and benefit from 57% lower member churn, which conceivably blunts the movement of “churned customers” to Big Tech.

The banks themselves have insight into the payment behaviors and account usage that can help them take a proactive approach to keeping those members engaged. While Big Tech’s point of access is through the mobile device, the banks have the digital and in-branch settings to keep customers’ attention, and to offer loans and other services in data-driven context.

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In a Friday (Aug. 9) financial institution letter, the FDIC said that state nonmember banks won’t need the regulator’s consent to set up bank branches as they insert interactive teller machines in different locations (i.e. not in branches) around their respective states.

As the letter noted, “Interactive Teller Machine (ITM) technology has become increasingly sophisticated in recent years. State nonmember banks have sought guidance from the FDIC regarding whether the proposed use of an ITM at a location other than an established branch facility would require the filing of a domestic branch application” and went on to note requirements of the machines themselves:

The ITM must operate as an “automated, unstaffed banking facility owned or operated by, or operated exclusively for, the bank,” and which can serve existing customer by connecting them via interactive sessions with “remotely located bank personnel.” The other condition is that customers are able to conduct core banking functions with or without the assistance of those remote banking staffers — in other words, self-service functionality must be on offer with these ITMs.

“ITMs that operate outside of these parameters may require a branch application,” the letter stated.

We note that state nonmember banks are those financial institutions (FIs) that are not members of the Federal Reserve system, and, as the name implies, operate only with state charters, and not national charters. As of the second quarter of last year, as detailed here, there were more than 3,600 state banks, holding assets of about $8 trillion, compared to more than 750 national players with assets of nearly $15 trillion.

Connected Banking, on Devices and on Site

PYMNTS Intelligence data has spotlighted the rise of consumers’ increasing comfort with digital and mobile banking, where those tech-enabled interactions are embraced by more than 40% of respondents surveyed across six countries. As for the smaller banks, 80% of all credit unions (CUs) report a positive return on investment resulting from their innovations across omnichannel settings; 12% of individuals opted to switch to their current CU primarily due to the lack of nearby branches at their previous FI. The branchless, ITM additions might go a long way toward rendering those customer/bank relationships a bit “stickier.”

In but one example of those initiatives, in April, Arizona Financial Credit Union launched a partnership with retail banking firm NCR Atleos. AZFCU has picked Atleos’ ATM as a Service (ATMaaS) offering to boost operational efficiencies within its self-service banking channel.

The move toward more interactive banking via ATMs had taken firm root during the pandemic — the growth of multi-functional ATMs had been estimated to be growing by 6% though 2026 — and video banking with bank staff had been a key feature of those interactions. The FDIC letter from last week looks set to streamline the installation and use of those machines in more locations.

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The newly established ClearBank Europe N.V. is headquartered in the Netherlands and has a Dutch banking license. It will offer U.K. and European institutions clearing and embedded banking services across Europe, according to a Friday (Aug. 9) press release.

“We’re thrilled to be open for business in Europe — and this marks the first milestone in our global expansion strategy,” ClearBank CEO Charles McManus said in the release. “We will soon fulfill client demand for euro clearing, as well as sterling, with the U.S. dollar coming next.”

With its new Credit Institution Licence from the European Central Bank, under the supervision of De Nederlandsche Bank, ClearBank can provide operating accounts, virtual accounts and access to major European payment rails, according to the release.

ClearBank Europe N.V. will also offer multicurrency and foreign exchange (FX) services to its European clients, upgrade ClearBank U.K.’s FX capabilities and roll out embedded banking services to European clients, the release said.

The company’s services are underpinned by a real-time cloud-native platform and are accessed via a single API, per the release. The platform holds client funds at the central bank — for maximum security, ClearBank said — and allows efficient and cost-effective transactions.

“With changing regulations impacting banks and payment providers across Europe — many of which will require major overhauls of technology infrastructure — we are best-placed to help our clients deliver compliant, next-generation banking and payments services,” ClearBank Europe CEO Rintse Zijlstra said in the release.

McManus said in April that ClearBank applied for a banking license in the Netherlands and was considering launching in the U.S. by 2026, possibly through an acquisition.

ClearBank also said in April that it posted its first annual pre-tax profit of 18.4 million pounds (about $23.5 million) in fiscal year 2023, after posting a loss of 7.1 million pounds (about $9.1 million) in 2022.

“We have been able to offer resilience and stability in an uncertain market, building services our customers need, including a best-in-class embedded banking offering,” McManus said at the time in a press release. “But this is just one step on the journey, not the finish line.”

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This phased approach makes the implementation less disruptive while delivering immediate value, thereby mitigating risk, maintaining stakeholder confidence and reducing upfront capital expenditures, the companies said in a Tuesday (Aug. 6) press release.

The new partnership brings together Zafin’s software-as-a-service (SaaS) core modernization and transformation solutions for banks and 10x Banking’s cloud-native core banking platform, according to the release.

With the integration of Zafin into the 10x Banking platform, banks can have one seamless interface for multiple cores, the release said.

This collaboration enables banks to build and manage pricing and products across multiple core systems and tailor the platform to their own needs and requirements, per the release.

“Together, 10x Banking and Zafin offer banks years of combined financial services expertise and proven technologies that reduce complexity, enabling banks to work in a more agile operating environment to bring new products to market faster and at lower cost,” Okan Ozaltin, chief product officer at 10x Banking, said in the release.

Chris Dickin, global head of strategic partnerships at Zafin, said in the release: “Working with 10x Banking provides banks with a highly modular, enterprise-grade core that easily scales with Zafin’s product and pricing platform so banks can gain efficiencies by streamlining existing and new operations.”

The banking sector is moving inexorably toward doing everything faster, which means that the back-end processes must be faster too, PYMNTS reported in June.

In another recent development in this space, Mastercard and Thought Machine said in June that they have expanded their partnership to deliver payments and core banking capabilities to financial institutions worldwide.

Together, these companies aim to help financial institutions shift from legacy core banking and payment technologies to cloud-native ones that are designed to enhance banking efficiency, lower costs, enable rapid introduction of more customer-centric experience and allow banks to offer more innovative pay-now solutions.

In March, Citi Ventures became a strategic investor in core banking provider Tuum, saying that Tuum’s platform “can help accelerate this long overdue transformation across the industry.”

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With this collaboration, Curinos’ deposit optimizing tools will be more accessible to the financial institutions that use FIS’ IBS and Horizon core banking platforms, the companies said in a Monday (Aug. 5) press release.

“Our alliance with Curinos is one more example of how FIS is delivering on our vision to unlock financial technology to the world by providing innovative, data-driven tools to help our clients achieve their strategic objectives,” Melissa Cullen, head of core banking solutions at FIS, said in the release.

Curinos offers data, technologies and insights that help financial institutions make better, more profitable decisions, according to the release.

The company offers a comprehensive suite of artificial intelligence (AI)-based decisioning tools, predictive analytics and science-based platforms that are fed by vast, proprietary data, the release said.

Clients that have used its deposit optimizing tools have typically outperformed other financial institutions, gaining a deposit pricing advantage of as much as 15 basis points in both rising and declining rate environments, per the release.

The partnership of FIS and Curinos comes at a time when financial institutions are working to grow deposits while also dealing with obstacles like fluctuating interest rates, regulatory demands and slowing deposit growth, according to the release.

“This transformative partnership leverages FIS’ robust customer relationships and Curinos’ depth of deposit data and optimization capabilities, empowering FIS’ clients to achieve their funding goals,” Craig Woodward, CEO at Curinos, said in the release.

This partnership comes on the heels of several other new product offerings introduced by FIS.

In July, the firm launched a solution designed to help banks source, underwrite and fund loans to small and medium-sized businesses (SMBs). The new SMB Digital Lending solution, which was created in partnership with Lendio, is the first product from FIS to focus specifically on loans for SMBs.

In May, FIS launched a new version of its mobile banking application for financial institutions, saying it features a simplified design, new fraud prevention features and upgrades to its functionality.

Also in May, the firm launched an embedded finance platform designed for use by financial institutions, businesses and software developers.

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As Reuters reported Saturday (Aug. 3), SVB Financial Group has been given leave to turn over its assets to its creditors, bringing its bankruptcy to a close.

According to the report, the company’s bankruptcy restructuring includes a provision for the establishment of a trust to move forward with a suit against the U.S. Federal Deposit Insurance Corp. (FDIC) which seized $1.9 billion from SVB Financial last year during Silicon Valley Bank’s collapse — one of the biggest in U.S. history

SVB claims that this money should be returned because the FDIC had invoked a “systemic risk” exemption to safeguard all deposits at Silicon Valley Bank, including accounts with upwards of the $250,000 that the FDIC usually protects.

The FDIC maintains it didn’t set out to protect SVB Financial’s bank accounts, but rather that it legally seized the money to cover the cost of bailing out Silicon Valley Bank.

Depending on the outcome of the lawsuit, SVB Financial’s senior bondholders — who are owed $3.3 billion — will get back between 41% and 96% of what they are owed, Reuters said.

SVB Financial filed for bankruptcy in March 2023, soon after Silicon Valley bank was shut down and taken over by regulators. The FDIC took over the bank following a run on deposits, and eventually sold the bank to First Citizens.

Silicon Valley Bank was one of a handful of regional banks that collapsed last year, leading the Federal Reserve and other U.S. regulators to put together new banking regulations in response to last year’s crisis, with rules focused on liquidity requirements to help prevent bank runs.

Amid the turmoil in the sector, PYMNTS has been tracking a shift in behavior related to banking, with smaller community banks and credit unions increasingly becoming the place where consumers go when they want credit cards.

The percentage of consumers with a community bank or credit union card as their primary card rose from 8.3% in 2020 to 13% in 2023, according to PYMNTS Intelligence, while close to a quarter of consumers reported that they would likely turn to these financial institutions the next time they wanted to sign up for a new card.

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The moves come as the Bank of England voted this week to cut rates for the first time in four years and signaled that there are more cuts on the way, Bloomberg reported Friday (Aug. 2).

Banks have told employees to forego business class and fly economy for trips of five hours or less, to seek forms of transportation other than taxi when going to meetings, and to arrange three meetings per day before booking a business trip, according to the report.

Standard Chartered has more than 200 programs in place to help it cap its annual expenses at $12 billion in 2026, per the report.

While there are likely to be job cuts at some of the biggest British banks, most of the banks aim to focus on property, infrastructure and other cost reductions that don’t involve headcount reductions, the report said.

It was reported in July that HSBC was slowing hiring and asking investment bankers to reduce expenses as part of an effort by CEO Noel Quinn to reduce costs in anticipation of interest rate cuts.

The banking giant stopped filling open positions, in some cases, and ordered some departments to stop hiring altogether.

It was also reported in July that Lloyds told staff to reduce their use of taxis and business class flights as part of the banking giant’s attempt to cut costs amid a $5 billion strategic overhaul.

“As we grow and expand our business … it’s important that we also keep a tight grip on our costs — particularly where our personal choices have a great impact,” Lloyds Chief Operating Officer Nick Laird wrote at the time in a memo sent to the bank’s corporate and institutional banking staff. “The clearest example of that is our travel which has both a financial and environmental cost.”

The Bank of England announced its bank rate reduction Thursday (Aug. 1), saying that its Monetary Policy Committee voted 5-4 to cut the bank rate by 0.25 percentage points, from 5.25% to 5%.

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Those breaches led to errors in the banking giant’s internal liquidity reporting, Reuters reported Wednesday (July 31), citing an internal document from Citi.

According to the report, the Fed’s Regulation W requires banks to restrict transactions such as loans to the affiliates under their control to protect depositors whose funds are insured up to $250,000 by the government.

Reuters notes that the infractions come as regulators criticize problems with Citi’s risk management and internal controls, and with the Federal Reserve and Office of the Comptroller of the Currency (OCC) fining the bank $136 million two weeks ago for a lack of progress on compliance.

A spokesperson for Citi told PYMNTS the bank was not confirming the details of Reuters report.

The report included a statement from Citi saying the bank was “fully committed to complying with laws and regulations and have a strong Regulation W framework in place to ensure prompt identification, escalation and remediation of issues in a timely manner.”

Citi was also fined $400 million in 2020 after regulators found “ongoing deficiencies” in its handling of risk management and internal controls.

The bank’s “subsequent reaction to the breaches resulted in liquidity reporting inaccuracies,” according to the internal document at the center of the Reuters report.

In other Citi news, PYMNTS on Wednesday spoke with Debo Sen, head of payments at Citi Services, about the state of the instant/real-time payment space for the series, “What’s Next in Payments: The Halftime Report.”

She highlighted the rapid adoption of these new payment rails in regions such as Asia-Pacific (APAC) and Latin America, with India and Brazil leading the way. In India, about 85% of all payments are now real time, due to the Unified Payments Interface (UPI) system, a sign of the country’s advances in digital payments infrastructure.

Brazil is a close second, with nearly 80% adoption. However, this trend is not limited to emerging markets, Sen added, noting that the U.S. and the European Union are also putting forth regulations and building infrastructure to support real-time payments.

“The interesting thing is there is always a lot of conversation as to whether instant payments will cannibalize other methods of payment — but in fact, it is digitizing cash in those economies and eliminating cash in many cases,” Sen told PYMNTS.

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“In addition to a growing list of integrated fintechs and integrators, CSI community banks and developers now have access to new documentation methods, resources and standardizations that simplify the implementation process and accelerate time to value,” the company said in a news release Tuesday (July 30).

That means these banks can consider more application programming interfaces (APIs) across account opening, payments, document services and other applications, to onboard solutions to open new lines of revenue, streamline back-office operations and enhance their engagement with account holders.

According to the release, the portal includes updated technical and application guides along with test environments that let both parties better understand data communication and associated business rules.

“Community banks competing in today’s market require the right combination of flexibility, speed and efficiency that can meet the needs of their account holders without a significant tech investment,” said David Culbertson, CEO and president of CSI. “Our Developer Portal is designed to meet all three of those needs with the scaffolding community banks need to reduce the burden of adoption.”

PYMNTS examined bank/FinTech collaborations earlier this year, noting they were born out of a growing demand by digitally-savvy consumers for frictionless banking experiences.

“Banks are starting to realize the speed at which technology has changed the world,” James Butland, vice president of payments and U.K. managing director at Mangopay, told PYMNTS for the series “What’s Next in Payments: What is a Bank? The Changing Landscape of Banking and Financial Services.”

“The challenge that a traditional bank has, is that they sit on 150, 200 years of legacy infrastructure and probably 60 years of legacy technology. So, banks have found it difficult to innovate quickly,” Butland added.

Meanwhile, PYMNTS spoke recently with Ken Gayron, CSI’s chief financial officer, about the role of the CFO in today’s world.

“Being a modern CFO is about using your analytical and financial skills to partner with the business, ensuring it makes the best decisions with the right financial lens. At the same time, you have to drive efficiency through automation and process improvement so that you can scale profitably and maintain a competitive advantage,” Gayron said.

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So, is ten million a good number? PYMNTS put the question to Marion King, chairperson and trustee of the U.K.’s Open Banking Ltd regulatory and advocacy group. And while she’s certainly not resting on any laurels, she’s satisfied that the government-mandated direction from the country’s top-tier financial institutions to make data sharing and new payment options available will lead to more success in the short term. Part of that momentum, she told PYMNTS, will come from the next tier of banks and their business customers.

“It’s a very good number,” King said. “We’re seeing really strong double-digit growth. And I think this is just the beginning, because you need to remember that this is only measured from the nine banks that were involved in the Competition and Market Authority’s initial open banking effort — so it could actually be higher. So double digit growth month on month is very positive, and I think it shows pent-up demand for secure data exchange as we move forward with all of this.”

Moving forward from the 10 million-user milestone started at a “Strategy Summit” on July 26 with several analysts, banks, neobanks and government regulatory agencies. At that meeting Andy Sacre, head of payments for U.K. neobank Monzo, told the audience that around six million of Monzo’s customers have used open banking — sharing their data to get better credit card rates, paying their tax bill, or connecting other bank accounts to their Monzo app so they can see everything in one place. Those are just some of the use cases King believes have made open banking in the U.K. a viable commercial proposition.

“One of the biggest use cases we have is the ability for people to pay their tax bills through their bank account without sharing any account details,” King said. This feature bypasses traditional card systems, offering a secure and direct payment method. The U.K.’s HM Revenue and Custom’s agency (its version of the IRS) collected over £3 billion at the beginning of the year from tax returns using this method.

Another significant application is in the SMB sector, where open banking facilitates the integration of accounting packages, minimizing manual systems and supporting real-time cash flow management. King also pointed out the not-for-profit sector is also benefiting, with organizations like Salad Money leveraging open banking to offer secure loans to those traditionally underserved by the banking system.

Looking Across the Pond

In the U.S. companies like Trustly are moving open banking forward, as are Visa and Mastercard with their API strategies. A PYMNTS Intelligence report, produced in conjunction with Trustly, found that nearly half of U.S. respondents are highly willing to use open banking for at least one type of expense, including monthly bills, groceries or subscriptions. Despite high interest in this method, it comes in third place behind paying via manual input of their account and routing numbers and using bill pay services offered by their banks. The study found open banking providers must confront an awareness gap: 44% of non-users said they were not familiar with the payment method.

Looking across the Atlantic, King suggested four cornerstone strategies to catalyze open banking in the U.S.:

1. Regulatory Framework: Compel data sharing among financial institutions to ensure participation and ecosystem viability.

2. Economic Model: Develop a model that makes data access economically sustainable, ensuring it supports innovation and compensates data providers appropriately.

3. Technical and Data Standards: Establish uniform standards to maintain service quality and reliability.

4. Broad Participation: Encourage wide participation across financial entities to enhance service accessibility and utility.

“These elements are crucial for creating a thriving open banking environment that benefits all stakeholders,” King said.

But while 10 million is a good number, the U.K.’s roadmap to expand open banking usage to 20 million revolves around increasing participation across the economy and launching innovative payment methods like variable recurring payments. VRPs, by Open Banking U.K.’s definition, are payments that let customers safely connect authorized payments providers to their bank accounts so that they can make payments on the customer’s behalf, in line with agreed limits. VRPs offer more control and transparency than existing alternatives such as Direct Debit payments.

“These enhancements put more control into the hands of consumers, aligning with our goals of transparency and user empowerment,” King said.

King is optimistic about the role of Big Tech in open banking, citing Apple’s integration of open banking features in the U.K. as a pioneering example. “Big Tech’s engagement will significantly boost user volumes, provided we maintain a strong commercial framework,” she noted.

As for ongoing challenges, King emphasizes the importance of continuous attention to fraud prevention and consumer protection, ensuring that as user numbers grow, the system remains secure and trustworthy.

“It’s not just about financial services, it’s about fostering a data-sharing economy that benefits everyone. The U.K.’s approach, combining mandated participation with voluntary contributions, creates a model that others, including the U.S., could learn from,” King said.

She also mentioned the support from the new Labour government in the U.K., expressing optimism about their enthusiasm for open banking and the broader implications of data-sharing policies. King highlighted that the Labour Party has already initiated a standalone bill for smart data and digital identity, which includes open banking, demonstrating their commitment to advancing these initiatives.

With government support and strategic industry collaboration, King is confident that open banking in the U.K. will not only reach but potentially exceed the 20 million user milestone. “We’re setting the foundation for a future where financial services are more inclusive, innovative, and securely integrated into our daily lives,” King said.

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