Video: Finovate Keynote – Focusing on the three pillars of banking: Deposits, loans, and money movement

Steven Ramirez:
Hello, Finovate. I’m Steven Ramirez, CEO of the San Francisco-based customer strategy and marketing agency Beyond the Arc. Today, I’ve got some good news—the sky is not falling.

But it could be that the ground beneath us is moving. I’m from San Francisco, and if there’s one thing we know, it’s earthquakes. As I look at the current state of financial services, I see some parallels. I want to share some of those insights with you in the ten minutes we have together.

The impact of earthquakes can be distressing and change your world in a moment. This might seem like a scene from a movie, but it was our lived experience in 1989. So, this metaphor of powerful ground movement and sudden surprise applies here.

I want to talk about:

• Disruptive forces,

• Tectonic shifts in the industry, and

• How organizations can get ready for what’s ahead.

As your organization completes its strategic plan for 2025 and beyond, I hope to offer an idea or two that may be useful.

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Disruptive Forces

First, some of the key disruptive forces.

Changing Customer Demographics

One of the most significant forces is the change in customer demographics—particularly Gen Z. I’ve been surprised not to hear more discussion about Gen Z over the past couple of days.

This group includes individuals aged 13 to 28 in 2025. Some financial institutions and fintech companies have said they are not focused on Gen Z yet and will prioritize them later when they have more money or become a stronger force. However, Bloomberg News reports that Gen Z is already a $360 billion cohort and is affecting how money is saved and spent globally.

There is a mindset among Gen Z that emphasizes transparency and authenticity. According to Pew Research Center, 53% of Americans overall believe the American Dream is still achievable. Among Gen Z, only 39% say the same. This indicates a shift in perception that may influence financial services.

Artificial Intelligence

Another major force is artificial intelligence. Two key points:

• There will not be just one AI, but many working in orchestration, including roles like AI project managers coordinating other AI agents.

• As generative AI tools are more widely implemented, the barrier of needing to write code decreases, and more people may effectively become programmers through natural language inputs.

Regulatory Recalibration

A third force is regulatory change. In the U.S., the Chevron doctrine previously allowed federal agencies to interpret ambiguous laws. This doctrine has been cited in over 18,000 legal precedents. Recently, the Supreme Court overturned it. This change may affect regulatory practices across many sectors, including financial services.

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Tectonic Shifts

Using the earthquake metaphor, there are three main types of shifts.

Divergent Shifts

These occur when tectonic plates move apart. In this case, demographic changes, shifts in customer attitudes, and the growing role of non-bank financial services are examples of divergent movement, which may challenge the traditional banking model.

Convergent Shifts

These occur when plates move together or collide. The Federal Reserve Bank of New York explored where the bank ends and where the non-bank financial institution begins. Traditionally, deposits flow into banks and are issued as loans to corporate borrowers. Now, banks provide financing to fintechs, which then lend to commercial customers. In this model, fintech platforms are part of the lending chain, but the funding originates with banks.

Currently, 25% of large bank lending goes to non-bank financial institutions. The relationship between banks and fintechs is increasingly interconnected.

Transform Shifts

These occur when tectonic plates slide past one another. One example in financial services is the ongoing shift in wealth distribution. More wealth is moving to demographics that have not historically held economic power—such as women and people of color. This change has implications for how financial services are structured and delivered.

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Conclusion

It may appear that changes in banking come suddenly, like earthquakes. But many changes build over time. For example, the number of U.S. banks has decreased from 16,000 to about 4,400 over the past 20 years. That reduction occurred gradually. At the same time, the ratio of small banks to large banks has grown more uneven, indicating increased concentration in the industry.

There are ongoing shifts across deposits, lending, and money movement. The goal here is to highlight some of the major disruptive forces and suggest they be considered as part of your 2025 planning.

That’s my 10 minutes. Thanks, Finovate.