Banks Embrace the Digital Age: Transforming into Financial Service Aggregators and Platforms

In a recent interview, Jim McCarthy, CEO of Thredd, highlighted the necessity for banks to break down their traditional structures to cater to evolving customer demands, according to PYMNTS. He emphasized the shift towards digital-first approaches in the financial services sector, noting the increasing familiarity of front-end interfaces.

McCarthy acknowledged the challenges posed by heavy regulations in banking, emphasizing the need to present banking services in innovative ways to meet consumer and enterprise needs effectively. He suggested that banks could learn from neobanks and platforms like Square Cash, which have successfully created two-sided networks to address underserved needs, effectively becoming banks in their own right.

He also pointed out the emergence of a vibrant industry focusing on connecting wallets and forming new networks in the money movement space. McCarthy highlighted the importance of banks catching up with the changing landscape, especially as the world moves towards directory services, risk management, and authentication.

A key aspect of meeting client needs, according to McCarthy, is providing a continuum of financial services with payments at the core. He suggested that banks could enhance their offerings by adding a tech «layer» on top of existing services or by creating orchestrated layers that consolidate disparate banking relationships into a single point of interaction, potentially leading to additional revenue streams. This approach would involve offering digital accounts and dashboards for managing various financial activities, including cards, subscriptions, and more.

The conversation between McCarthy and Webster, part of the «What’s Next in Payments» series, delved into the concept of banks expanding their networks and moving beyond traditional walled gardens. McCarthy highlighted an example where Thredd client Treezor, a banking-as-a-service firm, is owned by Societe Generale, illustrating how modern APIs can be used to bring on FinTech partners.

McCarthy emphasized the role of generative AI (GenAI) and open banking in helping banks aggregate different relationships and streamline complex banking structures. He stressed the importance of banks evolving to offer better digital experiences while leveraging their existing assets and technological resources.