This is the fourth interview in The Braintrust series, where we find leaders in the FinTech and bank disrupting space and have them share their expertise with our members.

This Monday, the Dow Jones Industrial saw its largest single-day drop by percentage since 1987’s “Black Monday” — the Dow fell nearly 3,000 points. The markets are reacting to the economic and social insecurities caused by the international spread of COVID-19. There’s instability in the economy and the way American business and banking is currently structured.

Last week, when the markets had begun to fall, but before the full reality of the current moment had materialized, Unifimoney spoke on the phone with Ron Shevlin, the Director of Research at Cornerstone Advisors, an expert on the future of banking and FinTech. Shevlin is also a senior contributor at Forbes where he writes the Fintech Snark Tank column.

We asked Shevlin about who would lead the next banking revolution. His answer? Big tech.

Unifimoney: This last decade has been a time of huge change for the banking industry with the growth of FinTech. What about the current banking system most needs to be innovated?

Ron Shevlin: The first thing that really comes to mind is a lot to do with geography and physicalness — which I guess is kind of a weird word. From the bank or credit union side, there’s two aspects to this. First is the branch as a physical place. There’s still a lot of people in the industry who, despite the numbers that show declining numbers of branches, will say, ‘Yeah, but that’s okay. We overbuilt anyway so this is just a correction. And, you know, look at these numbers: whatever number of millennials still go into the branch.’ It’s like, yeah, they go into the branch because they have to, not because they want to!

So they’ll go, ‘No, we’re repurposing it so it’ll be more strategic. It’s gonna be a place for advice.’ Well, here’s the problem: I’ve got numbers that show consumers don’t necessarily turn to their bank for advice. ‘Oh, well, it’s okay. We’re just gonna build smaller branches.’ Really? I got a study here from JLL that shows that both in the West and in the Northeast the average size of new branch projects is greater than the existing average.

The final part of the argument goes to, ‘Yeah, but people like to talk to people.’ And to that I always say, ‘You’re absolutely right. Which makes the smartphone a much better way of connecting people to other people compared to making your customers or members get up off their couch, get in the car, drive down to your branch, and talk to somebody who may not even be able to answer their questions in the first place.’

The second thing about physicality and geography especially affects a lot of mid-sized financial institutions, a lot of credit unions and community banks. They define their market around their geographical community. Their charters are probably state-based. For credit unions, their field of membership may be community-based. And the challenge is, FinTech providers can come into the market and they’re not in a particular geographic region. They’re all over the place. So, the FinTechs are not gonna necessarily cherry pick, but they’re going to skim various segments of the market across geographies that will leave community banks and credit unions who focus on particular geographic communities struggling to get enough customers and enough good customers.

So, the thing that’s at the top of the list of what needs to get straightened out in the banking industry is the idea of geography and physicalness versus digitalness. Someone, I’m sure, has better words for that. Brett King’s probably got terms for that stuff. But that’s really at the top of the list of what has to get sorted out in this industry throughout this next decade.

Unifimoney: With any growing market, there’s always gonna be some snake-oil salesmen entering to make some quick money. What ideas or companies or trends are you most wary of in the FinTech space right now?

Shevlin: Let’s look at it both from the deposit and credit side. On the deposit side — listen, you used the term ‘snake-oil salesmen’; I didn’t. I don’t want to paint them as being illegal; I don’t want them to be painted as immoral. I just want to paint them as not being focused on the right issues and challenges. There’s too many neobanks/challenger banks coming into the market with the idea that there is A) this great pent up dissatisfaction that young consumers have with their banks and B) that there’s great dissatisfaction with the mobile tools and technologies that banks are offering. And so, coming into the market with, ‘Oh, yeah, we got better mobile banking tools’ is not what the market’s really looking for and I’m wary of the potential success that these companies are going to have.

The other side of it where I’m really wary too is — okay, you gotta go back in time a little bit. It’s 2020 now, so we gotta go back about 12 years to when the financial crisis really hit in the United States. So following the financial crisis there was a contraction in available credit. The banks were much less willing to lend money so you had a bunch of companies come fill the gap. The Lending Clubs, the Prospers, a lot of the digital lenders. It initially filled the gap on the demand. Then, the economy improved a little bit, and more importantly, Millennials went from 25 years old to 37 years old and they became more established in their careers, higher income, better credit scores, and better potential borrowers.

But I’m wary that just simply offering a better digital application process makes these companies great and viable. Unless there’s really strong underwriting underlying those credit decisions then you’re still gonna have a lot of problems as a FinTech provider. This is even more true on the small business and commercial lending side. And so, it’s not uncommon that I’ll talk to bankers who are very wary and leery of all these digital lenders coming into the market thinking that because they offer a better application process that that’s gonna enable them to get a lot of business. It’s not unusual for bankers to say things like, ‘It takes 10 to 20 years to build a book of business to really understand the market.’ And you’ve got a lot of FinTech providers coming in with no book of business, but focusing on where they think the gaps are. So, I’m concerned, if not wary, that they’re gonna get themselves in a lot of trouble, especially if we are looking at a downturn in the economy in the next 18–24 months.

Unifimoney: You say that a UI or UX play is not a sustainable business, but I do think there’s some exciting technology that’s actually working to improve financial wellbeing on a personal level, through passive income, through different data insight. What are some exciting things that you’ve seen in that space that might work to actually change the way that we bank?

Shevlin: The online application tools and processes of the new players are certainly slicker, easier, faster than what a lot of the existing institutions offer. I don’t doubt that at all — I’ve seen it and they are pretty good. That’s driven not just by technology capability; it’s very much driven by philosophy and tolerance for risk. You got a lot of banks that’ll say, ‘Oh, I could do that, but compliance won’t let me, or regulations won’t let me.’ They’re just not tolerant of risk enough to do that.

But I think those are kind of like baby steps in the evolution of banking. Oh, great, you improved the application process. Big deal. I only do that once every four or five years, unless you’re young and flipping accounts all the time. So, I don’t really see that as a huge sort of impact on how we bank. It’s just how we open up accounts. I think what’s really going to change banking is less about what any individual FinTech player does, but more likely what a Big Tech player, like an Amazon or a Google could do.

I’ve believed for some time that Amazon has no desire to offer its own checking account — why the hell would it want that hassle? It’s not where it makes its money anyway. They can make their money by being a provider of technology services to banks. So, think about an environment where Amazon acquires ADP, a payroll processor. Now it’s got control of the source of the money, which is payroll. It can then buy a digital application provider, and take care of that technology. I think banking will get transformed when Big Tech players provide a completely different set of services to the institutions themselves in helping to break the reliance that financial institutions have on a lot of the core vendors like FIS, Fiserv and Jack Henry today. They’re all clients of mine, and I’m sure they don’t like me saying that stuff, but truth is truth, man. So, the real revolution or disruption will come when the Amazons, Apples and Googles take it on.

Unifimoney: What will change most for the everyday consumer’s banking relationship in 5 years?

Shevlin: I think the biggest thing is that they’re going to interact with some intermediary that kind of sits on top of a bunch of the financial relationships that they have. Now, we’ve kind of had that in the past with a Mint or the aggregator tools or things like that. But let’s call it the way it is: those tools were static; they were not transaction-based. They were driven by advertising. They were lousy experiences. They were just not very customer-centric. But I think they’ll be something different — and I think that it will be an Apple, a Google, an Amazon — kind of sitting on top of some big portion of the financial relationships that a customer has so that we won’t be interacting as much with the bank directly as we will with some intermediary.