November 15

Travel is one of the most aspirational and big-ticket spending categories for consumers. By providing an exceptional in-house booking experience where customers can spend their credit card points, banks are building loyalty while also carving out additional travel spend for themselves.

Capital One is the latest bank to step up its bid to build out travel services and entice credit card customers.  

It just invested $96 million in travel app Hopper, which powers the bank’s booking portal, as a follow-on to its $100 million investment last year. 

Capital One Travel includes price drop protection and easy cancellations for hotels and flights, as well as exclusive experiences and premium benefits at a curated selection of resorts and hotels. By investing fresh funds into Hopper, Capital One aims to accelerate the technological progress that will help further differentiate its travel products. Ultimately, it sees its robust travel offerings as a way to appeal to – and draw more spend out of – its credit card customers, as well as rope in new ones.  

Other big banks have been beefing up their travel products through partnerships, acquisitions, and investments as well. Here’s a non-exhaustive run-down of recent moves: JPMorgan bought luxury travel agency Frosch, Citi is partnering with Booking.com and just invested in car rental startup Kyte through its VC arm, and US Bancorp bought travel platform TravelBank.  

Confidential computing – which protects data while it’s actively being processed, not just when it’s stored or transferred – is making inroads with big banks for use in marketing, fraud detection, and cybersecurity. 

Confidential computing is starting to be adopted at major banks, thanks to efforts from cloud providers like Microsoft, Google, and IBM. 

This form of encryption allows data to stay secret even when cloud servers are analyzing it, which gives banks the ability to share information about transactions without making personally identifiable information and other data visible to partners or competitors.  

Pooling encrypted transaction data could allow big banks to use machine learning to flag unusual patterns that could point to fraud or money laundering. In that way, confidential computing allows a bolder approach to collaboration among banks without running afoul of regulations.  

Alternatively, it allows banks to share data with merchants, so that they can better target consumers for advertising without invading their privacy. For example, RBC uses confidential computing with Microsoft Azure to combine its own transaction data with merchant data, run machine learning algorithms to figure out how to best target consumers, and ultimately provide real-time, personalized ads without letting either side have access to new, unencrypted customer data.  

JPMorgan security director Matt Novak recently described confidential computing during a conference talk as set to revolutionize cloud computing in finance: “Confidential computing is to traditional cloud what traditional cloud is to legacy on-premise datacenters,” he said.   

As traditional financial firms continue to explore the use of blockchain and digital assets, compliance tools to help manage regulatory and reputational risk are in high demand.  

Blockchain intelligence firm TRM Labs is winning support from legacy financial firms for its ability to help launch blockchain and digital asset initiatives by analyzing and investigating crypto-related fraud and financial crime. The firm provides tools to vet and assess risk from third-party service providers, flag suspicious transactions, and prevent money laundering and other crypto crime.  

While big banks consider blockchain and digital assets worth exploring – experts believe they have the potential to fundamentally rearchitect the way that finance works – they need to be more cautious than their upstart competitors.  

Thoma Bravo just led TRM’s $70 billion Series B extension, with participation from Goldman Sachs, PayPal Ventures, Amex Ventures, and Citi Ventures (while Visa and JPMorgan both invested in a previous round).  

In the same vein, Mastercard acquired TRM rival CipherTrace in September 2021 while competitor Chainanalysis recently raised $170 million. Overall, financial institutions are leading the way in public company blockchain investments. 

As small businesses report feeling underserved by their banks amid this difficult economic climate, financial firms have an opportunity to buck the status quo by providing personalized analytics that help customers improve their operations and profitability. 

Standard Chartered is partnering with fintech platform upSWOT to offer forecasting, analytics, and advice to its small business customers. The partnership gives SMBs a single, comprehensive dashboard to track and analyze their cash flow, inventory, and return on investment, which can help drive their decision making around marketing tactics, financing requirements (like credit lines), and more.   

It’s a “win-win” situation for both the bank and its SMB clients: The partnership will allow SC to have a “deeper understanding of their business users in order to provide customized up-sell and cross-sell opportunities, speed up the loan underwriting process, cut renewal costs, and most importantly, build trusting relationships with their SMBs,” upSWOT’s head of digital acquisition, Nana Mardoyan, told Insights Distilled. SMBs, meanwhile, “will have access to advanced financial technologies that they need in order to compete in the increasingly complex global marketplace.”  

SC is launching a pilot initiative in Singapore, with plans to expand next year. It also isn’t the only bank that’s been beefing up its small business offerings recently: For example, US Bank has worked with an unnamed fintech to help SMBs predict their future cash flow, while Barclays is partnering with UK fintech Liberis to make cash advances faster and easier. 

Pay-by-bank capabilities – which let consumers pay bills directly from their bank accounts without having to type in routing or account numbers – reduces risks and costs for merchants and can earn goodwill from consumers. 

Mastercard and JPMorgan just announced a new pay-by-bank product to let consumers pay bills directly from their bank accounts with great security and ease. 

JPMorgan’s business customers benefit because pay-by-bank nixes credit card swipe fees and reduces their risk. 

“The technology behind pay-by-bank reduces the likelihood of unauthorized transactions and frees our clients from the need to retain — and the responsibility to securely maintain — consumer banking information,” JPMorgan’s head of payments, Max Neukirchen, said in the press release.  

Consumers, meanwhile, have an easy, instant, and secure way to pay, without relying on credit. “Digital acceleration has changed how people think about money and what they expect from everyday transactions,” a Mastercard spokesperson told Insights Distilled, citing those consumer expectations and technology innovation as drivers of open banking capabilities, including pay-by-bank. 

JPMorgan and Mastercard are piloting pay-by-bank with a small number of US-based billers and merchants this year and expect to expand in 2023.