Banksvs.

fintech:Atlast,itsofficial

SinzianaBunea,BenjaminKoganandDavidStolin*

October2016

Forthcoming,JournalofFinancialTransformation

Abstract
Recentyearshaveseenasubstantialamountofdiscussion,butlittleempiricalevidence,aboutthe
threatthatfinancialtechnology(fintech)firmsposetotheestablishedbankingsector.Weseekto
contributesuchevidencebyanalyzingexplicitmentionsofcompetitionfromfintechinU.S.banks
annualreports.Surprisingly,therewerenosuchmentionspriorto2016.Weidentify14banksthat
acknowledgebeingthreatenedbyfintechcompanies.Thesebanksrepresentonly3percentofthe
bankingsectorbycountbutnearlyathirdofitsassets.Whilethisfintechmentioninggroupis
skewedtowardlargebanks,itscharacteristicsandvaluationdifferlittlefromthoseofotherbanksof
comparablesize.Ontheotherhand,thereissomeevidencethatbankswhichhaveexpressed
concernaboutfintechcompetitionaremorelikelytobeinvolvedinthefintechspacethemselves.
Overall,banksthathaveformallyvoicedtheirconcernaboutfintechcompetitionseem,ifanything,
tobebetterequippedtoweatherit.

Keywords:fintech;banking;SEC

BuneaisattheUniversityofPennsylvania,KoganisatFinTxtLtd,andStolinisatFinTxtLtdandatToulouse
BusinessSchool,UniversityofToulouse.Emaildavid@fintxt.com.WearegratefultoFrankDierick,DavidLe
Bris,YuliyaSnihurandMaximZagonovforcomments.Allerrorsareours.

Introduction
Interestinfinancialtechnology,orfintechhasbeengrowingalmostexponentiallysincethelast
financialcrisis.Ithasbeenaccompaniedbypredictionsofseveredisruptionoftraditionalbanking.
HeadlinessuchasBanksarerighttobeafraidofthefintechboom(Hart,2015)havebecome
commonplace.Concernhasalsocomedirectlyfrombankexecutives.Inawidelyquotedcomment,JP
MorgansCEOJamesDimonsaidinearly2014[w]henIgotoSiliconValleytheyallwanttoeatour
lunch.Everysingleoneofthemisgoingtotry(Krouse,2014).TheEconomist(2015)statesthat54
percentoftheseniorbankersitsurveyedbelievethatbanksarenotmeetingthechallengeposed
byfintech.Morerecently,PWC(2016,p.19)reportsthat95percentofthebanksthatitsurveyed
believethatpartoftheirbusinessisatriskofbeinglosttostandaloneFinTechcompanies.Given
suchsentiment,onewouldexpectfintechdisruptionrisktofeatureprominentlyinriskdisclosures
amongU.S.bankinginstitutions,andtohavedonesoforsometime.
Inthisstudy,weexamineexplicitreferencestopotentialcompetitionfromfintechinannualSEC
filingsofU.S.bankholdingcompanies(forbrevity,weusethisterminterchangeablywithbanks).
Surprisingly,only14banks,or3percentofthetotal,acknowledgefintechasacompetitiveriskafar
cryfromthemajorityofbankersthatexpressconcerninanonymoussurveys.Nolessremarkably,not
asingleoneofthese14banksformallyconsideredfintechtobeacompetitiveriskpriorto2016.
Arethe14banksparticularlyvulnerabletothefintechthreatastakingthedisclosureatfacevalue
wouldsuggest,oraretheysimplymoreawareofit?Doesitmakeadifferencewhetherabank
discussesthefintechthreatexplicitlyorimplicitly?Whiledefinitiveanswerstothesequestionsare
elusive,somepreliminaryinsightscanbegleanedfromthedata.

Background
AllpublicU.S.corporationsarerequiredtofileannualreportsbytheSecuritiesandExchangeActof
1934.Sincethe1990s,thesereportshavehadtobefiledelectronicallythroughthesocalledForm
10K.1CompetitionthecompanyfacesistypicallydiscussedeitherinItem1(BusinessDescription)
orinItem1A(RiskFactors).InMirakhurs(2011)randomsampleof122filings,83%includeda
discussionofcompetitiverisks.Campbelletal.(2014)foundriskdisclosuretobeinformativeof
actualfirmrisklevels.Johnson(2010)statesthattheSEChadbeenpushingforgreaterspecificityin
riskfactordisclosure.IRRCInstitutes(2016)studyofriskdisclosuresreportsthatcompetition,
globalmarketfactorsandregulatorymattersarethemostcommonriskscitedbyallcompaniesbut
areoftendiscussedgenerically.Thissuggestsanopportunityforcompaniestoreconsiderexisting
genericdiscussions(p.3).Cohen,LouandNguyen(2016)showthatfirmsareveryslowtochange
thewordingoftheirquarterlyandannualSECfilingsbutwhentheydoso,thechangesarehighly
informative(especiallyinMD&AandRiskFactorssections).

AccordingtotheSEC,TheannualreportonForm10Kprovidesacomprehensiveoverviewofthecompany's
businessandfinancialconditionandincludesauditedfinancialstatements.Althoughsimilarlynamed,the
annualreportonForm10Kisdistinctfromtheannualreporttoshareholders,whichacompanymustsendto
itsshareholderswhenitholdsanannualmeetingtoelectdirectors.
(https://www.sec.gov/answers/form10k.htm)

Technologyhasalwaysplayedanimportantpartinthefinancialservicesindustry,beitthearrivalof
theinternet,thetelephone,orthetelegraph.2Inrecentyears,technologydriveninnovationin
financehasacceleratedtoapointwherethetermsfinancialtechnologyorfintecharecommonly
understoodtobeshorthandfortechnologicalinnovationsinfinanceand/orforthebusinesssector
comprisedoffirmsthatenablesuchinnovations.3Accordingly,thetermfintechhasbecome
acceptedwithinthebankingindustryaswell,withnumerousseniorindustryfiguresemployingitin
speechesandinterviews.4Inlightofthis,andwithnumerousreportsandsurveyspointingtofintech
havingthepotentialtodisrupttraditionalbanking,onecouldexpectbanksriskdisclosuretoaddress
fintechcompetitionbyitsname.

Thecharacteristicsoffintechwarybanks
Westartourinvestigationbyidentifyingalldepositoryinstitutions(i.e.corporationswhoseStandard
IndustrialCodes,orSICs,startwith60)whose10Kfilingsfrom2013onwardmentiontheterm
financialtechnologyorfintech.Weretainthosefilingswheretheabovetermsoccuri)inItem1A
(Riskfactors)orii)undertheheadingCompetitionoriii)inthesameorthefollowingsentenceas
awordincludingthestringcompet(suchascompetes,competitionorcompetitive)butnot
competen(suchascompetentorcompetence).
Ourfinalsamplecomprises14banks,representing3%ofthepopulationofU.S.listedbank
companies.Allofthesebanksexplicitlymentioncompetitionfromfintechintheir2016filings,and
notinthepreviousyears.Alistingofthesebanks,togetherwiththe10Kexcerptscontainingthe
termfintechorfinancialtechnology,ispresentedintheleftcolumnofAppendixA.Further,for
eachofthesebanks,wescantheir2016andthepreviousyears10Kfilingsforindirectmentionsof
competitionwithfinancialtechnologycompanies.Todoso,wefollowthesamecriteriaasdescribed
intheparagraphabove,butreplacethesearchtermsfintech/financialtechnologywith
online/internet/ecommerce/technolog.TherelevanttextisincludedinAppendixA,andtext
frompreviousyearsfilingsisshaded.
Althoughoursampleissmall,wenonethelesswillseektounderstandwhetherofficiallyfintechwary
banksaredifferentfromtheirpeers.Tothisend,weconstructapeergroupofcomparablebanksto
useasabenchmark.Specifically,wefirstidentify,usingtheCompustatdatabase,theeligible
populationofU.S.headquartereddepositoryinstitutionswithSECfilingsin2015and2016:this

SeeforexampleGarbadeandSilber(1978).
Itisalittleknownfactthattheearliestmentionofthetermfintechinapeerreviewedjournalfarpredates
itsmentioninthepopularandbusinesspress.Bettingers(1972)reportinInterfacesstartsasfollows:Overthe
lastfouryearsManufacturersHanoverTrustCompanysOperationsResearchDepartmenthasdeveloped
approximately100modelsthatarecurrentlyusedthroughoutthebank.Agroupof40modelshasbeenset
asideanddesignatedasFINTECH.FINTECHisanacronymwhichstandsforfinancialtechnology,combining
bankexpertisewithmodernmanagementsciencetechniquesandthecomputer(ouremphasis).Whilethis
decadesolddefinitionhasunmistakableparallelswithcommonunderstandingoftodaysfintechsector,
modernacademicjournalshaveyettoembracefintechasadistinctfieldofstudy.Italsoisinterestingtonote
thatManufacturersHanoverwasonetheconstituentpartsoftodaysJPMorgan.Formoredetailabout
FINTECH,seeGardiner(2016).Forabroadhistoricalperspectiveonfintech,seeGoetzmann(2016).
4
NotealsothatAmericanBankermagazinesFintech100surveywasfirstpublishedinNovember2004.
3

resultsinatotalof418banks.Then,foreachbankinoursample,weidentifyitscontrolbankasthe
bankwiththesame4digitSICandwiththeclosestnumberofemployees5tothatofthesample
bank.Wethenscantheirmostrecentandpreviousyears10Kfilingsformentionsoftechnologyand
competitioninthesamemanneraswedidforsamplebanks,andrecordtherelevanttextintheright
columnofAppendixA.
[Table1here]
Table1presentsour14banksampletogetherwiththe14matchingbanks.Foreachbank,itshows
itsidentifyinginformation:itsstockticker,name,stateofincorporation,anditsSECassignedCentral
IndexKey(CIK).Italsoshowsbankcharacteristicsasoftheendofthe2014fiscalyear,obtainedfrom
Compustat:marketvalue,assets,andthefulltimeequivalentnumberofemployees.Additionally,it
presentsthebanksrankbyassetswithinthegroupof418banksmeetingoureligibilitycriteria,6and
theratiosofthebanksmarketvaluetoitsassetsandtoitsemployeecount.
Thedistributionoffintechmentionsbybanksizeisheavilyskewedtowardlargerbanks.Threeofour
14banksareamongthesixlargestbyassets:JPMorgan(1st),PNC(5th)andBankofNewYorkMellon
(6th).Theotherelevenaresubstantiallysmaller,withnoneexceeding$100billioninassetsor$10
billioninmarketcapitalization.However,thesebanksarestilllargerelativetothe418memberU.S.
bankingsectorasdefinedinourstudy:onlytwo(CSBandHamilton)areinthebottomquartileby
assets,two(BeneficialandHorizon)areinthesecondquartile,andtheremainderofthesample
(whichincludesHuntington,Zions,SVB,Umpqua,UMB,IberiaBankandFirstInterstate)areallinthe
toponesixth.
Lookingatbanksizeanotherway,thedistributionoffintechmentionersisquiteintriguing.30%of
thetoptenbanksbyassetshaveadmittedtobeingexposedtofintechrisk,asdid7%ofthenext100
banksandonly1%oftheremaining308banks.Onthesurfaceofit,onecouldarguethatbigger
bankshavelesstoworryaboutastheyhavegreaterresourceswithwhichtoresistcompetitionfrom
fintechwhetherthroughcompetingwithfintechfirmsfortalent,signingpartnershipagreements
withthem,orevenbuyingthemoutright.Bycontrast,smallerbanksareoftenconsideredtobe
particularlyvulnerable(Antonakes2015andArora2015).Perhapsthegreaterlikelihoodoflarge
banksacknowledgingcompetitionfromfintechsimplyreflectstheirgreaterfamiliaritywiththat
sectorratherthantheirgreaterfearofitwithpossiblecluestobefoundinthebanksownwords
andintheiractions.

Whatdobanksactuallysayaboutfintech?
Beyondthemerefactofbanksmentioningfintechbyname,itisinformativetoexaminethese
mentionsincontext.Aspreviouslynoted,AppendixAprovidesthiscontext,supplyingbanks10K
textdiscussingthecompetitiveimpactoftechnology.

Weusethenumberofemployeesbecauseitisareasonableproxyforbanksizeandthedataareconsistently
availableonCompustat.
6
NotethatCitigroup,forexample,hasStandardIndustryCodeof6199(whichotherwisemainlyincludes
closedendfundsandETFs)andassuchisnotinoureligiblepopulation.Fortherecord,Citigroupdoesnot
mentionfintechinits10Kstatements.

Sixofthe14banksinoursamplesimplymentionfintechaspartofalistofcompetitortypesranging
fromfive(CSBBancorp,UmpquaBank)toeighteen(JPMorgan)innumber.Theothereightbanks
makeanefforttoexplainhowtheyarethreatenedbyfintech.Thesepointsaregenerallywidely
known,suchasPNCsbanksgenerallyarefacingtheriskofincreasedcompetitionfromproductsand
servicesofferedbynonbankfinancialtechnologycompanies,particularlyrelatedtopayment
services.
Twoexcerpts,however,evokelesserknownaspectsofthebankfintechdynamic.Thus,HorizonBank
raisesthepossibilityofcompetingwithfintechcompaniesfortalent,whileIberiaBanksuggeststhat
tryingtokeepupwithfintechfirmscouldresultinanincreasedlikelihoodofcyberattacks.
Theprizeforthedepthofdisclosurewithrespecttofintechcompetitionwouldhavetogothe
pioneer.HuntingtonBancorp,thefirsteverU.S.depositoryinstitutiontomentionfintechinits
annualreport,alsogoesthefurthestindiscussingitscompetitivestrategyinthisregard:weare
monitoringactivityinmarketplacelendingalongwithbusinessesengagedinmoneytransfer,
investmentadvice,andmoneymanagementtools.Ourstrategyinvolvesassessingthemarketplace,
determiningourneartermplan,whiledevelopingalongertermapproachtoeffectivelyserviceour
existingcustomersandattractnewcustomers.Thisincludesevaluatingwhichproductswedevelopin
house,aswellasevaluatingpartnershipoptionswhereapplicable.
Interestingly,HamiltonBancorp,byfarthesmallestandthemostrecentfiler,comestheclosestto
Huntingtonindeviatingfromboilerplatelanguageindiscussingfintechandprovidesperhapsthe
mostrevealingdisclosureofall:Theyofferuserfriendlyfrontend,quickturnaroundtimesforloans
andotherbenefits.WhileHamiltonisevaluatingFinTechcompanieswiththepossibilityofdeveloping
relationshipsforefficiencyinprocessingand/orasasourceofloansandotherbusiness,wecannot
limitthepossibilitythatourcustomersorfutureprospectswillworkdirectlywithaFinTechcompany
instead.ItwillbeinterestingtoseewhetherHamiltonstextforeshadowsmuchmorewidespread
andinformativediscussionoffintechinthenextfilingseason.
WealsonotethatwhereasfiveofthebanksmentionfintechcompetitionintheRiskFactor(Item
1A)sectionoftheannualreport,sevendosounderBusinessDescription(Item1),oneunder
ManagementDiscussionandAnalysis(Item7),andoneinitsthelettertoshareholders.
Lastly,comparisonwithpreviousyearsfilingsshowsthatoverwhelminglythefintechrelatedtext
hasbeenanadditiontoratherthanreplacementofearliertext.Inotherwords,thesebankshave
tendedtotalkabouttechnologycompetitionriskalready,butin2016theyaddedspecificitywith
theirfintechmentions.

Whatdocontrolbankssayaboutthecompetitiveimpactoftechnology?
Sincecontrolbanks,whilepresumablyoperatinginasimilarcompetitiveenvironmenttothatof
samplebanks,didnotmentionfintech,thisraisesthequestion:didtheyeschewthetopicaltogether,
ordidtheysimplyphrasethingsdifferently?Afterall,asShakespearesJulietnoted,thatwhichwe
callarosebyanyothernamewouldsmellassweet.

ExaminingtherelevanttextinAppendixAshowsthatthethreetoptenbanksinourcontrolgroup
prepareddisclosuresthatwereindeedinformativeaboutthethreatfromfintechinspiteofnot
mentioningthetermdirectly.Thus,BB&T,the9thlargestbankbyassets,isunmistakablyspeakingof
fintechinspiteofomittingthetermitself:technologycompanieshavebeguntofocusonthe
financialsectorandoffersoftwareandproductsprimarilyovertheInternet,withanincreasingfocus
onmobiledevicedelivery.Thesecompaniesgenerallyarenotsubjecttothecomparableregulatory
burdensasfinancialinstitutionsandmayaccordinglyrealizecertaincostsavingsandofferproducts
andservicesatmorefavorableratesandwithgreaterconveniencetothecustomer.Forexample,a
numberofcompaniesofferbillpayandfundstransferservicesthatallowcustomerstoavoidusinga
bank.Technologycompaniesaregenerallypositionedandstructuredtoquicklyadaptto
technologicaladvancesanddirectlyfocusresourcesonimplementingthoseadvances.Thesamecan
besaidofBankofAmerica(thesecondlargestbyassets),whichwritesthattechnologicaladvances
andthegrowthofecommercehavemadeiteasierfornondepositoryinstitutionstoofferproducts
andservicesthattraditionallywerebankingproducts,andforfinancialinstitutionstocompetewith
technologycompaniesinprovidingelectronicandinternetbasedfinancialsolutionsincluding
electronicsecuritiestrading,marketplacelending,andpaymentprocessing.Similarly,U.S.Bancorp,
thethirdlargestbyassets,mentionscompetitionfromtechnologycompaniesandelsewherewarns
ofinnovativewaysthatcustomerscanmakepaymentsormanagetheiraccounts,suchasthrough
theuseofdigitalwalletsordigitalcurrencies.
Inamorelimitedway,UnionBanksharesmentionscompetitionbyoutofmarketcompetitors
throughtheinternetandFultonnotesthatsomeofitscompetitorsconductbusinessprimarilyover
theinternet,althoughtheydonotoffermoredetail.Alongsimilarlines,BrynMawrspeaksofon
linebankingenterprisesandColumbiaofInternetbasedbankinginstitutions.Internetbanks,
however,arenotsynonymouswithfinancialtechnologycompanies,anditisnotclearthatthe
phrasingofthesedisclosureswouldhelptheirreadersgraspthebreadthofthepotentialthreatthat
thesebanksfacefromfintech.
Sterling,UnitedBankshares,CentralFederal,Keycorp,Synovus,andComericaofferboilerplate
languagesuchasThefinancialservicesindustryisundergoingrapidtechnologicalchangeand
someofourcompetitorshavesubstantiallygreaterresourcestoinvestintechnological
improvementsbut,unlikethetwocategoriesofbanksabove,donotspecificallywarntheirinvestors
aboutthepossibleimpactofnewentrantsinthefinancialtechnologyspacethephrasingtheyuse
couldbereferringtocompetitionfrombetterfundedand/ormoretechsavvytraditionalbanks.
Lastly,ourtextualfiltershavenotidentifiedanytechnologycompetitionrelevanttextforMB
Financial,eventhoughthisbank,accordingtoits10Kfiling,offersbothinternetandmobilebanking
toitscustomers.
WenotethatwiththeexceptionofBB&T,whichsignificantlyexpandeditsdiscussionsincethe
previousfiling,therehasbeenvirtuallynochangeintherelevantpassagesoftheothercontrol
banks.
Thetakeawayfromtheabovetextualcomparisonofsampleandcontrolbanksisnuanced.Among
toptenbanks,itishardtoarguethatthosecitingfintechbynameoffermuchmoreinformative
warningsaboutthethreattheyarefacingfromtechnologyfirmsthandotheirnonfintechciting
counterparts.Smallerbanks,ontheotherhand,clearlydoabetterjobofinformingtheirinvestors
6

aboutthisthreatwhentheyspecificallymentionfintech.Thissuggeststhatthechoicetomention
fintechexplicitlyismorethanjustaquestionofsemantics.

Banksfintechrelatedactions
Actionsspeaklouderthanwords,soanaturalwaytoassessbanksfintechawarenessistoexamine
theirpastactionsinthefintechspace.However,doingsothoroughlyisanontrivialundertaking.For
example,formerS&PpresidentDevenSharmacategorizespossiblefintechfacingactionsbya
financialservicesincumbentasfollows7:1)createacceleratorprogramforfintechstartups;2)setup
venturefundsforfintechcompanies;3)partnerwithfintechcompanies;4)buyoutfintechstartups;
5)launchownfintechsubsidiary;6)createanindustryconsortium.
Onthesemeasures,ourfintechmentionersappeartoberathermoreproactivethannon
mentioners.JPMorganhaslaunchedaresidencyprogramforfintechfirmsandisapartnerin
FinancialSolutionslabwhichrunsafintechcompetition,hasinvestedinfintechfirmssuchasMotif
andformedapartnershipwithOnDeck.BNYMellonhascreatedseveralinnovationcenters,including
inSiliconValley.PNC(alongwithJPMorganandseveralotherleadingfinancialinstitutions)invested
inDigitalAssetHoldings,ablockchaintechnologycompanysubsequentlynamedbyFortuneasone
thefivehottestfintechcompanies.8SVBwhichstandsforSiliconValleyBank,afterits
geographicallocationishistoricallyinnovationfocused,hasequityinvestmentsinsuchfintech
companiesasLendingClubandNvoicepay,andhostsafintechconference.Umpquaisestablishinga
fintechsubsidiary,alsoinSiliconValley.
Bycontrast,amongcontrolbanks,themostnotablefintechactivitiesareBankofAmericasannual
InnovationSummitinSiliconValleyandUSBancorpsandBB&TsparticipationinINVfintech
accelerator.

Thebankthatdidntbark
OfthetopsixU.S.banksbyassets,wehavesofarexaminedfive:three(JPMorgan,PNCandBNY
Mellon)areinoursample,andtwo(BankofAmericaandUSBancorp)areamongthecontrolbanks.
ThisleavesoutWellsFargo,thethirdlargestandaparticularlycuriouscase,givenitswellknown
andfarreachingactivityinthefintechfieldthroughitsFintechGroup,itsaccelerator,its
participationinClearXchangenetwork,andnumerousotherinitiatives.HowdoesWellsFargo,then,
talkaboutfintechcompetitioninitsannualreport?
Surprisingly,theBusinessDescriptionsectioncontainsonlyapassingreferencetoonlinelending
companies,whileRiskFactorsoffersboilerplate:Continuedtechnologicaladvancesandthe
growthofecommercehavemadeitpossiblefornondepositoryinstitutionstoofferproductsand
servicesthattraditionallywerebankingproducts,andforfinancialinstitutionsandothercompanies
toprovideelectronicandinternetbasedfinancialsolutions,includingelectronicpaymentsolutions.

7
8

Seehttps://vimeo.com/getsmarter/review/172078632/239ed4ba11.
Seehttp://fortune.com/2016/06/27/fivehottestfintechs/.

ItisworthnotingthatthedeeplyfintechinvolvedJPMorgan,inspiteofitsmentionoffintech,is
similarlytaciturnonthesubject.Itseemsplausiblethatparticularlyextensiveongoinginvolvement
withthefintechsectormakesbanksfeellessthreatenedbyitoratleastfeellessneedtoofficially
expresstheirconcern.9

Thetimingoffintechmentions
Havingdiscussedthenatureofbanksdisclosureonthesubjectoffintechcompetition,itisworth
addressingthesuddennesswithwhichbanksbegantoacknowledgeitbynameintheirannual
reports.Thefactthatthenumberofofficiallyfintechconcernedbankswentfromzeroto14ina
singleyearisrathersuggestiveofcopycatbehaviorinbanksdecisionstomentionfintech.Asa
simplecalculation,taking3percentastheprobabilityoffintechmentions(basedon14mentioners
outof418banksinthemostrecent12monthperiod),iffintechmentionswererandomthenthe
chancethatnoneofthe418bankswouldhavementionedfintechtheyearbeforeis0.97418,orabout
threeinamillion.
[Figure1here]
Theaboveinsightmakesitinterestingtoexaminethesequenceoffintechmentionsinmoredetail.
Toaidinthis,Figure1focuseson10KfilingsinFebruaryandMarch2016,theperiodwhen92
percentoftheeligible10Kswerefiled,includingthosebyallbutoneofthefintechmentioning
banks(aspointedoutearlier,HamiltonsfilingtookplaceinJuneofthisyear).Specifically,thechart
plotsthefilingbanksrankbyassets(sothatlargestbanksareatthebottom)againstthedayofthe
filing.Banksthatmentionedfintecharemarkedinred.
Severalthingsstandoutimmediately.First,regardlessoffintechmentions,largerbanksfileearlierin
theseason.Second,asdiscussedpreviously,banksthatmentionfintechtendtobelarger.Third,
withtheexceptionofthetinyCSB,allthefilingstookplaceinthespanoflessthantwoweeks,from
17Februarythrough1March2016,havingstopped(oratleastpaused)evenmoresuddenlythan
theystarted.
Thefirstevermentionofacompetitivethreatfromfintechon17February2016wasbyoneofthe
firsttenfilersoftheseason:Huntington,a150yearoldinstitutionheadquarteredinColumbus,
Ohio,andrankingonly21stbyassets.WhywouldHuntingtonbethefirstbankinthenationto
officiallyraisetheissueofcompetitionfromfintech?Apossibleclueliesinitsacquisitionof
FirstMerit,anotherOhiobankwithsmallerassetsbutanevenlongerhistory,whichHuntington
announcedthreeweeksearlierandwhichwaslargelymotivatedbygeographicsynergies.Itis
conceivablethatthefintechthreatwouldhavecomeupasanissueduringmergerdiscussionsand/or

Readersarefreetoformtheirownopiniononwhethersuchinsoucianceisjustified.WedonotethatCB
InsightsstrikingUnbundlingofaBankgraphic(https://www.cbinsights.com/blog/disruptingbankingfintech
startups2016/)isbasedonascreenshotofWellsFargosonlineservice.WellsFargoswellknownaggressive
focusonsalesmeansithasbothmoretogainfromsuccessfullytakingonorcooptingfintechfirms,andmore
toloseifitfailstodoso.ThesuddencollapseofitspartnershipwithAmazoninanattempttotakeonfintech
studentloanlenders(http://www.wsj.com/articles/wellsfargoamazonendstudentloanpartnership
1472681989)isanindicationthatevenforabankofitsresourcesandknowhow,thereareobstaclesin
implementingfintechlikesolutions.

duediligenceworkandasaresultattractedseniormanagementsattentionperhapssufficientlyso
tomakeHuntingtonthefirstbanktoacknowledgecompetitionfromfintechina10Kfiling.Onthe
otherhand,thedepthofHuntingtonsfintechrelateddisclosuresuggeststhatitmayhavebeen
seriouslycontemplatingthefintechlandscapeforsometime.
WhateverwasHuntingtonsmotivation,itwassharedbynoneofthefollowing16filers.Thischanged
onFebruary23rd,whenoneofthesevenbanksfilingthatdaydidmentionfinancialtechnology
companiesascompetitorsandthatbankwasnoneotherthanJPMorgan,thenationslargestbank
andonewhoseCEOsconcernaboutfintechcompetitionhadmadeaconsiderableimpressiononthe
mediaand,arguably,ontheindustrybackin2014.ItisnotentirelyclearwhyJPMorgandidnot
concedethethreatoffintechcompetitioninitsFebruary201510Kfiling,giventhatitsCEOdidso
publicly,albeitindifferentwords,almostayearearlier.Itdoesseemspossible,however,that
JPMorganspassingmentionoffintechcompetitioninitsFebruary2016filinghadsomethingtodo
withHuntingtonsearlierdeclaration,andwithJPMorgannotwishingtofallafullyearbehindthe
disclosurepioneer.Itisofcoursealsopossiblethatthetimingwasmerelycoincidental.Butthe
subsequentsequenceoftenfintechmentionsoverthefollowingoneweekstretch(outof86total
filers)seemslikelytohavebeentriggered,atleastinpart,byJPMorgansprecedent.
FromMarch2nduntilthe31st,however,onlyoneofthe258filersmentionedfintech.Why?One
possibilityisthat,oncethedustsettled,itbecameclearthatalthoughseveralofthenationslargest
banksindeedfollowedHuntingtonsandJPMorganslead,manydidnot.Yetthisdoesnot
satisfactorilyexplaintheextremereticenceofpostMarch1stfilerstomentionfintech.Another
possiblereasonisthat,Marchfilersbeingsubstantiallysmaller,theydidnotfeelthattheactionsof
largebankswereofrelevancetothem.WhileCSBisanexception,itistemptingtoconjecturethatit
mayhavetakenitscluefromHuntington,adominantbankinCSBsregion.Butthenwhydidntother
regionalbanksmentioningfintech,suchasZionsorIberiaBank,inspirelocalfollowers?
Analternativeinterpretationisthatfintechmentioningbanksaresimplythosethathaveexistingor
futurefintechactivityontheirmind.Viewedinthislight,thecluetotinyHamiltonBancorpsmention
offintechisinthefilingitself:ittalksaboutpossiblecollaborationswithfintechfirms(andspeaks
aboutthesectorinunmistakablypositiveterms).Ifso,andinthespiritofCohenetal.(2016),these
fintechmentionswillbegintomakesenseinthenearfuture.
Westressthattheabovearenomorethanspeculationsaboutthemechanismsunderlyingthe
patternsweobserve.Newdataandanalysesmayshedlightonhowaccuratethesespeculations
havebeen.Inthemeanwhile,wenowattemptsomepreliminaryanalyseswiththequantitativedata
wehaveatthistime.

Aquantitativestudy
Generally,anempiricalresearcherwouldbeilladvisedtoundertakeacrosssectionalanalysiswith
only14observations.Asdataavailabilityleavesusnochoice,weundertakethisexercise
nonetheless,inordertotryandgleansomeearlyinsightsintothebankfintechdynamic.Todoso,in
Table2wepresentanumberofcharacteristicsfor1)14samplebanks,2)14controlbanks,and3)all
418banks,andwereportondifferencesbetweenthefirstgroupandtheothertwo.
9

[Table2here]
ThefirstfewrowsofTable2focusonthefulltimeequivalentnumberofemployees,withthe
mediansof3,209and3,200,respectively,forsampleandcontrolbanksbeingveryclose,since
sampleandcontrolbanksarematchedontheemployeecount.Accordingly,parametricandnon
parametrictestsfordifferencesbetweensampleandcontrolbanksemployeecountsproduce
insignificantpvalues.Bycontrast,andasnotedearlier,thepopulationofbanksfromwhichour
sampleandcontrolbanksaredrawntendstohavebankswhoseemployeecountisanorderof
magnitudesmaller.
Similarpatternsholdforbanksassetsandmarketvalues:nosignificantdifferencebetweensample
andcontrolbanks,butsamplebanksaremuchlargerthanthebankpopulationonaverage(or
median).
Acrudebutpotentiallyeffectivewaytoassesshowinvestorsvaluebanksthatmentionfintech
competitionistoexaminetheratioofmarketvaluetofundamentalvariablessuchasemployee
countandassets.AsthenextrowsofTable2show,differencesbetweensampleandcontrolbanks
continuetobeinsignificant,althoughthismaybeduetothesmallsamplesize.Whilemarketvalue
peremployeeissignificantlyhigherforsamplebanksascomparedtothebankpopulation,thismay
beduetoeconomiesofscaleinthebankingsector,sincesamplebankstendtobelargerandinfact
thisratioisevenhigherforoursizematchedcontrolgroup.
Lastly,wecomparemonthlystockreturnsforallthreegroupsofbanksforthelastthreecalendar
yearsindividuallyandtakentogether.Alldifferencesareinsignificant,althoughonceagainthesmall
samplesizewouldnaturallymakeanydifferencesdifficulttodetect.
Whilethetableisrichinnumericalcontent,itsmaintakeawaysarestraightforward.Although
fintechmentioningbanksaresignificantlydifferentfromthebankpopulation,notablyinbeing
larger,theirstockmarketderivedattributes(suchasvaluationratiosandstockperformance)are
quitesimilartothoseoftheirpeersofcomparablesize.Inotherwords,whethermentioningfintech
competitionisareflectionofaninnovativestreakinabanksDNAorofitsgenuinevulnerabilityin
thefaceofsuchcompetition,thesehaveyettomanifestthemselvesinaprominentwayinthe
banksvaluations.

Concludingremarks
Havingemergedinthewakeofthe20082009financialcrisis,thefintechsectorhasbeen
increasinglyattractingattention,investmentandcustomerseversince.Remarkably,itisonlythis
yearthatU.S.banksfirstbegantoacknowledgeformallycompetitionthattheyarefacingfrom
fintech.Inthisreport,weexaminethecompositionofthepioneeringgroupofofficiallyfintechwary
banks,aswellasthetimingandthenatureoftheirdisclosureandthestockmarketsperceptionof
them.Weproposesomeplausiblecluesexplainingthecompositionandthetiming,althoughmuch
aboutbothremainspuzzling.Thesamplebanksdisclosureislimited,althoughgenerallysuperiorto
thatofcomparablebanksthatdonotmentionfintech;and(consistentlywithsmallsamplesize)
thereisnoevidencethatfintechmentionsarecorrelatedwithstockmarketvaluationor
performance.Overall,ourinvestigationintotheinauguralyearoffintechmentionsinbanksannual
10

reportspointslesstosystematicpatternsthantoindustrymemberstakingcuesfromoneanotheras
towhethertheyshouldbeadmittingtobeingvulnerabletocompetitionfromfintechfirms(or,
conversely,toimplicitlyboastaboutbeingpartofthefintechincrowd).Thisbehaviormaybea
reflectionoflargeruncertaintyaboutfuturecompetitiveinteractionbetweentraditionalbankingand
fintech.
OurstudyalsocarriesanimportantmessagefortheSEC.10Whileprivatelythemajorityofbankers
acknowledgetheseriousnessofthefintechthreat,onlyasmallproportiondosointheirannual
reports,despitebeingcompelledbySECregulationstodiscloseimportantrisks,andtodosoinplain
English.IsmostbanksfailuretomentionfintechriskasignthattheSECsdisclosurerequirement
lacksbite?Onepossiblereasonwhyabankmightnotmentionfintechexplicitlycouldbeabeliefthat
ageneralmentionofpotentiallydisruptivetechnologieswouldbesufficient.However,giventhatthe
termsfinancialtechnologyandfintechhavebecomeensconcedinthebusinesslexicon(and
fintechhasevenenteredtheOxfordEnglishDictionary),avoidanceoftheirusemayappeartobeat
oddswiththeSECsplainEnglishdirective.11Analternativeexplanationcouldbebanksbeliefthat,
onthecontrary,fintechcompetitionriskistoogenerictomeritamention,inthatitispotentially
applicabletoallfirmsintheindustry.Thesame,however,alsoapplies(forexample)tointerestrate
risk,whichisexplicitlyaddressedinmostbanks10Kfilings.Perhapsamoreplausibleexplanationis
thenotionthatmanybankmanagersfeelthatbybeingamongthefirsttoacknowledgeofficiallythe
threatfromfintech,theysignaltoinvestorsthattheyareparticularlydefenselessonthatfront.Still
anotherpossibilityisthatmanybanksmayholdtheviewthatstandalonefintechfirmsarenotviable
inthelongrunandwillbecomeabsorbedbyincumbentfinancialinstitutions.Suchbankscouldview
themselvesasbeingvulnerabletofintechinciteddisruptionwithoutnecessarilyregardingfintech
firmsascompetitors.
Ourexaminationoftheinitial,smallcohortofbankstorecognizeformallythethreatposedby
fintechcannecessarilygiveonlypreliminarycluesastowhatsetsthesebanksapart,andwhatthe
futurewillholdforthem.Isitthattheyareespeciallyvulnerableinthefaceofthisthreatafterall,
andthiswillbereflectedinsubsequentpoorperformance?Oraretheyunusuallyprescient,andas
suchwillexhibitgreateradaptabilityandresilience,accompaniedbystrongfinancialresults?And,
indeed,willtheperformanceofthefintechsectorjustifytheconcernsofourcohortofofficially
apprehensivebanks?Willdisclosuresaboutfintechcompetitioncontinuetospreadthroughbanks
annualreports?Ifso,towhichbanks?Willmostbankscopyoradaptothersformulations,orwill
disclosuresbecomeincreasinglyinformative?Thecomingyearspromisetoshedmuchlightonthese
andmanyotheraspectsoftheevolvingrelationshipbetweentraditionalbankingandthefintech
sector.

10

TheSEChasincreasinglybeentakinganinterestinfintech,mostrecentlyexemplifiedbyitsintentiontohold
aforumtodiscussfintechinnovationthefinancialservicesindustry
(https://www.sec.gov/news/pressrelease/2016195.html)
11
E.g.[a]plainEnglishdocumentuseswordseconomicallyandataleveltheaudiencecanunderstandand
[w]hereacronyms,suchasREIT,arewidelyunderstoodtotheinvestingpublic,theycansafelybeused
withoutcreatingconfusion(U.S.SecuritiesandExchangeCommission,1998).

11

References
Antonakes,StevenL.,2015,Fintechthreatenssmallbanksmorethancrisiseverdid,American
Banker,November24,2015,http://www.americanbanker.com/bankthink/fintechthreatenssmall
banksmorethancrisiseverdid10779641.html
Arora,Rahit,2015.Fintech:Anexistentialthreattocommunitybanks,Forbes,August15,2015,
http://www.forbes.com/sites/rohitarora/2015/08/25/fintechanexistentialthreattocommunity
banks/
Bettinger,AbrahamLeon,1972.FINTECHASeriesof40TimeSharedModelsUsedat
ManufacturersHanoverTrustCompany,Interfaces2(4),6263.
Campbell,JohnL.,HsinchunChen,DanS.Dhaliwal,HsinminLuandLoganB.Steele,2014.The
informationcontentofmandatoryriskfactordisclosuresincorporatefilings,ReviewofAccounting
Studies19,396455.
Cohen,Lauren,DongLou,andQuocH.Nguyen,2016.Lazyprices,WorkingPaper,HarvardBusiness
School.
TheEconomist,2015.TheDisruptionofBanking,
http://www.economistinsights.com/sites/default/files/EIU
The%20disruption%20of%20banking_PDF.pdf
Garbade,KennethD.andWilliamL.Silber,1978,Technology,Communicationandtheperformance
offinancialmarkets,18401975,JournalofFinance33,819832.
Gardiner,Gareth,2016.Fintechorinternet:Whichcamefirst?,http://blog.kantox.com/fintechor
internetwhichcamefirst
Goetzmann,WilliamN.,2016.Loanswithoutofficers?Investmentwithoutinvestmentbanks?
WelcometoFinTech,http://historynewsnetwork.org/article/163339
Hart,Patricia,2015.Banksarerighttobeafraidofthefintechboom,TimeMagazine,July8,2015,
http://time.com/3949469/financialtechnologyboom/
IRRCInstitute,2016,TheCorporateRiskFactorDisclosureLandscape,http://irrcinstitute.org/wp
content/uploads/2016/01/FINALEYRiskDisclosureStudy.pdf
Johnson,Sarah,2010.SECpushescompaniesformoreriskinformation.CFOMagazine,August2,
2010,http://ww2.cfo.com/riskcompliance/2010/08/secpushescompaniesformorerisk
information
JPMorgan,2015.2014AnnualReport,
http://files.shareholder.com/downloads/ONE/3844439630x0x820066/f831cad9f0d84efc9b68
f18ea184a1e8/JPMC2014AnnualReport.pdf
Krouse,Sarah,2014.DimonseesthreatfromSiliconValley,
http://blogs.wsj.com/moneybeat/2014/02/25/dimonseesthreatfromsiliconvalley/

12

Mirakhur,Yatin,2011.RiskdisclosureinSECcorporatefilings,WhartonResearchScholarsJournal,
Paper85.
PWC,2016.Blurredlines:HowFinTechisshapingfinancialservices,availablefrom
www.pwc.com/fintechreport
U.S.SecuritiesandExchangeCommission,1998,APlainEnglishHandbook:HowtoCreateClearSEC
DisclosureDocuments,https://www.sec.gov/pdf/handbook.pdf

13

Table1.Descriptivestatisticsofsampleandcontrolbanks
Thistablegivestheidentitiesandcharacteristicsofoursampleandcontrolbanks.Samplebanksare
unshaded.Eachsamplebankisfollowedbyitsmatchingcontrolbank(shaded).Samplebanksare
U.S.headquarteredpubliccompanieswhoseSICbeginswith60andwhichexplicitlyreferto
competitionfromthefintechsectorina10Kfiling.Controlbanksdonotexplicitlyreferto
competitionfromthefintechsector,butareotherwisesimilartosamplebanks.Specifically,foreach
bankinoursample,weidentifyitscontrolbankasanotherU.S.headquarteredbankwiththesame
4digitSICforwhicha10KformwithcompletedItem1andItem1Aisavailableforthemostrecent
fiscalyear,andwiththeclosestnumberofemployeestothatofthesamplebank.Alldataarefrom
Compustatasoftheendofthe2014fiscalyear.
Ticker
BK
BBT
BNCL
STL
CSBB
UNB
FIBK
UBSI
HBK
CFBK
HBNC
BMTC
HBAN
KEY
IBKC
MBFI
JPM
BAC
PNC
USB
SIVB
COLB
UMBF
FULT
UMPQ
SNV
ZION
CMA

Company
BANK OF NEW YORK MELLON CORP
BB&T CORP
BENEFICIAL BANCORP INC
STERLING BANCORP
CSB BANCORP INC/OH
UNION BANKSHARES INC
FIRST INTERSTATE BANCSYSTEM
UNITED BANKSHARES INC/WV
HAMILTON BANCORP INC/MD
CENTRAL FEDERAL CORP
HORIZON BANCORP/IN
BRYN MAWR BANK CORP
HUNTINGTON BANCSHARES
KEYCORP
IBERIABANK CORP
MB FINANCIAL INC/MD
JPMORGAN CHASE & CO
BANK OF AMERICA CORP
PNC FINANCIAL SVCS GROUP INC
U S BANCORP
SVB FINANCIAL GROUP
COLUMBIA BANKING SYSTEM INC
UMB FINANCIAL CORP
FULTON FINANCIAL CORP
UMPQUA HOLDINGS CORP
SYNOVUS FINANCIAL CORP
ZIONS BANCORPORATION
COMERICA INC

State
NY
NC
PA
NY
OH
VT
MT
WV
MD
OH
IN
PA
OH
OH
LA
IL
NY
NC
PA
MN
CA
WA
MO
PA
OR
GA
UT
TX

CIK MV ($m) Assets ($m)

1390777
45,367
385,303
92230
28,028
186,814
1615418
923
4,752
1070154
1,070
7,337
880417
58
621
706863
106
624
860413
1,274
8,610
729986
2,595
12,329
1551739
47
303
1070680
19
316
706129
241
2,077
802681
431
2,247
49196
8,537
66,298
91576
11,946
93,821
933141
2,169
15,759
1139812
2,457
14,602
19617 232,471 2,573,126
70858 188,141 2,104,534
713676
47,713
345,072
36104
80,275
402,529
719739
5,911
39,345
887343
1,586
8,579
101382
2,590
17,501
700564
2,212
17,125
1077771
3,745
22,613
18349
3,688
27,051
109380
5,788
57,209
28412
8,385
69,190

Rank Employees
5
50,300
9
33,400
114
830
81
836
351
186
350
186
68
1,705
56
1,703
404
58
402
62
186
448
176
444
21
11,873
18
13,853
48
2,825
53
2,839
1
241,359
2
223,715
6
53,587
4
66,750
23
1,914
69
1,844
43
3,592
44
3,560
34
4,569
29
4,511
22
10,462
20
9,115

MV/Assets
0.118
0.150
0.194
0.146
0.094
0.170
0.148
0.210
0.154
0.061
0.116
0.192
0.129
0.127
0.138
0.168
0.090
0.089
0.138
0.199
0.150
0.185
0.148
0.129
0.166
0.136
0.101
0.121

MV/Emp
0.902
0.839
1.111
1.279
0.313
0.569
0.747
1.524
0.803
0.311
0.538
0.971
0.719
0.862
0.768
0.865
0.963
0.841
0.890
1.203
3.088
0.860
0.721
0.621
0.820
0.817
0.553
0.920

14

Table2.Keycharacteristicsofsamplebanks,controlbanks,andtheU.S.bankpopulation
Thistableshowsthekeycharacteristicsofsampleandcontrolbanks,aswellasofthepopulationof
U.S.banks.EligiblebanksareU.S.headquarteredpubliccompanieswhoseSICbeginswith60and
whichfileda10KreportbetweenJuly2015andJune2016inclusive.Mcap(marketcapitalization),
Employees (the fulltime equivalent number of employees), and Assets (total assets) are from
Compustat as of the end of the 2014 fiscal year. Monthly returns are from CRSP. Comparisons of
means(respectively,medians)fordescriptivevariablesarefollowedinitalicsbyttest(respectively,
signedranktest)pvalues.ComparisonsofaveragemonthlyreturnsarefollowedbyFamaMacbeth
pvalues.

Sample

Banks
Control

All

Employees
median
average
N
%oftotal

3209
27408
14
26.1

3200
25916
14
24.7

354
3580
411
100.0

9 0.385
1492 0.474

2855 0.000
23828 0.000

Assets($m)
median
average
N
%oftotal

20057
252756
14
31.8

15863
210507
14
26.5

1595
26589
418
100.0

4194 0.761
42249 0.265

18462 0.000
226167 0.000

MV($m)
median
average
N
%oftotal

3168
25488
14
27.3

2526
23638
14
25.3

226
3217
406
100.0

642 0.808
1850 0.672

2942 0.000
22271 0.000

786
924
14

861
892
14

728
621
401

75.6 0.865
32.4 0.391

58.1 0.047
302.9 0.135

MV/Assets
median
average
N

0.138
0.135
14

0.148
0.149
14

0.132
0.125
406

0.010 0.268
0.014 0.298

0.006 0.473
0.009 0.877

Monthlystockreturn
average2013
average2014
average2015
average201315

3.13%
0.57%
0.43%
1.38%

2.92%
0.65%
0.55%
1.35%

2.93%
0.68%
1.09%
1.53%

0.21%
0.08%
0.12%
0.03%

MV/Employees
median
average
N

Differences
SampleControl
SampleAll

0.508
0.787
0.681
0.972

0.19%
0.11%
0.66%
0.16%

0.638
0.849
0.321
0.529

15

Figure1.Thetimingofbanks10Kfilingswithandwithoutmentionsoffintechcompetition
Thisfigureshowsthesequenceof10Kfilingsforthe384filingsthattookplaceinFebruaryandMarch2016.Thefilingdateisonthehorizontalaxis,with
theMondayofeachweekindicated.Thebanksrankbyassets(outoftheeligibletotalof418)isontheverticalaxis.Bankswhosefilingsexplicitlyreferto
fintechcompetitionareindicatedinred,withtheirstocktickershownnexttothedatapoint.

401

10KFILINGSBYBANKSIZE
filingsmentioningfintechcompetitionareinred
CSBB

BANK'SRANKBYASSETS

301

201

HBNC

BNCL
101

FIBK

HBAN
1
2/1/2016

UMBF
UMPQ
JPM

2/8/2016

2/15/2016

2/22/2016

IBKC
SIVB
BK

ZION
PNC

2/29/2016

3/7/2016

3/14/2016

3/21/2016

3/28/2016

10KFILINGDATE

16

AppendixA.Relevantexcerptsfrom10Kstatementsofbanksexplicitlymentioningfintechcompetitionandofcontrolbanks
Thisappendixshowstextdiscussingtechnologyandcompetitionforoursamplebanksthatexplicitlymentioncompetitionfromfintech,aswellasforcontrolbanksthatdo
not(inlefthandandrighthandcolumns,respectively).Specifically,foreachbankinoursample,weidentifyanotherU.S.headquarteredbankwiththesame4digitSICfor
whicha10KformwithcompletedItem1andItem1Aisavailableforthemostrecentfiscalyear,andwiththeclosestnumberofemployeestothatofthesamplebankas
oftheendofits2014fiscalyear(seeTable1).Wethenselectrelevanttextfromtheir2014and2015fiscalyears10Kstatementsasfollows.First,weretainallsentences
thatincludethetechnologyrelatedtextstringselectronic,ecommerce,digital,fintech,internet,mobile,online,ortechnolog,providedthati)theyoccur
under10KItem1A(RiskFactors)orii)thetextstringcompetappearsinthesamesentence,inoneofthetwoprecedingsentences,orastheheading.Wethen,atour
discretion,discardsentencesandpartsofsentencewhichdonotdirectlyrefertotheroleplayedbytechnologyinthebankscompetitiveenvironment,andoccasionally
addtheprecedingorsubsequentsentenceifneededtoprovidecontext.Tomakenavigatingthroughthetextextractseasier,weprecedewithastar(*)allwordsthat
containthestringcompet(e.g.*competitive),markinboldalltermsrelatedtotechnology,andadditionallyunderlinetermsreferringtofintech.Textfromthe2015fiscal
yearfilingsisunshadedandtextfrom2014fiscalyearfilingsisshaded.Foreachbank,weprovideitsCentralIndexKey(CIK)assignedbytheSecuritiesandExchange
Commission.Filingdatesand10Kitemsunderwhichtherelevanttextappearedareinitalics.

Bankmentioningfintechthreat

Controlbankmatchedonthenumberofemployees

BankofNewYorkMellon,CIK=1390777
[Filingdate2/26/2016,Item1]OurInvestmentServicesbusiness*competeswith
domesticandinternationalfinancialservicesfirmsthatoffercustodyservices,
corporatetrustservices,clearingservices,collateralmanagementservices,credit
services,securitiesbrokerage,foreignexchangeservices,derivatives,depositary
receiptservicesandcashmanagementservicesandrelatedproducts,aswellasawide
rangeoftechnologyserviceproviders,suchasfinancialservicesdataprocessingfirms.
[]Wealsobelievethattechnologicalinnovationisanimportant*competitivefactor,
and,forthisreason,havemadeandcontinuetomakesubstantialinvestmentsinthis
area.[Item1A]Rapidtechnologicalchanges,togetherwith*competitivepressures,
requireustomakesignificantandongoinginvestmentsintechnologytodevelop
*competitivenewproductsandservicesoradoptnewtechnologies.Ourfinancial
performancedependsinpartonourabilitytodevelopandmarketthesenew
productsandservices,adoptordevelopnewtechnologiesthatdifferentiateour
productsorprovidecostefficienciesanddelivertheseproductsandservicestothe
marketinatimelymannerata*competitiveprice.Theunsuccessfulimplementation
oftechnologicalupgradesandnewproductsandservicesmayadverselyimpactour
abilitytoserviceandretaincustomers.[]Inaddition,technologicaladvanceshave
madeitpossibleforothertypesofnondepositoryinstitutions,suchasoutsourcing
companiesanddataprocessingcompanies,toofferavarietyofproductsandservices

BB&T,CIK=92230
[Filingdate2/25/2016,Item1A][]theadoptionofnewtechnologiesby
*competitors,includinginternetbankingservices,mobilephoneapplicationsand
advancedATMfunctionalitycouldrequireBB&Ttomakesubstantialexpendituresto
modifyoradaptitsexistingproductsandservices.[]BB&Talsoexperiences
*competitionfromnonbankcompaniesinsideandoutsideofitsmarketareaand,in
somecases,fromcompaniesotherthanthosetraditionallyconsideredfinancialsector
participants.Inparticular,technologycompanieshavebeguntofocusonthefinancial
sectorandoffersoftwareandproductsprimarilyovertheInternet,withanincreasing
focusonmobiledevicedelivery.Thesecompaniesgenerallyarenotsubjecttothe
comparableregulatoryburdensasfinancialinstitutionsandmayaccordinglyrealize
certaincostsavingsandofferproductsandservicesatmorefavorableratesandwith
greaterconveniencetothecustomer.Forexample,anumberofcompaniesofferbill
payandfundstransferservicesthatallowcustomerstoavoidusingabank.
Technologycompaniesaregenerallypositionedandstructuredtoquicklyadaptto
technologicaladvancesanddirectlyfocusresourcesonimplementingthoseadvances.
[Filingdate2/25/2015,Item1A][]theadoptionofnewtechnologiesby
*competitors,includinginternetbankingservices,mobilephoneapplicationsand
advancedATMfunctionalitycouldrequireBB&Ttomakesubstantialexpendituresto
modifyoradaptitsexistingproductsandservices.[]BB&Talsoexperiences

17

*competitivewithcertainareasofourbusiness.*Competitorsmaydevelop
technologicaladvancesthatcouldnegativelyimpactourtransactionexecutionorthe
pricingofourclearing,settlement,paymentsandtradingactivities.[]*Competitors
includeotherbanks,tradingfirms,brokerdealers,investmentbanks,assetmanagers,
insurancecompanies,financialtechnologyfirmsandavarietyofotherfinancial
servicesandadvisorycompanieswhoseproductsandservicesspanthelocal,national
andglobalmarketsinwhichweconductoperations.Technologicalchangeis
influencinghowindividualsandfirmsconducttheirfinancialaffairsandchangingthe
deliverychannelsforfinancialservices,withtheresultthattheCompanymayhaveto
contendwithabroaderrangeof*competitorsincludingmanythatarenotlocated
withinthegeographicfootprintofitsbankingofficenetwork.
[Filingdate2/27/2015]Asin2016,butnomentionoffinancialtechnologyfirms.
BeneficialBancorp,CIK=1615418
[Filingdate2/26/2016,Item1]Weexpect*competitiontoremainintenseinthe
futureasaresultoflegislative,regulatoryandtechnologicalchangesandthe
continuingtrendofconsolidationinthefinancialservicesindustry.Technological
advances,forexample,haveloweredbarrierstoentry,allowedbankstoexpandtheir
geographicreachbyprovidingservicesovertheinternetandmadeitpossiblefornon
depositoryinstitutionstoofferproductsandservicesthattraditionallyhavebeen
providedbybanks.[Item1A]Ourbankingandnonbankingsubsidiariesalso*compete
withnonbankprovidersoffinancialservices,suchasbrokeragefirms,consumer
financecompanies,creditunions,insuranceagencies,financialtechnologycompanies
andgovernmentalorganizations,whichmayoffermorefavorableterms.
[Filingdate2/26/2015,Item1]Asin2016,butnomentionoffinancialtechnology
companies.
CSBBancorp,CIK=880417
[Filingdate3/14/2016,Exhibit13,Lettertoshareholders]*Competitionis
expandingaswell,withvariousformsofnonbankdisruptionfromfinancial
technologycompanies,creditunions,andinbroadercontextslargeretailers,auto
dealers,insurancecompaniesandothersalltusslingforashareoftheconsumers
financialserviceswallet.Therearesomanyentitiesvyingforshareofwalletthatthe
conditionshavefueledahyper*competitiveatmosphereinwhichserviceproviders
mustconstantlystrivetodifferentiatethemselvesorconsiderpartneringwithother
entities.
[Filingdate3/23/2015,Item1]Weexpect*competitiontoremainintenseinthe
futureasaresultoflegislative,regulatoryandtechnologicalchangesandthe

*competitionfromavarietyofinstitutionsoutsideofitsmarketarea.Someofthese
institutionsconductbusinessprimarilyovertheInternetandthusmaybeableto
realizecertaincostsavingsandofferproductsandservicesatmorefavorablerates
andwithgreaterconveniencetothecustomer,whocanpaybillsandtransferfunds
directlywithoutgoingthroughabank.

SterlingBancorp,CIK=1070154
[Filingdate2/29/2016,Item1A]Manyofour*competitorsaresignificantlylarger
thanweareandhavegreateraccesstocapitalandotherresources.Also,ourabilityto
*competeeffectivelyisdependentonourabilitytoadaptsuccessfullyto
technologicalchangeswithinthebankingandfinancialservicesindustry.
[Filingdate11/28/2016]Sameasin2016.

UnionBankshares,CIK=706863
[Filingdate3/15/2016,Item1]*Competition:TheCompanyandUnionface
substantial*competitionforloansanddepositsinnorthernVermontandNew
Hampshirefromlocalandregionalcommercialbanks,savingsbanks,taxexempt
creditunions,mortgagebrokers,andfinancialservicesaffiliatesofbankholding
companies,aswellasfromnationalfinancialserviceproviderssuchasmutualfunds,
brokeragehouses,insurancecompanies,consumerfinancecompaniesandinternet
banks.[Item1A]Thereisalsoincreased*competitionbyoutofmarket*competitors
throughtheInternet.[Item7]Factorsthatmaycauseresultsorperformancetodiffer
materiallyfromthoseexpressedinforwardlookingstatementsinclude,butarenot
limitedto:[]increased*competitivepressures[]fromchangesintechnologyand

18

continuingtrendofconsolidationinthefinancialservicesindustry.Technological
advances,forexample,haveloweredbarrierstoentry,allowedbankstoexpandtheir
geographicreachbyprovidingservicesovertheinternetandmadeitpossiblefornon
depositoryinstitutionstoofferproductsandservicesthattraditionallyhavebeen
providedbybanks.
FirstInterstateBancSystem,CIK=860413
[Filingdate3/1/2016,Item1]Thereissignificant*competitionamongcommercial
banksinourmarketareas.Wealso*competewithotherprovidersoffinancial
services,suchassavingsandloanassociations,creditunions,financialtechnology
companies,internetbanks,consumerfinancecompanies,brokeragefirms,mortgage
bankingcompanies,insurancecompanies,securitiesfirms,mutualfundsandcertain
governmentagenciesaswellasmajorretailers,allactivelyengagedinproviding
varioustypesofloansandotherfinancialservices.[]Thefinancialservicesindustry
couldbecomeevenmore*competitiveasaresultoflegislative,regulatoryand
technologicalchangesandcontinuedconsolidation.[]Also,technologyhaslowered
barrierstoentryandmadeitpossiblefornonbankstoofferproductsandservices
traditionallyprovidedbybanks,suchasautomaticfundstransferandautomatic
paymentsystems.
[Filingdate3/2/2015]Asin2016,butnomentionoffinancialtechnologycompanies.
HamiltonBancorp,CIK=1551739
[Filingdate6/29/2016,Item1A]Weexpect*competitiontoremainintenseinthe
futureasaresultoflegislative,regulatoryandtechnologicalchangesandthe
continuingtrendofconsolidationinthefinancialservicesindustry.Technological
advances,forexample,haveloweredbarrierstoentry,allowedbankstoexpandtheir
geographicreachbyprovidingservicesovertheInternetandmadeitpossiblefornon
depositoryinstitutionstoofferproductsandservicesthattraditionallyhavebeen
providedbybanks.[]*Competitioninthebankingandfinancialservicesindustryis
comingnotonlyfromlocalmarketsbutfromtechnologyorientedfinancialservices
(FinTech)companies,whicharesubjecttolimitedregulation.Theyofferuserfriendly
frontend,quickturnaroundtimesforloansandotherbenefits.WhileHamiltonis
evaluatingFinTechcompanieswiththepossibilityofdevelopingrelationshipsfor
efficiencyinprocessingand/orasasourceofloansandotherbusiness,wecannot
limitthepossibilitythatourcustomersorfutureprospectswillworkdirectlywitha
FinTechcompanyinstead.Thiscouldimpactourgrowthandprofitabilitygoing
forward.
[Filingdate6/26/2015,Item1A]Asin2016,butwithoutthetextdiscussingFinTech.

deliverysystems;
[Filingdate3/13/2015]Item1asin2016,Item1ANotapplicableastheCompanyis
permittedtoprovidescaleddisclosuresforsmallerreportingcompaniesinthisannual
report.
UnitedBankshares,CIK=729986
[Filingdate2/29/2016,Item1A]Unitedsstockpricecanfluctuatesignificantlyin
responsetoavarietyoffactors,including,amongotherthings:[]Newtechnology
used,orservicesoffered,by*competitors;[Item7]Actualresultscoulddiffer
materiallyfromthosecontainedinorimpliedbyUnitedsstatementsforavarietyof
factorsincluding,butnotlimitedto:changesineconomicconditions;business
conditionsinthebankingindustry;movementsininterestrates;*competitive
pressuresonproductpricingandservices;successandtimingofbusinessstrategies;
thenatureandextentofgovernmentalactionsandreforms;andrapidlychanging
technologyandevolvingbankingindustrystandards.
[Filingdate3/2/2015]Asin2016.

CentralFederal,CIK=1070680
[Filingdate3/23/2016,Item1A]Weneedtoconstantlyupdateourtechnologyin
orderto*competeandmeetcustomerdemands.Thefinancialservicesmarket,
includingbankingservices,isundergoingrapidchangeswithfrequentintroductionsof
newtechnologydrivenproductsandservices.Inadditiontobetterserving
customers,theeffectiveuseoftechnologyincreasesefficiencyandmayenableusto
reducecosts.Ourfuturesuccesswilldepend,inpart,onourabilitytousecurrent
technologytoprovideproductsandservicesthatprovideconveniencetocustomers
andtocreateadditionalefficienciesinouroperations.Someofour*competitors
havesubstantiallygreaterresourcestoinvestintechnologicalimprovements.We
maynotbeabletoeffectivelyimplementnewtechnologydrivenproductsand
servicesorbesuccessfulinmarketingtheseproductsandservicestoourcustomers.
[Filingdate3/27/2015]Asin2016.

19

HorizonBancorp,CIK=706129
[Filingdate3/1/2016,Item1A]Our*competitorsincludelargeregionalbanks,local
communitybanks,savingsandloanassociations,securitiesandbrokeragecompanies,
mortgagecompanies,insurancecompanies,financecompanies,moneymarket
mutualfunds,creditunionsandothernonbankfinancialserviceproviders,manyof
whichhavegreaterfinancial,marketingandtechnologicalresourcesthanus.[...]
Also,technologyandotherchangeshaveloweredbarrierstoentryandmadeit
possibleforcustomerstocompletefinancialtransactionsusingnonbanksthat
historicallyhaveinvolvedbanksatoneorbothendsofthetransaction.[]The
processofeliminatingbanksasintermediaries,knownasdisintermediation,could
resultinthelossoffeeincome,aswellasthelossofcustomerdepositsandthe
relatedincomegeneratedfromthosedeposits.Theeffectsofdisintermediationcan
alsoimpactthelendingbusinessbecauseofthefastgrowingbodyoffinancial
technologycompaniesthatusesoftwaretodelivermortgagelendingandother
financialservices.Arelatedriskisthemigrationofbankpersonnelawayfromthe
traditionalbankenvironmentsintofinancialtechnologycompaniesandothernon
banks.[]Thefinancialservicesindustryiscontinuallyundergoingrapidtechnological
changewithfrequentintroductionsofnewtechnologydrivenproductsandservices.
Theeffectiveuseoftechnologyincreasesefficiencyandenablesfinancialinstitutions
tobetterservecustomersandtoreducecosts.Ourfuturesuccessdepends,inpart,
uponourabilitytoaddresstheneedsofourcustomersbyusingtechnologytoprovide
productsandservicesthatwillsatisfycustomerdemands,aswellastocreate
additionalefficienciesinouroperations.Manyofour*competitorshavesubstantially
greaterresourcestoinvestintechnologicalimprovements,andwemaynotbeableto
effectivelyimplementnewtechnologydrivenproductsandservicesorbesuccessful
inmarketingtheseproductsandservicestoourcustomers.Failuretosuccessfully
keeppacewithtechnologicalchangeaffectingthefinancialservicesindustrycould
haveamaterialadverseimpactonourbusinessand,inturn,ourfinancialcondition
andresultsofoperations.
[Filingdate3/13/2015,Item1A]*Competitioncouldintensifyinthefutureasaresult
ofindustryconsolidation,theincreasingavailabilityofproductsandservicesfrom
nonbanks,greatertechnologicaldevelopmentsintheindustry,andbankingreform.
[]Thefinancialservicesindustryiscontinuallyundergoingrapidtechnological
change[andtherestofthecorrespondingextractasin2016]

BrynMawrBankCorp,CIK=802681
[Filingdate3/11/2016,Item1]TheCorporationsdirect*competitioninattracting
businessismainlyfromcommercialbanks,investmentmanagementcompanies,
savingsandloanassociations,trustcompaniesandinsuranceagencies.The
Corporationalso*competeswithcreditunions,onlinebankingenterprises,
consumerfinancecompanies,mortgagecompanies,insurancecompanies,stock
brokeragecompanies,investmentadvisorycompaniesandotherentitiesproviding
oneormoreoftheservicesandproductsofferedbytheCorporation.[Item1A]
Additionally,financialproductsandserviceshavebecomeincreasinglytechnology
driven.Ourabilitytomeettheneedsofourcustomers*competitively,andinacost
efficientmanner,isdependentonourabilitytokeeppacewithtechnological
advancesandtoinvestinnewtechnologyasitbecomesavailable.Manyofour
*competitorshavegreaterresourcestoinvestintechnologythanwedoandmaybe
betterequippedtomarketnewtechnologydrivenproductsandservices.Theability
tokeeppacewithtechnologicalchangeisimportant,andthefailuretodosoonour
partcouldhaveamaterialadverseimpactonourbusinessandthereforeonour
financialconditionandresultsofoperations.
[Filingdate3/12/2015]Asin2016.

20

HuntingtonBankshares,CIK=49196
[Filingdate2/17/2016,Item1]Internetcompaniesarealsoprovidingnontraditional,
butincreasinglystrong,*competitionforourborrowers,depositors,andother
customers.[]Inaddition,*competitionforqualitycustomershasintensifiedasa
resultofchangesinregulation,advancesintechnologyandproductdeliverysystems,
consolidationamongfinancialserviceproviders,bankfailures,andtheconversionof
certainformerinvestmentbankstobankholdingcompanies.FinancialTechnology,or
FinTech,startupsareemerginginkeyareasofbanking.Inresponse,weare
monitoringactivityinmarketplacelendingalongwithbusinessesengagedinmoney
transfer,investmentadvice,andmoneymanagementtools.Ourstrategyinvolves
assessingthemarketplace,determiningourneartermplan,whiledevelopingalonger
termapproachtoeffectivelyserviceourexistingcustomersandattractnew
customers.Thisincludesevaluatingwhichproductswedevelopinhouse,aswellas
evaluatingpartnershipoptionswhereapplicable.[]Manyofournonfinancial
institution*competitorshavefewerregulatoryconstraints,broadergeographic
serviceareas,greatercapital,and,insomecases,lowercoststructures.Inaddition,
*competitionforqualitycustomershasintensifiedasaresultofchangesinregulation,
advancesintechnologyandproductdeliverysystems,consolidationamongfinancial
serviceproviders,bankfailures,andtheconversionofcertainformerinvestment
bankstobankholdingcompanies.
[Filingdate2/25/2015,Item1]Asin2016,butwithoutthepassagediscussingfintech
(startingwithInaddition,competitionforqualitycustomersandendingwithwhere
applicable).
IberiaBank,CIK=933141
[Filingdate2/29/2016,Item1A]Theincreasingly*competitiveenvironmentis
primarilyaresultofchangesinregulation,changesintechnologyandproductdelivery
systemsandtheacceleratingpaceofconsolidationamongfinancialservice
providers.[]Oursuccessdependsonourabilitytorespondtothethreatsand
opportunitiesoffintechinnovation.Fintechdevelopments,suchasbitcoin,havethe
potentialtodisruptthefinancialindustryandchangethewaybanksdobusiness.
Investmentinnewtechnologytostay*competitivewouldresultinsignificantcosts
andincreasedrisksofcybersecurityattacks.Oursuccessdependsonourabilityto
adapttothepaceoftherapidlychangingtechnologicalenvironment,whichiscrucial
toretentionandacquisitionofcustomers.[]Theincreasingly*competitive
environmentisprimarilyaresultofchangesinregulation,changesintechnologyand
productdeliverysystemsandtheacceleratingpaceofconsolidationamongfinancial
serviceproviders.

Keycorp,CIK=91576
[Filingdate2/24/2016,Item1A]Thefinancialservicesindustryhasbecomemore
*competitiveastechnologyadvanceshaveloweredbarrierstoentry,enablingmore
companies,includingnonbankcompanies,toprovidefinancialservices.Technological
advancesmaydiminishtheimportanceofdepositoryinstitutionsandotherfinancial
institutions.
[Filingdate3/2/2015,Item1A]Asin2016,exceptislikelytobecomemore
competitiveratherthanhasbecomemorecompetitive

MBFinancial,CIK=1139812
[Filingdate2/19/2016]Nomatchingtext.
[Filingdate2/27/2015]Nomatchingtext.

21

[Filingdate3/2/2015,Item1A]Ourabilitytogrowand*competeisdependentonour
abilitytobuildoracquirethenecessaryoperationalandtechnologicalinfrastructure
andtomanagethecostofsuchexpandedinfrastructure.[]Theincreasingly
*competitiveenvironmentisprimarilyaresultofchangesinregulation,changesin
technologyandproductdeliverysystemsandtheacceleratingpaceofconsolidation
amongfinancialserviceproviders.
JPMorganChase,CIK=19617
[Filingdate2/23/2016,Item1]*Competitorsincludeotherbanks,brokeragefirms,
investmentbankingcompanies,merchantbanks,hedgefunds,commoditytrading
companies,privateequityfirms,insurancecompanies,mutualfundcompanies,
investmentmanagers,creditcardcompanies,mortgagebankingcompanies,trust
companies,securitiesprocessingcompanies,automobilefinancingcompanies,leasing
companies,ecommerceandotherInternetbasedcompanies,financialtechnology
companies,andothercompaniesengagedinprovidingsimilarproductsandservices.
[Item1A]*CompetitorsoftheFirmincludeotherbanksandfinancialinstitutions,
trading,advisoryandinvestmentmanagementfirms,financecompaniesand
technologycompaniesandotherfirmsthatareengagedinprovidingsimilarproducts
andservices.Technologicaladvancesandthegrowthofecommercehavemadeit
possiblefornondepositoryinstitutionstoofferproductsandservicesthat
traditionallywerebankingproducts,andforfinancialinstitutionsandother
companiestoprovideelectronicandinternetbasedfinancialsolutions,including
electronicsecuritiestradingandpaymentprocessing.Newtechnologieshave
requiredandcouldrequiretheFirmtospendmoretomodifyoradaptitsproductsto
attractandretaincustomersortomatchproductsandservicesofferedbyits
*competitors,includingtechnologycompanies.
[Filingdate2/24/2015]Asin2016,butnomentionoffinancialtechnology
companiesandwithoutthelastsentencequotedfor2016(startingwithNew
technologieshaverequired)
PNCFinancialServicesGroup,CIK=713676
[Filingdate2/29/2016,Item1A]Theabilitytoaccessandusetechnologyisan
increasinglyimportant*competitivefactorinthefinancialservicesindustry,anditisa
criticallyimportantcomponenttocustomersatisfactionasitaffectsourabilityto
delivertherightproductsandservices.Banksgenerallyarefacingtheriskofincreased
*competitionfromproductsandservicesofferedbynonbankfinancialtechnology
companies,particularlyrelatedtopaymentservices.[]Wecontinuallyencounter
technologicalchangeandwecouldfalterinourabilitytoremain*competitiveinthis

BankofAmerica,CIK=7684
[Filingdate2/24/2016,Item1]Our*competitorsincludebanks,thrifts,creditunions,
investmentbankingfirms,investmentadvisoryfirms,brokeragefirms,investment
companies,insurancecompanies,mortgagebankingcompanies,creditcardissuers,
mutualfundcompanies,andecommerceandotherinternetbasedcompanies.[Item
1A]Totheextentweexpandintonewbusinessareasandnewgeographicregions,we
mayface*competitorswithmoreexperienceandmoreestablishedrelationshipswith
clients,regulatorsandindustryparticipantsintherelevantmarket,whichcould
adverselyaffectourabilityto*compete.Inaddition,technologicaladvancesandthe
growthofecommercehavemadeiteasierfornondepositoryinstitutionstooffer
productsandservicesthattraditionallywerebankingproducts,andforfinancial
institutionsto*competewithtechnologycompaniesinprovidingelectronicand
internetbasedfinancialsolutionsincludingelectronicsecuritiestrading,marketplace
lending,andpaymentprocessing.
[Filingdate2/25/2015]Asin2016.

U.S.Bancorp,CIK=36104
[Filingdate2/25/2016,Item1]TheCompany*competeswithothercommercial
banks,savingsandloanassociations,mutualsavingsbanks,financecompanies,
mortgagebankingcompanies,creditunions,investmentcompanies,creditcard
companiesandavarietyofotherfinancialservices,advisoryandtechnology
companies.[Item1A,incorporatedbyreferencetothecorrespondingsectionofthe
AnnualReport]TheCompanycouldlosemarketshareandexperienceincreasedcosts
ifitdoesnoteffectivelydevelopandimplementnewtechnology.Thefinancial

22

arena.Thefinancialservicesindustryiscontinuallyundergoingrapidtechnological
changewithfrequentintroductionsofnewtechnologydrivenproductsandservices.
Theeffectiveuseoftechnologyincreasesefficiencyandenablesfinancialinstitutions
tobetterservecustomersandtoreducecosts.Wehavebeeninvestingintechnology
andconnectivitytoautomatefunctionspreviouslyperformedmanually,tofacilitate
theabilityofcustomerstoengageinfinancialtransactions,andotherwisetoenhance
thecustomerexperiencewithrespecttoourproductsandservices.Ontheretailside,
thishasincludeddevelopmentssuchasmoresophisticatedATMsandexpanded
accesstobankingtransactionsthroughtheinternet,smartphones,tabletsandother
remotedevices.[]Ourcontinuedsuccessdepends,inpart,uponourabilityto
addresstheneedsofourcustomersbyusingtechnologytoprovideproductsand
servicesthatsatisfycustomerdemandsandcreateefficienciesinouroperations.A
failuretomaintainorenhanceour*competitivepositionwithrespecttotechnology,
whetherbecausewefailtoanticipatecustomerexpectationsorbecauseour
technologicaldevelopmentsfailtoperformasdesiredorarenotrolledoutinatimely
manner,maycauseustolosemarketshareorincuradditionalexpense.
[Filingdate3/2/2016,Item1A]Asin2016butwithoutthepassagediscussingfinancial
technologycompanies(startingwithTheabilitytoaccessandusetechnologyand
endingwithparticularlyrelatedtopaymentservices)
SVBFinancialGroup,CIK=719739
[Filingdate2/26/2016,Item1]Thebankingandfinancialservicesindustryishighly
*competitive,andcontinuestoevolveasaresultofchangesinregulation,
technology,productdeliverysystems,andthegeneralmarketandeconomicclimate.
Our*competitorsincludeotherbanks,debtfunds,specialtyanddiversifiedfinancial
servicesintermediariesandother"Fintech"disruptorsthatofferlending,leasing,
payments,investment,foreigncurrencyexchange,advisoryandotherfinancial
productsandservicestoourtargetclientbase.We*competewithalternativelenders,
suchasmarketplacelenders,peertopeerlendersandothernontraditionallenders
thathavemergedinrecentyears.We*competewithnonfinancialserviceproviders,
particularlypaymentfacilitators/processorsorothernonbankingtechnology
providersinthepaymentsindustry,whichmayofferspecializedservicestoourclient
base.
[Filingdate2/26/2015,Item1]Asin2016,butnomentionofotherFintech
disruptors,minorwordingchanges,andwithadditionaltextasfollows:Moreover,we
*competewithnonfinancialservices,particularlypaymentfacilitators/processorsor
othernonbankingtechnologyprovidersinthepaymentsindustry,whichmayoffer
specializedservicestoourclientbase.

servicesindustryiscontinuallyundergoingrapidtechnological changewithfrequent
introductionsofnewtechnologydrivenproductsandservices,includinginnovative
waysthatcustomerscanmakepaymentsormanagetheiraccounts,suchasthrough
theuseofdigitalwalletsordigitalcurrencies.TheCompanyscontinuedsuccess
depends,inpart,uponitsabilitytoaddresscustomerneedsbyusingtechnologyto
provideproductsandservicesthatcustomerswanttoadopt,andcreateadditional
efficienciesintheCompanysoperations.Developinganddeployingnewtechnology
drivenproductsandservicescanalsoinvolvecoststhattheCompanymaynotrecover
anddivertresourcesawayfromotherproductdevelopmentefforts.TheCompany
maynotbeabletoeffectivelydevelopandimplementprofitablenewtechnology
drivenproductsandservicesorbesuccessfulinmarketingtheseproductsandservices
toitscustomers.Failuretosuccessfullykeeppacewithtechnologicalchangeaffecting
thefinancialservicesindustrycouldharmtheCompanys*competitivepositionand
negativelyaffectitsrevenueandprofit.
[Filingdate2/25/2016]Asin2016,exceptforseveralminorwordingdifferenceandno
mentionoftheuseofdigitalwalletsanddigitalcurrencies.

ColumbiaBankingSystem,CIK=887343
[Filingdate2/29/2016,Item1A]We*competewithothercommercialbanks,savings
andloanassociations,creditunionsandfinance,insuranceandothernondepository
companiesoperatinginourmarketareas.Wealsoexperience*competition,
especiallyfordeposits,fromInternetbasedbankinginstitutions,whichhavegrown
rapidlyinrecentyears.[]Ourabilitytosustainorimproveuponexisting
performanceisdependentuponourabilitytorespondtotechnologicalchange,and
wemayhavefewerresourcesthansomeofour*competitorstocontinuetoinvestin
technologicalimprovements.[]Thefinancialservicesindustryisundergoingrapid
technologicalchangeswithfrequentintroductionsofnewtechnologydrivenproducts
andservices.Theeffectiveuseoftechnologyincreasesefficiencyandenables
financialinstitutionstobetterservecustomersandtoreducecosts.Manyofour
*competitorshavesubstantiallygreaterresourcestoinvestintechnological
improvementsthanwedo.Ourfuturesuccesswilldepend,inpart,uponourabilityto
addresstheneedsofourclientsbyusingtechnologytoprovideproductsandservices
thatwillsatisfyclientdemandsforconvenience,aswellastocreateadditional
efficienciesinouroperations.Wemaynotbeabletoeffectivelyimplementnew
technologydrivenproductsandservicesorbesuccessfulinmarketingtheseproducts

23

andservicestoourcustomers.Inaddition,theimplementationoftechnological
changesandupgradestomaintaincurrentsystemsandintegratenewonesmayalso
causeserviceinterruptions,transactionprocessingerrorsandsystemconversion
delaysandmaycauseustofailtocomplywithapplicablelaws.Therecanbeno
assurancethatwewillbeabletosuccessfullymanagetherisksassociatedwithour
increaseddependencyontechnology.
[Filingdate3/2/2015]Asin2016.
UMBFinancialCorp,CIK=101382
Fulton Financial,CIK=700564
[Filingdate2/26/2016,Item1]Recently,financialtechnology(fintech)companies
[Filingdate2/26/2016,Item1]TheCorporationalsoexperiences*competitionfroma
havebeenpartneringmoreoftenwithfinancialservicesprovidersto*competewith varietyofinstitutionsoutsideitsmarketareas.Someoftheseinstitutionsconduct
theCompanyforlending,payments,andotherbusiness.[]Successfully*competing businessprimarilyovertheInternetand,asaresult,maybeabletorealizecertain
intheCompanyschosenmarketsandregionsalsodependsontheCompanysability costsavingsandofferproductsandservicesatmorefavorableratesandwithgreater
conveniencetothecustomer.[Item1A]ManyoftheCorporationsfinancialinstitution
toattract,retain,andmotivatetalentedemployees,toinvestintechnologyand
infrastructure,andtoinnovate,allthewhileeffectivelymanagingitsexpenses.[Item *competitorshavesubstantiallygreaterresourcestoinvestintechnological
1A]TheCompanyfacesintense*competitionineachofitsbusinesssegmentsandin improvements.Inaddition,newpaymentservicesdevelopedandofferedbynon
allofitsmarketsandgeographicregions,andtheCompanyexpects*competitive
financialinstitution*competitorsposeanincreasingthreattothetraditionalpayment
servicesofferedbyfinancialinstitutions.TheCorporationmaynotbeableto
pressuresonlytointensifyinthefutureespeciallyinlightoflegislativeand
effectivelyimplementnewtechnologydrivenproductsandservices,besuccessfulin
regulatoryinitiativesarisingoutoftherecentglobaleconomiccrisis,technological
innovationsthatalterthebarrierstoentry,currenteconomicandmarketconditions, marketingtheseproductsandservicestoitscustomers,oreffectivelydeploynew
andgovernmentmonetaryandfiscalpolicies.
technologiestoimprovetheefficiencyofitsoperations.Failuretosuccessfullykeep
[Filingdate2/25/2015].Asin2016,butwithoutthesentencementioningfintech.
pacewithtechnologicalchangeaffectingthefinancialservicesindustrycouldhavea
materialadverseimpactontheCorporationsbusiness,financialconditionandresults
ofoperations.
[Filingdate2/27/2015]Asin2016,exceptforminordifferencesinwording.
SynovusFinancial,CIK=18349
UmpquaHoldings,CIK=1077771
[Filingdate2/25/2016,Item1]Risksanduncertaintiesthatcouldcauseourfinancial [Filingdate2/29/2016,Item1]Thefinancialservicesindustryishighly*competitive
andcouldbecomemore*competitiveasaresultofrecentandongoinglegislative,
performancetodiffermateriallyfromourgoals,plans,expectationsandprojections
expressedinforwardlookingstatementsincludethosesetforthinourfilingswiththe regulatoryandtechnologicalchanges,andcontinuedconsolidationandeconomic
SecuritiesandExchangeCommission("SEC"),Item1AofthisAnnualReportonForm turmoilwithinthefinancialservicesindustry.[]weoften*competewithmuchlarger
10K,andthefollowing:[]*competition,includingfromfinancialtechnology
nationalandregionalbanksthathavemoreresourcesthanwedotodelivernew
companies.[Item1A]TheCompanyfacesintense*competitionineachofitsbusiness productsandservicesandintroducenewtechnologytoenhancethecustomer
segmentsandinallofitsmarketsandgeographicregions,andtheCompanyexpects experience.[Item1A]Certainofour*competitorsarelargerandhavemoreresources
*competitivepressuresonlytointensifyinthefutureespeciallyinlightoflegislative thanwedo,enablingthemtobemoreaggressivethanusin*competingforloansand
depositsandinvestinginnewproducts,technologyandservices.[]Weexpectthat
andregulatoryinitiativesarisingoutoftherecentglobaleconomiccrisis,
wewillneedtomakesubstantialinvestmentsinourtechnologyandinformation
technologicalinnovationsthatalterthebarrierstoentry,currenteconomicand
systemsto*competeeffectivelyandtostaycurrentwithtechnologicalchanges.
marketconditions,andgovernmentmonetaryandfiscalpolicies.Ourmostdirect

24

Someofour*competitorshavesubstantiallygreaterresourcestoinvestin
technologicalimprovementsandwillbeabletoinvestmoreheavilyindevelopingand
adoptingnewtechnologies,whichmayputusata*competitivedisadvantage.We
maynotbeabletoeffectivelyimplementnewtechnologydrivenproductsand
servicesorbesuccessfulinmarketingtheseproductsandservicestoourcustomers.
[]Thefinancialservicesmarketisundergoingrapidtechnologicalchanges,andifwe
areunabletostaycurrentwiththosechanges,wewillnotbeabletoeffectively
*compete.Thefinancialservicesmarket,includingbankingservices,isundergoing
rapidchangeswithfrequentintroductionsofnewtechnologydrivenproductsand
services.Ourfuturesuccesswilldepend,inpart,onourabilitytokeeppacewiththe
technologicalchangesandtousetechnologytosatisfyandgrowcustomerdemand
forourproductsandservicesandtocreateadditionalefficienciesinouroperations.
Weexpectthatwewillneedtomakesubstantialinvestmentsinourtechnologyand
informationsystemsto*competeeffectivelyandtostaycurrentwithtechnological
changes.Someofour*competitorshavesubstantiallygreaterresourcestoinvestin
technologicalimprovementsandwillbeabletoinvestmoreheavilyindevelopingand
adoptingnewtechnologies,whichmayputusata*competitivedisadvantage.We
maynotbeabletoeffectivelyimplementnewtechnologydrivenproductsand
servicesorbesuccessfulinmarketingtheseproductsandservicestoourcustomers.
[Filingdate3/2/2015]Asin2016.
Comerica,CIK=28412
ZionsBancorporation,CIK=109380
[Filingdate2/29/2016,Item1]TheCompanysmostdirect*competitionforloansand [Filingdate2/26/2016,Item1A]Thefinancialservicesindustryexperiencesrapid
technologicalchangewithregularintroductionsofnewtechnologydrivenproducts
depositscomesfromothercommercialbanks,creditunions,andthrifts,including
institutionsthatdonothaveaphysicalpresenceinourmarketfootprintbutsolicitvia andservices.Theefficientandeffectiveutilizationoftechnologyenablesfinancial
institutionstobetterservecustomersandtoreducecosts.Comerica'sfuturesuccess
theInternetandothermeans.Inaddition,theCompany*competeswithfinance
companies,mutualfunds,insurancecompanies,brokeragefirms,securitiesdealers,
depends,inpart,uponitsabilitytoaddresstheneedsofitscustomersbyusing
investmentbankingcompanies,financialtechnologyandothernontraditional
technologytomarketanddeliverproductsandservicesthatwillsatisfycustomer
lendingandbankingcompanies,andavarietyofothertypesofcompanies.
demands,meetregulatoryrequirements,andcreateadditionalefficienciesin
[Filingdate2/27/2015]Asin2016,butnomentionoffinancialtechnologyandother Comerica'soperations.Comericamaynotbeabletoeffectivelydevelopnew
nontraditionallendingandbankingcompanies.
technologydrivenproductsandservicesorbesuccessfulinmarketingorsupporting
theseproductsandservicestoitscustomers,whichcouldhaveamaterialadverse
impactonComerica'sfinancialconditionandresultsofoperations.
[Filingdate2/17/2015]Asin2016.

*competitioncomesfromotherbanks,brokerages,mortgagecompaniesandsavings
institutions,butmorerecentlyhasalsocomefromfinancialtechnology(or"fintech")
companiesthatrelyontechnologytoprovidefinancialservices.
[Filingdate2/23/2016,Item1A]N/A.

25