Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols.

And this is Breaking Banks. Happy Thanksgiving for those who celebrate. And even if you don’t, I bet you’re wondering, what am I going to talk about this weekend with all those friends and family? How do I wow them with my fintech and banking knowledge? Well, never fear, we’ve solved this problem for you at Breaking Banks.

I’ve invited some of my favorite turkeys to do our first ever Fintech Turkeys and Banking Thanks. I was really excited to host Mary Winooski, Kia Haslett, Jason McCoula, and Alex Johnson to talk about the last year, where have there been the turkeys, and what are the things that give us a lot of hope for the future of the industry. I hope you have as much fun with this episode as we do.

And we’re thankful for you, our listeners. Well, thank you to some of my favorite people to gather around the virtual Thanksgiving table to record our first ever episode of Fintech Turkeys and Banking Thanks. I have visions of the good old John Madden on the Thanksgiving day, the one I’m talking about where he would pass out the drumsticks to people.

Come on, somebody has to remember this. So unlike Kia’s genetically modified, what they would do is Frankenstein this bird so that they would attach 16 drumsticks to this thing, sewn on to a turkey, and he would hand out his turkey awards with this drumstick. But in our case, I think the turkey is, as we look back at 2023, which things were turkeys and which things we think were good things to have happened.

Any volunteers to kick us off? I can one one popped into my head, so so I guess I can I can start. Go for it. Let’s say Goldman’s consumer banking business and its partnership with Apple Card going up in flames like somebody trying to not boil deep fry a turkey.

I keep getting these videos of like, don’t burn your house down by frying a turkey. I feel like Goldman’s Apple partnership is like burning down some portion of 200 West Street and in Manhattan. Why do you think that had such high hopes? Right.

Everyone wanted to laud just how that was going to change the industry. And talk about a wonk wonk when you see the numbers right on, like one has to actively try to lose that much money. I don’t know if if the losing money was was entirely on purpose, I do agree with your your assessment that like, you know, both the Apple thing in particular and then the wider consumer thing in the early days when I was there, you know, tended to be hailed as like, oh, look, big banks can figure out how to do fintech.

And, you know, at some point, I’m thinking probably like 2021, 2022, that narrative started to turn and then it just, you know, exploded like a turkey hit in the deep fryer. I mean, I think broadly, like if we’re going to poke at turkeys, it feels like the age of consumer fintech with Zurp, you know, finally going away, like consumer fintech really is taking a hit. Yeah, that was going to be mine.

That was going to be mine. Yeah, I and Jason and I, Jason and Mikula and I talked about this on a different podcast recently. But yeah, I mean, I think the it took a little while with rates going up before we saw sort of the effect of that.

But I think we are seeing the the impact now on consumer facing fintech companies, right? HM Bradley just pivoted to infrastructure. There’s sort of rumors floating around that pedal the credit card for thin file and no file consumers may be looking for an exit at some point. So, yeah, I think we’re getting to a point where a lot of the consumer facing fintech that was built on, as we’ve talked about on this podcast before, sort of shaky business models took a while for the cash to kind of run out.

But I think with interest rates having gone up and investors sort of moving on to other areas, that’s that’s definitely been a turkey this year. What about fintech? Oh, I was gonna say more broadly than just Goldman Sachs. What about fintech partnerships and kind of the wheat in the chaff? I mean, we can’t just paint a broad brush here, but I think the some of those partnerships haven’t been as successful as they maybe had hoped or thinking about for banks.

These fintech partnerships didn’t promise bring in all of the easy deposits and have kind of that. There’s just a lot of work that comes with it. And I don’t know if that’s like a turkey, but I think the realization and also, you know, I kind of joke that banking as a service metalware needed to fly under the radar, like literally just needed to be like nothing to see here, you know, just and they and they failed to do that this year and and the regulators caught on.

And, you know, I think that’s, you know, for not if it’s not a turkey for some banks this year, it might be a turkey for some banks next year. I think there were a few turkeys that were caught already this year. You’re going to hit mine already.

This illusion of like for me, the biggest turkey was interest rates can also go up. Granted, that started last year, but the amount of trepidation and feigned surprise from people, frankly, that should know better, right? Like it’s one thing if you’re a fintech that started in the bull run. But if you’re a banker and you’ve been at this for a while, rates greater than zero were the norm.

Yeah, the amount of banks that said we’re like asset sensitive and we benefit from rising rates and you just kind of are like, do you, you know, I think the kindest reading is that the transition can be really, really painful. And maybe one of the turkeys is super safe assets. And whatever strategy worked in 2021 just doesn’t work anymore.

But to to think that a lot of banks were really kind of burned by some of the learning that comes with the transition, plus all of digital banking, that was a big, big turkey for 2023. Well, it’s also I mean, to build on that, it’s both, you know, perhaps banks, but also the regulators are always managing to the last crisis. And it’s like the next crisis is never the same as what the last crisis was, right? So it’s like, okay, you know, we went through 2008, like subprime assets, mortgage backed securities, this stuff blowing up, and the crisis we had this time looked entirely different.

And it was not what I won’t say anyone, but not what most people, you know, including me necessarily anticipated was going to happen. Yeah, Mary, I know we might lose you at one point. What’s your turkey? Or you always being kind? Are you going to lead us? I think you can talk to my brothers about that, Jason.

I’m going to one up. I mean, I’m going to plus one, the turkeys that have been spoken already, but I’ll add different examples. For the interest rate thing, I have a different perspective, because I worked at bank rate.

And so I’m thinking about it from the consumer perspective. And I think there’s still this belief in the industry that like people love chasing rate, but I can speak to all the kinds of people who don’t chase rate and just hang out with the big bank account. So like, I think that is just a turkey for people.

And then I want to bring up the Capital One lawsuit going on right now. Yes, yeah, that’s a turkey. Oh, that well, I thought you I think we’re gonna go with the Walmart Capital One lawsuit, but the rate trickery, the rate trickery.

Yes, yeah, the rate trickery, like marketing. Yeah. So those are those are ones on my mind.

You think it’s a turkey that banks do that to consumers or that consumers aren’t you think more consumers should be rate sensitive? Um, I think if you have a decent pile of money, and you’re earning nothing, it’s a good idea to put it in something that you’re at least getting paid something. You know, for people who don’t have that much savings, I don’t know if it’s like worth worth it if they’re satisfied in other ways. But if you think like if people are thinking they’re in one account, but it’s another, that’s, that’s a problem.

I’m gonna blow all of your minds right now. There, there are a couple of institutions in Mexico offering 15% on savings. Well, I mean, to be fair, the central bank rate there is 11%.

So everything is like leveled up, but 15%. I’m gonna move all my money to pesos, so I may be rich. Yeah, what are the limitations on? All right, this is this is a fintech problem to be solved.

So finally, one of these cross border things that I get pitched all the time, you know, I’m going to sign up for if they can do a cross border 15% savings account. Yeah, there’s some real deposit arbitrage here that a fintech company could figure out. You’re taking some forex risk, you might need to hedge that.

But like, it probably still pays out. With 15%, I got plenty of room to hedge. It is funny to think like, when I started covering banking, interest rates were 0%.

And some of my colleagues used to tell me that, like, Oh, did you know savings accounts used to be 8%? And I was like, Oh, my God. And they were like, well, that’s because mortgages were like 12 to 17%. And I just, I remember telling someone, when we were talking about her refinancing her student loan in like 2019, I said, like, I don’t think rates are ever going to be higher than they are today, like at the pace that they’re going, where employment is, like, I just don’t think they’re I was super wrong.

But it is funny that we are just kind of super back in the 80s in some regards. But again, like the way money moves through digital channels, that I mean, the fact that we’re joking about having a fintech set up an account, so we can move money to Mexico, so we can get 15% rates versus 5% in the United States. Like, we just live in a different world.

But you know, some of these things are still really similar to what was in the 70s and 80s. I’m curious for the group. Is the money movement via digital channels is real at the kind of consumer and small business level is everyone feared? Right? We hear this a lot about why, you know, you’re not seeing RTP and Fed now send implemented quite a bit, which I think both of those kind of are, if not Turkey’s own overcooked stuffing, you know, at the least that they’ve not lived up to the fanfare yet.

And I’m not sure, you know, the reasons why is it this is spouse versus enacted behavior. It’s interesting. I just caught Michael Barr on odd lots.

And it felt like he was very intentionally trying to set a low bar for Fed now adoption. It’s like, this is just the beginning. It’s going to be a very, you know, it’s going to be years.

It feels like you’re intentionally trying to set low expectations, anticipating that there’s going to be a slow adoption curve. And I wonder, it’s like to assert at a certain point, does that become like a self fulfilling prophecy? Right? Like, we’re when I say we, I mean, the United States, you know, trying to rely on market forces to drive adoption. And Jason, other Jason to your point, like, not that, you know, Zelle or Venmo are necessarily like exact substitutes for what Fed now or RTP are, but they do provide some portion of the consumer benefit.

Like, I know, I’m gonna do the cliche and talk about picks and UPI was like, in Brazil, it was mandated that all institutions implement picks the US, the Fed is not I don’t even know if they have the authority to do that. And they’re certainly not going to do it. Yeah.

Of course, you know, I guess I have to declare my own turkey, this guy who said, regulators are never going to come down and demand open banking, I guess I gotta go, you know, chew on that turkey leg, because, you know, with 1033 coming out, let’s see if the rule actually, you know, gets fully made. Now it’s implemented. But, you know, we are finding very different relationships between regulators and their willingness to lay stuff out proactively, as opposed to just, you know, the regulation through enforcement.

Yeah, I mean, the CFPB, in particular, I think, has had a pretty good year, actually, I mean, relative to how they view it. I’m not sure every banker listening to this would agree with that. But they’ve been very, very active about looking at not just with 1033, but across all the areas where they have rulemaking authority, and kicking off that process and trying to modernize the implementing regulations around a lot of laws that need to be probably updated.

But that’s not going to happen through Congress. I guess that would be another turkey we could poke at if we wanted to. But at least how much time do we have? Can we pivot into a politics podcast? I think that one, though, is, I don’t know, maybe that’s the one to be slightly thankful for.

I mean, I’ve actually been very happy that just to pick on like a regulation that I’m sort of a nerd about, but like, the FCRA has been in desperate need of like modernization. And the CFPB is working on doing that, and I think has pushed the market already in a direction that’s probably healthy. So I’m actually very thankful that we’ve had a little bit more proactive rulemaking, as opposed to just enforcement.

Well, Alex, you put a turkey in my mind just here, but with FDIC and the damning article of them being like super sexual predators, like I shouldn’t be shocked, but I’m absolutely shocked. That might be my vote for like biggest turkey. That’s a huge one.

Did not have that on my bingo card. Like, no. Yeah, I think, well, the FDIC, I think that one of the through lines of that article is, you know, the supervision and the kind of like the speck in your own eye and the log in someone else’s or whatever, that maybe one area for a big improvement.

So maybe one turkey, not maybe for 2023, but for 2022 was how supervision was enacted at banks and the identification of big, big risks. And also the plausibility that those risks would ever be materialized or realized. And then to kind of draw that to the FDIC, I think, you know, the criticism is like the FDIC is maybe missing some of its own opportunities for cultural improvement and missing signs of risk within its like employee ranks.

Right. And like, you know, remember in Wells Fargo, like the fake accounts panel, there was these claims that like like managers at different branches were calling in and complaining about things they viewed as fraud, which was using customer information to open accounts that weren’t authorized. And the bank kind of said like, well, that’s isolated.

And also it’s like kind of to be expected. And everything was kind of treated in isolation. And, you know, Wells Fargo is still under their asset cap today for remediation issues that kind of show, you know, like it’s not just this one problem.

It’s kind of how you approach the problems that you are told about. And so I wonder, you know, if there is, you know, the supervision vision through line, this cultural approach through line B, how do I how do I identify when something is a problem and could it become like a bigger problem down the road? And I think like the FDICs, the material loss reviews earlier this year and this reporting about disgruntled employees who didn’t feel heard and seen when they did try to raise this internally and had no choice but to leave. Yeah.

And I think this goes back to the prior point, though, is we tend to regulate the former crisis as opposed to looking about what’s ahead of us. And I think there’s a cultural issue with that, too, which is what is the right culture on a look forward versus what was, you know, acceptable in, you know, let’s face it, when you take a white male dominated industry, right, and give this group kind of power. Is anyone fully surprised that it had horrible, you know, underpinnings in terms of what took place? Well, no.

Thinking about it now, but like I was shocked reading the headline because I was like, how do you get away with this? Like, how are you not immediately fired when those reports go in? And just like, you’re gross. You’re just like physically gross. You’re like intellectually gross.

Like, how is this happening? Another very minor data point that jumped out to me from that coverage, assuming I’m interpreting this correctly, was that the average tenure at the FDIC was 25 years. And as we all know, it’s like things are moving and changing very rapidly in the banking space and not that, you know, more senior employees, not that old dogs can’t learn new tricks, but it does, you know, require a atmosphere where you’re attentive to what is changing and what new risks do those changes present? And if it’s just like, well, we have this manual and it says, look at this, this, this, this, this, and you’re not asking the questions of like, well, what has changed? What am I not looking at that could pose a risk? You can have novel problems. And I think we’re seeing some of these novel problems come to the surface now.

Yeah. I mean, I was going to say, do you guys remember when you talked about uninsured deposits, like right after Silicon Valley Bank? And I’ve been kind of fascinated by the like total sea change towards are uninsured deposits a good thing for a bank to have? Like, is it good to have really big accounts from your corporate customers who will all have uninsured accounts if they are very successful and good at their job? And, you know, now to be saying like, these could leave immediately. What have you done to like, what’s your liquidity coverage ratio? If like all of your uninsured deposits left, what is your like insured deposit ratio to uninsured deposits? And so, yeah, like reading in the material loss reviews, you can see how in the examination findings in the Camels reports, banks with very high uninsured deposits had very high liquidity ratings because, you know, we had, we believed something about these types of deposits.

And then we had a total shift in attitude, which, which we had talked about as, as hot money. Sorry, Jason, I totally cut you off. No, Kia, I mean, tell me, you know, I didn’t make your 2023 a full hour dedicated to you, Alex and I talking about deposits and deposit ratios.

That’s one of the things I’m really thankful for this year is all of my favorite banker topics became everyone else’s bank nerd topics. I felt like I felt like an evangelist, like for six years have been drumming on this beat about deposits, like deposit types and how they behave. And all of a sudden, like everyone’s like, tell me more.

Let’s talk about this. All I took was SVB going down and everyone was like, Kia, you’re onto something. Well, actually, last year, I was a total menace at Thanksgiving because I talked about AOCI to everyone.

And like, I talked about it with Jason Mikula, like last year, and he just like, I just I’m gonna put him on blast. He literally like he did his very like, Oh, okay. Okay.

And I just was like, Oh, God, that was such a that was so nerdy. It was so weird. You did that.

And then I found out later, he just didn’t know what I was talking about. I had no idea. I had no idea what you were talking about until SVB.

I had no idea what you were talking. I just don’t know how to respond to I don’t know how to even like push this conversation forward intellectually. So yeah, but now now we’re all on the same page.

Everyone knows AOCI, I don’t have to be the weirdo at Thanksgiving talking about it. What are you gonna bring up this Thanksgiving, Kia, so we can get ahead of the next crisis? I’ve been really interested in FHLB’s report. I don’t think we’re talking about that enough.

The 100, they just put out a report for what their it’s their like 90th year anniversary. And so they are looking forward. FHLBs are very interesting in the banking space.

They are a large provider of liquidity. If liquidity we think is going to be a big topic. They’re also the liquidity is market based or carries a market rate.

So when we see deposits cost rising or funding cost rising, FHLB funding could be a large part of that. FHLB funding requires pledged mortgage-backed securities. So there is ostensibly a mission for affordable housing.

I don’t know how well that has gone in the last 20 years in the United States. And then if you know, FHLB has a super lean position in a bank failure. So when Silvergate, SVB and First Republic failed, I believe that the FDIC had to pay back like $43 billion to the FHLBs.

SVB did not even have funding or a connection to the discount window set up. They had relied fully on FHLB funding and FHLB funding is raised in the market. And so you can’t just, it’s not emergency funding.

It doesn’t, it shouldn’t function as that. So the going forward, I think like regulators really need to think about the role that FHLB funding plays in the bank space and whether it’s achieving its mission of home loan. I’ve joked that they should actually just change the name of the FHLB system to like backup liquidity for banks, like instead and just take out home from it.

That’s where I’m thinking about. I don’t think anyone wants to talk about credit risk or office space. So I won’t mention CRE at the Thanksgiving table.

I wish you would. CRE is one of the frequent topics in one of my nerdier WhatsApp group chats. It comes up quite frequently.

And is the perspective around impending implosion or the need to repurpose and make these livable spaces? It’s with some non-banker, but like investor type friends of mine. And so their concern is more like macro level plus knock on impact to banks that have originated the CRE loans and like, oh, if occupancy in Cincinnati is at like 50% and not coming back, like what’s happening to all the banks that made these loans? More of that tenor. That’s what I hear.

People freaked out like that. But they were so safe, right? For so long, it was viewed as so safe, so safe. And all it took was one global pandemic to knock.

All it took. Well, actually, I think the assumptions that people would go work in office buildings was correct. What I was freaking out about is I did not realize the refi activity that was so essential to continuing the financing of the building itself.

Like, I guess I thought that these were like mortgages, like home mortgages. And you kind of, you know, there was some stability to the ownership and you weren’t constantly refinancing. And I did not realize how important like interest only refinancing and also floating rate was to this asset class.

And so I think like the asset class itself is like fine, but they financialized it so that it became risky to and or vulnerable to occupancy. There are like if you have a building that’s 10 years old, shouldn’t it kind of be mostly paid off? Right. But why would you have a loan that is two years or three years resetting on a building that that is isn’t new? So that’s been what I’ve been.

I was just I’ve been so fascinated to learn about how this whole industry is like mortgage and how all the investors just roll their money over all the time. And it makes them extremely vulnerable to rate changes. Well, it’s interesting, too, because the other thing that happens in the commercial lending world broadly is looking at some regional bank.

And they were talking about they had kind of a bad quarter. And they’re like, yeah, two of our loans went bad. And you’re like, two loans went bad.

But in the world of commercial lending, they optimize to such a low loss rate. And the loans are all individually massive that all it takes is screwing up one or two of them. And it really drags down your performance.

So, yeah, I mean, to Kia’s point, we’ve been driving really close to the edge in that market for a long time, assuming like, of course, people are going to go to downtown San Francisco and work from an office like why wouldn’t they? This is, you know, prime class one real estate like there’s no chance it’s going to go bad and just takes a little bit of a push. And that market is pretty vulnerable. It raises the question for any of these institutions is too much of a one thing, a bad thing, right, in terms of your level of exposure.

The flip side of that is too many of the banks that we interact with and no merit can build on this is they try and be all things to all people and compete with the biggest banks when they don’t have enough scale in any one of those things. You know, Sam Kelmer at Cornerstone did an episode and one of the guests compared banks to, oh, gosh, I’m going to forget. Well, it was the difference between in and out and then a menu with like a ton of things.

And so like the new cheesecake factory. Oh, yes. Because it’s often used for 300, Bob.

But I just keep picturing it or the visual. And like, also, you know, I’ve been I’ve been interviewing a decent amount of community banks recently. But one thing that keeps coming up is like this, how hard it is to kill off a feature or a product just because there’s like just a few people maybe who are like so upset about it.

So like, I don’t know, I just see all of checks, see every single check that someone writes. And I still have to write one for this department, this rent control. That’s the only payment I can do.

Yeah, well, I remember times I will make a joke with the bank board. I’m like, and it’s kind of like still having passbook savings. Right.

And then they all look comfortable. I’m like, oh, my God, you guys still have passbook savings. The I will say the bank failures that happened this year have been really the first three.

Actually, I’ve been fascinated by relationship lending and the ways that relationship lending can be a strength for banks, but also create concentration risks that need to be distinctly managed among the the customer base themselves. I’ve also been fascinated by and I don’t think they really, really explored this. How did trouble at Silicon Valley become trouble at Signature? How what was the association between whose brain to make to like make that association and begin pulling money out of Signature? And I’ve been told that it’s crypto.

So is it like one guy at a crypto company? Was it two guys? Was it two people in different WhatsApp’s that made the association between these two banks that are on different coasts? They’re in different business lines that would have started a deposit run. And then from there, I think First Republic, it kind of makes sense because you would Silicon Valley that they probably have the same borrower base. But where did PacWest come from? Like that? That’s like a mystery to me that people just make these associations that aren’t maybe aren’t visible there.

I don’t know if I would have had considered them in peer groups. And so that and thinking about how relationship lending is probably the theme that in certain business lines is the theme that connects these institutions. And what does that mean for banks going forward for potential contagion effects? Well, I mean, how much is it a bunch of guys on a podcast and then a whole bunch of other how many banks do these podcast guys know about? Sorry, I don’t even want to speculate.

Yeah. Well, no, I mean, I think it’s a good point, right? I mean, it’s like there’s relationship, which is the banks working with borrower. I think the thing he is kind of tugging on there that’s really interesting is what are all of the relationships we don’t know between all of the people who work with these banks or like talk to these banks or think about these banks? And it is interesting, right? Because like, you know, rewind the clock 30 years, you know, like pre, you know, interstate banking, like regional banks really were like totally isolated from each other.

And so you could have a problem in like one part of the country and, you know, Southern California is flipping out, but no one in Massachusetts knows anything about what’s happening. And I don’t know, I wonder if like part of the thing is just now everything is so much more interconnected, even if those banks aren’t operating in the same markets or necessarily serving the same customers, like all just connected now because they’re regional banks. I think there’s a false sense of security in what a relationship really means coming back to Kia’s comments around rates and rate sensitivity.

Well, we don’t, you know, I think inherently, whether we’re a business or a consumer, there is some activation barrier, right? Like to Mary’s point, you know, having worked at Bankrate, it’s like, you think everyone is, you know, clicking refresh on Bankrate and moving their money around. Reality is they’re not, right? Just like, you know, I can’t believe we haven’t talked about Mint yet, right? I was about to bring that up. I was wondering if Mint was going to come up with the consumer finance.

I didn’t know if that counted. It counts, it counts. It’s a little guard that it counts, yeah.

Right. But it’s the thing that we think everyone does that no one in reality really goes and does, right? Most people do, but it’s a very specific, much smaller segment than you’d expect. Yeah.

But I mean, you have your small percent of like hyper optimizers, and I’m going to guess that all of us are more or less where it’s like, okay, okay, apparently Jason’s not. I should be, you would think I am, but I am not. I feel guilty about not, right? Except he wants to move money to Mexico for 15% interest.

He is a hyper optimizer at 15% or above. And then you have everyone else. It’s like a PFM, and this is not to go into a whole discussion about why PFMs are like not a standalone business.

I was like, they appeal to people who are already like highly motivated and involved with their financial life, whether they’re doing it in Excel or Mint or whatever, QuickBooks or wherever. But that is a tiny fraction of the population. Most people do not think about their financial life as like a CPA.

I will actually say, now that I’m thinking about it, maybe my Thanksgiving conversation will be about moving checking accounts into or savings accounts into higher rates. That has actually come up a lot this year. When people find out I’m a financial reporter, if it wasn’t, is my bank going to fail? It’s going to be like, where can I get higher rates? Or like, people have asked me about CDs this year, like more times than probably my entire time, like my entire time being a bank reporter.

And I was going to put that down as like Alex’s bank things is that he’s just like, so glad CDs are making their comeback. He thinks they’re good for everyone. Yes.

CDs, like let’s make CDs sexy again. Like I mean, not to go off on a whole other thing. Well, yeah, I mean, probably, probably not.

No, probably not. I mean, like, I don’t know, there’s kind of to Jason’s point, there’s a weird gap sometimes in the market, particularly from banks where it’s like, hey, you’re a young consumer who’s trying to figure out like, what are the good sort of habits to build when you’re first starting out sort of mapping out how you’re going to manage your finances. And I don’t know, CDs are a pretty cool one, right? Because it’s a very like simple marshmallow test, like, can you segment a portion of the money that you have, put it in this account, not touch it for a dedicated amount of time, and then get a higher return back? Like that’s a nice building block to building financial discipline.

And unless banks want to do a bunch of crazy lending, they don’t offer CDs anymore. It’s not really seen as like a consumer facing product. So I wish they would bring CDs back.

CDs are like my number one. I’m thankful this is back on the radar. I convinced you, Mary.

I can tell, I can tell I convinced you. I respect a CD. I’m just, I have a, I just remember when I started at Ben Gray, I was like, who’s getting these CDs though, really? Hey, I’m getting them, I’m signing up for these CDs.

But I will tell you, like at the end of that job, there were a bunch of millennials then signing up for CDs. So I don’t know, maybe Gen Zers are doing it now too. But then like, you have to have enough money to be comfortable to tuck it away.

And that is not that many people, especially when you’re younger. And to jump back to the midpoint, I had an unusual perspective when I reported stories at American Banker, because one of my first things I had to do was test all these PFM tools. And like, you know, I was a starting salary.

I probably made $40,000 and lived in New York. So it was just like all these tools saying, you’re naked of net worth, give up now. And I was like, what the hell is this? And why do I have to do this for my job? But it did reveal like, oh, there’s, this is not a good starter product.

You know, it doesn’t make me feel good. How do I grow? Arguably, it’s increasing my anxiety about money, not decreasing my anxiety about money. And it never is, at least as far as I recollect, or how I used it, it never really like, told you what to do.

It said, here’s a chart of like, how much money you spent last month at Uber or how negative your net worth is. And it’s like, again, for some people that that KPI, that data point is interesting. And it’s what they want to know, sort of like categorization and visualization.

But for your typical consumer, it’s like, okay, here’s a chart that shows how much money I spent and made last month. Oops, it’s negative. What am I supposed to do with that information? Go get a better paying job.

Well, to tie like the two themes together, I, you know, as you guys know, I have my own feelings about personal financial management. Do not, do not pitch. But I want to, but like, one of the things I think about is that the bank, banks don’t offer this, like they could, they don’t.

So why Mint existed because banks didn’t offer it, right? 100% that’s, banks were doing nothing with this data to show it. So Mint makes, does exist and can’t make money. So then it closes.

But also banks aren’t, I feel like I’m talking about CDs a lot because my friends aren’t learning from their bank about CD options. They’re not being asked, they’re not being informed. They’re not saying like, hey, you’ve been a customer with us for a decade and we’ve done the math and it seems like you have an extra like $5,000 that you probably won’t need if nothing changes.

Would you like to put that into a CD that we will offer you and we’ll offer you this rate and they could use this to kind of reward potentially deepen loyalty. And I just feel like they’re kind of not. I feel like the only time Chase has ever offered me a CD is when I’m going to the drive-thru to like get $20 for while I’m traveling.

And the CD offer is like deposit $100,000 and you get a CD for like six months and you have to like bring in all of your new, and I’m just like, this is not a serious offer. You are not, you are not like, and also like, I’m just at the drive-thru. You don’t even know who I am.

This is, you know, so I’ve just been kind of fascinated by, you know, when we talk about deposit loyalty or customer loyalty, when we talk about money leaving the bank versus money coming into the bank versus how does the money get there? Right? Like banks aren’t seem to be doing a lot to like really sell, you know, the products that they have to the customers that they already have. I mean, I will echo that point very briefly. I am also, I will admit, I’m a Chase customer when my, for my US things.

And, you know, at various points, there’s been a meaningful amount of money go in and out of that account. And never, you know, never have I been marketed to, to be like, Hey, instead of moving that money to Fidelity or wherever, like do something with a Chase product. I do get all sorts of weird emails that are like, not at all targeted to my life about borrowing money for a Maserati, or I think I got one also for Greenlight.

I do not have any children. So it’s like, you’re, you’re marketing to me, but you’re marketing stuff that makes no sense given my life. And then with the data that you do have, you can see money come in and you can see money go out to Fidelity or wherever else.

You’re not actually using that data to target me with a product that I might be more open to. And, and I have to say it again, I can’t even believe I have this knowledge, but when I was bank hopping websites at bank rate, like the highest paying CDs are often there on allegedly online only bank count products. Right.

But like, their websites often suck. They just suck so hard. They pay a great rate, but sometimes they don’t even have a mobile app.

Now you can argue why do you need a mobile app for your CD, which is just locked away. But I remember thinking, wow, this, this feels like a scam. I know this is a bank, but the website looks like a scam.

It’s like, give us your money. You won’t be able to access it. You can’t check up on it.

Like the website doesn’t look very legit. And like signing up for the account really hard. Like mail in your application facts in your application.

Yes. That’s my, that’s my rant on that. Well, and you know, we’d be remiss if we didn’t talk a little bit about AI and I’m curious, people think is that apple pie or is that a turkey? Probably both, right? Yeah.

Do you guys do the thing with the crackers where you pull them apart? And sometimes there’s like a really cool prize in it. And sometimes there’s nothing in there. When I’m living my best life.

Yes. That, that feels very AI-ish to me because sometimes there is something really cool and sometimes not at all, nothing. And it was just a loud noise.

So that, that’s probably the closest, I think, analogy for, for generative AI specifically. Yeah. Bankers that I talked to, again, they’re the smaller ones, but they tend to think this can be super helpful to them and their fraud reduction ambition goals.

Yeah. I don’t think I’ve seen a 180 faster than I’m very skeptical of AI versus please give me all of the AI right now and bring it into my bank. Mary, would you agree with that? Yeah.

Like a couple of years ago, I think this is just like a, let me follow the herd mentality kind of industry is like, Oh, this, this person’s this bank’s doing this. This company is doing X. I got to be, it’s often like coming from like, I don’t know, even a board member who’s like out of touch with a lot of the. Again, just get rid of like, get rid of your checks first.

Like, let’s talk when you get rid of your checks, then we can bring in the AI, like just, you know, the, the, the kind of the change in the systems and the mindsets, like sometimes I’m just like one foot in front of the other. And I mean, to, to emphasize Alex’s point, you know, there are AI encompasses a lot of different technologies that can be deployed in a lot of different ways. And at least we used to call like machine learning modeling, a type of AI, and that’s been in use, at least in non-bank lenders that I’ve worked for, for like a decade at this point.

So like, that’s not necessarily novel, you know, what, what actually becomes of generative AI and how that gets deployed, I think is still an open question. Maybe Turkey, maybe not Turkey. I think the Turkey is not yet cooked to say the least, you know, where AI goes.

You’re mixing so many of these metaphors. Yeah. Turkeys are bad.

AI is not a turkey that’s not fully cooked. I’m hungry. It’s 9am for me and I’m ready for lunch.

All right. We’ll break for lunch. Well, thank you all for taking time to inspire people as they gather around their Thanksgiving tables to have the nerdiest banking topics ever.

Follow Kia for more acronyms. Dude, I didn’t, guys, we, I didn’t even mention Cecil when you were talking about credit or commercial real estate. That’s some self-restraint.

Yeah. That, the bank nerd brand wouldn’t be strong if I wasn’t bringing it up. If you, I think we haven’t really seen if Cecil works yet because I don’t think the pandemic really counted.

So we’ll see if Cecil works under commercial real estate, I guess. Stay tuned. We’ll see if Cecil works and then see if Alex can get a credit builder product to work.

Don’t, just don’t. I can’t, I can’t, I can’t do it. Yeah, it’s way too soon.

I need to, I need a couple of weeks off. I’ll come back with more thoughts on that one later. More thoughts on credit building.

Well, happy Thanksgiving. I’m thankful for such a motley crew to join us to talk about all things banking and FinTech. Thank you, Jason.

Yeah. Thanks, Jason. Thank you.

Become a disruptor in the emerging FinTech space through NYU Stern’s Master of Science in FinTech program. This is a one-year part-time program divided into one online and six on-site modules that take place in New York and in rotating global locations. The MSFT program is designed for experienced working professionals who want to strengthen their FinTech skills or transition to FinTech leadership positions.

The final application deadline for Stern’s Master of Science in FinTech program, class of 2025, beginning May 2024, is March the 1st. GMAT and GRE scores are generally not required. To learn more about the program, submit your resume for a candidacy review at stern.nyu.edu slash msft dash breakingbanks.

That’s it for another week of the world’s number one FinTech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer Lisbeth Severance, audio engineer Kevin Hirsham, with social media support from Carlo Navarro and Sylvie Johnson. If you like this episode, don’t forget to tweet it out or post it on your favorite social media, or leave us a five-star review on iTunes, Google Podcasts, Facebook, or Instagram.

Wherever it is that you listen to our show. Those actions help other people find our podcast, and in return, that helps us build an audience that can be supported by sponsorship, so we can continue to provide you with our award-winning content every week. Thanks again for joining us.

We’ll see you on Breaking Banks next week.