Speakers

• HOST: JP Nicols (Speaker 2)
  
• GUEST: Alex Johnson – Founder, Fintech Takes (Speaker 1)
  
• CO-HOST: Barb McLean – Founder, Velocita; Former SVP, Coastal Community Bank (Speaker 3)
  
• IN MEMORIAM INTRO: Breaking Banks Community Tribute (Speaker 4)
  

Tribute to Barb McLean: A FinTech Legacy Remembered

SPEAKER 4
In June, we lost Barb McLean, an innovator, mentor, and beloved figure in the FinTech ecosystem. A pillar of Alloy Labs and a key voice on Breaking Banks, Barb combined deep expertise in technology and banking with a human-centered approach. Her FinTech Playlist newsletter became a beacon for many. This episode revisits one of her most compelling conversations with Alex Johnson and JP Nicols.

“She never hesitated to speak the truth… whether on a podcast or the stages of Finovate.”

Support her family and legacy: Links to the GoFundMe and FinTech Playlist T-shirt proceeds are in the show notes.

What Is the ‘Invisible Heist’ in Commercial Banking?

HOST
Traditional banks are losing relevance. FinTech platforms are moving upstream, and silent switching is taking place.

• Community banks are losing 12–18% of operational deposits yearly.
  
• 68% of small businesses now use at least one non-bank financial service.
  
• 23% plan to increase use of non-bank providers in the next year.
  

“This isn’t just another FinTech conversation. It’s about survival.”

GUEST (ALEX)
Small business owners prioritize convenience and workflow efficiency. They’re not shopping for banking, they’re solving for business outcomes.

Why Relationship Banking Isn’t Enough Anymore

CO-HOST (BARB)
Banks cling to the idea of “owning the customer relationship.” But they’re failing at digital experience design, especially for small businesses.

• Banks often “skin” retail UX for business users, missing the real operational needs.
  
• Many assume the customer will come to them, rather than integrating where they are.
  
• Loyalty is often inertia, not genuine attachment.
  

“It’s not loyalty, it’s inertia. And inertia is eroding fast.”

What Are Small Business Operating Systems (SBOS)?

GUEST
SBOS platforms like QuickBooks, Square, Shopify, and Toast bundle business tasks, including banking, into one seamless experience.

Two Categories of SBOS:

1. Horizontal Platforms
   
   • Square: From payment acceptance to loyalty programs.
     
   • QuickBooks: Accounting expanded to full financial workflows.
     
2. Vertical-Specific Systems
   
   • Toast (restaurants), Brightwheel (daycares), ServiceTitan (field services), MindBody (wellness).
     
   • Deep specialization enables embedded finance with high relevance and stickiness.
     

“They’re not stopping at payment processing. They’re coming for banking.”

Embedded Finance: The Real Threat

HOST
Platforms already control large swaths of the customer experience. The example of Ramp illustrates:

• Bank clients using Ramp for expense management didn’t know their bank offered a similar product.
  
• Thousands of dollars flow to competitors monthly, right under the bank’s nose.
  

CO-HOST
Banks are blind to this because their data infrastructure is outdated or fragmented.

“You can’t compete with what you can’t see.”

Understanding Merchant Cash Advances (MCAs)

GUEST
Square Capital’s embedded MCA model is a case study in smart underwriting:

• Only available to Square merchants.
  
• Uses internal data to project cash flows.
  
• Repayments are taken directly from payment streams, lowering credit risk.
  

HOST & CO-HOST
Most banks can’t match this model due to:

• Lack of real-time data access
  
• Inflexible underwriting models
  
• Limited integration into client workflows
  

“Over $9 billion loaned to 460,000 merchants, quietly.”

What Should Banks Do Now?

CO-HOST
There are two camps:

1. Strategic Banks: Open to partnerships (e.g., Xero, Shopify).
   
2. Frozen Banks: Don’t know how to start.
   

Quick wins:

• Enable API access to pull account data into SBOS.
  
• View integrations as customer service, not threat.
  
• Reframe the digital experience from “log in to my portal” to “live where the customer lives.”
  

“You don’t need to own every experience you need to integrate into it.”

Reimagining Working Capital and Product Design

GUEST
Small business lending should match customer jobs—not force them into bank-defined products.

Example Use-Cases:

• Payroll lending with payroll system verification
  
• Equipment financing tied to invoices
  
• Travel expense float via smart cards
  

“Don’t sell a loan. Solve a problem.”

HOST
Banks must evolve from menu-based products to use case-driven solutions. Especially as SBOS players eat into receivables/payables with verticalized offerings.

What’s Next in the Embedded Banking Era?

CO-HOST
Bankers must stop mistaking retention for loyalty. Silent attrition is real. Every “zombie account” that looks active but functions as a paycheck motel (Ron Shevlin) is a missed opportunity.

GUEST
There’s still hope, but banks must:

• Accept embedded finance as the default
  
• Focus narrowly on niche markets, partnerships, or verticals
  
• Use data as their guide to innovate
  

“You can’t be everything to everyone. Find your lane and double down.”

Memorable Quotes

“It’s not loyalty. It’s inertia and inertia is eroding fast.” — Barb McLean
“Don’t sell a loan. Solve a problem.” — Alex Johnson
“Square Capital loaned $9B without most banks realizing.” — JP Nicols
“You can’t compete with what you can’t see.” — Barb McLean
“Your job isn’t to own the digital experience. It’s to be embedded in it.” — Alex Johnson