493 It s All About Relationships 

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. The role of technology in financial services is perpetually in flux. The pandemic finally forced the laggards to get on board with digital transformation.

The recent rise of generative AI raises the question, where does the human fit? In the first half, Brendan Andrews, marketing director for Dart Bank, and James White, general manager of the banking segment for Total Expert, and I talk about how technology complements rather than replaces the human element. But the human also has to adapt. In the second half, Patrick Sells, CEO of True Digital, and I talk with Cyrene Wilkie, COO of Horicon Bank, about maximizing the ROI of technology investments.

Spoiler alert, compare features all you want. Success is not about picking the right partner. Relationships, relationships, relationships.

It is nearly impossible to get a community bank or credit union executive alike to pipe down about the importance of their relationship with their customers. I mean, it’s worse than the nine out of 10 to 10 dentists will recommend. If you ask any one of these financial service executives, they’re going to go off.

Their unique competitive advantage is their relationship, which always begs the question. It’s not really unique if nine out of 10 of you are saying it’s the same thing. Except I don’t think relationships really mean what they think it means.

And moreover, I think the nature of relationships is really changing. And so, James, why don’t we start with you? What defines a good relationship? How can that be your competitive strength? Well, I think that a lot of times we as financial institutions forget, you know, that a good relationship, whether it be business, is the same as a personal relationship. You want to make sure that, you know, you’re reliable and consistent, you’re relatable, you understand the person that you have a relationship with, or you have a desire to understand them, and that you’re credible, that you have trust, that that person feels like that you’re in it for their best interest, or at least it’s equal interest, that you’re not just in it for yourself.

And that’s the same, whether it be your best friend that you golf with, or your financial institution. You know, those characteristics are really the same. Brennan, would you agree with that? Because I mean, do many of us really come at this and say, I don’t want to be relatable, or I don’t have your best interest in mind? It feels like that should be a commodity.

Yeah, I mean, I think one of the biggest things is what we view a relationship is how in our light, we’re not looking at it from, you know, what individual customer, what group of customer, what is that relationship from their, their point of view? And I think, you know, that buzzword relationship gets thrown around, but it’s from the banker’s perspective. And I think that’s where you can actually have an advantage is trying to kind of reverse engineer what that thought would be. Well, that is a really important point.

While we continue on that thread, what do you think a good relationship means from the customer’s point of view? I think it would be, you know, being there when things are not going well. I often find, you know, it’s super easy to meet people’s needs when, you know, everything’s going well in the banking environment or everything is going well in their lives. However, you know, it’s when it’s late at night and their debit card won’t work and they’re in a really hard, you know, spot or, you know, their family just went to the hospital and they need to access their banking to do something for them.

And we have examples of that, you know, cultivating those relationships and really, you know, focusing on those hard times. And that’s really when it matters. It’s not when, you know, they’re depositing a check.

It’s when they need that money. Yeah, I could not agree more. And if you think about, you know, financial institutions have so much information on these individuals and have really been trying to find ways to convert that to action since probably the mid-90s and been overwhelmed by that.

And so instead of found a bowl of the ocean, just focus on being relatable, you know, being the individual that’s going to be there, that’s looking out for their best interest when times are hard, which we’re probably on our way to have a lot of opportunity to do that with our customers. Yeah. A bank CEO once told me that tech-driven companies view data as assets to be used, while banks view it as assets that should be locked up in the vault.

And James, you’re hinting at something broader here, like our ability to use and unlock data to do new things is really coming of age, right? I don’t think you can, you know, turn on the news without hearing about AI and chat GPT, which is something I think a lot of financial institutions on the smaller side, especially worry about. Do you have some examples about, you know, how can we better utilize data? I mean, it has to be something better than getting an email or a text message from your dentist saying, happy birthday. How do we unlock the power of data? Well, and it has to be a crawl, walk, run, you know, I can’t tell you how many financial institutions I talked to, and I talk about what are they looking to do, and they immediately go to AI and machine learning.

And I asked them how they leverage data today, and they don’t. And so you can’t go from nothing to everything. And so just as an example, I mean, we’re in a deposit era right now.

Everybody wants to retain their existing depositors as well as garner new ones. Manage and nurture your existing CD customers or members so that you don’t have to worry about them chasing rates, financial education. All that takes is their existing rate, their existing expiration date, and who they are.

There’s three super small data elements where you could be communicating to your existing CD holder six months before renewal and be very targeted. I mean, that’s just something super simple. It amazes me how often I get email marketed to by my financial institution that their idea of personalization was to add my name to it.

And I open it, and I’m like, you really thought these personalized offers were tailored to me? Do you even know who I am? Brendan, I’m curious. DartBank is thinking about personalization in this crawl, walk, run. What were the first steps you took, and where has that journey taken you? So I’ll start with a crawl.

It’s little data points where we find out that we have a customer that is going to an ATM overseas. So we send them a notification that, hey, is this really you? Because you didn’t notify us. You didn’t use the app to notify us of travel.

And they reply, yes. Well, that note is then going to be sent to deposit operations. And they might reach out to the customer and say, hey, we see you’re in Ireland.

You use an ATM that’s not one that could be free that’s a block away. These are all the ones that are free with your card. Oh, and by the way, since you’re on vacation, do you need us to raise that limit for your credit? That way, you don’t get yourself in a bad situation.

So that’s not a super complicated process. It’s using a little bit of effort and a little automation to change a future problem that they might have. And then in terms of other personalization, I think it’s leveraging tools, whether it’s high tech or AI, to actually deliver something that matters most to them.

It could be a, hey, I just saw you got a promotion on LinkedIn because you follow them and you feed them a message. It could be leveraging their data to know that the CD example, hey, you actually could qualify for another rate. It costs us a little bit of money to tell you that because they’re going to get a better rate on their deposit.

But it’s going to impact their lives positively. So I think it’s those little data points that make a big difference. Well, I mean, you both have hinted at something that I think historically hasn’t been necessary.

But it’s this idea of being both predictive and proactive in the relationship when we’re really used to customers walking through our door, whether it be a banker or credit union telling us what they want or need. James, across all of the total expert spectrum, I’m curious, what examples do you have of who’s doing it right when it comes to being predictive? Yeah, so it’s always a balance between human and technical interaction. And it really is different around segments.

So you have to be able to understand the segments. And so I was actually just on the phone with an individual earlier today. And he was talking about that balance and how it’s different for him who’s a Gen X than it is his kid who’s a Gen Z and how his bank had actually lost his relationship with him because of that.

He’s used to person-to-person interaction and had built a strong relationship over a long period of time. But now his kid is getting marketing content that does not relate, as you mentioned earlier, Jason, things that the kid is below 18 years of age. There’s only very limited things that should be communicated to his kid.

He’s like, if you’re trying to push and sell my kid this hard, you either don’t have something going or you don’t have my best interest at heart. And so he was recently shifted banks. And that’s what we see from a technology perspective at Total Expert.

It’s about creating tailored plans to those individual segments and then executing that balance accordingly. So normally, when we think about segmentation, it is really around age and maybe gender and maybe marital status. They tend to be very vanilla things.

And I’m curious for either one of you, where have you found the most useful way to begin thinking about segmentation, if not the generic demographic? JASON BUCKLEY I think it’s leveraging data points that don’t necessarily look at that. You could have a 20-year-old that has a million dollars. You could have a 50-year-old that has $10 in their bank account.

You wouldn’t want to segment them necessarily the same. I think you can get really granular and build these segments however you want to shape it to their benefit. But the idea is to actually benefit the consumer and actually use as many data points as possible.

So I don’t want to ever group an email, for example, that’s 18 to 21. That age range should be similar, but it’s not. Where they come from, where they’ve been, where they are in their lives.

Already out of college, they could have already had their own business at 16. They could have done all these things. They’re not the same person.

I think if you look at that from a data point segment versus an age segment or where we expect, it’s all these assumptions and going into the AI space where they’re having issues with the assumptions. Because as humans, we make those assumptions. So it’s trying to think a little differently and build it more based on the actual versus what we think the actual is.

That is such an important point about being data driven in this, that in an old world that we built more slowly in this human interaction, drove where we went. We didn’t have to look at the full complement of data because it wasn’t available, frankly. It was easy to make assumption and have those assumptions reinforced because it becomes a self-fulfilling prophecy.

I’m curious from actually deploying this. We think about planning campaigns typically as we make some assumptions, but we call them hypotheses. Our approach is to digitally or maybe even sending some paper, deploy those.

But it becomes a set it and forget it. When you think of this new era and the use of data, how do FIs need to think differently about that approach and the use of data? Yeah, that’s a great question because there’s really two ways. First, you’ve got the age old campaigns where you may use a segmentation, homeownership, income, presence of children, those types of things where you’re pushing an individual product.

I know it’s April and I’m going to send out my refi campaign, my auto refi campaign, the age old seasonality type stuff. But the real way to do it, those things still work to some extent, but is individual one to one marketing and leveraging intelligent alerts. Or some people say triggers, but now triggers is really starting to get negative connotations with the CFPB and some of the things.

But really trying to leverage individual data points so that you can, to Brennan’s point, create these custom segmentation for your individual market and the demographics that are in your market. DART banks in Michigan, that’s very different banking than it is in New York City. And those demographics are very different and those segments have to be very different.

And so being able to leverage those data points, understanding how your customers are engaging with you as well, what channels should be factored into that segmentation as well. Now, I’m curious for both of you, the world has shifted dramatically, not just with COVID, now it’s actually with rates going up. And I think that may actually be an even bigger shock to the system for banks when capturing, retaining deposits are more important than ever when we haven’t had to worry about that for the last 15 years.

Brennan, I’m curious, within DART Bank, how has this shifted your playbook and what you worry about and how you’re working on doing that? Yeah, it really depends. I think with rising rates, you have to be more creative. You have to compete in a way that your rates are competitive, but also you provide something extra.

We were placed really well pre-COVID because we had already implemented video banking software. So someone could bank with the teller that they know from their home before COVID even started. So we had already gone through that training process of our customers.

And then we also had established interactive teller machines in our drive-through. So they were really familiar with seeing their banker on the actual screen versus going in and necessarily cultivating that relationship in branch. And I think you are going to lose some deposits based on someone that does a crazy CD special, but at the end of the day, you need to do a better job of reaching out to them and saying, hey, in this turbulent time, we’re here for you.

These are the additional things we’ve added in the last three months that might benefit you individually at your account. And this is what I’ve noticed. I see you’ve been spending this at a different place.

Do you have any questions for me? How can I help you? And then that’s kind of how you compete. And it goes back to that relationship. But it’s leveraging the technology times the relationship to meet their outcomes that they desire.

Yeah. So Brent, I couldn’t agree more. You’ve got to be able to leverage the technology to somewhat manufacture some of that relationship that you used to build at the teller line when you went to church and school with the branch manager and all those things.

And so you still build the relationship through having those interactions, but you have to manufacture some of that through things like relationship pricing and being able to try to get as sticky as possible. Also, whenever you have a new customer, making sure that you’re leveraging age old things like onboarding to make sure that they’re getting the different channels engaged. Not only do they get a login to online and mobile banking, they actually logged in.

They have bill pay and they’ve actually set up a biller. They’ve debit card, they’ve activated, they’ve swiped it, they put it in their virtual wallet. All those types of things are crucial because no matter what we think, our relationships are so much more fragmented now.

The average consumer has 5, 6, 10 financial relationships. If you really look at some of the fintechs out there and people are rate shopping, but you can’t win on rate. Your cost of funds isn’t going to support winning on rate long term.

And so it’s really, it’s been very interesting for me because not all of us in the financial services industry are old enough to remember rate increases and what it takes to have a strong deposit strategy and making sure that we can really manufacture those relationship components we were just talking about. Think about if you get reduced closing costs, if you have a direct deposit on a mortgage or if you have, you get 50 basis points off your auto loan, as long as you have a money market and a check-in account, you’re not going to leave just because you don’t want to have to deal with the increased rates or increased fees for all these other products. It’s going to be crucial that not only banks and credit unions start to look at this, but that the core systems support it in the background as well for them to get creative around these relationship products.

Well, we so often take as a presumption that we are the most important financial relationship that our customers have, and don’t look at those data around where else are they using and how do I actually begin to integrate instead of this assumption, the one that leaps to mind, the number of banks within the Alloy Labs Consortium said, oh, our customers don’t use Venmo because they don’t need that. We’ve got pot money or Zelle, right? And then they looked at the data and they were stunned that we don’t often see banks using the asset they have right back to putting it in the vault. And when they do look at it, that tends to become a, what’s the next best product? And James, I know you have a strong point of view about this, that it isn’t about marketing to your customers and misusing that relationship.

So if it isn’t about customers wanting to be marketed to you, how do we think about expanding the relationship? Yeah, well, what’s old is new again, is what immediately comes to mind as you say that question. It’s really getting back to that relationship and focusing on the relationship and building that relationship, which has a lot of things like offering products and services that may benefit the consumer more than you. It’s a big buzzword, financial health and financial wellness.

Well, most banks and credit unions do that to some extent. They may have a blog on their website. But that’s very different than leveraging the segmentation that Brennan mentioned earlier in providing education around financial wellness that is very specific to that individual user or consumer.

Those types of things, it’s like we’ve got to get back to what we know we have to do, which is work hard to build those relationships. Free money is over, opening the door and growing by 20 to 30 percent is over. Like we got to get out and beat the streets again like we used to.

Well, back to that, there are some in the industry that don’t understand the zero interest rate phenomenon was a phenomenon as the operative word in Zerp, that we need to rethink value and how we deliver value. Brennan, I’m curious, when you think about expanding the relationship and competing on more than rate, what does that mean for Dart Bank? So for me, and just going back to what James said as well, is it’s not spamming your customer. It’s knowing, are they opening your emails? Are they going in? Are they clicking the links? Are they reaching out more, tying in the call function on Google? So we know they’re calling us.

Today, I had one of my team members look, and the last two emails we sent, we had a 61 percent open rate and a 58 percent open rate. So if you can do that because you’re not spamming your customer, you’re not delivering them information that they’re just going to delete right away or never open, you’re already ahead of the game, in my opinion. And we do that by segmenting them specifically.

So you’re not going to get an email, hey, open up a CD with us if you already have opened up a CD with us. That doesn’t make any sense. That’s you’re spamming the customer and you’re wasting that relationship.

And they know now that you are not even looking at it. So to me, it’s using that. And then also, I think the power of testimonials is often lost now with providing those examples of, hey, this is why you should use this.

This is why we’re here for you. We had an example the other day where we had a customer that went to the hospital and one of their family members needed to co-sign something that was due. And we were able to do that right from their phone in the hospital.

And it’s sharing those messages. It’s not necessarily using their names, but saying, hey, we’re here when it’s a turbulent time. We’re here when you have questions, when you need us, and really leveraging those stories to the people that might need them.

So you wouldn’t blast that out necessarily to everyone at the bank, but you might look at your segment to be like, OK, these people have a higher chance of opening that email because they’re interested or they have a higher chance of clicking the website to learn more to watch that testimonial because they had a recent experience where they had a hospital billing, for example. It’s stuff like that that you really can get granular, which is kind of scary, but also very beneficial. At my previous role, we offered sales training.

And one of the things that we used to tell financial institutions, especially community banks and credit unions, being a community institution, it’s your responsibility to keep your customers and members fiscally strong and financially healthy. And if you truly believe in your products and services and you believe it’s going to benefit them, you’re not selling to them. If you’re offering your products and services, you’re helping them be more financially well.

And I think that’s exactly what you’re saying, is communicating to them when you know they need that communication in a way that they need to be communicated to. Yeah, I’m curious for both of you as we come close to time, because those are very important points. Do you have any stories or words of wisdom around when relationships or use of data can go wrong? I do.

So, Jason, mine often is a lot like yours that you mentioned earlier in the podcast. I have been a member of a credit union here in Birmingham for forever. They have every product and service just about with us.

I’m friends with the chief marketing officer. We play golf. And I get direct mail pieces or email pieces that don’t even relate to me at all.

So I have younger daughters and I’ll get a piece of mail that says something about a baby. Are you having a baby? Do you want a credit card? I do not have a baby and I better not have a baby. Otherwise, I’m going to lose my mind and probably burn my whole city down if my young daughters end up pregnant.

And I’ll send him a message that says, whoever you bought this list from, you should ask for your money back. Why are you sending me this? Well, I mean, it’s back to you can actually, the personalization, if you get it wrong, can work against you. It’s better to say nothing than the wrong thing when it comes to that.

We’ve had automation problems where someone will leave the bank and we didn’t realize they were on a system and they were still mailing out or emailing people that had actually passed away. And we just didn’t have it on the policies and procedures where, hey, that’s going on the checklist because we’re not going to make that mistake again because no one wants to get an email saying, oh, happy birthday to someone that just passed. I think that’s a main one that’s a good example of what we’ve seen in the past.

So last part of this, if a bank or credit union can do just one thing to begin to improve, what should that first step be? And James, we’re going to start with you because I know you are perpetually pushing FIs that they need to do something, anything to get started. What would you recommend? Yes. So first off, I would say do not get overwhelmed by the ocean of data and possibilities.

You’d be surprised at how many financial institutions don’t do just some of the things that we consider blocking and tackling. Onboarding campaigns or onboarding journeys where you’re not just welcoming a customer to the institution, but you’re making sure that they’re engaging in those sticky products. That’s super simple.

Right now, all of your deposit products, making sure that you’re understanding your data within those money market and CD savings accounts, finding businesses that are hidden in retail checking accounts, those types of things so that you can offer them the right product and service to keep them there without having to offer the crazy rates that some institutions are that are buying business. That’s very simple. I would just say focus on your database and have all of your employees understand what your database actually looks like.

That’s where I’d start. Fantastic. Well, thank you both for joining to talk about relationships, relationships, Marsha, Marsha, Marsha, and you really look forward to the next time we get together and see where the world has changed and which of your predictions have come true or not.

Thank you, Jason. Thank you. This show is brought to you by Alloy Labs.

As much as we love talking on the show, we believe that action is more valuable than talk. Alloy Labs is the industry leader in helping fearless bankers drive exponential growth through collaboration, exclusive partnerships, and powerful network effects that give them an unfair advantage. Learn more at AlloyLabs.com. Alloy Labs, banking unbound.

I want to start with a true false question for each of you, right? Just one word answer, and then we’ll unpack it. Serene, I want to start with you. Picking the right partner ultimately determines the project’s success.

I would say definitely not true, so that’s a false. False. Patrick? I’m going to go with false too.

But isn’t that what you guys do? Let’s unpack this. Why, when you talk to the majority of, especially banks, and I would say credit unions definitely fall into this, and even a number of the fintechs, we get so fixated on finding the right partner. And Patrick, I want to start with you, because you’ve been on both sides of this, where you’ve both been a non-banker joining a bank, and then you flipped the script when you went to Nighting, and you’re selling into lots of banks.

Where does this fixation come from? There’s something we talked about and thought about even going back a couple of years ago to Quantic, when the three of us first got to know each other. I do think very much inside of the banking industry is this understanding or assumed standard of perfection. And there’s parts of our lives as banks that you do need to be perfect when it comes to compliance and regulations, but that thing can carry over into all other decisions.

And so I think we try to oftentimes approach it that way, and it leads to a lot of friction and inefficiency as a result. And I think, I was going to use the word, it comes from a place of fear, which is kind of the same thing what Patrick said, we’re afraid to make mistakes, and sometimes mistakes can be dangerous, but that’s where, Patrick, you always said progress, not perfection, right? I use that mantra a lot too. I mean, if we always were so focused on being perfect, we’d never get anything done in banking.

So we’ve got to be calculated and careful about the decisions we make, but we can’t let a vendor selection turn us into having analysis paralysis and then not doing anything because that’s more dangerous. That’s a bigger risk. The late Steve Schnell, one of the things he very early on taught me or made sure I knew his view on was a bank’s job is not to avoid risk.

It is very much to take risk. That’s why there’s regulations and compliances to make sure we do that in a responsible way, which means we need to be really good at mitigating risk, but not entirely avoid it. And that creates that perfection and that analysis paralysis that I think is so pervasive to the industry.

Yeah. It’s to manage the risk, not mitigate it, which means that your eyes wide open as to where you’re taking those. Probably not what people would expect coming into this podcast title in terms of what we’re going to talk about, but let’s talk about risk for a second, not the risk and compliance side.

But Serene, talk a little bit about with your team, this desire to be perfect or to avoid having made a mistake. Culturally, how have you had to manage that across the various banks and credit unions you’ve worked with? And what have you seen that really works? And where does it start to fall down? Small iterative experiments. So I found that it helps to give people the freedom to try little things, little things, and then it snowballs.

And then there’s this ripple effect. And I think people get more and more comfortable with realizing, oh, I didn’t die. I changed this process or I tried something different and the world didn’t fall apart as a result.

And as a result, I’m like, wow, this is great. I don’t have to do this extra step for this process. Or now we’ve got this great tool in place that makes our lives easier.

And that is a culture shift, though, and it takes time. It’s not something that happens overnight, but it does get exciting when you start to see some traction there. And the probability you burn the house down by doing one small iterative thing is relatively low.

Patrick, when we talk about risk with the capital R and the risk and compliance side, let’s start with the cultural and at Quantic, how did that work? And then let’s talk a little bit about so much of the energy in vendor and partner selection ends up around risk compliance and a lot of these very important but relatively tactical things. Let’s talk about how you solve that problem. But first, let’s start about this.

Where does risk and compliance fit into the partnering process? Yeah, I think it affects every aspect of it in good ways and in unhelpful ways. And so I think you’re right in the question because it is very central to all of this. I remember very early on at Quantic, having never worked at a bank or having any clue what regulators were, I hadn’t been there very long when we had the examiners in the office.

Almost explaining to me, if you will, and I can’t remember how explicit she was in this or how much it was kind of my inference or takeaway, but the fundamental or central idea was if you want to be innovative in this space, you need to understand the law works the opposite as it does for you as a citizen. You can go do whatever you want as long as you don’t break the law. As a bank, you can only do what the law explicitly states is permissible.

And so even in that, I think it’s this understanding that look, as a charter, you have to behave in a certain way. And if you really want to be innovative, you have to know what is possible. You can’t avoid that.

And I think so often times in the culture is like, hey, look, there’s an awareness of risk and compliance, but maybe I only want to immerse myself so much in that versus offloading that to someone on the team. But you can’t really do that if you want to be effective because it all does start with the law and risk and compliance. I don’t know.

Serene, what do you think about that? Yeah, I mean, I think that’s, I always say we get to do all kinds of fun things, but we have to do it within the framework of safety and zone. We still have a bank that we have to run in a safe and zone manner. So it’s a delicate dance, right? But that’s what our jobs are.

And it’s the risk profile of our banks doesn’t seem to get any smaller. So it’s the space we have to get more comfortable playing in. Yeah, I was kind of thinking it’s a little bit off topic, but one of the things coming into True Digital and chasing me a comment about being a banker, buying vendors and on the other side of it, I think never have gotten so immersed from the point of view or perspective of vendors as today and actually coming to understand how many vendors a bank works with is kind of mind blowing.

Like, and when I think about the number of vendors to even like the headcount, I can’t even come close to an analog in another industry. And it’s also like in that understanding, it’s, wow, how important is this? And also how complicated it is, because there’s like 200 other pieces that get affected when you add any one person or any new vendor to the pie. Yeah, that network effect, right? Like what is Moore’s other law or Metcalfe’s law that the power of the network grows exponentially with each node.

I would say Patrick’s law is the complexity of your compliance regime grows exponentially with the number of partners and vendors you insert into it. Yeah, but you have to have them and you need a lot, you do need a lot of them. So how you approach that is very important.

Yeah, and I know you won’t make this a sales pitch, but I think it is important for you to share the problem that True Digital set out to solve because it’s very unique within the industry in terms of how you think about those vendors in the interconnections between them. So we’d love your thoughts on how that works and why you founded True Digital. It really did come out of my experience of selling to banks and rooted in kind of the truth of like I love the industry for being a quantic and being a vendor, there are certain questions I was asked, hey, who are your competitors? And hey, can I speak to your references? And being in that moment is like, wow, I have some type of incentive to not maybe answer that as well as you would like me to answer it because I can’t help but have my own selfish understanding of mine.

I’m in business and I thought about how it was in all of that and feel like, okay, wow, there’s got to be a way for a bank to find the truth it needs to without being influenced by someone. There’s lots of great things out there. The vendor can be a great partner.

There’s lots of groups like Alloy and consultants and VCs that play an amazing role when you say, hey, I need your help. But I do think there’s something really powerful to be able to kind of self-serve and just understand. And that was kind of why we started True Digital was in the discovery process and try to make that easier.

I think going now even four or five months into it, realize there’s a much bigger opportunity in understanding around the optimization of the vendors that bank works with. But it was really from the experience of being a vendor and then saying, what would I have wanted if I was a banker? True Digital. Yeah.

Well, you and I have talked about True Digital since I think the very first time we met at an ABA conference when you were fresh into the quantic role. And we were talking about digital account opening and the boil the ocean that had to take place. And I’m curious in your disclosure, Quantic when Patrick was there and Alloy Labs both invested in Mantle as a result.

But I’m curious, Patrick, with that hat on, and Tyreen, we’d love for you to opine as well. Is picking the Mantle the key to success versus many of the other digital account opening platforms out there? Because I know there are plenty of banks and say credit unions that love Mantle and others who say that they’re disappointed. And what’s the difference? Yeah, I mean, I think I would put it this way.

And again, this kind of comes into even the relationships the three of us have and what you’re kind of trying to do today, which is the key to any vendor is kind of can I actually get the collaboration that I need from the vendor, from my team, and from my peers in the industry? Because we do have complicated things we have to deal with, with existing vendors and legacy tech and compliance. And OK, I mean, the key for us with Mantle was actually being able to talk to other banks to it, also work with them and have the same core, et cetera. That’s what I mean, there’s so many moments I remember that journey where the key was knowing someone else.

And that’s how even all of us became friends. The idea of ALE was, hey, here’s a way for you to find others to help or to collaborate with. And I think that’s really the key is with all vendors is the collaboration, the vendor internal to the organization and with each other sharing experiences.

And it doesn’t have to be any specific name, vendor name. I think Patrick’s right. This is the difference between a vendor and a partner, right? It’s that relationship.

And bankers can understand this because we’re always, at least community banks, we focus on relationship banking versus transactional banking. And I think it’s a nice comparison to our FinTech partnerships. Our FinTech partners could be a transaction or they could be a relationship.

Well, there’s a big difference there. Are you going to partner with somebody who’s going to be there through thick and thin? And you’re going to have a symbiotic relationship where it’s a little give and take. I’ll beta test this for you, you deliver it for me.

I mean, there’s a lot of that that happens. Transactional, I mean, you have some of those because you have to, but it’s usually just a service that you turn it on, you let it ride. You’re not looking at innovating or plowing new ground or trying to do something different or new.

So I think that’s an important difference. Yeah, Serena, I want to pull on that thread because it feels like it came in vogue that everything’s now a partner, that we don’t pick vendors, we partner with everyone. And so let me ask the question to both of you is, should every piece of technology or service you use be a partner, not a vendor? I don’t think so.

I mean, I think there’s a place for every type of service. I can think of probably a half a dozen tools that we have in our tool belt because I work in both the technology side and on the operations and some of the bank application side. I think my colleagues here at Horicon would agree with me that there are certain things that they do their job.

There’s no reason to have to worry about having a best in breed or a strong partnership. But then there’s other things that that’s absolutely more critical. Yeah, I agree with that.

And I think almost what came to mind was an analogy that approaches from a different perspective. I did a lot of work at one point in my career around culture and how to set that and how to manage that as a leader. And one of the things that Patrick Lincioni teaches about is, hey, look, there’s permission to play values, and then there’s core values.

And those are different, but we oftentimes can play them. Things like honesty and integrity, that’s actually permission to play. If you don’t have that, you don’t get a job here.

But that’s not the defining thing that makes you unique. And so in a similar way to answer your question, there are relationships that we need as a bank or even as a non-bank that are transactions. It’s like permission to play.

And I don’t need to approach it in the same way. And then there’s other relationships where they are very important to what I’m doing. And that’s when I should approach it like a partnership.

Yeah. I mean, I would throw out that every bank should be making better use of their email marketing system. But that is also a vendor, not a partner, that they need to understand and should watch videos, the A-B testing and reporting available to them.

But if they’re selling you on partnership, that’s probably not energy well spent. And Patrick, I love the permission to play because I just had this conversation with the CIO today around, I got to look at their RFP they’re sending for something that truly is a partnership. But if you look at the first page, it’s all around things that I would say you just described as permission to play, like SOC 2 and API architecture.

Things that aren’t ultimately going to be the determinant of what if this project is going to be successful or not. I’m curious from both of you, Serene, we’d love to start with you. What are the true success factors that if you look at what’s going to make a partnership really work or versus a vendor relationship really work, what sets that up for success from the outset? I used to think a little bit more like that transactional experience that you referred to.

I think we as banks tend to not set realistic expectations for some of the partnerships that we explore. We’ve already kind of alluded to the fact that a partnership is really somebody who’s going to be there with you to kind of work through some things. Maybe not everything is ironed out.

Maybe you don’t have a SOC 2. That’s something that in the early days I was like, oh my goodness, I can’t work with a company that doesn’t have that all figured out because that’s going to be problematic. But through the years, I’ve learned that you actually make much better progress and traction when you work with maybe an early starter or somebody who’s eager and driven to really work with a committed partner. It’s like any other relationship.

People are emotional. We’re humans, right? There is some level of emotion, whether we want to admit it or not. But I think that comes from a place of developing a relationship with a potential partner.

And it’s true in business and these FinTech partnerships because you know you feel committed on both sides to see each other be successful. It’s not just all about me. It’s about how can I help you also be successful? That’s something that I think I’ve learned through the years to pay attention to, more so than I did in the early days.

Playing that a little bit, I think, in a similar way to how the lesson learned there is getting to work at NYDIG and really the parent company, Stonebridge, all of a sudden, I go from community banking to Wall Street. And I had very little practice or preparation for that. But one of the things that I took away that was so, so valuable was a mindset around how to understand risk and the sharing of risk.

And that’s quintessential to trading. And when it comes to partnerships, I think so much of it is exactly, to your point, it’s a relationship and relationships need clear expectations. And there’s actually an exercise in saying, hey, this is what you can expect of me and running into that, not hiding from it.

Because when it’s open, then both sides can help say, OK, how do we manage that risk? Exactly. To your point, if it’s an early stage, someone saying, I don’t have a SOC 2 yet. Do you actually tell me that? I can work with you to get to the finish line.

When you’re trying to manage or maintain certain expectations that aren’t right, that’s when we get in trouble. Because what it’s ultimately doing is hiding some risk from someone else. And that just doesn’t work.

I have a small story about that. I’ve been tailored to banks. I have a colleague of mine that works for another bank.

We actually selected the same exact partner. They’ve since abandoned that and we are plowing ahead. Now, in the beginning, what we purchased was something that we intended to serve as a solution and it really didn’t serve that purpose.

However, we’re committed in a true partnership here and they are working with us to develop what we originally thought we had purchased. That’s the difference. Any other transactional relationship would have said, okay, sorry, we oversold you and this just isn’t going to work.

And then we would have had to part ways. Well, that’s not the case for us. We’ve decided we’re going to help you and you’re going to help us.

And in the end, you’re going to have a better product and we’re going to have better processes. So let’s stay in the game. I don’t know many that have the courage to admit that openly.

And conversely, I’d say, I have another bank that, Serena, I’ll tell you afterwards, another Alloy Labs member, they’d say one of their greatest attributes is they learn the hard way. If it’s not working, sometimes grinding it out is not the best approach. That the willingness to admit at the C-suite that the risks they identified going in were in fact playing out and they pivoted.

I think both require acts of courage that not often when we talk about partnership and vendor management do acts of courage mainly get surfaced. But it feels like even making the decision sometimes requires an act of courage and being willing to admit things aren’t working is an act of courage, which is never going to work if we don’t change. And I’m curious in that process, organizationally, Serena, how do you breed that courage? Because Horicon, especially, has developed such a unique culture around this openness to share what’s working and what’s not.

Well, I think I have some predecessors here at the bank to thank for helping to plow that ground and creating that culture. But I think, again, it goes back to integrity and commitment and that relationship and making sure that if we’re the bank that abandons ship every time something gets rocky, nobody else is going to want to work with us either. I mean, this is one of the things I think is valuable about True Digital.

I was on the phone this morning for over an hour with another bank that has a similar system that we do, but they’re experiencing some challenges. They’re like, how is it that you’re able to be successful? Is it sometimes we’re our own worst enemies as banks? So sometimes we need a reality check, like, OK, is it me or is it them? Or is this a common problem? And I think that’s where we will have an additional resource to go to to find, OK, is this us? Is this a culture problem? Is this a systemic problem with the vendor partner that we’re working with? Is it something that’s a pattern with other clients that they’re working with? Or is this something that we can recover from? And we should always be, again, seeking the success of not just ourselves, but who are our true partners and making that a symbiotic positive win-win. ED HARRISON Patrick, part of the True Digital platform requisite to this is the idea of information sharing.

As you’ve been talking to banks, because historically and ironically, credit unions share information and the biggest banks have built consortiums that share information. And it’s the wide middle from community banks up to the, call it the regionals, where the problem lies. What kind of receptivity have you found? And what do you think is the motivating factor? ED HARRISON So two things.

One, kind of just come into this a bit even to the last point, which is sometimes you do have to say, I need to pivot. But if I can approach that by everything I’ve learned up until this point will help me pivot in the best way, you can be very, I think, successful. But that does take courage.

I mean, even True Digital, it’s a network of banks that are trying to come together to make something possible. How are we here? Well, I got to know a lot of banks, frankly, while trying to help bring Bitcoin to the industry. And OK, what have I learned through that process? How can I apply it? And if I can in a way that solves a bit more problem, creates more value for people, then I need to be committed to that.

Not an idea of something. It’s solving a problem. I think with True Digital, again, similar here, I got to talk to almost around 1,000 banks and credit unions in the last couple of years about crypto.

And some of them would have very intense, we are not talking about this. We don’t want anyone to know we’re talking to you. It’s our crypto strategy.

And then there were others who talked to each other. And kind of sitting from where I did, the banks that I saw actually engage with each other about us and how they were thinking about things and solving things were the banks that generally seem to be making a lot more traction, not just with crypto, but in terms of what they were doing. Whereas the banks that were more closed off, it did feel like a difference there.

There were some things that were probably, in most of the cases, they were winning. But it was a different kind of overall momentum and pace of innovation than the banks that engaged with each other. And I guess I just saw through that process how powerful it was when we were trying to get the first, you know, Betfli is live on the Q2 system.

Two banks talking to each other, or a bank and a credit union working together to figure out, OK, this core to this front end, how do we make this thing work? It was in that collaboration. We actually, so much progress was made. And I think that’s what trying to help do is make that possible by design for banks, not left up to chance.

I mean, it’s ironic if ultimately what we’re trying to do is reduce risk, sharing information can be one of the things that reduces that risk. And it’s the thing that we’re most closed off to doing often, right? Yeah, you know, there was probably a moment in the industry when there was more than 20 vendors, but not 2,000. And in that moment, maybe who you worked with did matter a bit more because the risk reward of getting the right one was just inherently higher in a smaller denominator.

But today, there’s thousands of vendors. We all need them. And it’s just no longer true.

And so we need to re-underwrite that to say, OK, given the reality today, this is actually now a complex web, and I want to get help because it’s not a competitive advantage anymore. There’s not any risks there. Like, we all need to do the same things.

Now, as we come to a close, I want to bounce two things off of you, the fire around. Serene, we’ll start with you. What is the one thing you wish would change around the industry when it comes to partnering? Again, I think setting those expectations for early starting partners and setting the same expectations for them as we would for a larger, you know, already well-established fintech partner.

I think both of them are smaller or name brand or no name, whatever you want to call it. They have equally great technologies, and we have to get comfortable. I would like to see us get a little bit more comfortable in our industry with being able to work with partners that maybe are in a seed stage, maybe working through series A, and maybe don’t have everything completely buttoned up, but that we can be on that journey with them and then help them get to the end goal for their product.

And then in the end, we also have a service or something that meets our needs. And then in the end, you have a success story for both sides. And I think too many banks shy away from that because they don’t feel comfortable with the risk of doing that.

So I think that’s just an opportunity that’s lost for some institutions, unfortunately. Patrick? Get out of our own way. We all need to hear that sometimes from, you know, our friends and our parents and mentors, which is the, hey, like, you’re kind of in your own way here.

You know, I think about even showing the true digital platform to, you know, so many banks for the last couple of months. And truthfully, very few were like, no, that wouldn’t be helpful. You know, call me when you have enough, you know, people signed up.

You know, if you’ve seen the product and you’ve heard the proposition, we’re really just trying to build a way for banks to interact with each other. The product is actually dependent on you, the bank, and we’re, you know, saying, hey, this, I will use this and I will contribute in this way. And so again, like so many, yes, that’s great.

But like, call me when you get there. And we’re kind of in our own way. I think we all, you know, when it comes to partners and, you know, not just about true digital, but when it comes to partners, maybe, you know, be okay with a little bit more of a mess up front.

Be okay, just like saying, okay, and taking the step. It’s okay. And there’s a ton of learning by just getting off of zero as possible.

Well, and I think one of the most important lessons with that is if you really want to deliver on a relationship that’s differentiated and powerful, being the exact same as everyone else isn’t going to set you apart in a way that makes for an interesting relationship. And I think both of you talking about that courage to get into some of the messier things and figure it out together is ultimately what the majority of banks and credit unions that are going to thrive in the coming era are going to figure out. Thank you both for sharing your perspectives on why it’s not all about the vendor and partnerships are important, but ultimately not the most important.

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.

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