Episode 334: Zeroing in on the CX with Jack Henry Digital

For this episode of Breaking Banks, Brett King and long time contributor Alex Jiménez are joined by Lee Wetherington and Benjamin Metz of Jack Henry Digital. They dive into the evolution of digital banking and discuss how Jack Henry Digital has helped community financial institutions stay competitive in this rapidly changing landscape. Join us to hear where customer expectations are headed and what steps financial institutions will need to take in order to meet the growing demand in digital advancement.


[1:00] Brett King and Alex Jimenez talk about current events and the future of banking after COVID-19.

[6:58] Ben Metz discusses the importance of community financial institutions and the vitality of remaining competitive. 

[9:51] Brett King asks the guests about the human factor of banking versus the digital aspect.

[14:10] Extractable has seen a huge spike in customers logging into digital banking during the COVID-19 pandemic.

[15:15] Jack Henry & Associates have designed a first of its kind conversational channel feature for Banno digital banking. 

[17:30] Community financial institutions are working diligently to remotely service both customers and employees.

[21:41] Jack Henry Digital worked with Simmons Bank to roll out a successful digital-first experience. 

[35:03] The guests talk data and segmentation.

[41:00] What conversation relating to digital banking should be taking place right now in the boardrooms of financial institutions?

[49:00] Jack Henry is seeing an increase in digital spend by financial institutions.


Brett King

Alex Jimenez



Lee Wetherington

Benjamin Metz



Jack Henry Banking- https://www.jackhenry.com/

Extractable- https://www.extractable.com/

Simmons Bank- https://simmonsbank.com/

Breaking Banks is the #1 global fintech radio show and podcast, created by Brett King. Tune in for a look at how technology and customer behavior will bring about more changes in banking in the next 10 years, than in the last 200 years. Listen every Thursday at 3pm eastern time, noon pacific on the VoiceAmerica Business Channel. Subscribe at Provoke.fm to hear the show nearly 2 million listeners from 72 countries are raving about.

Brett King
Alex Jimenez

Lee Wetherington
Benjamin Metz


Financial technology or fintech is one of the fastest growing industries in the world today with New York, London, Tel Aviv, Edinburgh, Singapore, Moscow, and other major cities all buy in for a piece of the action. Welcome to Breaking Banks. The first dedicated radio show that focuses on how this new boom is changing everything from the way we bank to the very concept of money itself. Now here’s your host, Brett King. 

Brett King: Welcome to Breaking Banks. We are live from New York city and around the country today with the number one global fintech radio show and podcast. I’m really glad that you guys could join us this week. I am of course I’m your host, Brett King. And joining me to cohost today is Alex Jimenez, chief strategy officer at extractable and longtime fintech mafia pal, Alex, welcome to the show.

Alex Jimenez: Thanks for having me. It’s been many years coming. 

Brett King: Yeah, it has. So actually we’re just about to come into our
Seventh year, right? Cause May is the anniversary. I have to check on that what the anniversary date is, but we probably need to do a birthday anniversary show. That’ll be fun. So Alex, before I introduce our guests how have you and your team been coping during the coronavirus crisis? 

Alex Jimenez: Well, there’s a few of us to work remotely, so we’re nothing really has changed for us, but the majority of our team sits in San Francisco and certainly they have been working out of their homes for the past several weeks now. And seems to live in san Francisco, they live in very small apartments. So they’re all going stir crazy. 

Brett King: But you guys are well equipped to do it remotely, right? 

Alex Jimenez: Yeah. I was just on a pitch call with one of our prospects. And that’s something that we usually do in person, not on the phone or remotely. So there are some things that are different. 

Brett King: Yeah. Well let’s get to some fintech news before we get into the main part of the show. Do you want to kick us off Alex?

Alex Jimenez: Sure. So one of the big news that I saw this morning was that Monzo applied with the occ for a US banking license. And that’s just more of the neobanks coming from Europe into the US markets. And I wish them all the best of luck, but this is not [02:42 inaudible]. 

Brett King: It’s a long lengthy process. It’s not going to; I think they’re going to find it a shock compared with the whole UK process. 

Alex Jimenez: Yeah. It could be years.
Brett King: But you know, good on them. And I think obviously Monzo has built a strong following. They’ve got a great brand. It’s probably about time we get tom back on the show actually. We should do a bit of a catch up with Tom Blomfield to sort of see how things are going. So I commit to trying to make that happen. Also, in the news, we saw china’s digital currency and rollout across four cities there. Right now you can use the digital currency for travel subsidies, pay your party fees to the CCP, McDonald’s Starbucks and subway, and next, apparently in terms of rolling this out. So that’s what’s happening in terms of the digital currency. What else is happening on the UK challenger front AJ?

Alex Jimenez: Yes, so fintech firms raised the plug gaps in UK’s corona virus released measures, and there was a headline today. So unlike the us, the large banks are having problems in the UK in doing loans for small businesses. And so the fintech’s are stepping in and that’s great. And in the US, we actually seeing the reverse. So the new funding does not allow fintech companies to participate. So it’s a parallel paths and the drivers are different.

Brett King: Exactly. Yeah. Alright, well, listen AJ before we get into Q&A with our guests from jack henry Banno, I know you’ve been researching some of this stuff, the digital adoption, the transformation changes that have sort of accelerated during the crisis. But I’ve also seen you commenting on the fact that you expect that some of the changes that happened during coronavirus, particularly around behaviors, that you think they will last well beyond the corona crisis. So, what sort of things do you think will stay with us or influence the poster coronavirus banking space?

Alex Jimenez: It’s going to be muddy. Some people are going to be afraid to go back into big groups. So you’ll see people sticking with some of the digital tools that they’ve learned to use. But I think there’s going to be a lot of people who are going to yearn to be out there, who are going to yearn to do things in a nostalgic the way it used to be before. And so I’d expect that… 

Brett King: There’d be a bit of mixed bag. 

Alex Jimenez: Yeah. We may actually see a bump in branch use for a little while. I don’t think… [05:55 inaudible] and I agree on this part. It’s an interesting one. Cause sometimes we disagree in a lot of items. But I think that particularly… 

Brett King: You guys probably agree more than you disagree, but that’s… 

Alex Jimenez: We do it more. 

Brett King: All right. Well, that’s a good framing for the conversation. Let’s invite our guests to the show now, we have Benjamin Metz, the senior md of jack henry digital and the managing director of Banno. Ben, welcome to the show. 

Benjamin Metz: Thanks. 

Brett King: Yeah, we hear you fine. And Lee Wetherington, the director of strategic insights for jack henry also Lee, welcome to the show. Welcome back I think, I think you’ve been on before. I don’t know. Lee are you there?

Lee Wetherington: Yes, I’m here. 

Brett King: Great. All right. So AJ, you want to take us with the first question? 

Alex Jimenez: Sure. So with traditional banking channels disrupted, explain what jack henry is doing to help financial institutions respond to the need of better digitization today?

Lee Wetherington: Ben, you want to take that one? 

Benjamin Metz: Yeah. Start off with a monster question, I guess. Wow. Well I think, I’ll give you just a couple of quick prefatory remarks. Really everything that I say is in the context of the idea that I just don’t think the world here in the united states is a better place without our community financial institutions. And I fundamentally think they’re at risk and under asymmetric, highly concurrent threat. And so, with that context you have to start to think about how do you help them compete? How do you help them compete? It’s interesting just listening to you guys, talk through the landscape, the first part of the call. That landscape poses opportunity and threat. So anytime you have disruption, I think I know I’m going to preach to the choir just a bit here, but disruption provides asymmetric upside and asymmetric downside. It’s pretty simple. And what we want to do is help our community institutions reach asymmetric upside. And there’s really two critical things in my view that you have to achieve. One is you have to help them compete with and on the personal relationship front. So you have to help them compete locally. You have to have them compete on relationships and trust. And the fundamental problem with all technology since the mid-nineties created per banking, is it removed all the human beings. Just all the humans are gone. And so that’s one major focus of ours. So figuring out how we rebuild that relational connectivity that underpinned the competitive advantage for community financial institution. The second thing is, I think is equally as critical, if not more, is that you have to build banking as a service. You have to build a proper platform. It has to be absolutely open and easily available for other developers, fintech etc. Because we’re not the only ones who can, how do I want to say it? Like we have to enable innovation outside of jack henry and Banno, so those would be the two critical things that we’re focused on. And there’s a lot more, but that would be my first run at it.

Brett King: I think, Lee I get your comment on this as well, but one of the key issues we face with the whole digital revolution in banking is it’s primarily been service oriented in terms of, the existing services within the bank, or, the way bank looks at service costs. And so we’ve optimized things that could potentially lower the cost of service from a bank operational perspective. We’ve not really had a clear engagement focus with technology because it’s been seen as competitive to the human factor. So Lee where are we at in that cycle? Obviously, the coronavirus has shifted all of that, but do you think now’s the time we start talking about developing meaningful relationships with our customers over digital?

Benjamin Metz: Yeah, I think the pandemic has put that into stark relief, and fortunately we’re a good two years, thanks to ben and his team at Banno and another team or two out there. We are at the beginning stages of translating personal service meaningfully inside of digital channels. And the reason why that’s necessary, we’re seeing this now, just because the user experience changes dramatically in the context of a crisis like we’re in now. And what I mean by that is and you’ve been talking about this a lot on your podcast of late, in terms of the changes in behaviors that are going on. But what you, what you hear everybody saying is how important digital now is that we can’t be physically proximate with each other, but relationships remain front and center. And in fact, they’re even more important in the context of a crisis. The problem is that you can’t design to the average and think that you’re going to satisfy everybody, especially in the context we are now. What I mean by that is that every single customer and member of a community financial institution or any financial institution out there reaches the limits of self service at a different spot in the digital channel. Based on their history, their, you know, technological proficiency, even just their base comfort level with certain or other of the features and things that you can do inside of a digital banking channel. So the real question is what happens at the limits of self-service inside of digital. That is where the meaning happens. The way that I frame this is that if you do technology right, you’re going to use it to minimize the mundane in order to maximize the meaningful and the meaningful for human beings is, and always will be irrespective of technology, their relationships with other human beings, especially in the moment of need. And it just so turns out that we’ve got millions more of us. Now I’m in the white-hot fire of need. And in that moment of need, it doesn’t matter how old you are, what income bracket you’re in. Everybody only wants the same thing. And that is, if you have a fear, a question, a real concern about your money or your viability through the end of the week, the month, or even next month you want to talk to someone right away, preferably someone that, you know, have history with have continuity with that is empowered in the moment to resolve that question, concern, fear, or curiosity. And this to me is a new category. It’s so new that we don’t really have language for it yet. And we haven’t disabused ourselves of the categories of language we’ve used historically to really fully appreciate it. But this is what I call personal digital. And it’s not, it’s different from personalization. Personalization is any number of applications of data analytics that give that end user more relevant information in the context of self service, but it doesn’t go to the personal service that’s needed at the limit of self-service whenever it’s reached in that digital channel.

Alex Jimenez: At extractable, we are tracking the volume of activity through our financial services. And the past couple of weeks, we’ve seen some huge spikes in logging into a digital banking, into going to product pages and looking at products. We have a guess on why people are doing that, but what are you hearing from your clients? What are you seeing from your platforms? 

Benjamin Metz: Yeah, [14:44 inaudible]. I’ll jump back in here. And that is that, generally what we’ve seen, we’ve seen what others have seen in the way of just a surge of use of digital generally, but specifically we’ve seen for those of our financial institutions who have levered this first of its kind conversations feature that ben and his group built, that’s jumping in some cases 30% or has jumped 30%. And what I mean by that conversations feature, that’s an integrated, secured and augmented conversations channel in which consumers can be immediately connected to a real live local person at their local community bank or credit union. And immediately because they’re already authenticated immediately begin a candid conversation about their problem. Not only that, the way ben’s group designed that conversations thread, the end user doesn’t have to remember an account number or describe the transaction that’s problematic. They can actually attach transactions and other nouns inside of digital banking, literally into that thread to expedite getting to the meaningful resolution of the problem. So even inside the context of the conversational channel, you’re minimizing the mundane aspects of the exchange to more quickly get to the resolution. And this to us is what the mother KPI for digital is now. It’s minimizing the amount of time that elapses between the moment of need and the moment of resolution. And so that’s the key KPI against which I know ben is developing everything that his group is working on.

Brett King: So I’m very interested, ben, and Lee both of you can give me some comments on this, but we have seen during the crisis, we’ve seen problems with getting stimulus checks. We’ve seen problems with applying for SBA, you know, PPP loans and so forth. And some community banks have handled this better than others. For example, we’ve had Jill Castilla from citizens of Edmonds on the show a few times, and they appear to have done really well, getting a shout out from Mark Cuban even on their efforts there. Some others have done pretty well, but in respect to what’s been asked of jack henry digital during this process from these community banks, how do you see this operationally impacting community banks right now? What changes have they had to make fairly rapidly to be able to sort of do some of these meaningful conversational pieces, or reducing that time to solving a customer’s issue? 

Lee Wetherington: This is ben. It’s a good question. I wanted to just follow up on your last question very quickly. I mean, basically digital usage on our platform is through the roof on every measurable dimension. So, I mean, it’s just through the roof. Some of our customers reporting over a hundred percent uptake in just remote deposit cash for example. So every sort of critical features just through the roof. Lee was focusing on our relational channel that we built into everything. I’m always hesitant to make major comments on behalf of our financial institutions, because I think, they’re just, I’ve so much empathy for them during this time. Because, I mean, I can’t tell you how many conversations I’ve had with just different folks, just working 80, 90-hour weeks. They are just wall to wall slammed under, major duress, trying to make sure they can do everything they can for their customers. And, in terms of like challenges, like figuring out, I talked to a gentlemen who is trying to figure out how he could make sure to have a secondary office just in case he had an outbreak with his staff. Just the level of intensity they’re dealing with right now on the ground is difficult. In addition, they have to service such the entire range of analog to digital, we’re heavily focused on digital now, but there’s still plenty of people that they have to service across the generational divide that require and to maintain and manage their analog situation. In addition, I’m probably stepping across a line here, but regulators have frowned upon, back office applications working outside the firewall, effectively working on the internet. And that’s another place that we push really hard and done our best to pioneer. Back office applications not being able to run on the internet is a real problem in a Covid crisis. You know what I mean? So there’s some real challenges, also things that people don’t want to talk about.

Brett King: Yeah, I’ve heard of some of the major banks in the states, one of the big four having to go and register 117,000 people on zoom the day one of shutdown, because they had no remote working capability that was considered secure outside of the bank offices as an example.

Alex Jimenez: I also had a bank that I know that only had a hundred licenses for their VPN and they ran out right away. 

Brett King: So there wasn’t a lot of contingency planning to go pure digital it appears anyway. 

Lee Wetherington: I think that goes for everybody in the space, especially last week under the stimulus stress.

Brett King: Yeah, so it is transformational. Hopefully some of this sort of digital staff sticks around. I think both if community banks and other banks find themselves able to have meaningful conversations and meaningful engagement with their customers over digital, it may not be as much fear, but this we’re, so we get back to this conversation or whether we get back to normal or there’s a new normal around digital. So tell me about sort of the input from the leadership team at jack henry. I know Alejandro Carriles, the CDO, the chief digital officer of Simmons bank took a really customer centric approach to launching Banno mobile this year. And they had some big numbers or big effects from that. Maybe could you tell us how you guys help Simmons bank with that earlier in the year?

Lee Wetherington: Well, first, big shout out to Simmons bank. We love those folks and big shout out to Alex. I think you guys know he’s first class, world-class when it comes to the intersection of banking and digital technology. So yeah, I mean, it’s been fantastic to work with Alex and that entire rollout and just fantastic working with Simmons as well.  They really made a big bet to go digital first and bringing Alex on board I think just kind of shows that the Simmons bank commitments there, and they’re just a really fantastic group of people to work with in general. So in [22:50 inaudible] really smooth. So that’s always good. These cut overs, it probably bears mentioning these digital cut overs are really tough. Something that not a lot of people talk about in the industry. These cot overs where you switch out, the digital engagement features, for Simmons customers or just, they’re super challenging to manage for the financial institution. So yeah, I got nothing but high praise for Simmons and Alex, for sure.

Brett King: Hey, of the changes we’re seeing right now as a result of coronavirus, which of those do you think will tend to become more permanent or become habits for people?

Benjamin Metz: Yeah, I think I would agree with you, I think Brett on the fact that we’re introducing a large swath of people were not using digital banking are using it for the first time. And there are some that were using digital banking on a limited basis that are using it on a more extensive basis. You’ve mentioned mobile deposit capture just a moment ago. And I think history tells us, the cycles always tell us convenience trumps all else, right? So ben calls it, the law of least effort, but when some of these folks that were doing things in analog channels that they now realize can be done sufficiently faster, quicker, better on a self-served basis. I think those behaviors will remain. I think, where it will get interesting is, whether and how many and how soon we’ll be introduced to meaningful relationship building and nurturing through those same digital channels. You mentioned PPP earlier, we’re sitting here in this really interesting window today on Thursday, the congress should pass the second round of funding for PPP. It could be made available through SBA as early as tomorrow morning. One of the things that we’ve learned in terms of US inside of digital channels and the context of these small to medium sized businesses who are desperately trying to get their PPP loan apps in the door process decisions and funded is that there’s a lot of handholding that goes on there. So, whereas the average consumer typically inside of these like these conversations channels, like the ones Banno is built really are totally cool with, you know, using kind of a chat interface inside of that thread. The small businesses who are needing sometimes hours long handholding to get their PPP loan apps completed correctly with the banks guidance really do want more of a video over IP interface, whether that’s zoom or otherwise. So I think what we’re learning from that is that, depending on the complexity of the moment of need, that may dictate whether the format or flavor of the engagement form that is called upon. And ultimately what you need is you need an integrated way to entertain and facilitate all of those forms inside of an authenticated integrated channel inside of the context of digital banking so that everything can be contextual. More than that it needs to be also transactional, but the conversations channel needs to be transactional. And the only way to really do that in real time way is to have that channel connected directly to the core so that you can, in the context of conversations actually move money around in real time.

Brett King: Absolutely. All right. Well, listen, guys, we’re got to go to a quick break. Before the break I just want to give a shout out to our sponsors. First of all, to Fiverr, Fiverr has come of age in the corona crisis with access to mobile and a freelance resources. This type of time, it’s difficult to go through the interview process and find resources Fiverr particularly for freelances makes us so much easier. We’ve used fiber freelancers for a range of activities at Breaking Banks and for provoked media, doing creative work for us, helping us put together marketing materials, our media kit for example with designers. So we’ve been using them for some time now. Fiverr’s marketplace helps you get more done with less. It connects businesses with freelances who offer hundreds of digital services, including graphic design, copywriting, web coding, film editing, and much more. And you know exactly what you’re paying for upfront. There’s no negotiation. The rates are transparent, and they’ve got a 24 seven customer service hotline. So take five and check out www.Fiverr.com and you’ll receive 10% off your first order by using our code, breaking. It’s so easy, don’t waste any more time and get the service you deserve by going to www.Fiverr.com. That’s wwww.Fiverr.com code breaking Fiverr. It starts here. Of course, this episode is also brought to us or sponsored in part by jack henry digital is joining us on the show today, the pioneers and creators as personal digital banking that help community financial institutions translate their trust and live local personal service, meaning live, sorry, local personal service, meaningfully baked into digital channels for the first time. Jack henry digital helps community financial institutions strategically differentiate their digital offerings from those of the mega banks, the big techs and FinTech’s. So how do they do it? Well, we’re learning about it now with the Banno digital platform, a complete 100% API enabled open digital banking platform. You get beautiful lightning, fast native apps, integrated PFM via customers and members, and cloud-based core connected back office tools for employees. With the website marketing and content management capabilities built in, community banks and credit unions can create, launch and track targeted campaigns quickly from click through to product acquisition across all digital devices. My personal favorite part of the platform is the conversation piece. As we were talking about, it’s really the first of its kind, where it’s a fully authenticated secure check capability that enables branch staff front and center in real time at the moment are made, but through a digital relationship channel. This extends the relationship-based banking model and restores that community aspect to the ability to sell context in a live digital service. So check it out, visit www.Banno.com to schedule a demo today. That’s www.Banno.com. We’ll be right back with you guys after this short break.


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You’re listening to Breaking Banks featuring your host Brett King, to reach the show today, please call +1 866-472-5790, that’s +1 866-472-5790. Or join the conversation on twitter by using the hashtag Breaking Banks. Now back to the program.

Brett King: Yes absolutely. If you are listening in live right now across the world, then feel free to jump in on twitter. You can tweet us at @breakingbanksone on twitter. If you’ve got a question for the team or you got a question for us as the hosts or dial in if you’re in the US and you can get access to the +1 800 number. We are Breaking Banks, the number one global fintech podcast and radio show. I’m your host Brett King. And joining me in the hosting chair today is Alex Jimenez, chief strategy officer at extractable. But before we continue, just to shout out to provoke media’s official finovate podcast with Greg Palmer, where you guys should check that out, he’s recently launched their fintech in extraordinary time special. Got a bunch of interviews on people talking about how we coping with covid-19 and what comes next. One really interesting session that obviously we played as part of our special edition show a couple of weeks ago was the interview with Adrian Harris, who was with the national economic council during the Obama administration. And talking about what would be going on in the white house right now from the perspective of someone who’s been there during crisis and so forth. But Alex let’s continue with our jack henry discussion. You want to kick us off?

Alex Jimenez: Sure. So all of us are often talking about the need for personalization in banking and better segmentation, is this the right time to become more proactive with data strategy? 

Lee Wetherington: Yeah. Again, with your big, big questions.

Benjamin Metz: We like your questions ben. 

Brett King: We want you to talk and the rest of us just listen. 

Lee Wetherington: That’s good. That’s good. Yeah, the short answer is yes. And, we can’t do it fast enough, that’s the thing. The difficult part with segmentation and titlements in general, and I know I’m going to give you a quasi-technical answer, but sometimes technical answers aren’t unavoidable. But the underlying machinery and pretty much all the united states in of the banking technology stack that underlies everything we do, doesn’t really have a strong and a very strong concept of a user. And there’s a lot of reasons for that. But most of them being traditional, most of the fact that most of it oriented around the idea that a lot of these systems were built before the internet. So they were built before we had a concept of the internet. And so then the internet kind of got tacked on. And so that’s kind of the short version. So what has to be done is you really have to build this data layer on top of them. And so that’s what we’ve been aiming towards as fast as we can get there, part of the reason it’s important for a community financial institution. Again, that’s always my context in which I’m working, but is that you’ve got a different banking experience across each generational divides. And I know I’m going to be captain obvious for a second, but it seems like everybody forgets this. And that is that my mom, who is 70 old and lives in Redding, California has 13 accounts, at her financial institution runs multiple businesses with my dad who is semi-retired. And then my 16-year-old son has $13 in one account and needs me to send him money on square. That’s a big difference. And you got to deliver an application for a community institution that covers that. So this is where I get sometimes a little bit annoyed with like the discussion about in and around challenger banks, challenger banks are not trying to bank my mom, my wonderful mother living in Redding, California. That’s really not what they’re trying to do. In fact, they can’t most of the time. So I’m not saying that goes for everybody. I’m just saying that would be statistically true. So, you know, what do you do then? What we’re working on and it’s very challenging is building a segmentation layer on top of all the machinery we connect to so that we can provide a different UX, a different user experience. So we just shipped a bunch of technology over the last two months that will in the future, I have to be really clear about this because this is a lot of work. We have to be able to shift the user experience based on login to cover that problem I just described; we have to be able to do it. And then if we can do that well, that provides a lot of tooling for the financial institution to really win across all those different dimensions. So that effectively, my son could have like an n26 or a Monzo type experience, and my mom can get more of her style of experience that she needs as just a very quick framing of it. But you’re asking a darn good question. I could talk about that for an hour. I’ve skipped over all kinds of other things when it comes to data, but you mentioned segmentation and I think that’s what’s really important for our community financials.

Brett King: What about on the acquisition side? I know you’ve talked about the challenge of banks and they’re not necessarily trying to acquire accounts like your mum, but at the same time, if there’s a small business, if there’s need for credit, the process of KYC and getting those applications in for things like the PPP stuff, that is typically been done face to face in the brand. So are you seeing those changes in terms of process around onboarding customers and cross sell upsell as a result of this coronavirus thing as well?

Lee Wetherington: Short answer there is, yeah. I think all groups that are working in any consumer facing product inside jack henry, have been putting in long hours to get there. You kind of skipped over a really in what you were saying, a really good point. And that is that I think a lot of our financial institutions and I hope I’m not being too critical here. They’ve tried to take that in branch experience and move it to online. And I think there’s a lot of innovation that can happen if it’s thoughtfully really thoughtfully, architected and worked out. And especially in terms of KYC, if you, I know you jumped right to small business lending, etc. and some of the relief efforts, but if you just like, think about deposits, for example, one of the things I always say is, there’s no reason, again, this gets back to data and segmentation. This is all, it’s such a good question, Brett. Let me see if I can frame it up this way. If I have $200 that I wanted to put in Simmons bank, and I lived in little rock, what’s the risk to Simmons for me to do that, and do you have to have full anti money laundering? 

Brett King: Right. Sort of progressive identity verification process, not all in one. 

Lee Wetherington: The realization of that, the reason it’s challenging is that you have to give those levers to the financial institution. 

Brett King: I think you have [40:48 inaudible] local regulators. 

Lee Wetherington: Boy, you just hit the nail on the head. I’m glad you said it, not me. That’s the issue that you have to be able to hurdle.

Brett King: Yeah. I mean, what you’re talking about, it’s extremely logical, but when you’ve got these whirlwind processes, but this is the way we’ve done it. That’s the challenge.

Lee Wetherington: Yup. That’s exactly right. And you’re right to name the regulators on the ground, which vary widely. There’s a wide variance, so I want to be careful in any critics. [41:27 inaudible] but it’s, you’re exactly right to name that the challenge. And so one of the things that Lee and I have worked really hard on is we’ve built a lot of, I’m not trying to pat her on back here. I’m really just trying to put an idea out in the world to other listeners that they might be willing to latch onto this. We’ve done a bunch of work and documenting how these technical systems work so that regulators on the ground can understand them better, if that makes sense. So we actually hired an outside firm to do a lot of illustration of deep, difficult technical concepts. And we call it our due diligence document, but it’s designed, the documents designed for regulators on the ground, at the financial institution. Which is, there’s a weird distortion that you’re kind of naming. And I always get, I always wonder what I can say about this, but I think I can say this. They’re regulators that come and talk to me right at my office. The FFIC comes every year. They don’t talk to the regulators that are on the ground at the financial institution and vice versa. So that’s a real problem. And it’s kind of a problem like nobody talks about. And so like, how do you bridge that gap? And generally that gap gets bridged by vendor due diligence, coming back through from the bank so that the onus is on the financial institution, which is it’s too much of a lift, for them to educate their examiners and auditors, on the ground about the technicalities of the systems that are using. And that problem that you accurately described will only get worse, orders of magnitude worse as we move along with the technology [43:10 inaudible].
Brett King: Lee, let me throw a question at you, and this is more of a strategy crushing cause obviously, you’re on the strategy side of jack henry, but at the same time you’re dealing strategically with some of these banks. Obviously for many of these banks, the strategic plan for 2020 has gone out the window right now because of coronavirus. So, if you’re sitting on the board of a medium sized, say a regional bank or something like that in the united states right now, what sort of strategy conversation is going on about digital right now?

Lee Wetherington: Yeah, from the boardrooms that I’ve been in now remotely the last couple of months getting sort of being firsthand witness to how those conversations are shifting, how the priorities are shifting. First of all, there was a whole lot of strategy work being done. Everything got really tactical very fast.

Brett King: It was [44:15 inaudible] to then suddenly rapid strategization right.

Lee Wetherington: Right, exactly. So I will say now though, just in the last couple of weeks even and it’s been complicated a bit just because of the PPP to, everybody’s trying to get that process as optimized as possible, especially in advanced at this second traunch of funding that’s coming. But the ones that are pulling their heads up and looking out are thinking about things like and I’ll just give you a few anecdotal examples. Hey, it turns out that these, a lot of our remote employees or employees who are newly remote, who were never remote, do we necessarily need to bring them back into the physical building? So I’ve heard a lot of conversations about that if we don’t need to bring them back into the physical building, what does that mean about the overhead for our branch and analog channels? If we wanted the relationship centered and centric and we want to do that well in digital channels how much of a branch presence do, we need? How do we recalibrate that? How will that be recalibrated coming through and onto the other side of the pandemic? Those are the kinds of questions that a lot of banks and credit unions are wrestling with right now. They don’t know exactly what that new normal looks like. This gets to the question that you’re really [45:45 inaudible]. 

Brett King: That they know it is coming.

Lee Wetherington: They know that there is some behavioral shifts afoot. They don’t know exactly how those will meet out across generations exactly. And more specifically across their deposit base more particularly. But they are getting a first glimpse of being able to do very intensive relationship-based stock and handholding without being physically proximate. And that has, I think has opened their eyes and also has, and this is, I think also being captain obvious here. Whatever they were thinking abstractly about digital transformation has now become much more concrete. And I think going through the rest of the pandemic and rolling into 2021 and 2022, you will see some of the presumptions about the digital channel go away. What I mean, the, the biggest one of which is digital equals self-service only. That’s the biggest one that’s going to go away. They’ll realize [46:48 inaudible].  And not only that for the first time, they’re going to realize that they can-do high-quality engagement. So if you think about, I mean, any community bank or credit union, the credit union movement mantra is people helping people and they will tell you that they have always thought that you can only do high quality engagement face to face, but when they realize that they can do that in digital channels, member engagement, they can do that in digital channels and do it at a faster clip. In other words, minimize that moment of need to resolution KPI. And whether there’s no longer a tradeoff between the quality and the convenience of the engagement you are now able to optimize for high quality engagement velocity, which is a brand-new thing. And which is something that I think bodes really well strategically for both the credit union model and the community bank model, because they’re both relationship based.

Brett King: I like that high-quality engagement velocity. So AJ? 

Alex Jimenez: I worry though I think for the credit union movement, I think you’re dead on and our clients in that space talk about that, but thinking about the community banks, particularly those that are publicly traded, they have a problem. They’re way behind in digital and they are, and they’re being squeezed by low margins, lower revenues. And so whatever they had in their budget for digital transformation this year might go out the window. What are you hearing from that set of [48:37 inaudible]? Well, if they have to blow, if they have to spend more money, where are they going to get that money when their revenues are being squeezed? 

Brett King: Are you seeing tactical commitments to spend like that Lee?

Benjamin Metz: Yeah, surprisingly, and this again is anecdotal. But yes, we’re seeing actually really, really strong demand for digital spend because of the dynamics that we’re talking about. And that’s just again, anecdotal of the banks and the credit unions that I’ve been talking to of late. I checked in with some folks on our sales team the other day to gauge that. And they are seeing surprisingly sort of liberal commitments to spend on digital because of what they’re learning and what’s being put into stark relief by the crisis. So I think longer term, if you look at the cost basis of doing the things that we’re talking about here, you will see the cost basis come down and down and down as we continue this, as a service cloud sort of infrastructure that movement that is simplifying, but also bringing down the cost basis of each of those complex layers of the bank and stack. And that’s translating in real time too, that downward cost pressure is coming down over time. And most of what we’ve talked about here doesn’t require massive outlets. But it does require a new way of thinking and quieting some of those old presumptions and assumptions we’ve made about the digital channel being diametric or mutually exclusive from strategy related to the branch channel. Because with things like what ben’s group has built, brand strategy and digital strategy are now literally technically in concert with each other, they’re directly connected to each other. Where staffed channels are literally the ones who are front and center in the digital channels at the moment of need. So it requires a brand-new way of thinking.

Alex Jimenez: Yup. That’s what we’re hearing too. Yep. 

Brett King: Can I ask you guys sort of one question, obviously, with the accelerated attention on digital, there is an opportunity for sort of greater depth of services for organizations like jack henry. Are you guys looking at maybe some acquisitions from FinTech’s and so forth during this process to beef that up?

Lee Wetherington: It’s such a funny question. We’re a publicly traded company, so obviously we can’t comment on anything like that. I think jack henry is always inquisitive.

Brett King: So, let me throw you the question a different way. Tell us about the plans for jack henry digital and for Banno that have sort of emerged now that where you see this rolling out over the next, say 6 to 12 months. How has it changed your focus on your digital platform?

Lee Wetherington: Well, I think honestly nothing’s changed. Our big bets were, hey, we’re going to build an open platform. We’re going to build a back office, suite of software that runs on the internet. And we’re going to differentiate on local, personal relationships and service and the next leg that we’ve been hyper focused on. And you read it in some of the copy there was just that we now want to make the selling and engagement of buying these products from community institutions. We want to make that personal and relational again. So that part is now in play and is landing over the next few months. www.jackhenry.dev is now live and up and running. So you can actually see the early stages of the open platform. So again, maybe I’ll finish up with this Brett. We want to be wide open for fintech to come work with community institutions. And we want a developer to be able to start tomorrow writing code and building on behalf of our financial institutions. Like that’s really where we have to get to. Where I was a decade ago when I first started writing code for Banno. What we’re now releasing is what I needed a decade ago to help these community institutions.

Brett King: Yeah, I hear you. I can absolutely relate to that. So AJ just, so ben and Lee thank you very much for [53:24 inaudible]. AJ just give us a bit of an update on extractable quickly before we wrap up.

Alex Jimenez: Sure. So extractable, we are a digital strategy, strategic consulting design and data analytics consultancy out of san Francisco. And we help mostly small community banks and credit unions throughout the u s with their digital transformation. 

Brett King: Great. Well, thanks for that. And you’ve been there a few months now, how long have you been there? Eight months already. Wow. That’s gone quickly. Oh boy. All right, guys. Well, listen, that’s it for us this week. We’re very grateful to have you listened to us. We’re very grateful for jack henry support. You’ll be hearing more about their journey over the coming weeks and months. We’re very grateful to have them as a sponsor for the show. Clearly definitely go and check out www.Banno.com. The platform that we’ve been talking about a lot through this, that’s www.Banno.com for jack henry and they can give you a demo of the whole piece, but as always, if you like our show, the single best thing you can do is go to wherever you download this, or wherever you listen to this and give us a five star rating, give us a shout out, tweet us out to your friends, put us on LinkedIn or Facebook, or where is that you hanging on social media and let other people know about the show. That’s what gets us the growth and the listeners and the audience that keeps this show going to the 178 countries that we publish the show to every week. Normally now we’re doing shows a couple of times a week. You can also listen to our 300 shows, our past episodes, including the shows that we’ve done in the past. You can check out Breaking Banks Europe tech on [55:18 inaudible], the finovate podcasts, fintech five, all of the shows on www.provoke.fm. That’s it for this week. My thanks to ben and Lee for joining us. AJ for helping me host and to matt, our producer at VoiceAmerica who had keeping us running live. That’s it for Breaking Banks. I will see you guys next week.

You’ve been listening to Breaking Banks with host Brett King. Please be sure to join us again next Thursday at noon, pacific time, 3:00 pm eastern time for more of the latest and fintech news.