Fintech Hustle // Siya Vansia and Daniel Haisley

Well, hello out there. This is Sam Kilmer with Cornerstone Advisors, host of Fintech Hustle. Glad to be back with you today on this episode.

I’m joined by a rock-star cast of characters from the halls of fintech, and I’m looking forward to the chat.

My co-host today is Mary Wisniewski, director here at Cornerstone Advisors. Many of you may know her from the halls of fintech as well.

Hello, Mary. Good to see you.

Hi. Great to see you.

We’re obviously going to be hearing some more from you. I know you’re going to Fintech Meetup coming up here pretty shortly, and you’re out there in the halls and whatnot of fintech.

Our two guests today, who we’re really honored to have with us, are Cinzia Morelli, chief brand and innovation officer at ConnectOne Bank, and Daniel Haisley, head of innovation at Apiture.

Cinzia, I think we met at Finovate maybe last year or so.

Yeah. I spotted the Sam hat, and we grabbed some coffee.

That’s right. Hats and coffee.

For the audience’s edification here, in addition to your work at ConnectOne, you guys have had a lot of developments in the New York-New Jersey market as well as Florida.

I think Frank Sorrentino refers to Florida as New York City’s sixth borough.

New York City’s sixth borough.

Exactly.

In addition to another borough, let’s just call it the fintech borough, in 2019 you had the acquisition of BoeFly in the small-business lending space for a sort of direct-to-market fintech.

That was another reason why I thought this was a really interesting story.

I’m looking forward to hearing some of your thoughts on the industry.

Then also Daniel Haisley, who is head of innovation at Apiture.

Apiture is one of the digital-banking firms, but I think you guys, in addition to doing traditional digital banking, are into deposit-account origination and, if I’m not mistaken, doing some work in analytics as well.

I think you were at the AOBA conference here in Phoenix just last month talking about some analytics work.

Welcome to Fintech Hustle, Daniel.

Yeah, thanks, Sam. Happy to be here.

We do retail banking, commercial banking, account origination, data focus, API focus, a little bit of it all.

One of the things I’m always talking about at Cornerstone are trifectas.

When I started out in the banking world, there were really three different camps.

You had your tech investors, your tech vendors and then banks.

They were largely three different cocktail parties, with the exception of a few key industry conferences like BAI or whatever back then.

It just seemed like it was mainly separate.

What I like about you guys, and hearing some of the things that you share, is, Daniel, I know you were at First Source Bank and Live Oak Bank.

You’ve been a bank exec, like Cinzia.

On the other hand, you’re also in the tech world, and obviously Apiture is in that whole Canapi world too.

So you’re kind of in the investor world too.

Same thing with ConnectOne’s investment into BoeFly.

It just seems to me like the banks are getting into fintech, the fintechs are getting into banks and bankers are going back and forth.

I love having people with your varied backgrounds.

Similarly, Mary, I think you and I met originally when you were an editor at American Banker.

It seems like you navigated nicely between the banker world and fintech throughout your career as well, right?

Yeah, thanks for that, Sam.

I definitely started off more in the banker world and was like, “Who are these people?”

But then we figured it out a little bit more.

Right.

It’s good to have all of you.

As always, this is an unscripted chat.

I have a few things I’ll run by you guys, but really it just comes down to what’s working and what’s not.

What do you see working?

What do you see not working well out in the land of fintech?

It’s been a really volatile past year, maybe even a little longer, in the fintech world, with a lot of public, not-so-great situations on valuations and impacted people.

But it seems like there’s some other stuff working.

Let’s start on the positive side.

Cinzia, what do you see working well out there in fintech right now?

I’ll make a statement that, for a long time, and I’m going to say 2021, was an unpopular opinion in fintech.

I think what’s working, and I think this is an evergreen rule, is fintech is more likely to be successful if it supports the banking industry.

We saw a lot of plays where there were great technologies that wanted either banks to change their models, their credit models, their operating models, or compete with banks.

Some of that taught us a lot.

But I think the companies that are doing really well, and that will continue to do well, are those that support banking or traditional financial infrastructure.

Whether it’s in your pitch or not, all of fintech is still dependent on the financial infrastructure that exists in this country.

It might be a little bit further removed.

I think the companies that really understand the financial ecosystem are starting to do well.

In the next year, I think the companies that can help banks in the deposit-gathering space will continue to do well, just because that is a need for banks.

I think there’s a lot of opportunity as we look ahead in treasury-services products, any fintech operating in that space.

I’ll respond to that real quickly.

There’s so much talk in boardrooms about treasury.

It seems like such a major area, all types of cash management and commercial applications.

For years, it seemed like 80% or 90% of fintech use cases were consumer-oriented, which is fine, but it left a little bit of a gap for commercial.

That’s a really good observation.

Daniel, what do you see working well out there?

You guys are consumer and commercial, and I know as a banker you were on all sides of that.

What are you seeing working well in fintech right now?

I couldn’t agree more with the focus on business.

We make our rounds to the conferences, and you see things that pop up and emerge, then often go subtly into the night or sometimes violently into the night.

We have far less talk about crypto than there was last year, as an example, or buy now, pay later.

But the focus on business is moving away from a strict focus on retail and into business.

There are a lot of conversations where both banks and credit unions that have been more retail-focused in the past are putting a heavier focus on not just big corporate treasury, but SMBs, the true mom-and-pop and growing small businesses.

The other thing is a focus on connectivity.

So many banks and credit unions come to us and say, “We want to be able to integrate A, B, C, D.”

They have these problems in mind that they want to solve.

You have a number of fintechs out there that are point solutions.

They exist to solve a very cogent, salient problem.

Then it comes to either those banks that have their own engineering teams and are able to put forward the work to integrate those folks, or partnering with folks like us, where that’s what we do.

We can bring those service providers to the table and provide the connectivity so that banks and credit unions can move as quickly as they’re able to incorporate that change.

That cycle never ends.

Very interesting.

Mary, let’s get you in on this.

Any observations there?

Yeah.

I guess I’m pulling from AOBA since that was the last event I was at, but of course everyone’s talking about, “We need deposits.”

I’m still in awe that there was a tweet about a bank calling its customers to say, “Please don’t leave me,” probably in different words, but that’s remarkable.

This is more on the retail side, but something I’ve seen is there’s a company called Atomic.

They have a partnership with U.S. Bank.

I think I just saw they signed with H&R Block.

There’s long been this perception, and a reality, that people are not changing their bank account.

Atomic is making it easier to switch your direct deposit.

That’s something I’m really focused on because I still feel like that’s a really hard thing to accomplish, even if you make direct deposit easy to switch.

The other thing on my mind is revenue.

A lot of the talk was also around, “Okay, overdraft fees, we’re not making so much money on that. Where can we get new revenue sources?”

I’m watching, and I say this threateningly because I mean it in a threatening way, for revenue models that are doing harm to consumers or small businesses because they could be even worse than an overdraft fee.

I’ll add real quickly that, Daniel, you mentioned engineering.

I hear and see more of our bank clients now, and looking at your background and Cinzia’s background and what your shops do, you guys are builders and buyers.

You’re not simply taking things off the rack.

You’re used to putting things together either as a banker or as a tech firm.

I’m seeing a lot more bankers now that, while they might not want to build a brand-new thing, are talking about having way more dev resources.

To your point around connectivity, they’re moving to more point solutions to be competitive, but they’re also beefing up their own teams to be able to do some of this integration work so they’re not at the mercy of anyone.

That makes them a little bit more of a builder.

If they were more of an off-the-rack buyer in the past, they’re moving now to being a little bit more of a cobbler, if not an absolute builder of something, even if that’s just APIs or a little bit of SDK work around integration points.

They’ve got to take accountability for some of this as opposed to relying on somebody to take care of all of it for them.

That was one thing that I thought was interesting.

I think another thing, and I think you alluded to this too, Daniel, but I’ve heard it in some of the conversations, Cinzia, around what you all are doing with BoeFly.

One of the things I remember you saying was, “Is it good for BoeFly?”

Meaning it’s not just what’s good for the bank. It’s what’s good for the consumer.

There’s so much data in what we’re doing.

We’ve been talking about data for years, but I’m seeing a lot more people put emphasis into really gritty use cases on applied use of data in a workflow.

It’s no longer this big infrastructure back-office thing that gets harvested and then ETL and all this other business, and nobody ever gets there.

It seems like there are a lot more workflow-based data things that people are talking about applying.

Not just cost reduction and reducing fraud, both perfectly wonderful things to do, but growing their market and client base.

I don’t know if you guys are working on anything like that, but those things were a couple things that struck me.

I think you’re 100% right.

From the bank perspective, we faced so many limitations because of the inability to access our data in the ways that we needed to, or the inability to build those integrations or connect systems.

We sort of got by because the industry faced that.

There was an industry-wide problem.

But that, to me, is why fintech became an industry of its own.

We learned very quickly what we could be able to do if we could take control of our data sources, if we could connect data that had historically been siloed, and if we could control some of those workflows.

I’ve definitely been in a position where we’re at the mercy of our vendors to run the integration, and you end up with a less-than-optimal product for your client base.

You end up with longer timelines.

You said it well.

You’re at their mercy.

I’m paying you so you can tell me how to do things.

That’s crazy.

Cinzia, what kind of data were you able to grab especially?

For most of banking, we all run through a couple of different core providers.

Part of the challenge is our contracts.

Part of the challenge is the age of this technology.

We can’t just pull the data in the way that we need it in an aggregated way.

There’s a lot of work that we as banks have had to do.

Some banks have taken the middleware approach.

Some banks have built a data lake.

Some banks have built API libraries.

Some may have done a combination of all of those things in order to say, “Hey, I just want a holistic view of my client.”

For a long time, that was really hard to do if you weren’t doing it on a manual Excel spreadsheet.

I think we’re finally at the place, because of the talent we’ve hired and because of what we learned from fintech, where we’ve built a good baseline foundation to now go and leverage that and do all of the things Sam talked about.

One of the challenges I see on that same front is where banks and credit unions inherently know, “Data. We need access to our data. We need to be able to pull that data in.”

Then there’s the next step of, “Now what do I do with it?”

You need the right human capital and skill sets inside your halls.

Maybe that is purely inside the bank, and maybe that’s in conjunction with a partner.

You have to say, “Now that I have this data, now that I can derive insights and I have that 360-degree view of the customer, now what?”

How do I do this?

Am I arming my branch personnel if I’m still leaning on a branch network?

Am I arming my commercial bankers to help drive conversations they’re having with their customers?

Am I getting to these customers through digital channels so they’re actually being met with opportunities, advertisements, warnings or whatever it may be that are contextually relevant to them?

I think the hyperscalers and partners have helped banks get the data, despite some players making it as hard as it could possibly be to get, standardize and leverage that data.

But then there’s asking the questions and putting that to use.

I see a lot of financial institutions in the middle of that part right now.

It’s a really exciting time in that space where you’re starting to see folks make material traction.

Very interesting.

One of the interesting things about applying the data that I keep running into in our client base and in some of our fintech work is oftentimes the really good data nuggets you need aren’t really in the servicing system anyway.

You’re looking at origination systems, underwriting systems and payments networks.

A lot of the data sources aren’t really in the core yet.

You need to see them in almost, maybe not real time, let’s not get that fancy, but closer to it so you can actually influence a buying decision.

It sort of gets to this digital-marketing point.

Cinzia, you mentioned bringing on a lot more talent around data.

I’m thinking also one of the things we’re hearing a lot of clients talk about is bringing on marketing talent.

Not just around the delivery side of it.

Do I have a content-management expert?

Do I have somebody who knows how the CRM and campaign-management systems work?

But also someone who can coordinate content within the bank or fintech.

It’s one thing to be able to reach people effectively using tools.

You also have to have something to say that’s hopefully helpful to them.

That’s something we’ve taken for granted.

You mentioned the branch, Daniel.

It’s like we’ve spackled over all these seams in the experience by pouring people at it at the point of sale.

Now we have a digital point of sale where you can’t just pour somebody on top of it to spackle it.

You have to have a well-thought-out, orchestrated thing.

It strikes me, and I don’t know if you guys are seeing this in your own shops, that’s hard work.

There’s a lot of work involved in that.

It’s not necessarily familiar work to a lot of banks.

Maybe fintechs are a little more familiar with it.

Daniel, I see you nodding your head.

Any thoughts on that?

Yeah, I agree.

It’s really interesting.

We get into the data discussion, and it makes me think of places I’ve been in the past where you have that triad of power inside an institution.

You have the marketing group that says, “We own the brand. We own the discussions with the customers.”

You have the IT group, technical group or engineers who say, “We’re the ones delivering this. We know what you need.”

Then you have the business that says, “Whoa, we’re paying for this.”

Oftentimes in these organizations, these sorts of initiatives get trapped in figuring out who’s ultimately going to make the decisions.

You need some unifying force that brings all three of these together because you need that unified message.

You need to be able to operationalize it through the business, and you need to be able to execute on it through the technical group.

I see banks struggling with that at times.

Those that I’ve seen be most successful have strong top-down leadership, where you then get a culture of, “This is how we communicate with our customers.”

This is just a toolset that allows us to be more effective and treat our customers more uniquely.

Cinzia, with your combined role around brand and innovation, I thought that was a really interesting combination.

I’m not assuming that was because you were purposely trying to make sure things like that don’t get trapped, like what Daniel’s talking about.

But what has been your experience around bringing data together for better marketing?

You also mentioned the top-down piece.

You seem like a really strong internal and external advocate for what ConnectOne is doing and what you’re trying to do with your fintech group.

Any thoughts on that?

I’ll start with the role.

I have an awesome management team who was forward-thinking and willing to say innovation doesn’t have to be a back-office function.

It was important to our CEO, Frank, to align innovation with the brand because I was one of the few places in the company that sat at the intersection of inputs from our clients, our employees, because a lot of the work we do is for our employees to deliver a better client experience, our shareholders and investors, and then the broader fintech and banking community.

I had a pulse on trends.

I knew I had a pulse on our client base.

While I wasn’t in a frontline role, I sat at the intersection of all these inputs.

It seemed like a natural place to put innovation.

To what you were talking about, Daniel, I want to twitch a little bit because it’s hard to sit at the center.

When you’re running a project, you’re the central input point from all of those parties.

I work really hard to be the glue that keeps the projects moving along and keeps everyone moving toward a finish line.

It’s been interesting.

It’s been unique in the industry.

It’s been exciting for me.

The flip side of that is, yes, a lot of these projects are dependent on data.

You talked a little bit about BoeFly.

BoeFly is a fintech that we bought that’s a subsidiary.

They have their own CEO.

They have their own CTO.

We don’t want to ruin them.

But we do share some resources, administrative, accounting functions and, to some extent, marketing.

They’re an end-to-end digital platform that focuses on the franchise space.

What I like to say is they fill the void between the franchisee and the franchisor, which is the brand.

One takeaway is they own all of their infrastructure.

They built their own workflows.

They have access to their own data.

They’ve built their data infrastructure, so they can do anything.

We’re learning a lot about what’s possible from them, from the way they work to the way they can stand up their next product.

Just because we’re learning doesn’t mean we can quite do it in the same way.

On the flip side, we’re working on building our own data lake.

There are lessons we’re learning from BoeFly that we can build in, and there are also lessons BoeFly gets to learn from us.

It’s been a cool experience.

Similar to you, Sam, I get to wear two different hats.

I get to be the ConnectOne banker, but then I get to wear a little bit of this fintech hat where, I don’t want to say you can do more, but you get to do things differently.

And probably quicker.

One hundred percent quicker.

Cinzia, you mentioned Frank, and I just wanted to call out a really great moment that happened at AOBA.

During the panel, he got up on stage to tell men to go to the women’s reception events.

I just thought, wow, this is such a sincere moment.

I loved it.

I was really proud of him in that moment.

As you know, there was a women’s luncheon at the conference, Women in Banking, which was awesome.

It was a room full of women.

But he made a really important point that conversation needs to happen on the main stage.

I’m really happy Michelle made that happen.

It was impromptu.

It wasn’t planned.

That was kind of awesome.

That’s what made it so sincere.

I remember at American Banker, I edited op-eds and we did a series on women in banking, but it was always, you need men to write on the subject too.

Otherwise progress isn’t made.

That was a cool moment.

Yes, it was.

I think it points to another thing that jumps out at me.

You think we’re going to have a discussion about fintech, so this is going to be about standing up products and connecting databases and things like that.

Of course, those are topics we talk about.

But I’m surprised how much, in our fintech advisory work, culture and org-chart stuff comes up.

It gets down to this whole thing that you mentioned, Cinzia.

I use the term ownership.

Making sure you don’t just think about the culture of the organization, but of multiple organizations.

You don’t run roughshod over an organization or a group of leaders, whether that’s strong women in the organization or a group of people that have the pride of authorship of having created a company together when they come in as a subsidiary.

Figuring that out matters.

Daniel, one of my takeaways from something you mentioned was things getting trapped.

We have to figure out a way not to overburden people with big-government projects, but we also cannot trap stuff.

Trapping stuff is something I remember from my early days coming into this industry when digital banking was a new thing and I was a chief digital officer.

There were constantly things getting trapped.

Another topic I’d love to get your perspectives on is this whole embedded topic.

It seems like we’re still working on what Mary and Ron lay out as the embedded-finance path, where you sort of go through the brands, or there’s the embedded-fintech route, kind of a fork in the road where you’re putting together solutions and bringing them to the bank as opposed to embedding the bank into a brand.

I’d love your perspectives, Daniel and Cinzia, on the split of embedded finance versus embedded fintech.

Daniel, start with you this time.

If I think of embedded fintech as a digital-banking provider, we’ve got 200-plus third-party integrations.

This is what we’ve done since the beginning.

It’s great.

We need to continue to make it easier and easier for us to integrate third parties and for third parties to integrate directly to us.

That’s kind of digital-banking platform 101.

We need to continue to invest and make that as easy as possible to move as quickly as possible.

I think the entirely new paradigm is particularly on the deposit side of the house.

Taking that experience and those digital-banking capabilities, the ability to originate a new account, to see my accounts, make payments, make transfers and derive those insights, the salient insights we talked about with data.

Instead of forcing customers or members to log into your digital-banking site, to come to your bank to see those, go out and find them where they are.

You have small-business customers.

They’re using a practice-management solution.

You have a student base.

You’re in a college.

They’re using the university bursar for some reason.

There are these communities defined not by geography, but instead by some common shared problem that have pulled up digitally.

We can then take banking and expose it directly inside those applications.

As bankers, we always think we’re super important.

Everything we do is mission-critical and everyone cares about their banking experience.

The reality is, you’re a small-business owner.

You care about time.

You care about running your business.

You want to make things as easy as possible.

Embedded banking is the ability to fundamentally change how a bank can grow and expose itself out to customers, both existing customers and prospects.

We think we’re in the very early stages of it, but we’re really excited about the direction it’s headed.

I agree.

I love the idea of embedded finance, and I don’t know that there’s one direction that’s better than the other.

I don’t know that embedded banking wins or embedded fintech wins.

I think it comes down to two things.

The use case, because that will determine whether the bank should plug into the fintech or vice versa.

Then I also think it will come down to who is the bigger platform.

If I have an opportunity to partner with a big tech company, am I going to say, “You’ve got to plug it into ConnectOne,” or am I going to figure out how to get ConnectOne to show up in their environment?

I think the business case ultimately determines that.

We’ll see more of that shake out, the hiccups and the opportunities that are developed with both.

I’m excited about it.

I would create a distinction that I think is important for us.

In the banking-as-a-service world, that third-party application then owns the brand.

I think I’m banking with someone like Chime, but I’m actually banking with the bank behind Chime.

With embedded banking, you can maintain where the bank is still the brand.

It’s like having a branch inside of that application.

To me, it’s the mix of both worlds.

But to your point, I actually don’t think one’s going to win over the other.

You need both.

You still want people to come to the digital-banking site.

You still want them to come to your front door.

But those functions that are the quick hits or where I’m going to start a relationship, you may be able to do that through channels you’ve never been able to in the past.

Yeah, and reach new audiences.

Mary, any thoughts on this?

What Cinzia was saying, it definitely depends on what you’re doing.

What problem are you solving?

I immediately think of something like Steady, which is a neobank targeting formerly incarcerated people.

They pull in job leads to help people because they need income before the bank account.

I think about things like that.

I’m someone who does freelance work.

Something that’s been useful to me is, I hate chasing checks.

Nothing could be worse.

Well, so many things could be worse, but it’s one of the nightmares in terms of finances.

I love an embedded bank-account experience where they’re spitting out the invoice.

Then I’m not like, “Hey, Sam, where’s my money?” every five minutes.

I don’t know, Mary.

Where is it?

I wanted to bring up something when you were talking about content.

Something I’ve noticed, and I guess it’s been going on for a little bit, especially with Robinhood, is short-form content.

I’m going to Fintech Meetup and there’s a panel about neobanks.

I think it was MoneyLion, but I’m noticing, and I’m seeing this at banks too, where they’re doing short-form content and it’s in the app.

It’s engaging your customers in this way.

I think that’s such an interesting newer wrinkle that will inevitably affect banking, which will add a whole host of problems.

To your point about technology being older, how do you get the language to work on an old bank system?

I’m curious about anyone’s thoughts on short-form video to engage a digital-banking customer, either small business or consumer.

I love it.

I’m working hard to figure out a strategy, and it’s not really the strategy, just the tactical side.

Who’s going to do it?

Who’s the editor?

Who’s the Bailey?

I think there’s something to it.

I’m a big fan of MoneyLion.

I think their brand’s approach is so interesting.

You sort of know what they’re about.

They actually acquired a content company, Malka Media, a couple years ago.

I thought that was an interesting play.

I think short-form video is very interesting to all of us.

I don’t know that it’s just for digital companies.

I think all of our attention spans are slowly shrinking because we’re bombarded with content.

I think it’s an interesting play for any company.

What MoneyLion has done really well is they’ve found a delivery channel that forces their audience to really pay attention to the message.

You can have great content, but then how do you get it to stand out and get the eyeballs on it?

There’s a lot of work for me to do there, but it’s exciting.

What about you, Daniel?

Any thoughts on short-form video?

I don’t mean to make this a commercial, but just from personal experience, one of the most successful product launches we’ve had is something called Data Engage.

It gave our customers, who are banks or credit unions, the ability to inject either text or video into the UI to a certain segment of their customers.

Think of the first time I’ve ever logged into online banking.

I log in, and we have banks where their CEO has recorded some 30-second welcome video.

“Thank you so much for banking with us.”

It doesn’t require technical resources.

It doesn’t require a project.

They can upload that and decide who sees it and what that looks like.

Those quick hits of contextually rich, meaning relevant to me in this particular moment, videos have been super popular and very engaging.

I think we see that just across society in general.

Look at what we’re doing right now.

This is engagement.

To that end, I would say real quickly, because I know we need to be mindful of your time, that it seems like even what you might call long-form video, whether it’s webinars or whatever, has changed.

I’ve seen folks like established banks, even PNC, do some really focused pseudo-webinar-type work in the commercial and treasury space.

It’s really interesting how they’re using that.

I think what’s happening is some of what used to be long-form video, and we didn’t have a word for that to my knowledge, just keeps getting shorter anyway.

If you were doing a 60-minute webinar before, there’s a better than decent chance you’ve got it down to 30 minutes now, and it’s probably headed toward 15 because of our ADHD-level attention spans.

Anyway, really interesting conversation.

Like I said, I want to be mindful of your time because I know we’re at time here and you may have other meetings going on.

I just want to take a second and say thank you, Cinzia.

Thank you, Daniel.

Thank you, Mary, for joining Fintech Hustle today.

I love this chat.

We’re going to be out at the Association for Financial Technology Conference in Tampa, Finovate in San Francisco.

Mary, you’ve mentioned you’re going to be at Fintech Meetup coming up, and I think you’re at a couple other events.

We’ll be at FinXTech coming up in Tampa as well.

So, in the halls of fintech, Fintech Hustle.

Good to be with you today.

Thanks again, Cinzia, Daniel and Mary, and have an excellent year.

Thanks, Sam.

Thanks, Sam.