Fintech Hustle // Tara Schultz and Mike Triggiano

Well, hello out there. This is Sam Kilmer, your host of Fintech Hustle. Good to be with you today.

I’m really, really happy to have a great crew again. We’re re-recording. Our demo tape didn’t work out as planned in the studio, so we’re redoing this.

For this episode of Fintech Hustle, I’m joined by my co-host, and I believe you were referred to as El Instigator, Ron Shevlin, our chief research officer at Cornerstone Advisors.

I’m also joined by two great guests from the halls of fintech: Tara Schultz, chief strategy officer at CSI, and Mike Triano, executive vice president at Velocity Solutions.

Good to see you guys.

Great to see you, Sam.

Good to see you, Ron. Tara, thanks for having us back. I guess we didn’t screw it up too badly the first time.

Every now and then, you have a few little snags like that.

I should also point out, for those of you out there in fintech land who don’t know Tara and Mike, in addition to being leaders at their firms, Tara’s background also includes being a banker. Mike, prior to being a leader at Velocity Solutions, was a tech founder and CTO and comes from the tech side.

So we have some nice backgrounds here to get perspectives on the industry.

Thank you. I grew up around community banks. My dad was the CEO of a bank, and then I worked at Wells Fargo before jumping into the land of CSI.

I obviously have a deep passion for everything community banks do for their communities and the businesses they serve, so I’m happy to be here.

Good to have you guys.

I should point out that somewhere in here, we probably need to show some pictures of our prior engagement, where we got together and had some audio difficulties.

In our defense, or maybe in my defense, it was the first time we’d set up that nice technology rig.

As we all know from the industry, the alpha release doesn’t always work out the way you planned.

So I appreciate your patience and flexibility in getting back together with us.

I don’t know, Sam. In our world, the alpha release has to work too, so you might need to work on that a little bit.

But I think doing these in person at the different events is a phenomenal way to do it. Trying to get that figured out would be huge.

Yep. Well, we’re working on it.

Let’s talk about where we were.

We were at the Association for Financial Technology, AFT, conference in Tampa. Spirits were high. We were being harassed in the hallway by people going to and from the elevator, as I recall, Tara.

We were like, “Hey, you don’t have to harass us that much. Could you just take our picture?”

It was a fun grouping.

To get started here, and Ron, I know you were a speaker at AFT as well, I’d love to get all of your perspectives coming out of that event.

What were some takeaways that really popped out to you as big topics that people listening to the podcast might appreciate knowing more about?

Tara, do you want to go first?

Yeah, happy to.

I love that event, first of all. It’s very different from any other event I attend throughout the year.

Obviously, it’s our time to get in a room with both competitors and other fintechs that we partner with or are looking to partner with.

If we’re competing with them, we put our swords down and help each other be better.

I think that’s the whole theme of that entire event: better together.

As a core solution provider that has that holistic stack, we’re still looking for more fintechs to bring a better experience to the consumers and small businesses we serve through community banks and financial institutions.

I think that’s the biggest thing for me.

Whether that means fintechs focusing more on the data they can dive deeper on and give to us or give to the banks, helping financial institutions launch solutions in a better way, get to market faster or be more successful in helping the end customer and small business, I think that’s the entire theme of the event.

Again, it’s about putting your guard down and sharing what you’ve gone through, the challenges you’ve had, things you’ve tried and what’s been successful.

We’re all in this for the same purpose, and it’s to keep those banks relevant.

That’s what that event is all about.

Good stuff.

What about you, Mike? Anything you took away from the event?

Tara is exactly right.

It is a phenomenal event for all of us in fintech who provide solutions to banks and credit unions to get together and really figure out how to leverage technology as an enabler.

It’s all for the same purpose, which is making community banks and credit unions as relevant as they can be against the megabanks that have millions and millions of dollars in IT and R&D budgets to build whatever they want to build.

So it’s phenomenal.

For me, one of the things that stood out, and I think we all know it exists, was hearing people speak about the concept of going down stack and really addressing some of the core issues we have that each of us as a vendor is dealing with.

That was one of my takeaways.

Well, it sounds like the guys in the engine room behind you are going down stack as we speak, Mike.

I don’t know if you’re picking up on that, but Ron, I’ll let you jump in while the engineers are knocking out the stack over there at Mike’s place.

Oh, is that what that was?

I thought Mike just couldn’t keep his kids under control and they were just playing.

It was like, “Dude, tell your kids to man up here a little bit. Tell them your dad’s working and you’ve got to be quiet for 10 minutes.”

Big difference.

Here’s how I take it.

I hope this is an okay analogy.

After 9/11, I remember the first time Saturday Night Live came back on the air and they had Rudy Giuliani on.

They said, “Hey, is it okay to be funny again?”

And Rudy Giuliani said, “Have you ever been funny?”

I felt like there was sort of this mood in the hall that was, “Hey, we’re kind of going through this crisis. Is it okay to still think about the future and investment?”

The answer is absolutely yes.

You’ve got to face the headwinds, but you’ve also got to ride the tailwinds.

I think the mood at the conference was, look, we have to keep our clients focused on the long term.

They’re going to get through the short term.

We’ve got to help them do it.

But we still have to keep our foot on the gas pedal for future investment in technology.

A couple of things jumped out at me.

I was thinking of Frank Martire’s session, where he was being interviewed by Kera Parkey, and just talking about whether it’s a small bank, medium-sized bank or large bank, going above and beyond to take care of them and not signing someone if you don’t want to take care of them.

It sounds so simple, right?

Don’t sign somebody if you don’t want to take care of them.

But I thought the candor offered there was great.

A couple other things jumped out at me.

Stephen Bohanon from Alkami had a session where, in addition to best practices, he shared a couple of lessons learned.

I think he even had a letter from like 10 years ago when the first client ever gut-punched them and told them, “We’re not going to deploy your solution now because you’ve gotten ahead of yourself a little bit in terms of your ability to get things done the way this bank or credit union wanted to do it.”

What I loved about it was people letting their guard down a little bit.

To your point, it’s okay to be candid.

It’s okay to talk about our weaknesses and share where we can do a little bit better.

I was also given a bit of a boost because Neil Stanley, who’s somebody who’s been telling me for the last four or five years that these banks have got to be thinking about all their deposits and analyzing their deposit portfolios and franchises, didn’t tell me, “I told you so.”

I was kind of thinking maybe he would corner me by the elevator and say, “Sam, I told you so.”

So that was good.

I just loved the spirit of people sharing strengths and weaknesses.

Your point about the down-stack piece, I think that was Ben Metz’s mic that talked about it.

Good stuff.

I know, Ron, you had a session around bridges, which I thought got into building a bridge.

I think the whole story there was around integration and partnerships.

It seemed like a lot of the sidebar chats and breakouts were getting into the how-tos of integration and how to get it done, which I thought was a productive conversation.

Yeah.

I was trying to introduce the notion that there’s a new competitive factor you’ve got to work into your pitch and into dealing with new clients.

Features and functionality are always important.

Price is always important.

The user experience is always important.

Over the past couple years, there’s really been a focus on support and service and that kind of thing.

But if you look from a financial institution’s perspective at where their biggest weaknesses are, it’s generally at the points of connection.

Whether the points of connection are internal systems, cross-functional processes or, increasingly, external organizations.

I was trying to get the folks at AFT to realize this is what’s going to make or break you in the next couple of years.

How good are you at helping your clients enable those connections, especially externally, and helping them create those connections and ecosystems?

I was using A Bridge Too Far, the 1977 movie with Sean Connery, where it was about Operation Market Garden in World War II, where they couldn’t hold that last bridge and it was a bridge too far.

My point was, when it comes to your banking and credit union clients, there is no bridge too far.

You’ve got to do them all.

I think the interesting thing there is everything you’re talking about leads to what we’ll see this year too.

I think this year will expose quite a bit of legitimate business models, but also more consolidation.

We’ll see more of those fintechs in that room doing the one-plus-one-equals-three.

The fintechs trying to solve this tiny little area of a bank’s problem are pairing with others to create more of a push toward deposit engagement, retention and all of that.

A good example from AFT is Digital Onboarding grabbing Atomic to pair it together so the bank doesn’t have to select two partnerships.

They’re bringing a package together to create better engagement after the onboarding of the accounts.

The more we see fintechs pushing with better data and better partners to create that stack solution, it helps us.

It helps the banks, and it helps create better experiences at the end of the day.

So I think that bridge-too-far concept and everything you talked about there is a push toward what we’ll see this year as well.

Exactly right.

The connections are a big part of it, but it’s about creating a frictionless experience for consumers, whether it’s a retail consumer or a commercial consumer.

That whole experience has to be frictionless.

It can’t feel like it starts one place, stops and they have to go somewhere else.

That’s why this is so important.

Otherwise, we’re going to lose the consumer.

We’re going to lose them somewhere else.

It’s funny how AFT has changed in that respect.

Ten years ago, when we joined, there were some really heated conversations around integrations and allowing third parties in.

It’s not the same today.

I think it’s phenomenal that we’re all rowing in the same direction.

We’re all trying to figure it out.

It’s difficult, but everybody’s working together and really trying to figure it out.

Some are doing better than others, but it’s really about creating that frictionless value proposition for the consumer.

That’s what’s going to keep them with their bank or credit union and help with retention.

It’s interesting to me because I’m seeing a lot more midsize banks that historically may not have had deep integration expertise or developers, or anybody like that inside their own world.

They tended, Tara, to lean on folks like you or whoever to get it done.

A couple things I really like seeing.

One is that you have people working at a lot of these companies where this is not their first hayride.

I’m thinking, Mike, of people like Ted Brown over at Digital Onboarding.

It’s like he’s been down this path before.

A lot of these folks have.

That’s one element.

I see some of the banks hiring up on talent.

Historically, they may have let somebody else do it, but now they realize, “I need to own some of this, or at least be knowledgeable about where these things are buried in our organization, how the tables join and how things work together.”

I think the other thing, and Tara, you and I may have talked about this, but I’d love to get your and Mike’s perspectives on it, is the rise of these specialty companies.

Yes, you’ve always had systems integrators.

You could go out to a big-six firm and pay tons of money to have somebody come in with a hundred people and put them in cubes.

That’s always been an option, but it’s extremely cost-prohibitive for a lot of banks.

Yet you’ve got these specialty companies that build up connectors in the middle.

They’re not necessarily ready to pull right off the shelf, but they can help ease that process a little bit.

Tara, I think you had some thoughts on this when we were doing our demo recording.

Anything else you want to add?

We didn’t know it was a demo recording.

No, we didn’t.

Yes, I do.

The whole middleware space is pretty saturated.

I think we’ll see a lot happen this year in the way of the whole BaaS stack, middleware stack and so on.

You have banks that are ready to take on program management for BaaS, and you don’t necessarily need that.

You have banks that are wanting to accelerate more fintech integrations, but they don’t necessarily have the staff to manage those integrations.

You have companies like Lee’s company with Core10.

I think it’s a phenomenal company.

They have a great onboarding solution as well.

I think there’s a place for that.

The whole area of middleware and BaaS gets a little messy on program ownership, compliance and all the attention that space is getting.

So just be really clear about what you own and what you don’t.

But if you can’t build out fintech integration support and program management, look at a Core10 that can manage that for you and help you do the direct integration, for example.

Good stuff.

Mike, any thoughts on that?

Yeah.

It’s one of the areas in which we try to leverage our own technology to other third parties.

We’ve been implementing fintech solutions into the cores for over 20 years, and as a result have built some really good APIs into all the different cores.

We have a large data set.

That helps all these third-party fintechs provide their solutions without having to recreate the wheel.

We can simply license the APIs to our Velocity Intelligent Platform, and it allows folks like Digital Onboarding, WalletFi and a bunch of others to just plug it in and go.

They don’t have to do any implementation.

That’s the beauty of where we’re heading with the new technology stacks.

When we struck a deal with Hawthorn River, they were up and going in less than a week on all coding done by them.

Then we are ready to push to all banks that are ready to switch their commercial and origination system with digital application.

That’s the beauty of the technology, really leveraging the fintechs that can connect into the newer systems and architecture.

We can’t build everything.

We won’t build everything, and we don’t want to.

It’s important, though, to distinguish between the one-time integration effort and the ongoing integration effort because the one-time thing is the old model.

Yeah, we’re going to deploy a particular system.

We need to make the connections.

You bring somebody in, and maybe it’s that big systems integrator or maybe it’s someone specialized.

But the new business model for financial institutions is constant third-party partners.

You can’t go negotiate a contract every time you need a new integration.

It’s got to be a competency, a capability, an ongoing thing.

I don’t know that you build that just once.

You’ve got to continue to recognize that the bank is going to say, “We’ve got five new partners this month, and we’ve got to bring them all in somehow.”

You can’t then just sit down and negotiate another contract with another vendor to figure out how that gets done.

That’s exactly right, Ron.

As fast as the cores are rolling out updates, and as the other fintechs are as well, if you’re going to provide that kind of integration, it’s ongoing development, maintenance and support.

I think the other thing, looking at it from inside and outside the industry, is that historically, and I came from the fintech bank-tech space, providers looked at integration work as lower-margin, hard work compared to intellectual property or products.

There was this notion of, “We’ll just let the banks do it themselves,” or let some third party that really wants to focus on hard, lower-margin work do it.

As it turns out, it’s such high-value work and such a success factor that what I think is really interesting is you sort of have this thing going on where some people are like, “Let them eat cake. Let them go figure it out.”

Then you’ve got people saying, “No, no, no. They’re going to choke on the cake. We either have to do this or have partnerships.”

Tara, you mentioned Core10.

We’re seeing investment going into others out there like Candescent and NXTsoft.

There just seems to be a stable of providers that aren’t really about the product, but about welding things together, whether it’s helping companies like yours or helping the banks directly.

What I think is going to be really interesting is to see whether it’s the core providers or digital-banking providers.

Ron, you and I may have been talking about this.

Tara, you guys do both of those things, but it seems like digital banking is becoming one of the new loan-integration battlegrounds, where friction matters more than whether it connects to the core, which has historically been perhaps the main pipeline of the integration conversation.

I don’t know if you guys have any perspectives on that.

I think you’re spot on with the rise of embedded fintech.

When we look at it from a strategic-partner standpoint, we still have a benefit to choosing the solution that meets the best criteria for the market that we serve.

If you look at a chat-video solution, we could easily embed a custom menu, quick link or anything like that today from a vendor that a bank selects.

But we can look at that partner and really embed it throughout the entire stack, throughout the entire customer journey.

That’s what we’ve chosen to do with the flexibility on the back end.

We take it to the website we host.

We take it through the onboarding journey.

We want to make sure that no matter where they hit that moment in need, that customer is served via chat, video and then digital banking too.

No matter where that friction point is, you need to be there for them.

I think it’s an evolution of the embedded-fintech journey and really taking it down to the customers and small businesses for them to select what they want.

I think that whole embedded path, for example, Autobooks not letting the bank choose exactly who needs that payable solution, but pushing it to or letting them select that payable solution, matters.

Otherwise, they’re out there selecting eight different payable solutions and feeding right into the financial fragmentation that Ron speaks about on every stage he’s out speaking on today.

I think that journey is an evolution, but it’s one we all need to solve for.

Tara, let me push back a little on that concept because it sounds like the right thing to do, but it’s like if you wanted to sell your books on Amazon.

You’re going to get lost on Amazon.

Sure, the customer can choose, but how do you use the platform to get in front of the customer?

That’s the hard part.

Autobooks can load up its service in hundreds of different financial institutions’ platforms, but if the businesses doing business with that bank don’t know that the service is there, there needs to be some push.

It can’t all be pull.

There’s got to be some mechanism by which the bank recognizes that there are a set of customers who should have this and says, “Look here. Here’s what’s there.”

I don’t think it can all be pull like that, but it is a better model than the one-off negotiating thing that has always happened in the past when it comes to partnerships.

Yeah.

You hit on two really good points and something I brought up on stage last week at AFT.

It’s getting that data to showcase to the banks why they should really be looking at this for the small businesses or customers they serve.

They’ve done a nice job of that.

But it’s also taking it one step further, and this goes to every fintech solution out there.

How are you educating better on what you provide to consumers and small businesses?

A good example of that is LemonadeLXP, John Findlay’s platform, that creates more engagement and education in a virtual manner.

I think the best application I’ve seen of that is Neural Payments and how they utilize the virtual-education piece of why they should make that a part of the platform.

Again, you can’t leave that to one party.

You know the problem you’re solving.

You know the market you’re after.

Grab the education platform and place that into the journey to push further adoption.

We’ve got to figure out how to personalize it for users and consumers.

That’s how we get adoption.

That’s how we’re able to educate.

If we’re not personalizing it through very direct correspondence, whether it’s an email, text or other communication, we’re not going to attract people to utilize our services.

That’s still an area we’re not good at in this industry.

That’s why it’s so important to have a really good account-engagement platform that can help drive that, where you can leverage the data to find out how to personalize these messages and then track the personalization so you can see how your conversions are going.

I think it’s a good point.

I like your examples of Derek at Autobooks and John at Lemonade because one thing both of those guys have in common is they’re really good at content.

They’re really good at putting together a storyline and getting content out there to help people understand it, whether it’s a 30-second ADHD-type scenario or whether it’s, I know Derek has been big on hosting seminars to take people all the way through so they can easily transfer that knowledge to the business client in their client base.

We have focused a lot on distribution for all the right reasons.

But I think one of the things those two are really good at is developing and distributing content to make people aware of something they could be doing better, a way they can help themselves or that you can help them.

You’re right, Mike.

We have not done a particularly good job of that in the industry.

Ron, any other perspectives on that before we move on?

I would shout out to Mike and Velocity Solutions as well.

I think both them and Autobooks do a good job, from a content perspective, of focusing on the business opportunity that’s at hand and not, “Hey, we have a solution for you,” or, “Hey, look at me, look at me.”

I think both organizations, and Derek, do a great job of that.

I couldn’t agree more.

When you said feature and functionality, value proposition, that’s what it’s about.

That’s the beauty of the fintechs that are solving those very specific problems versus the holistic approach.

You have Velocity.

They have a job to be done and they focus on that.

They don’t try to eat the whole sandwich at once.

Same with Autobooks.

They’re very focused on that job to be done.

Oftentimes, they can help the banks focus more on the SMBs a lot better than the banks can do traditionally or naturally.

I think it’s all about fine-tuning the market that you’re after.

And Ron, I think I read something earlier this week about knowing your market.

You said USAA knows their market.

Their bullseye is deployed service members.

That is their bullseye.

By nature, they’re serving retired members and family members outside of that.

But they’re very focused on what they want to achieve and the journey they need to go on to serve that particular focused market.

They’re not trying to serve everybody.

Then the rest comes with it.

I think that’s no different on the fintech side.

Yeah.

It’s important to think about that too because they were the ones that pioneered mobile deposit.

Why?

Because their members could not get anywhere close to a physical branch to do it.

Who’s using mobile deposit these days?

Everybody.

Not just people who can’t get to a branch.

People don’t want to go because they don’t have to anymore.

So it’s key to recognize that you may design your operations, products and processes for the center of the bullseye, but it tends to provide plenty of support and fill the needs of a lot of folks in the outer rings of the bullseye.

Interesting.

If nothing else, a couple takeaways I had here are, to your point about necessity being the mother of invention, follow the people who really need it the most.

But everybody needs integration.

Pretty much everybody needs content.

Everybody needs a way to originate new clients.

Some of these things are almost universal.

It’s just that some people, if they don’t have those things, are out of business.

Capital One, right?

If they’re not any good at data, they’re out of business because if you want to be a good credit-card lender, you’ve got to be good at data.

Certain people have to be better at it than others, but I love the way this is transferring into other areas.

I know you guys have a lot going on.

Before I let you go, any other closing thoughts on things you’re hearing from the industry or things you think we should talk about before we let you go on about the rest of your afternoons?

Mike, anything else before we let you get back to the naval-shipyard building exercise going in there with the kids?

I want to thank everybody for allowing me to participate in this.

It’s been a lot of fun, and it’s always a pleasure working with you, Sam and Ron.

Tara, I enjoyed both of our podcasts, even though the public will only see one of them.

A lot of fun.

We’ll figure out how to do this in person.

Yeah, absolutely.

Tara?

Yeah, thanks for having us.

I can assure everyone that our first try was way better, but you won’t know.

Maybe we’ll figure out a way to mash the two up into some kind of hip-hop thing.

I don’t know.

I love it.

I’m a huge hip-hop mashup fan, so I love it.

You’re a hip-hop mashup expert.

Love that.

Ron, anything else?

Oh yeah, there’s like a million things we can talk about, but that’s it.

We talked about the one thing.

A million things.

We’ll let it go.

We’ll bring it up on the next one.

We’ll get these guys back and do part three at some point here.

All right.

Thanks, everybody, for joining us on this episode of Fintech Hustle.

In the hall on the first version, kind of, sort of in the hall on this one.

Good to be with you.

Have a great quarter, semester, year.

We’ll see you soon.

See you all soon.

Thanks.