Exploring Fintech Trends at AFT Conference // Alex McLeod, Ben Metz & Will Bryant

Well, hello out there. This is Sam Kilmer, Cornerstone Advisors, your host of the Fintech Hustle podcast, and we are on the road and in the hall, mostly in the hall, on the pool deck here at the Loews Coral Gables in Miami, Florida, at the AFT Spring Summit.

Sorry, I need to get my branding protocols all straightened out here.

I am joined by a rock-star lineup.

I’ve got a CEO.

I’ve got a CDO/CTO combination.

And I’ve got a COO.

So the C-suite is covered here in our session today.

Let me introduce our guests.

For starters, Alex McLeod.

Yes.

Thank you, McLeod.

CEO of Parlay Finance.

We have Ben Metz, not Merz, I heard earlier, but Ben Metz.

Who was it that Sam Moul said that, right?

Yeah.

Ben Metz, the CTO/CDO of Jack Henry.

And Will Bryant, who is the COO of Quontic.

Welcome, guys.

By the way, I should also point out, Will is also on the board of directors of AFT.

I think Ben is also potentially a music producer of some sort?

Own a recording studio.

I’m sorry, he owns a recording studio.

We can get into the semantics of that later, the differences.

And Alex is also a musician.

She is in the band, if I’m not mistaken.

This is the Entrepreneurs with a D, so just nerd alert in effect right now.

So that’s pretty cool.

It’s great to be here.

The weather in Miami is just pretty ideal.

If you’ve ever spent a lot of time in Florida during the rain and during the crazy humidity and heat, this is actually probably the best we’ve had.

It’s been a fantastic event.

But I want to ask our guests to tell us just a little bit about a day in the life.

Alex, what does that look like?

Gosh.

Okay.

Well, a day in the life of Alex.

One, getting to hang with you guys, this is pretty much the best day ever.

As CEO, everything from big-picture strategy to super tactical in the details and everything in between.

Try to get to as many customers as possible and hear what they care about and how we can help them with their pain points.

Fall on my face 10 to 15 times a day, get back up, drink a bunch of coffee, and go back to work.

That’s pretty much it for me.

How about you?

I spend maybe 20% or 30% of my time in Cedar Falls.

So when I’m in the office, I’m working with designers, engineers and product teams.

I’m building new software.

The rest of the time, I’m on the road a lot meeting with customers.

So I probably meet with two to three customers a week.

That’s the day in my life.

Yeah, we’re still kind of a newer company, so the question I constantly ask myself is simply, how do I make this work?

Then making sure what “this” is, being able to define what this is, because that changes over time.

So just making it work.

Simple as that.

Well, great stuff.

I don’t know if you guys would agree, and this is permission to speak freely, but I think this has been another great AFT conference.

I mean, it’s been great sessions.

Alex, you’ve got a session here.

Ben, I was in your panel earlier.

I just think it’s been fantastic.

But I would love to get your perspective on any, you know what they say, two data points don’t make a pattern, but maybe three or four do.

If you think about things that you’ve been hearing, hallway chatter, scuttlebutt, but also in the sessions, what are some of the things that have been capturing your attention over the last day or so?

Other than the fantastic food and drink and everything here.

Any topics or anything that you’ve been hearing in the hallway that stands out?

Feel free to jump in, whoever’s interested.

Sorry to put you on the spot, but that’s kind of how we roll in this.

Oh, by the way, you’ve got to keep the branding point.

It’s kind of a thing.

Anybody?

Well, this is an obvious one.

I’ll go ahead and get it out of the way just to clean the air.

AI, of course.

People talk about it.

But Ben, I think you guys did a good job talking about how the precursor is with the data, really.

That’s something everybody still loves talking about, still is figuring out.

I think the conversation is evolving forward slowly but steadily.

So that’s the first and most obvious one.

I think you had something?

Well, I just got here last night, so my experience is just this morning.

The sample size is small, but I couldn’t get out of the hallway without having probably four or five AI discussions.

Then the other big one, just because I’m on the leadership team of Jack Henry, is just like, how do we work more with Jack Henry and what do we do here?

So those would be the conversations.

I’m here for both.

Cool.

I would definitely add AI is the flavor.

What I really like about what’s happening right now, though, is that we’ve gone from conceptual hype, big-picture AI, to, okay, great, now we’ve gotten past the hype.

Let’s actually talk about what we can do together.

I love your point about, okay, cool, before we actually achieve this thing, you need the data to power the models that you want to put in place.

We did a session a little bit on that too.

How do we roll this back to the problem and then figure out what solution that employs AI would actually be good at fixing that problem?

I think there’s been a return to a bit more pragmatic, okay, great, now let’s get into it and figure out how to do this for real.

I think the other thing that I’ve loved is the curiosity that people have at this conference as to how they might be able to collaborate or learn from each other.

It’s not transactional at all.

I’m sure that’s why people are so excited to talk with you guys, to explore ways to collaborate.

There’s just a lot there that’s cool.

I don’t know what you do.

Tell me.

Okay, I thought you might be a competitor, but you’re not.

Great.

Let’s find a way to do something together.

I just love that.

That’s unique.

Yeah.

One of the things I’ve always loved about this particular tribe is how people just sort of jump into conversations and go past, pardon the language, the normal sheen layer, and they go straight into, “Now, how is it that you connected the Q2 widget to the app? How did you do that, and why does it have to work that way?”

People sort of skip the whole, “Hey, did your team sign an NDA with our team?” and, “Hey, can we have two prep calls before the actual call so we can talk about what we’re going to talk about?”

That sort of falls by the wayside in AFT in a really interesting way to me.

I agree with you, Will, about your point around the, I think Ben, you made some excellent points around preparing to not only maintain data and store, but to structure data for this future.

I think it was Wade Arnold who used the metaphor of comparing this to the point, was it 2007, 2008, of the mobile design era.

We’re now entering a new design era.

It has more of an impact on the UX and just sort of what expectations will be of people using technology.

So I thought that was kind of interesting.

I thought the day before, kind of juxtaposing the Navy captain’s kind of leadership against Pixar-level creativity.

Let’s face it, there are a lot of people, this is a group of inventors and builders, but a lot of our banker clients, for lots of good reasons, haven’t historically been builders, which is why they’ve leveraged people in the ecosystem.

I just find it really interesting that we’re kind of going down open creative, open design-type discussions as opposed to just talking payments and lending.

We like to talk payments and lending, but it’s great to talk about some of the design stuff.

Any other reactions to anybody else’s stuff before we move on?

Yeah.

I was at AFT 14 years ago as Banno CTO with Wade, and we were building.

So I’ve been on the other side, and now I’m part of the establishment.

Right.

Very much like, I’m now part of the system that was definitely, I would say in quotes, hated when Wade and I were here in the early days.

So I would 100% agree.

I really, and I don’t get to come here all that often just out of being pure busy, but I would just say this morning’s hallway conversations were exactly that.

“Okay, I heard what you said on stage, but then how do you actually build that?”

Then how do we actually work on things together?

I would say too, AFT, just to put a plug in, it is like a really magical place for people to build companies.

It’s a really important, I almost think it’s one of the most important places to be if you’re building in this side of the tech pond, if you will.

Well, good stuff.

I also love the entrepreneurship and the founders here, and also people that have just been on the early-stage companies through the mature, just all different varieties of that together kind of thrown down in a fairly fearless environment.

In the spirit of that, as they say, a good entrepreneur is always focused on solving a problem.

I would love your perspective on what’s a problem or a pain or something broken in this business?

Something that is just screaming for somebody to get their arms around.

I’m sure there’s probably a baker’s dozen of them.

Financial services, and that could be banking, that could be fintech, that could be bank, credit union, fintech.

That’d be the way I would go anyway.

My particular aim, the thing I’m really focused on, is trying to help community financial institutions win.

The critical thing, if we put that in mathematical terms, is non-interest expense divided by revenue is the efficiency ratio for a bank or credit union.

I think that with lots of chatter about AI and lots of things, we’re just going to be maniacally focused on the efficiency gain at the financial institution because right now our customers scale with humans.

It’s not like there’s all this chatter about, “Well, is it going to replace...”

One of the things that is really possible on the horizon that our customers face is the ability to scale and grow.

That efficiency ratio is the thing that can be impacted.

It doesn’t even have to be AI.

So I have a list of things I call “no AI required.”

If you can just build the right feature set in, say, a really boring back-office space of something that you’re working on, that often is one person’s job at the bank or the credit union.

Oh, by the way, they have two other jobs that they do.

I’ve never met one of our customers that doesn’t have us, like, “We have too many people and we don’t know what to do with them.”

Right?

Because they are scaling that efficiency ratio.

I think that efficiency ratio is something fundamental that our customers face for growth.

Software can have a, again, there should be a much longer list of “no AI required” versus AI solutions, for sure.

There needs to be a focus on “no AI required” to affect that efficiency ratio.

Also AI.

Totally.

Add to that.

Agreed on that.

I think across the space, what our software does is we help with the lending side.

How do lenders get more small businesses approved for loans?

You’re totally right that efficiency ratio is top of mind for everyone.

People are wondering, “Okay, well, I can’t hire that many people anymore because the pressure of growing is so high. How can we grow without adding a single person? How can we use who we have and leverage technology to help us do that, be that with AI or not?”

To your point, there are tons of non-AI-required applications of that.

I think it’s always really fun and challenging to tie that in with the end-customer problem too.

So in our case, efficiency ratio, net interest margins, growing in a way that is cost-adjusted and where unit economics make sense, that’s the lender side.

The small-business side is, cool, well, how do I know whether I can get approved for this as fast as possible?

Because I can’t grow unless I’m funded.

Then my business won’t grow.

Then our GDP as a country doesn’t grow.

So finding ways to make those two pain points that are tied work together, that’s one piece.

I’d say the other thing that I love about AFT, just to go back to that, but that comes back to a problem, is I find in the space there are still a lot of closed-ecosystem perspectives.

“Hey, I am an entity and I’m not particularly interested in finding ways to collaborate with fintechs to jointly solve problems for my bank or my credit union or whatever it is.”

Historically it’s been okay to do that.

I think some of the AI talk is starting to break that a little bit, where players who maybe historically would have preferred a closed ecosystem are saying, “Cool, we have to collaborate. We don’t want to. We’re reluctant, but now we know we have to find ways.”

I would say AFT is a breath of fresh air because the absence of that is very clear.

But there are also a lot of legacy obstacles and tech stacks and all of that to overcome to generate that value together as an ecosystem that is open and jointly committed to solving some of the challenges that Ben outlined.

Excellent.

Will?

I’m going to move the camera here a little bit because I want to make sure we’re getting you in this.

I thought I saw that maybe we were just going a little bit fading there.

What do you think?

Yeah.

I mean, I think both of you guys had great answers.

The thing that has been on my mind lately is when we go and talk to banks, there constantly seems to be this question of, how do we remove the adjacency between the bank and the client?

When you think about the fact that banks have transaction data on every customer within every bank, and yet they probably couldn’t buy a Christmas gift as good as their family member would be for that person.

They don’t know that other person as well as their family does.

But yet their family, they probably don’t talk to each other about what’s in their bank account.

That’s kind of crazy to think about.

I think the second part of that problem is there also seems to be a little bit of a question around, okay, well, say we do have all this data and we know our customers really well.

How do we motivate the front line to talk to our clients?

A lot of people are talking about, can we get AI to do that?

I think a lot of people are starting to troubleshoot that.

But it seems that no one’s really figured out the poison pill.

So that’s what I’m thinking and hearing a lot about.

Any reactions to any of that before?

Yeah.

I think in a world of AI automation, which we’re going to get, I don’t think there’s any argument against that that can be sustained.

If that’s true, I think the value of human-oriented service and relationships is going to go up.

I think it’s a massive equilibrium lever for our customers if we can get that right.

Meaning the value of what our customers differentiate on is going to go up, and then they’re going to need technology to take out some of the things that keep them from doing exactly that, which is going and building relationships on Main Street with their businesses and their customers and the families and the community.

I look at this as just an outsized opportunity for service, relationships and trust.

But you’re going to have to, there’s going to be a lot of “no AI required” to enable that in overhauling legacy systems that weren’t oriented to this.

I’m definitely part of that effort to go try to overhaul these things.

By the way, mad respect too for what you were saying about being part of the system.

I’ve been there.

I’ve been the person, what was it, the toll bridge in the core-system world or whatever.

I think it’s come a long way since the time that I was in that world.

Mad respect for the transparency, but also the work, the strides that have been made on it too.

Hey, listen, I’m a consultant.

So what does a consultant do?

Good ones, they go critical and negative early.

I did.

I went for the problems and asked you what was broken.

So let’s switch to the other ledger and go positive.

What’s something you see working really well right now?

Whether it’s collaboration or just other things, I would love your take on anything you see happening right now that just really makes you jazzed about being in this industry and doing what you’re doing.

Anybody want to take a shot at that?

Yeah.

I mean, it seems like, I’m still really young, so it’s funny.

The more I learn, the more I realize I don’t know.

That’s really fun, though.

I really enjoy that.

But from my limited understanding of finance, it seems that we’ve never been at a time in history where the consumer is more enabled to participate in the financial market.

You look at the fact that, we’ll call it 30 or 40 years ago, you had to go to a bank to open up a stock account, a brokerage account.

You can now do that on Acorns or whatever.

There is more consumer enablement than ever when it comes to finance.

So that’s been pretty interesting to see, and I only think that’s going to happen more and more.

That’s my take.

Yeah.

I would definitely add, totally building on that, there have never been more ways to solve problems at a higher scale than now.

I feel like even last year when we were chatting to banks about different ways we could solve problems, AI-enabled or not, there was a lot of, “Well, that’s going to take a long time. This is going to be a really big effort. Multi-year strategy type things.”

I think technological leaps, especially in the last 12 months, have demonstrated that’s not always true.

There are some things that will take a long time, but there are also some things we can now solve that previously were unsolvable because of the technical complexity or the difficulty of the issue at stake.

People are now suddenly orienting toward the art of the possible and also the art of the feasible.

Suddenly people are thinking about it differently.

I think that is the humongous human aspect of this too.

If we all believe we can do something, we sent a man to the moon.

Okay, great.

Let’s solve challenges in fintech and banking the same way.

I’ll just buttress what you’re saying.

I would give a huge shout-out to our customers.

If you kind of rewind time, I’m getting old now, so I have to talk about how old I am, but in the ’90s and the advent of the internet, our customers were not aggressive adopters of the internet.

I don’t think that’s any secret.

Then as we got into Web 2.0, pretty much ignored.

Actually, the capital markets didn’t really come into funding fintech until the financial crisis.

Then we got the cloud.

Also, our customers did not aggressively adopt the cloud.

Then, of course, you get the advent of Bitcoin and crypto, cryptographic monetary networks, as I like to say versus just saying crypto.

You get the advent of that, of course, not a lot of adoption.

Then obviously in the middle of all that, mobile.

Again, slow to adopt.

The thing that’s amazing to me is how fast our customers are adopting AI-oriented tooling inside the financial institution.

It is like, I honestly am bewildered.

Like, okay, we have to actually catch up to our customers because they’re just going all-in.

My intuition is that it goes back to what I said earlier.

I think they can see the efficiency gains that they can get with it that are going to really help them differentiate on relationships and trust.

So man, shout-out to our customers.

It’s amazing.

I think some of that also is the generational change that we’re all going through, right?

Us Xers are now becoming more responsible for things.

For better or worse.

All right.

But that’s all happening.

Anyway, big shout-out to our customers.

Well, what is it, all work and no play makes Sammy a dull boy or whatever?

Would just love, not to put you too much on the spot, but what the heck.

In the spirit of Fintech Hustle, a little bit of a music theme there.

If you had to pick your front-row dream concert, an artist currently living or who has since long passed, anything come to mind?

Anybody have a dream concert?

Or it could be favorite style of music or anything like that.

Just to kind of...

Alex always.

Okay, so I wish I could have seen Pink Floyd back in the day when Wish You Were Here.

That’s my favorite song of all time.

I hope it’s the one that I learn on guitar first.

It’s just amazing.

So that one, for sure.

Yeah.

They were getting along back when they were still a functional relationship.

Yes.

Then a recent band that I love, he’s a DJ, he’s called Fred again..

His Boiler Room set is amazing.

He is classically trained, and he basically then went and broke all the rules of being classically trained, which is my favorite kind of musician.

He’s just unbelievable.

So that would be one.

I’m going to put together a concert I would love to see, which would be John Coltrane and Fugazi.

Okay.

There’s an artist, actually a band named Sade.

She used to be sort of a British pop icon, but has been really reclusive lately.

I’ve signed up like four times on her website.

Yeah.

She might potentially be doing a tour again.

So I would kill to see her in concert.

Thing is crossed.

How about you?

I love that.

You know what, I saw Tom Petty and the Heartbreakers so many times live, and they were the highest quality in my mind that I can recall.

Early Van Halen was good stuff too.

But Tom Petty, I would say current era right now, and I’ve already seen them twice, and they’re probably my favorite touring band right now, is Tedeschi Trucks Band.

Susan Tedeschi and Derek Trucks.

I mean, they just cook.

But I just saw Marcus King and Nathaniel Rateliff and his band with the Teskey Brothers.

So I will get back to you on others.

Question, sorry, did the Traveling Wilburys ever play live?

That would be a concert I would...

That would be a dream concert.

I can’t remember which one Tom was.

I think he was either...

No, Lefty was...

I can’t...

Anyway, they all had individual personas that they took on.

But anyway.

Well, in the spirit of that, I want to also offer you these limited-edition, highly valuable, I mean, I’m sure you can probably get them on eBay somewhere for millions of dollars, and some kind of like, you know, you could probably trade your Snoop Dogg stash box metaverse ownership for one of these.

But this is a new double-album set of coasters.

You can’t actually play them.

I had somebody try to actually play this.

Don’t do that.

It’ll ruin your needle.

But it’s great to sit your bourbon or whatever you have on it.

Then, well, you know the other thing is, Ron Shevlin won’t wear it because he thinks it’s a little bit dweeby, but I have to tell you, this particular bucket hat, not yet endorsed by the Oasis reunion tour or Billie Eilish, but I kind of like them.

So you all also get some great Fintech Hustle swag because we’re all taking ourselves really seriously here.

But hey, out there, join me in thanking my guests.

Will Bryant, COO, Quontic.

Ben Metz, CTO/CDO of Jack Henry.

Alex McLeod, CEO of Parlay Finance.

Couple speakers, board member of AFT.

Thanks for joining us from AFT Spring Summit in Miami.

See you out there on the road.