Transcript
Hello out there. This is Sam Kilmer, managing director of Cornerstone Advisors and your host of the Fintech Hustle podcast.
I’m coming to you on-site, in the hall, almost on the Skyline Deck here at the Hyatt Nashville at the JAM FINTOP Summit.
Learning a lot about fintech and banks. I think there are a lot of bankers, a lot of fintech portfolio companies and other fintechers, and other busybodies like myself here in the hall.
I’ve got a rock-star lineup for you today to learn a little bit more about the fintech industry, what’s going on and what they see happening.
Over here on my far right is Steve Soukup, who’s the CEO of DefenseStorm.
Steve and I have known each other for a long time, but suffice to say, and I should point out that you’re a JAM FINTOP portfolio company, I think also Curql Collective and TTV and many other storied backers.
Steve, veteran of the industry from the Q2 days, Digital Insight, I think back in there somewhere, and a banker too at some point.
Recovering banker, right?
Just like you know my hair.
Yeah, I had hair back in the banking days.
Absolutely.
So welcome, Steve.
We’ve also got Todd Clark here.
Todd is the president of InvestiFi, which is a wealthtech company.
Like Steve, storied in the industry.
Was the CEO of Co-op, which is now part of Velera, and prior to that a long career with First Data and some other folks.
Apparently somebody’s honking the horn down there.
Former First Data people down there on Broadway.
So just a lot of great background.
Looking forward to hearing more about what all of you are doing.
Welcome, Todd.
Since this is not just fintechers, but it’s also bankers, I have the first, by the way, repeat guest on the podcast in five years in Erin Simpson, who’s the chief operating officer, chief operations officer, of Encore Bank.
Erin has a storied history in banking too, was at First Security and Centennial.
But one of the things I love about Erin, we’ve known each other a long time, is that she celebrates her partners and Encore Bank celebrates its partners.
So she’s wearing fintech cheer.
I mean, come on.
Her merch is competing with Fintech Hustle.
I should probably be, you know, it’s competitive.
Let’s just put it that way.
It’s okay, though.
It’s good because I forgot my merch.
So shame on me.
Welcome, Erin.
Good to see you again.
Then last and certainly not least, we’ve got Karan Kashyap, who is the CEO and co-founder of Posh, an AI platform straight out of MIT, if I remember correctly, like 2018-ish, 2017-ish, something like that.
Some really exciting things going on there, and a lot of backers and some things that maybe you can tell us a little bit about in a minute.
Anyway, welcome, Karan.
Yeah.
What I’d like to do to start off is have you guys tell us a little bit about what the day in the life of a leader in fintech looks like.
Steve, since I led with you on the introduction, why don’t you start?
What’s a day in the life of Steve Soukup look like?
It doesn’t look like this.
Poolside, rooftop.
It’s different every day.
That’s part of why I love it.
When I came to DefenseStorm, I didn’t realize it was the smallest company I had ever been a part of.
Some of the things you take for granted in larger companies, you better learn how to do pretty quickly.
So it’s been a really, really fun journey.
I grew up in sales, so I love that part of the role.
But I’ve loved learning enough about engineering to keep our CTO honest and enough about marketing to keep our CMO honest.
I love interacting with our clients and our prospective clients and our partners.
That’s a lot of what I do at things like this.
But I don’t know, a big part of it is people and culture, and that’s different every single day.
So it keeps you on your toes for sure.
Todd, what’s a day in the life of Todd look like?
Well, a day in the life of Todd.
First, let me correct you, Sam.
We’re not insurtech.
We’re wealthtech.
Way, way more money in wealth than there is in insurance.
But yeah, day in the life, I think it’s probably very similar to Steve.
I run most of the operations of the company every single day.
If I’m home that day, then it starts at 5:30 or 6 a.m. walking two Labrador retrievers.
Then when we get back, I try to go for a run for myself.
Try and get in my chair by 8:00 Eastern time.
Work the East Coast, even though I don’t live on the East Coast.
Then I have the days where I’m at a place like this and it’s driving to the airport and riding an airplane for several hours during the day and trying to get some work done while I’m doing it.
Love the startup culture.
I’ve ebbed and flowed my whole career.
I started in a startup, and then we sold that company to First Data and I stayed at First Data for 10 years.
Then I kind of went back to midsize and then back to startup and then back to big, and then I’m back to startup now.
I think what I like is I just like a challenge.
The hardest thing I’ve got to do right now is book my own travel because I had a fantastic assistant for many, many years.
I don’t have one right now except for myself, which is sort of a sad statement, but it’s happening.
Maybe we can share one.
I need one too.
I start my day off with coffee.
Much-needed coffee.
Usually really, really early.
I’m that person who could do a full-on TED Talk about 5:30 a.m., but I’m going to ghost you by 8:30 p.m.
We start with emails and checking those.
I run operations for the bank, so I’ve got to make sure that we’re up and running.
Nothing’s failed.
No files have failed first thing.
Our team’s good.
I oversee deposit operations, loan operations, fraud, e-banking, all the things.
But the goal for the bank, as Sam knows, is to build the most tech-forward commercial boutique bank where we have connectivity throughout the entire bank.
It’s my challenge to myself not to enter anything twice throughout our whole bank ecosystem.
That part of my job, the strategy and working with the fintech partners to do that, is my favorite part.
Hopefully by the time we end this journey, we’ll have that completed.
So, day in my life.
Fun fact, I try to start every morning doing the Wordle puzzle.
I have like a 390-day streak or something.
The one day I forgot to do it was a horrible day because I had another 300-day streak going on.
So I’ve got to remember to keep doing it every day.
But yeah, I work in AI, obviously, so AI is changing by the minute.
I have to start every day by kind of catching up on what happened overnight.
What’s the latest that’s going on?
I try to code every day still.
Even though I’ve been CEO of Posh for almost seven years now, this is my only job I’ve ever had after school.
I went through MIT, coded every day.
I try to continue to write a little bit of code every day if I can.
But a lot of my day now is not coding.
It’s coming to events like this, doing sales, doing marketing, booking my own travel.
But hopefully an AI agent will do that soon as well.
Yes, that’s right.
Need one of those too.
So it’s fun.
I like it a lot.
I love being on the application side of AI.
I think there are so many things you can do with it, and you can only do so much as one person or one company.
So a lot of the hard part of running a company that does AI is figuring out, what are the things that we’re going to do, but what are the things that we’re not going to do?
Somebody else has got to do those things, right?
It’s tough to focus when there are so many possibilities.
That’s the hard part.
Yeah, very interesting.
And kind of point of information, I have to book my own travel too.
So I’m looking forward to, that’s probably got to be our first use case that we solve, intrafintech executive travel booking.
That’s a use case.
We’re going to take that.
That’s right.
It’s automatic, automagical, auto-healing, autonomic, all the autos.
We want them now.
I don’t know about your investors, but if that’s the first use case we solve, I’m in trouble.
I don’t think that’s what they want me focused on.
Well, don’t listen to the host on that.
Speaking of don’t listen to the host, just so you know, not only do I do my own travel, but I also do my own introductory notes, which is why, unfortunately, Todd, I said insurtech instead of, of course, I knew you guys are a wealthtech with the robo and all the good stuff tying to the checking account and all that stuff that people are talking about right now.
Curious, other than, I’m told the chat that we had today with acting FDIC chairman is kind of off limits.
We’re not really allowed to, what is it, Chatham House Rules.
But just generally, without incriminating anyone, not that session but everything else, what are you guys hearing in the hall here?
What pops out at you that you’ve been hearing in your conversations?
AI, AI, AI.
Yeah, your world.
It’s interesting because I think even as recently as last year at this time, the questions we would at least get on AI were more along the lines of, “Hey, our board wants to know what you’re doing because they don’t want you in this pool too far, too fast.”
Right?
Measured approach.
We’re risk-averse.
This year, it’s like, “Where are you at? What’s taking so long?”
As a recovering banker, I’ve been in the space a long time.
It reminds me of when I was back at the Bank of Boston and we were selling online treasury management and we started to talk to our corporate customers about doing it on this web thing instead of this beautiful dial-up Boston thing.
“You know, we picked this bank because you’re safe and secure. We would never do that.”
Then six months later it’s like, “Hey, Wells Fargo has us on the web. Why aren’t you there yet?”
That whole dynamic has just changed so dramatically.
Some really good sessions on it for the fintechs to think about.
But those two letters are the thing I’m hearing the most.
Well, since I know at least one more of us is going to talk about AI, I’ll go with the other thing I heard a little bit about today, which is stablecoins and what should people be thinking with regard to stablecoins and how they should prepare.
I think our position, from my own personal space and also from InvestiFi, is right now for banks you should be watching and paying attention, but you don’t need to leap.
Yes.
There’s nothing you need to do today that you can’t do tomorrow or probably even third quarter next year.
What you should be thinking about, though, and the most important thing for you as a financial institution, is going to be taking stable, converting it to fiat, and back and forth.
Everything else is still very theoretical.
Very, “We hope one day maybe we might could.”
What you watch out for is a customer coming in that has stable that they got somewhere, probably through some sort of international remittance or something like that, and they want to turn it back into actual money.
Today, that’s what you should be thinking about.
Take a little off your plate.
Just real quickly, I think that’s a really interesting point because whether you’re going into stable or not, the point is get used to multicurrency.
Get used to being able to talk about more than just dollars.
Yes, of course, dollars and converting back, but just thinking about multiple positions or multiple types of value within a given constraint, whether it’s an account or a relationship.
I think just getting your brain around that for a lot of folks is probably going to be important.
I heard in one of the sessions earlier somebody said something about whenever their bank’s customers said, “What do you do with international?”
They went, “Oh, let’s talk about cards.”
They would immediately start changing the subject because they don’t do anything with international.
What I thought was interesting about that is movement in and out of stable or whatever.
It’s a little bit like that, which is, are you going to change the topic to stars, or are you at least going to have a point of view on, “Oh yeah, well, our vision is something like this.”
Really interesting point.
Erin, what are you hearing?
So from a banker standpoint, we’re talking about all the things that you mentioned.
But I would say the priority first, before we get to stablecoin, because I think you’re exactly right about where that priority should be today, is real-time payments.
It’s the use case for real-time payments.
How are you going?
Can you already receive?
You should be able to.
Then how are you going to originate?
Who’s going to be that payment gateway for you?
Are people going to use it?
Do people want it?
Then the second thing that is super top priority, it is for us, is ERP integrations.
All of our commercial clients want that ease of use.
They want to get into that one accounting software system.
They don’t want to get into that and online banking.
They want those efficiency gains there.
So that’s going to be the biggest priority for us next year.
We’ve already done a few, but we’re going to do several more.
I think whoever’s going to win is going to be who’s going to be able to do it the fastest.
Yeah.
So obviously going to second Steve, a lot of AI talk.
What’s interesting to me, though, is I think there are two factors that we’re seeing.
I think the macro pressures are definitely easier now than they were the last couple years.
I think banks are positioned better now to start actually innovating.
There’s a little bit less fear, both from a regulatory pressure standpoint but also from an operational flexibility standpoint, to actually put some money into innovation initiatives.
What we’re also seeing now is that banks are starting to explore the application layer of AI.
I think last year or the year before was kind of like, “Hey, how do we get our team ChatGPT licenses, or how do we get our team licenses to Copilot?”
Most banks have already done that now.
So it’s like, okay, now that we have licenses, how do we get the next magnitude-shifting benefits out of AI?
What is that from the application side?
Is it on the lending side, or knowledge management, or customer service?
There are plenty of ways you can start.
But we’re seeing a lot of banks kind of circulating around, okay, we have the chat tool internally.
How do we actually build applications using AI now?
I think another application we’re picking up on is an AI that suppresses train sounds.
For those of you who haven’t been to Nashville recently, the skyline has been full of cranes forever.
You can tell because the skyline has really popped.
Apparently they’re bringing in all the construction materials by train because it’s been a pretty steady flow.
But it’s all very good stuff.
Listen, the room, including all of you here, is full of entrepreneurs.
Entrepreneurs are always thinking about, what are pain points that need to be solved?
I’m devilishly curious from all you entrepreneurs.
What’s a problem that you see right now in the industry, or a pain in your neck or pain in the industry’s neck, that you see and think, man, there should be somebody tackling this?
Sam, I think this goes back to what you posted about just the other day.
It’s people saying that those integrations are seamless and that they’re going to be super, super easy, and everything’s API-compatible and it’s all going to work.
I think being real about that and being honest about that is so important.
We’re working on some projects, again, I said in the beginning...
I hope that’s not coming for you, Sam.
That’s somebody that is claiming seamless.
Yes.
Come pick them up.
Watch out.
We’re trying to solve for that interconnectivity, like I said earlier.
One of the pain points for us was around onboarding for treasury management, and we identified that pretty early on.
We said, “Hey, how do we find a fintech partner that will partner with us to help us build a solution that really will work and solve the problem and think two steps ahead?”
So we worked with The Crew, which is one of the companies that are here, and we built that treasury onboarding.
It’s also connected to their commercial online account opening.
Then we even took it a step further and said, okay, we want to work with TruStage to generate those treasury documents because there wasn’t a treasury-doc solution out there.
Then can we connect to our online banking platform, which was Q2, and push all that data into the treasury fulfillment?
That type of connectivity would not be as beneficial if you didn’t have all the true integrations.
Finding partners that’ll make those seamless and easy, that’s what we’re trying to solve for, is to have that interconnectedness throughout with an ease of integration.
Anybody else with a pain that needs to be solved?
Well, yeah.
Not trying to do a commercial here, but part of what we’re trying to solve is outflows, deposit outflows.
If you run a cross-section across normal retail banks, they’re seeing 5% to 10% of their deposits flow out to investment companies across the country.
I think it’s something that a lot of times the banks and even credit unions don’t realize is happening to them.
Their CSRs are recommending, “You just open an account at Robinhood,” if you’re a small-dollar investor.
Even if they have wealth management, it’s just not happening.
So I think it’s an ongoing crisis.
We were going to invest at it at Co-op.
When we merged with Velera, I was no longer there, and so I went and found a company that does it and now addressing those issues.
Take one.
Sure.
I think everything that we’re talking about, there’s a theme of pace of change that is refreshing for events like this.
I’ve been to a lot of banking events over the years, and sometimes you wonder, are they all going to make it?
This is energizing because every bank here is very forward-leaning.
Karan talked about the pace of change in AI, the pace of change in your institution by all this interconnectivity, all these problems we’re trying to solve.
From our standpoint, little DefenseStorm plug, the pace of change is awesome.
Change begets risk, right?
Because the threat actors that are targeting every one of these FIs, they see that pace of change and they know that it brings an element of lack of control, for lack of a better word, and that’s what they prey on.
Helping enable this change by helping FIs just proactively identify and address that risk instead of doing the classic whack-a-mole and reacting to it when it happens, that’s the big opportunity that we see to fix.
Just real quickly here on that point, historically, what’s the reason why banks, you said I think it was very insightful, are they going to make it?
I think we always said, hey, what’s their credit portfolio looking like?
Bad credit is what puts a bank down.
Then we saw it’s not always it.
It’s liquidity.
So two liquidity problems.
Deposits going out.
How can we be more of a solution provider, whether it’s wealth or whatever those things are around that, so that we can watch those flows and at least maybe be first in line?
Maybe we don’t win them all, but at least we’re in the game.
We may not make it, but we’re going to fight like hell.
I think the other thing is, Steve, to your point around DefenseStorm, if someone gets the sense that your cyber is not up to snuff, you could have a run on the bank.
I’m not saying it’s going to happen.
But if you’re in the headlines a couple of two or three times, it doesn’t take much until there’s a wave.
Then the next thing you know, it’s the regulators that are going, “Whoa, whoa, whoa. What’s going on here?”
So I think there is some connectivity to that.
I’m interested that you brought it up.
Karan, anything to add there?
Yeah.
I’ll share another concern that I’m seeing.
We talk to a lot of technology innovators at banks and I think they fully understand that AI is exponentially changing really fast.
One blocker we’re often hearing, and why they’re not adopting, is because there’s concern from their boards.
I think there’s an opportunity for someone to come out there and basically just educate the boards.
Educate some of the people that might be blocking innovation decisions on why this technology is not something you sleep on.
You don’t have the opportunity to sleep on it for too long because when things are exponentially changing, there’s an exponential cost to falling behind.
That’s how that works.
What I’m worried about is that some banks I’m talking to are looking at AI for a 2028 initiative.
There are other studies out there that are talking about people may not even need jobs by 2028.
So on one hand, banks are looking to start exploring AI in 2028 because they’re in the middle of some kind of core conversion right now, or they’re still moving to the cloud.
It’s a difficult problem because you want to modernize other things too.
But I don’t know that I have an answer for that.
How do you interleave AI into these other initiatives?
Because just because you’re modernizing a system, just because you’re doing a cloud conversion of another system, I don’t think is an excuse to just not do anything with AI.
I think you have to get that DNA in your culture somehow.
Yeah.
It’s really interesting.
I sometimes will hear people talk about AI like it’s a back-office thing.
Like you’re saying, we’re going through a core conversion, let’s lump it in with that.
Just think about it as it’s very front office in terms of the interactions with customers.
I’m trying to remember, I think it was Wade Arnold at a recent conference that said AI is going to be a little bit like autofill.
There was a time when you would go to a system and you would type in a value and it didn’t autofill, and we were used to that.
But now if you start typing in Karan’s name, you expect it to start filling in his.
It happened pretty rapidly.
I thought that was a really insightful point that Wade made.
What you’re talking about is you could end up in 2028 or 2029 because of that delay factor that you put on it, looking completely ancient by just not being in front of it.
So yeah.
Todd?
I was going to say from an AI perspective, we’ve already implemented some AI solutions.
One of which is, in our world, obviously there’s a ton of disclosure and verbiage that has to go in between transactions and when you’re leaving the bank’s website and going to our solution and that sort of thing.
So there’s a ton of marketing material that’s out there.
We have a full-blown AI solution right now where you can submit that, AI looks at it and then calls out the two or three things that you correct.
Then we finally touch it off with an actual human doing the final look.
But I have a feeling within a few months we’re going to be comfortable enough with the AI that we’re just going to go.
That’s a huge timesaver for us.
Yeah.
I think, to your point, you make a really good point.
I think it’s the fear and it is the lack of education.
It’s not just boards, it’s your bank employees too, right?
Even some of your IT teams.
What we’re doing to combat that is, one, to get educated.
Talk to your regulators about it.
But it’s also to start smaller and know that you’re going to have a plan to get bigger, but test on a small scale.
One thing that I learned this year, and this is all pretty new to me, is just how to calculate return too.
I think that when they put it in front of you and vendors put it in front of you, at first it’s very hard to determine, what is that return going to be from AI?
But learning about tokens and how to measure those, and how the accuracy that we’re going to get back from AI.
Because a human is going to make a mistake, right?
One of the examples we’re looking at is taking our credit memos, which are these big commercially prepared credit memos, which are so complex and have so many covenants and have so many terms and conditions, and comparing those to the notes that are attorney-prepared, so they’re all different.
When you have a person doing that, there’s going to be an error and it’s going to take them a really long time.
But when you can have AI do that and say, “Hey, here are the differences. You correct them,” we’re going to have less loan review because we’re going to be able to prove it.
We’re going to have fewer errors and lawsuits and all the things because we’ve done this.
So I do think, though, that that’s a great opportunity, is to teach the agent.
It was the part, I think, that scares people the most.
Yeah.
Listen, let’s end on a positive note here.
I know we’ve got another reception session coming up here and you all are busy people.
What’s something you see in the industry right now, whether it’s here at JAM FINTOP or whether it’s out in your many travels, self-booked travels, what’s something that you see in the industry right now that really jazzes you or is really working well?
I always like to close on a positive note.
Consultants, we go negative early, but we try to keep it good.
Anything you guys see that you think is working well right now?
I’ll reiterate what I said before.
That was kind of the catalyst for the problem statement we’re solving.
There are a lot of financial institutions leaning into change and transformation and just embracing what’s going on.
That’s a huge positive.
I’ve grown up in places, like you referenced the time at Q2, where our mission was all about empowering communities by strengthening their financial institutions that exist within them.
I hope I got that right if Matt Flake is listening to this by chance.
But the antithesis of that is, you wake up and we’re Canada with five big FIs calling all the shots for the whole country.
When you come to an event like this and see the FIs that are leaning into tech and leaning into change and leaning into transformation and trying to learn AI and stablecoin and everything else that we’ve talked about, it’s invigorating because it gives you hope that this system, which I think is really key to the fabric of our country, has legs still.
It definitely has legs.
Yeah.
I’ll second that notion.
This conference has been fantastic and it was completely different than what I thought it was going to be.
This is our first time at JAM FINTOP, and I think we thought we were coming to talk to the LPs about maybe a round we might do next year.
But what we actually talked to was a whole bunch of customers that were dying for a solution like ours.
I heard multiple times today, “There’s nothing like this.”
That’s really exciting.
I agree with Steve.
The banks are really leaning in.
Talking to a $35 billion bank today and they’re not saying, “Oh, your small startup that only has 70 or 80 employees scares me to death.”
They’re saying, “No, you’re exactly who we want to work with.”
It’s been a great experience.
I’d say it’s just, we’ve had a rough couple last couple years, right?
In banking, it’s been hard.
With rates going up so high, people have just pulled back on lending and it’s all been about deposits.
Now people are getting excited about it all again.
People are ready to spend on technology again, and they’re ready to jump back in with their clients and do things differently and look at it differently and try it, not be afraid of it.
So I think we sense that excitement here this week too.
People are coming out of that bad time and they’re just ready to go.
So we’re thrilled.
That’s where we’re at too.
But it has been cool to see the focus shift to deposits because there was all this focus on lending and that’s where everybody’s putting all their money and working on the solutions for it.
Now they’re starting to put it into the deposit and treasury side, and you haven’t seen changes to that environment in years.
Now you’re starting to see it and be more commercialized.
So that’s what I’ve been excited about.
Yeah.
We’ve been doing a lot of stuff with the community bank space this year.
We were part of the ICBA ThinkTECH group earlier this year.
Obviously we’re a JAM FINTOP portfolio company.
I think the one thing I’m really starting to get excited about is we are seeing more and more community banks starting to embrace the fintech partnership side of things.
A few years back, I’ve been at this event for I think three or four years ongoing now, there was a tendency in the past to just kind of wait to see what the big behemoths did.
What did they do for technology?
That kind of shaped what a lot of banks were doing.
Okay, whenever a behemoth company launches something, that’s when it becomes real.
I think that has been changing a lot.
Maybe the pace of innovation is changing or just the trust in fintechs, or the fact that a lot of these banks are investors in the fintechs probably helps as well.
But yeah, we’re seeing much more openness to working with fintechs.
Even for Posh, we’re seeing a lot of banks coming to us with use-case ideas and saying, “Hey, I know you guys are doing X, Y and Z, but have you thought about this other use case? Is that something you’d be willing to co-develop with us or explore with us?”
So it’s not even like, here’s your menu and I’m walking away if I don’t like something.
It’s like, I see your menu, but are you willing to cook something up with me that’s kind of unique, but still up your alley?
Yeah.
I think that’s what’s unique to JAM FINTOP and some of the partners here.
We’ve done that with several.
We’ve done that with The Crew.
We’ve done that with ZSuite.
We’re going to do it with more.
But it is that true collaboration partnership.
It’s not often that companies in the past would be open to hearing the change and saying, “Come sit down with me at my bank. Come workflow this with me at my bank. We will help you test.”
But then on the return side of that, we will help you sell your product.
We will help you market to others.
We want everyone to be successful on both sides of the house.
When you get those two together, it’s just magic.
I love how you used workflow as a verb.
Come workflow this with me.
You mentioned ICBA.
Was it the ThinkTECH Accelerator?
Wayne Miller, on the next episode, he’s joining me.
We trade notes on soul records and fintech.
He’s got it all going.
He does all that and more.
But listen, I have to say thank you to all of you guys.
My guests, Steve Soukup, Todd Clark, Erin Simpson, Karan Kashyap.
I should also point out special thanks to Lee Farabaugh, who was here earlier and was really kind of getting us motivated and amped up for this.
I feel very honored and blessed to be in the hall doing an unscripted chat in the hall.
It happens to be on the roof here of the Hyatt in Nashville across from the Frist Art Museum.
You heard all the motorcycles, the construction, the ambulances, the commerce.
It’s all exciting.
We’ll see all the rest of you out there on the next episode of Fintech Hustle and see you on the road.
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