Transcript
Hey, everybody out there. This is Sam Kilmer with Fintech Hustle, managing director at Cornerstone Advisors. Glad to be with you here at Bank Director’s Acquire or Be Acquired conference.
We’re not really in the hall. We’re kind of outdoors here. We’ve got a few palm trees working for us, but I’m really honored to have some great guests with me today to talk a little bit about what we’re seeing going on in the halls of fintech.
I’ve got Kim Snyder, founder and CEO of KlariVis. We’ve got Jamie Punishill, CMO of nCino. And you may know this guy over here a little bit, Ron Shevlin. He’s chief research officer, and I think Jam Master J of Snark may be another title we could apply to him.
It’s good to have these guys here. I just really wanted to get their sense of what’s going on in the industry, in fintech and what they’re seeing here at Acquire or Be Acquired.
I’ll kick right off.
Kim, have you seen anything here at the Acquire or Be Acquired conference that rocked your world or really jazzed you about the industry?
First of all, the number of attendees here is absolutely unbelievable. I think this has to be the largest one they’ve had, perhaps.
A big takeaway for me is that your competitor is not the bank down the street.
Competitors for small business are PayPal, Venmo and Square.
You need to understand that.
I think oftentimes community banks like to focus on who’s next door to them in their industry, and that’s really not where their focus should be.
Great.
Jamie, I know you guys were both on stage, so you’ve seen this from the stage and from the audience.
Have you seen anything that rocked your world while you’re here?
Anything that rocked my world? No, I don’t think I’ve seen anything that rocked my world.
My sense was a crowd really trying to digest the duality of the economic realities of the environment we’re in and the imperative to continue the transformation they’ve been working very hard to support for the last few years.
That’s going to be a really interesting environment, where you have to balance those things in a different way.
It’s the same way fintechs are trying to figure out what to do when it’s not growth at all costs and money doesn’t fall from the sky.
Right.
Capital is a thing right now.
What about you, Ron? What have you been seeing?
First of all, I couldn’t agree with you more.
One of the themes of our What’s Going On in Banking report this year was fighting the headwinds, riding the tailwinds.
It really is a duality.
There are economic issues, but banks have gone up and down with that for years.
You’ve got to know how to deal with the economic ups and downs.
More important is the long-term technological change, the impact of fintechs and the impact on the industry as a whole.
There are a couple things that I’m not sure rocked my world, Sam, but a couple things really stuck out for me.
It’s interesting.
We’re at a conference that’s about acquiring or being acquired, about mergers.
Why do banks merge?
It’s about scale.
But over the past 20 years, what’s changed?
You can get scale through technology, not only through mergers and acquisitions, which take years.
When you start putting companies together, you’ve got to jump-start that with technology.
I think there’s a growing recognition among a lot of the attendees here that it isn’t strictly about acquiring or being acquired.
What they’re acquiring is technology to help them scale, not just another bank down the street.
Interesting.
Keeping it loose here, no preplanned topics, but we like to cover what’s working and not working out there in the land of fintech and banking.
Jamie, let’s start with you.
What are you seeing in fintech right now that’s working really well in the business?
I think the zeitgeist right now is digesting all of these things that they’ve bought, these programs they’re trying to implement.
I’m new to nCino now. I’ve been here six months, and I’ve spent a lot of time talking to customers.
“What are we doing well? What are we not doing well? What could you be doing differently? What have you learned?”
There’s a growing recognition that there has been a lot of adoption of technology and not a lot of transformation of the business while they’ve been doing it.
That really is what this is about.
The second thing I was struck by coming away from here is a different duality.
The folks who get that this is now a technology-driven universe have also stopped treating these things like projects to complete and be done with, so then they can go back to normal.
Right.
The batch is over.
Exactly.
“Great, we got that implemented. Now we can go back to the business of banking.”
There’s an emerging group of customers that recognize, “No, this is the business of banking.”
That’s quite different.
Interesting.
What about you, Kim?
I couldn’t agree more.
We’ve had so many conversations this year relative to previous years about utilization of the technology stack that banks are already on.
We often see banks implement about 20% of what they buy, then they’re like, “Oh gosh, that didn’t work. Let me go buy something else.”
I think there’s a lot of realization around that now.
Let’s take a step back and absorb what we’ve purchased.
What can it do for us?
What does it not do for us?
Let’s not just go buy more.
Ron, I’m happy to jump in, but why don’t you answer your question and then jump in here.
One thing, I started out in this industry doing a lot of data analytics at a time when there weren’t really a lot of great tools.
Then we kind of went through a period where there were lots of tools that harvested data in these big warehouses and lakes and ponds and whatnot.
All very interesting, except people weren’t getting a lot out of them.
What I found interesting in the hall, whether it was Kim with KlariVis, Jamie with what you guys are doing around data and working into a lending workflow, is I saw a lot of companies that were really focused on applied data and actually getting something out of it on the other end.
Since you asked, Ron, thank you very much. I’ll add that.
There’s always been a heavy focus in fintech around retail banking.
I saw a lot in the hall that solved problems for commercial banking, which is most of the banks walking around.
Absolutely.
That really jazzed me.
Let me address that and add a point to it.
Your point about the retail-commercial split is spot-on and totally predictable.
You look at other industries, and the changes always start with the consumer stuff and then move to the B2B, back-office kind of things.
That’s just the normal pattern.
We’re finally at the phase, I think the inflection point, of really changing the commercial stuff.
When it starts really changing commercial lending, and more specifically commercial real estate lending, we’ll know the fintech stuff has really hit.
The other thing I wanted to comment on is you asked about what’s working and what’s not working.
God, I hate to be a negative analyst, but that’s me, man.
That’s me, man.
I think digital transformation is kind of on a decline as this buzzword.
I think there’s a better recognition that it’s really more about digital modernization, not transformation.
Honestly, I haven’t quite thought that through very much yet, but that’s the sense I’m feeling from a lot of folks.
Have you been sitting inside some of the meetings we’ve been having?
We’ve been working on some brand positioning that may or may not be in that zone.
We’re doing the same thing, Jamie.
Face it, the core systems were built on first-generation technology.
That’s why our banks are struggling so hard to actually implement transformation of digital technology.
Modernization is absolutely key.
One of the things that has not worked well, or has not gone according to plan, is that for the last several years there’s been this, “We need to get into fintech,” and here’s a slide full of logos.
What I think is promising is something I heard Drew Anderson from Opry Bank say on one of the panels.
It was something like, “If you see a 40-page deck full of logos and that’s the roadmap, you’re probably doing it wrong.”
I think what we’re starting to realize now is when are we looking at dreamware versus when are we looking at practical things that we can get applied in the next quarter as a bank?
Anything else that you guys have seen here?
I’m going to tack on to that because roadmap is a dirty word.
I was a community banker before I did this with fintech.
The cores are all out there promising roadmaps that never come to fruition.
Banks are now weary of that word.
We stay away from that and truly talk about what our product does today and what it’s going to do in the next six months, not in the next three years.
Right.
No six-year dreamland stuff.
No.
Stuff that’s actually going to happen.
Anything else jump out at you?
We’ve been through this cycle a number of times together.
There’s a natural inclination to go into this three-month, six-month view of the universe, which blinds you.
There’s an old saying on Wall Street.
The stock market is like watching somebody walk up a hill while they’re playing with a yo-yo.
Everybody focuses on the darn yo-yo and misses the fact that they’re slowly walking up the hill.
You have to find another duality.
There’s big change happening.
We have barely begun to see the impact of AI into process, risk management, etc.
If I put my Jamie Punishill the marketer hat on and look at what we’re doing in our marketing transformation, it’s AI in almost every tool.
That’s a different staff.
That’s a totally different way of thinking about our data.
Marketing is kind of at the forefront of this applied-AI stuff.
Bank world five years from now is going to be a completely different world.
I don’t think you can take your eye off the six-year vision, even as you make sure you’ve got that sustained, slow walk up the hill.
Incremental improvement.
Continuous improvement.
I love the passion.
I think the other thing is both of you are obviously great storytellers.
It’s one of the reasons why you’re on the stage.
One of the things that’s wrong in the industry right now, that’s not working very well, is there are a lot of fintech providers that are not telling great stories and not showing very good demos.
I’m seeing them ask a lot of great questions in discovery, then they forget about it and don’t actually use it when it comes time to talk about what’s going on and how they can help someone.
I’m always looking for who’s really good at that.
Folks like you guys were bankers.
You’ve done this stuff before.
Not everybody could be a banker like that.
That’s one of the things I’m seeing wrong.
Anything else you guys think the industry could be doing better right now that they could take back to the next Bank Director Acquire or Be Acquired?
Let’s look at it from two perspectives.
Is it the banks doing a better job, or will the fintechs do a better job?
I’ll start with the fintechs first.
I tend to think they paint a great picture of what technology can do out there in some future.
I live in New England.
I’m not far from Maine.
The joke is if you go up to Maine and ask for directions, they’ll say, “Can’t get there from here,” because the coast is like this.
I think a lot of fintech vendors come in and go, “Here, this is what the future looks like.”
But it’s not a roadmap from a technology standpoint.
How do I get there?
How do I, the bank, get there from here?
That’s not an easy thing, and I don’t think they’re doing that.
On the bank side, where they’re falling down is integration.
I think it might have been Steve Williams, Cornerstone’s president and co-founder, who on a panel said, “Look, if you’re a midsize bank, you can’t build it all, but you can, and maybe should, integrate it all.”
Meaning you’ve got to have the internal capabilities to do that.
It’s no longer just expecting your vendor community to do that for you.
I think that’s where banks need to focus some of their technology personnel efforts, on the integration side.
I used to joke that the only thing banks were worse at than building stuff was integrating it.
I think that’s actually still true.
We’ve bet our future on this.
I think we’re going to see an emergence of platforms and ecosystems that just have to simplify this.
It’s just too hard and things change too fast.
There are too many pieces to put together.
The banks themselves can’t be put in the position of having to make all those decisions.
It’s too hard to change and pivot, and the world is too fluid.
We’ve seen it in almost every other area.
There’s going to emerge some sort of ecosystem that provides the connections and integrations around your central nervous system and helps the bank solve this problem.
That’s the only way they can keep up with the pace of change being demanded and put on them by externalities.
Can I just follow up on that?
Who will be the emerging platforms?
Can the cores be the emerging platform, or is it going to be new fintech providers?
I’ve made my own personal economic bet that it’s going to be particular new platform providers.
But that doesn’t have to be an either-or.
As I said, the cores, it’s a slow journey to this new world.
They’re going to have to move a little faster.
You see a couple of the major core providers, the two largest major core providers, they’re not here.
There are like a thousand CEOs in here from banks, and I’m like, hell.
Anyway, Kim?
I think banks get hit so hard.
The reason implementations are so difficult is because banks want to customize everything.
They think their bank is uniquely special.
What they really need to be focused on is, why are they buying the fintech solution they’re buying?
Take it the way it comes.
Where implementations go wrong inside organizations is when they try to customize it.
It goes 12 months too long.
Then they’re sitting there and they’ve forgotten why they bought the tool to begin with because they’re trying to change three or four little things that just fit them.
Sometimes it’ll do 80% of what you need.
Take the 80% win and run.
You know there are going to be a thousand bankers watching this going, “Whoa, Ms. Snyder, hold on a second.”
I think there are some systems integrators who...
I was on a panel in Austin last year at FinXTech, and every bank on that panel told me that.
It was music to my ears because I’ve been saying that for a long time.
I truly believe it.
Again, I was a community banker.
I saw how to implement projects the right way.
You don’t have to customize every single thing you purchase.
And if you’re a vendor, stop trying to be all things to everybody.
I just love the passion, and I love the fact that we’re willing to have an argument about it.
We need more arguments in this industry, I think.
Just to wrap things up here a little bit on this episode of Fintech Hustle, I wanted to give a big shout-out to Michelle King, Laura Schield and the whole team on-site here at Bank Director.
I did the cocktail-napkin math, and I think it was literally on a cocktail napkin last night.
I think I’ve been to between 150 and 200 conferences over the years, and this was the best one.
Not only is this the best conference, but this particular one was probably the most productive and, candidly, fun interplay, arguments, barroom brawls and that kind of thing that I’ve seen.
I don’t know about you guys, but I just think these guys have knocked it out of the park.
Couldn't agree more.
Absolutely.
That’s from the hall here at AOBA 2023.
Good to be with you.
Hope you join us on another episode of Fintech Hustle.
Thanks to my guests, Kim Snyder from KlariVis, Jamie Punishill from nCino and Ron the man Shevlin over here from Cornerstone Advisors.
Have a great year.
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