Transcript
Welcome to Money Isn’t Everything. I’m Mary Wisniewski, Cornerstone Advisors editor-at-large. Every other week, we bring on a guest who is shaking up financial services in some way, and we get into the why, how, and possibilities.
This episode is a conversation with Jim Bruene, who I first met years ago when he was very early into his creation of Finovate, and he schooled me in home banking.
Today, just weeks ahead of Finovate, we’re getting into how to stay creative in a really freaking rigid industry, some of the fun backstories of developing Finovate years ago, and small business banking possibilities.
Jim, welcome to Money Isn’t Everything. It’s great to have you on the show.
Thank you so much.
Yeah. So, when I came up with this concept, I was like, “Oh, I have to talk to Jim, and I have to talk to him very quickly,” because I want his point of view to set the tone for this show.
You are someone who founded a fintech event when most people wouldn’t even know what fintech was. You also followed digital banking, I think, well ahead of anybody I knew at the time. So, I think it’s really great to have you here to share some of the perspectives you learned while being so early in this wild world that it’s become.
I want to take you back in time. I remember in one of our earlier interviews together, I believe you were telling me that when you first started, you’d tell people you were in bank marketing and people would look confused, like, “Oh, what do you market?” Am I remembering this right? Tell me a little bit about that experience.
Yeah, it’s exactly true. I would have different titles. Sometimes I’d say I work in bank products or bank marketing, and everybody would just have a blank stare, which I always thought was interesting. They didn’t think there were products or could be any kind of marketing approach to something as plain as banking, I guess.
So, that’s a good reality check that you’re not in a fancy business.
You’re not in a fancy business. Well, you are sort of. What year was that, Jim, when that was happening?
I started in 1988. That was my first foray into banking. So, that’s when I learned that no one really wanted to hear what my job was.
Do you think that’s still true today? Do you think people realize now, if you said, “Hey, I focus on bank marketing,” certainly the industry knows, but do you think it has a little bit more universal appeal?
Yeah. Maybe it’s just from thinking about it for 40 years, but I feel like people understand that there’s marketing involved. I think they can see that now through all the different financial services that people see so much of. So, I think it might be a little bit more accepted now.
Also, now you can say “fintech,” and that helps. But that’s still not considered banking, I don’t think, by most.
Not by most. But you’ll hear certain people say, “In time, fintech will become banking.” I know that’s a controversial point of view, and some people say the opposite.
Before we go into that, I wanted to pull up an old blog that you wrote that’s now on Finovate, but it must have been on NetBanker.
Yeah.
The first one was posted on January 5, 2004, and I thought it was so interesting because you were listing the top innovations. I want to set the tone for what Jim was doing with bank marketing, but some of these innovations are just so funny.
I’ll just name the first one: May 1995, Wells Fargo is first in the world to offer web statement access.
I mean, that’s wild because it points to the fact that people were relying on paper statements to understand their money.
I know. Most people listening probably don’t remember. You relied either on the paper that came two weeks after the close, or most people would call and listen to their account through an audio system.
That was really what people did, especially younger people who were maybe living paycheck to paycheck. You were just calling on the phone all the time, going through the menus, and listening to your data come at you.
That’s probably hard to listen to, thinking about it. Have you ever done it? Have you ever had to call and do that?
You know what? I haven’t done that in a while. But I remember when there’s a security thing and they’ll be like, “Is this your transaction?” I’m like, “Oh gosh, I guess it is my transaction,” or not, as the case may be.
Well, I want to talk about how you saw this moment. When this wasn’t really a thing yet, you were like, “Hey, let me do this wild thing and start something called Finovate.” What was the thinking process there, Jim?
Well, I was lucky enough to get into the online banking section at U.S. Bank in 1992, which was very much a pioneer. We were working with Microsoft, getting online banking into Microsoft Money, their PFM software.
So, I got lucky to see it at the very beginning. It was pre-internet, and it still was really interesting at the time because people were talking about dialing in through AOL or through message boards or CompuServe, that kind of thing. Or you could directly dial into the bank through Money software at the time.
It was interesting, but it was really hard because everybody had to load software and use modems and all this kind of thing. Ease of use was horrible at the beginning.
It sounds horrible.
It was. But you could see that people were starting to get excited about it.
This is my origin story. I was working in a bank in 1994 in online banking, and I see in American Banker magazine that two-thirds of the banks say they’re going to look into or start something in online banking in the next five years.
That’s when I decided to go solo and write a newsletter about it. There was a lot of interest, but it was pre-internet. Then the internet came in 1995, and everything just exploded. I was so lucky that happened, with Netscape Navigator.
You were lucky, but you also sensed something before other people. That’s what I really want to drill into because I think these are the lessons to think about now as fintech funding has been dialed back a bit. I know the budget is the budget, but I’m playing around with this segment for this podcast. I’m going to do it for you too, and it’s “That’s What You Said.” I want to quote back good things you said.
Don’t worry, I don’t normally keep a file on people, but I remember we had an interview where we talked about this. I don’t think this made the final cut, but I have a note of this.
You said, “The things I could think of seemed bigger than the reality of, you need to write this thing for a brochure.” That was one thing. Then another thing: “The whole magic dries up when bills start to come in. It’s hard to meet expectations for pioneering things. I think that would be the case anywhere.”
I’m so glad you said that then. I wonder if you feel the same now. We’re in a climate where the pressure is on more to cut creative ideas at a bank or at a credit union.
I’m curious how you navigate that tension of wanting to try something new, but then you’re in this bigger corporation, so there are all these rules. It’s easy to have your ideas killed or turned into something you wouldn’t have done.
I got my start working inside these big companies, and I did get a little frustrated with some of the speed. Luckily, I was in kind of an R&D area, so it was better than some of my other areas.
But I saw the industry go through that boom-bust cycle a couple times, especially when everybody was so excited from 1995 to 2000, and then everybody was completely disillusioned by it.
You were the rock star at a bank, or wherever, if you were in the internet area in 1999 or 2000. Then it was a horrible place to be in 2001 through 2005.
I just thought it was bizarre because the whole idea of banking delivered online hadn’t changed between 1999 and 2001, but the whole mindset really crashed. It really set back the industry for five or six years.
I think we’ve gone through that cycle a little bit recently, but not quite back to the beginning. It’s, “Let’s not invest as much, maybe,” now. But for a while there, it was, “Don’t invest anything,” for about five years.
Wow. Any advice to someone working at a corporation who is feeling fed up with their ability to try something new?
Well, yeah. Just try to come up with something where you can prove there’s some revenue. It may not be your vision for the future, but if you can show some kind of a revenue path or profit path in the next couple years, that’s what I was always trying to do.
I just lived in a spreadsheet, always trying to show that if we make these improvements, over five years it pans out. Always trying to be really tangible in cash flow and so forth on projects.
But it definitely gets frustrating.
Yeah, super frustrating. Even when I’ve been at bigger companies, I’m like, “Oh man, get out of my way.”
It doesn’t always work. I definitely had some things that maybe even entered into my long-term record that weren’t so positive as an employee. It helped me get out. It helped me start my own business, that’s for sure.
Well, those things become motivating.
That’s true.
I know you just mentioned proving the path of, “This could make money,” but I also remember us talking a lot about features that would be useful.
I’m dating us, but I think I’m just starting to see it come out for certain banks. I remember us talking about searching transactions, the ability to just search for your transactions.
I’m still noticing when a bank announces that because I still don’t think it’s typical. But you tell me, is it typical at this point?
It doesn’t seem like it would be difficult at all because most of the data that you have, you could have 30 years of data in your accounts, and it’s hardly any information. It’s hardly any bandwidth. It’s just a couple megabytes of data.
So, it seems like it should be relatively easy to search. But that’s taken so long.
As soon as Google came out, whenever you started using Google, 2001 or 2002, whatever that was, you could see how easy that was. If Google could search the entire web, you ought to be able to search your bank account. If not equally, at least in the same ballpark.
But that has taken a long time.
Right. Let’s talk about that. It seems so simple. Why not? Why has that taken so long?
I think it probably doesn’t get to the top of every customer’s list because, at least for a long, long time, the customer was happy to be able to see their data.
You take your paper statement, and it’s instantly visible to you online. That was such a great improvement over what you had before, where you had to wait until it came in the mail or whatever.
That metaphor of a paper statement made people happy for a long time. You couldn’t search your paper statement, and the fact that you couldn’t easily search your online statement, I think, just made sense to people. It wasn’t something they were clamoring for.
Even though everybody working on it or using it would say, “That’s a good idea,” it doesn’t rise to the point of a customer leaving the bank because the ease of search isn’t there.
That’s a lot of the problem when you have captive customers. These little features aren’t going to make you lose customers, so it’s hard to make a business case. “Let’s spend $50,000 or $100,000 or $500,000, whatever, to improve our transaction search,” when there’s not a real ROI on it.
I think that’s always a problem.
I wish online banking had evolved with fees on it instead of it all becoming free. There haven’t been premium accounts or gold accounts or anything that anybody paid for.
So, the P&L internally, or the ROI internally, is always tough because there are no direct fees paid for anything. Everything has to be justified without any direct revenue.
Well, you’re really screwing up the premise of my show, Jim.
True.
But I will forgive it.
I really wish the industry would get to a point where someone would dump their bank because their search was crappy. I wish that’s how high-stakes these things were because it feels like it should be. But as you say, if the pressure is not there, why would they do it?
From your perspective, do you think fintech has improved banking? We’ll date it back to the first Finovate. Do you think it has improved, and if so, in what areas? Because people weigh in differently here.
Yeah. It’s improved so much.
A lot of it, I think, took the mobile app to actually make the user interface so much better.
Before, when you were designing for the desktop, it was still this sort of paper statement. You had all this real estate and you could lay it out with all kinds of stuff everywhere.
But once you had to shrink it to the mobile phone, I think that really made things a lot easier to use.
That’s not the advanced functions you’re talking about, but it sure became easier to look at.
For the first, call it 15 years of online banking, it was very cluttered. The look and the names of everything, figuring out what to do, the ease of use was poor.
Now, I think the ease of use is good, if not great, because people learned how to do it through mobile, beginning with mobile in 2007, 2008, 2010, 2011, that kind of time. Actually, really after 2010 and 2011, after the financial problems got behind us and people could invest again.
Yeah. You’re bringing me back to a memory I totally forgot about. One of my first company phones was a BlackBerry, even though we were in an iPhone world. It was an old model, and I was like, “How does this work?”
You had a keyboard, though, right?
Yeah, it did have a keyboard, and it was resilient. I once fell into a fountain, and it was the one tech thing that survived that little splish-splash incident.
That sounds more interesting. Tell us about falling into the fountain.
I thought I could jump it. I was wrong. Things you learn in your early 20s.
What about small business tools? What are some of the features you’d like to see, either with small business digital banking or more general banking?
I’m picking small business because I know you have a lot of expertise in it, but beyond holding money, what’s missing there? What would you like to see?
Yeah, I always had a sort of interest in small business banking for a couple reasons.
I was a small business starting in 1994 through basically my whole life, so I felt the pain.
Also, there are so many more interesting things that you can do for a business. Again, about the money, the business customer has an ROI. You’re saving them money. There’s an ROI for the business user that isn’t there for the consumer.
With the consumer, you’re trying to make them happy and improve their life. There’s nothing wrong with that. That’s a great thing to do.
But on the business side, you’re helping them improve their life and improve their prospects, and they can see it easier. Therefore, they’re willing to pay more for it.
I always said, as a small business owner, I would pay my bank $500 a month if you gave me what I needed in the banking and accounting world. All the numbers. I would be happy to pay hundreds of dollars a month.
Okay, I want to drill into this fee thing because it’s actually a really important point. It’s been exposed as a flaw with certainly the neobank model, not having the right revenue model.
Of course, they’re trying to build a product that has broader reach to more consumers. So, this fee versus non-fee question really is important to creating new experiences and products for consumers.
I feel like we’re finally reaching a point where at least neobanking is coming to, well, it’s also so controversial, but a tipping model or a subscription.
But you definitely are of the belief that one ought to pay for something in order to get a good product, AKA, “I’m not scamming you,” sort of thing.
Yeah. I just think it would have helped people make better products faster.
I think it’s all happening now. I think the neobanks, the challenger banks, created competition. They were very focused on making the digital experience great, so there was competition more than there had been before that era began, maybe 10 years ago.
I think that does really help.
I think customers would pay. I don’t think they would pay for just anything, like vanilla access. You can’t really charge anybody to look at their data.
But I think you could have, and will be able to, bundle premium services, better customer service, better security, this feature and that feature. I think that’s still wide open for people to do.
Two thoughts here.
One, you’re reminding me of an old story that I didn’t write, someone did, but it was about a bank branch charging people who came into the branch, which caused a big fuss, of course.
Did that really happen?
But to this idea of small business, I’m also really curious about products that are useful to gig workers, which often is sort of a small business owner in many ways, if not all.
Have you seen any interesting tools or anything for people struggling with volatile income because of the way they’re paid through gigs or running a small business?
Yeah. There’s at least one or two of the challenger banks that have worked on moving up your pay.
It’s kind of like factoring. You invoice someone, they give you the money right away. Factoring is a big deal for bigger businesses generally, but they’ve scaled it down to more of this very, very small business, high-end consumer kind of thing. So, you can get your money faster.
All the things that have been done to make payments, invoicing, collecting your payments, and following up on your payments, all those kinds of tools being integrated into online banking, that’s a core thing that the small business challenger banks are doing right now.
There are about 17 pure digital challenger banks in the United States. I think that helps move the product cycle along better because those companies are really working on all the margins of trying to make the business experience better.
Yeah, wow. Seventeen. That’s a better number than I would have thought, so that’s already feeling promising.
Yeah. Mercury is one of the big ones. You see them a lot, but there are others too.
Jim, I want to walk back to Finovate just because I know by the time this airs, Finovate is going to be around the corner.
When you first started, it was in the basement, right? You held it...
It was. Yeah. On Third Avenue and 54th Street, in a basement, sub-basement.
This was in the era of the first mobile phone, and you couldn’t get mobile phone access in that sub-basement. It was not a good thing for the people on stage.
I think there were 16 presenters demoing, and four of them were mobile phones. That wasn’t a good thing.
Well, you got some feedback, I’m sure.
Yeah.
I like this headline, “Bankers in the Basement.”
When you first were starting, were there bankers at the original Finovate?
Yeah, there were. There were only 170 chairs in this auditorium, and we sold it out.
Then we added another room, so you had to watch it on a feed from a separate room. We put 30 or 40 people in that, and then we still had to turn people away.
I remember Citibank was one of them. All of a sudden, they wanted to send over their emerging products team of five people, and we had to say no to Citibank and their money at the very first one. That hurt.
But yeah, it was probably half bankers, maybe two-thirds bankers. It definitely attracted them. That was the audience that we were really trying to attract.
What did Citi say when you were like, “Sorry”?
They didn’t really understand that we were serious. It took a little convincing.
You bounced them.
Well, now there are so many fintech events. I feel like what’s happened, or at least it feels like it’s happened, is that bankers don’t really know where to go. They don’t really know where to go to source new ideas or be like, “I really want to find something interesting,” or meet up with a partner that could be really compelling for both.
It feels oversaturated, and there’s this confusion of where to go.
If you were to recommend something to someone who authentically wants to know what’s the latest and greatest out there, what would your advice be to seek out fresh thinking?
I think conferences in general are fantastic for being able to open up your mind.
There are quite a few choices, but I think more important than maybe the exact one you go to is that you go to some conference.
Maybe less today than back in the day, where you could get away from your phone and work and all that, but just be in a different space, a different headspace, where you could think about things.
Then you always have the plane ride back and all the brainstorming you can do coming home.
I’ve always loved conferences for that ability to reset your brain and think about things that you wouldn’t otherwise, and all the things that you run into.
Obviously, my experience is with Finovate. That’s still a great place to go. Money20/20, you can’t go wrong there if you want to run into new ideas. But there are also quite a few others that have good digital programs.
Jim, I’m having this... You like theater, don’t you?
I do, yeah.
I’m curious. It doesn’t have to be theater, but have you ever had a business idea while you’ve been doing a different activity, either seeing a play or musical or what have you? Have you ever been like, “Oh, this is very different from my everyday, but I could apply it to my work in some way”?
Yeah. I used to love to go to the ballet with my wife.
I know.
I would sit there and brainstorm the entire ballet. I love the music, and it’s just a peaceful thing. I would come out of there with two or three hours straight of idea generation.
I always loved doing that.
See, that’s cool. So, that’s another tip. Go to the ballet.
Go to the ballet.
Clearly, I will go to the ballet.
It’s the music part of it. If you went to a Broadway play, you have to pay attention to the plot. But I like it where you can just...
Where it’s more just musical.
Yeah.
Well, Jim, I have one last question for you. But before I ask it, for those who want to get in touch with you, is there a best way to reach out to you or find you?
We have a website, Fintech Labs, where we keep track of conference calendars and also some small business digital banking. So, it’s jim@fintechlabs.com.
Wonderful.
Jim, my last question for you is, what is the photo on the lock screen of your phone?
Well, it was my mom’s artwork, and I just switched it to a rotating one where it grabs a picture out of your camera and changes it every day.
I just did that yesterday, so I have two answers.
What made you want to change it up, to be surprised?
I don’t know. I just thought I’d give that a shot. Like, what if it just threw a different picture at you every day? How interesting would that be?
But I kind of miss my mom’s artwork on there. So, Mom, I’m going to switch back to you.
Yes.
Well, Jim, thanks so much for being on Money Isn’t Everything. A pleasure to speak with you, so thanks today for your time.
Thanks, Mary. I look forward to another time.
Okay, so the biggest thing I learned in conversation with Jim today is that anyone can be turned down anywhere, even a banker at a bank tech event. Frankly, I find that reassuring.
Secondly, one of the biggest barriers to rethinking traditional products very well might be the business model.
If you enjoyed this show, and I really hope you did, give me a rating and a review. It’s the number one way to get the show out into the world in front of people like us.
And if you haven’t subscribed yet, please do. I don’t want you to miss the next episode dropping in two weeks with the founder of Debbie.
I’ll catch you then.
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