Banking on Digital Growth
Banking on Digital Growth

Episode · 2 months ago

143) #NewStartsNow: A Small Business Guide to Fintech: Insight for the Future

ABOUT THIS EPISODE

Traditional banking institutions are slowly being replaced by other fintech banking solutions and small businesses are taking note. With more options available than ever, business owners are realizing that switching to more efficient banking solutions is as easy as downloading an app.

We speak with Renee Newman - Industry Advisory Board Member at Nymbus, Derek Sutton - VP of Marketing at Autobooks, and Corey LeBlanc - Co-founder at Locality Bank about the marriage of small businesses with fintech and taking the necessary steps to creating a better customer experience.

We cover:

- How small businesses are collaborating with fintech & inspiring hope

- Empowering small businesses to maximize their growth capability & overcome fear

- Creating a better customer experience & keeping each other accountable

- Considering fintech a collaborator, not a competitor

You can find this interview and many more by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

Listening on a desktop & can’t see the links? Just search for Banking on Digital Growth in your favorite podcast player.

...if we're truly wanting to put theclient in the center, then we have to look at experience first. Mhm. You're listening to banking on digitalgrowth with James robert ley who believes there is no better time thannow to educate and empower financial brands to gain a fresh perspectivearound future growth opportunities. That's why today's episode is part ofthe new starts Now series brought to you by Nimbus, who offers a completeset of tech tools and services, all designed and engineered to empower youand your financial brand to maximize your future growth potential greetings and hello I am James robertley and welcome to the 143rd episode of the banking on digital growth podcast.Today's episode is part of the new starts now series and features afireside chat conversation that I facilitated, framed around smallbusiness growth opportunities for financial brands more specifically howyou, the dear listener can create value for S and B. S by transforming thefinancial experience. Now, this is a passion topic of mine, which isempowering and elevating small businesses because I do believe S and B.Small businesses are the backbone of our local economies, rooted deep withinour local communities. In fact, I predicted all the way back in episodenumber 55 which was my top 12 growth trends for banks and credit is in 2021That the SMB market would be a tremendous growth opportunity forfinancial brands to capture over the next 36 months. This was my second of12 predictions that I make every year and so far from the trends that I'mseeing in the marketplace for 2021. both from banks and credit unions aswell as from Fintech. This prediction is coming true. You see small businessis an ever growing market opportunity for financial brands and fin techs tocapture as there were half a million new businesses started In January of2021 alone, according to a study from salesforce. And I predict we willcontinue to see this trend of small business growth continue as thebarriers to entry. The barriers to start a new business have never beenlower the problem. However, especially for incumbent financial brands, Isthere are now over 150 different fin techs competing for the attention, theeyeballs, the deposits, the loans of small business owners. And this reallycreates a tremendous amount of choice in the marketplace and, and that'schoices leading to a tremendous amount of complexity and even confusion forsmall business owners who do they choose, where do they turn for help?Who should they trust? Will they turn to you, your financial brand, your bank,your credit in your Fintech startup or will it be someone else like a squareor Paypal? Maybe even a quickbooks, just to name a few. The good news foryou is that new starts now and now is the time to cut through the noise withmarketing and cells and growth strategies that put the transformationof people in this particular case. the transformation of small business ownersover the commoditized transaction of dollars and cents. So pour yourself acup of coffee, grab a glass of wine, craft your favorite cocktail and getready to join me for a fantastic fireside chat conversation with threevery smart three very passionate people including Renee Newman who is anaccomplished financial services executive and board member Derek Sutton,who is the VP of marketing at auto Books and Corey Leblanc, who is the cofounder at locality bank. And if you'd like to watch this conversation unfoldinstead of just listening to it, you can always hop over to nimbus dot comforward slash S. MB far side that is...

...nimbus dot com ford slash smb fireside readings and hello, my name is Jamesrobert lay and I'd like to welcome you to the new starts now series brought toyou by nimbus specifically today we're going to be talking about smallbusiness. It's a $370 billion opportunity for financial brands not tocompete with Fintech but to collaborate with Fintech and because we're talkingabout small business, I'd like to think the East Austin hotel for theirhospitality for welcoming us in and say so studios out of Orlando for filming.Today's discussion joining me today is Renee Newman, an accomplished financialservices professional and board member. I'd also like to welcome Derek SuttonVP of marketing from auto books and finally Coral Block co founder atlocality bank. And as we begin today's conversation and discussion. I'd liketo hear some stories, some stories hope, inspiration from small business leadersthat you've talked with, that you've worked with that you've interviewedover the last 12 to 18 months because what a challenging 12 to 18 months thishas been. And when you think about small business and the importance theyare the backbone of the american economy, they they create over half ofthe jobs in the United States. What have been some of these stories of hopeand inspiration? Derek let's start with you today. Yeah. So you know at all thebooks we talked to a lot of business owners and we make that a priority wewant to hear from the front lines and the stories you hear are amazing. So aswe all know small businesses are resilient, that's the, that's thenumber one redeeming quality. And so you hear these stories of transitionwhere I have a business and traditionally I'm going on site or intosomebody's home to conduct a business. So there's a um an educational companythat we work with and they help kids with reading disorders and they used togo in home and meet with the kiddos and the parents and they would do a littlecurriculum around um helping the kids learn how to read well with Covid thatgot broken and so they had to be resilient and the way that they adaptedwas they started virtual training and virtual learning sessions. But thentheir payment mechanism broke right out of that. And so their cash flow cyclestarted to extend and the great thing is, is they're bank happened to bepartnered with us and was able to deploy a digital receivable solution.So now the business was able to quickly pivot, maintain their cash flow and getpaid by the parents. They have now pivoted most of their sessions tovirtual now and they found the efficiencies in that. But we're hearingstories like that all the time about how businesses have just found a way,which is great. And I think that's the key. It's the resiliency, it's thededication. It's wanting to create a bigger and better, brighter future asyou're starting locality. Bank Corey, what, what, what are you seeing, whatare you hearing over these, these conversations with small businessowners? So the same thing with Derek, right? We're hearing a lot ofresiliency from the small businesses coming out of that. But one of thefrustrations that they have is on the financial side of things. How do theycontinue to run their business effectively? Right. So they're reallykind of looking for help. Right on the backside. It's, I mean, we had aconversation with a buddy of mine who runs a, a startup tech company out ofnew Orleans and they kind of, it's called rent check and what they do isthey basically settled between the renter and the Rinty, this uh, you know,initial payment right to say, okay, what the end of my, my lease, I'm gonnago back and say, hey houses as it was, right, well if the renter doesn't agreewith the rent, e you have a digital time stamp up and he was creating thisbusiness and he was telling me, look, I'm pre revenue, I'm trying to figureout what this model is gonna look like and I had to hire a fractional CFO justto help me manage my business. He's like, I've read two businesses alreadybefore my co founder was, you know, a naval academy grad, he's an academygrad and they still couldn't figure out how to balance the difference betweentheir bank account and their stripe account and the, you know, the squaresand all these other pieces. So Derek was pointing out there trying to figureout ways to get those things...

...orchestrated and when I think and hearthat story, I'm working at a financial brand, I'm working at a Fintech. One ofthe opportunities is small businesses looking for two things they're lookingobviously for help. But I think the other thing is they're looking for somehope they're looking that someone is going to be there to guide me on thisjourney beyond to your point. These questions and concerns rene when, whenyou think back over these past 12 to 18 months of working through this, whatwe'll call the covid experience, what have been the biggest trends, thebiggest patterns that you've seen unfold for small business, inrelationship to financial brands, in relationship to Fintech. Um when itcomes to offering help, when it comes to offering hope. So for for me, it'sall about that human connection in the humanness and I think what we alldiscovered and found is that human contact's still matters and that as afinancial brand, it's important to place yourself as a trusted advisor.And the process was so complicated and convoluted. And when we positioned ourbankers to be there and to provide help and hope, and we tried to take care ofthe technology on the back side to automate and make it easier. We foundthat we could magnify those moments that matter. You talk about humanizingthe digital experience if you will, as you're starting up locality, howimportant will call it humanity play into this overall experience here. It'shuge. Just the whole reason why locality is going to be a bank, right?So we could have easily came at this and said, let's go build a tech companyor financial services tech company off of another bank charter. And let's justroll this thing out nationally. Try to hit this thing big. Let's find aspecific segment that we can go maybe in payments, maybe in lending orsomething. We can create those efficiencies and humanize this part andgo sell that to banks. But then we started asking ourselves is like, youknow, where's the problem though? So we start to look at the communities andthe businesses that operate out of there where the difficulties for them,right? And that's the piece that's missing is we talk about thesetechnologies and we talk about personalization, but we don't talkabout personal right? And so for us is how do you take people who understandthe market, understand the difficulties and can work with those businesses willneed it. But when not needed, you still have the digital capability andeverything in place that they can self serve and they can get to point frompoint A to point B as fast as possible. Also, again, have that guy that Stewart,right, that fundamental purpose of the banks exist. So when you think aboutthe small business, competitive threats today, you, as you mentioned before,they're square coming in diving deeper. There's paypal, there's quickbooks,there's a lot of complexity. As a small business owner myself, I think, what doI need to choose? How does all of this fit and work together? But also as afinancial brand. It's death by 1000 cuts. It's a very slow bleed of therelationship. So Derek, what are the big competitive threats that financialbrands and fintech also need to be aware of as we face them today. Sure.So I would just kind of pull it down to this whenever the world went digital,the way the business is deposited money changed fundamentally. Andunfortunately financial institutions weren't prepared for that. And uh largeFintech and now Fintech, newly bank with Square were and they were leadingwith digital receivables. They made it very simple for businesses to onboardin minutes and start accepting payments and I haven't met a business yet thatdoesn't need to accept money. And so whenever the cycle got broken of incommunity accepting cash and check, taking it to a physical location to getaccess to operating capital when that broke, they had to go, it's like watergoing to the lowest point businesses are going to go find a way to get paidand those were the outlets for that. And there's an acceleration of accountcreation services as part of those...

...receivables companies. So square,adding a bank account, um Shopify quickly came to market and said, hey,we're now a business bank wave quickbooks online as well. And so theyall found the opportunity and they've done what Clayton Christensen wouldcall an innovator's dilemma. They've unlocked non consumption. So there wasa lot of non consumption of merchant services taking place inside of thefinancial system and they've unlocked that. And now they're creating aflywheel of other banking products that are slowly and now more rapidlydisplacing services at a traditional financial institutions. It'sinteresting that you mentioned Shopify and how that is an online e commercecompany, helping small businesses get started selling, you know, gettingthose receivables and now they're offering banking services when youthink about that. What a Renee from a relationship standpoint. Is it evenpossible for a small business owner to have that human connection that humanrelationship with a Shopify with a Paypal with any of these othercompetitors or or is there an opportunity for you know what we canbridge the best of both worlds? What does that look like to you? So I reallythink that hybrid approach is the sweet spot if you will, their statistics thathave shown that through the P. P. P. Process that those fintech companiesdidn't have as great as client satisfaction. And I think that's wherethe humanness comes into play. So you need to find an opportunity or a way tobridge that gap. Business owners have more options now than ever and you knowwhen push comes to shove and they need to get something done, it's notdifficult to switch, it's downloading an app on your phone, right? So we haveto figure out how we make that happen. And if the value you can add as arelationship banker in that is helping that business owner tie that alltogether. That's huge. Yes. What have you seen from a relationshiptransformation over the last 12-18 months? Corey, yeah, I got a storyactually, I was sitting down on a buddy of mine the other day, just went intohis shop. He's my tattoo artist. He's run a business for quite some time andhe's had a lot of success, right? But I wanted to ask him, I was like, look, ifanyone's gonna know this is my buddy Joey, right, what is the problem thatyou have running your business? Like, what are you using? How do you function?And this guy is, I mean, not technical at all. He's very archaic in the waythat he ran his business. He does have square, he started accepting creditcards not too long ago, but before that, it was just all in cash, right? When Ifirst started working with him and I was talking to him and he said, well,look, I don't really know anything about the banking technology stuff andhe doesn't even know the word Fintech, right? He doesn't understand. He waslike, so I don't really know how to tell you to make this better. Right? Soyou tell me what you're doing and I'll tell you if that makes sense as well,who are you using? So are you using the local bank, which I know he has arelationship or using the big bank. You know, the national make that I know hehas a relationship like, which one is your primary bank? Here you go. Andhe's like, what kind did you square? He was like, I start using it from mylending and we're talking about this last night. And what he does is he'slike, I can go get a loan, right? This amount of money, This capital for me torun my business same day and then pay it back. And when I don't need any more,I still have everything, all those receivables, all that information inthere and I can kind of run my business. He's like, it helps me know the thingsI really don't know. And he's like, that's huge for me. And the fact thathe right is running on square totally kills this idea that you have thesedigital natives out there that are gonna start to adopt these things andmove forward. And then you also have these more traditional people who wantto sit in the traditional institutions. So what we're seeing right in theconversations is that again, these businesses are having to figure out howto run their companies, right? And you do want that person that they want thatpersonal element. However, what's most important is efficiency. It's runningthat business day today. So if you don't have that with the personal,they're going to go take the efficiency. Well, what I would say is, but whatyour body is experiencing that is...

...personal to him. And although it'scompletely digital, it's his personal finances, it's his family, it's runninghis business. And so oftentimes digital gets a bit of a bad rap because thecustomer actually thinks that's great personal service, right? So who's theamazon wrap that you've ever met? We all think they have great service, butit's all digital. Well, I think there's that disconnect and I think that's thekey service is in the mind of the receipt, right? And it comes down tothat idea of experience and what is experience. It's well defined systemsand processes that have been strategically thought out, that havebeen applied. And I think the key here, particularly when talking aboutrelationships optimization, what is working well, what could be made evenbetter? I'm curious as we reflect on where we've been. How did we get tothis point today? Derek if we can go back and think what brought us to thisand how did these relationships begin slipping away? We'll call it slowly.But then what has that journey looked like from your world? Yeah, I think Ihit it on it earlier. It's community banks and banks that were reallyfocused on a branch network. The branch was the epicenter where activity tookplace and the expectation was people needed to come to us for service. Andbut we also had this trick where you know, the only place you could depositcash and check was that a financial institution. And so you had thisnatural connectedness to the market and you had people coming in and out, youwere learning about new markets, new opportunities, business success, you'rehaving conversations, you're building a personal relationship when paymentswent digital, all that got broken and those conversations are now taking outof the branch, those connections are no longer made and um you know the winnersand that are those that are leading with the digital receivables and so Ithink that's all the epicenter of a lot of this and it's gonna take a bit of anadjustment, you know, financial institutions kind of gave up on umpushing merchant services to businesses long ago and when you look at eventraditional merchant service penetration rates inside organizations,it's not that great. And so I think we have to get back to the number onepriority about businesses cash flow as an organization. How can we get infront of cash flow because he or she who controls how business gets paid,ultimately going to control the relationship? And that's a great point.Cash flow. You mentioned before access to capital as well with the story ofyour tattoo artists Renee, I think about Quickbooks, um I'm in quickbooks.Quickbooks knows me. Quickbooks understands what my operations lookslike, probably sometimes even better than I know myself and then they'remaking offers to me to get that access to capital. Um and I'm not getting thatfrom, say, my traditional banking relationship, what's the opportunity totake that type of experience and then deploy it through? We'll call it anincumbent or a traditional financial brand, is it in partnership, is it incollaboration with Fintech? Is it something that we build internally?What are your thoughts on this here? I think for most traditional financialbrands, what we've done with small business is taken all of our commercialproducts and services and solutions and made a commercial light and so thatthat even goes to policies, procedures, processes, pricing, you name it andwe're trying to fit small business in a box and that doesn't really work withthis disruption, which I'll, which I'll call a beautiful disruption. What wesee is a bit of an aha moment where financial brands can say, wow, can I dothis or if I can't do it, can I partner with someone who can help me do it. Ialso think we struggle with our own data and I watched a focus groupplayback and and this was a great moment where someone said, why do youask me on a check, renewal? My last...

...check. Don't you have that information?I think we've been hesitant for some reason to use our own data to help umif we have a relationship with someone there saying help me, we should belistening, we should be helping them when they're searching for something.We should offer that up. And that's where I think Fin techs and financialbrands can partner well together, you know, everybody can offer a product orservice, right. But what is that extra value? How do you infuse thosememorable moments of those brand moments that differentiate you? That'swhere I think there's great opportunity today's episode of banking on digitalgrowth is brought to you by Nimbus who believes in creating even betterfinancial services for all better access, better experiences, bettervalue, all while supporting the entire customer journey. And how do they dothis offering end to end niche banking solutions that you can buy or build,providing accountability beyond the technology and prioritizing impactful,intentional innovation. Instead of chasing features ready to transformwhat is and create what's next, learn more at nimbus dot com. I want to talk about that opportunityeven further because when you think about that relationship betweenfinancial brands, Fintech small business, one of the discussion pointsthat we've had before is empowering a small business to maximize their growthcapability because a lot of times as a small business owner, your head's down,you're focused on the business, it's very hard to look towards the futurewhen you think about that relationship and and you're building the future nowwith locality. What are the opportunities to, to educate? Notfinancially, but we'll just call it more just business advisory for smallbusiness. Yeah, I think the opportunity is huge as Renee was pointing out isthe fact that banks really are not using the data and the way they should.Right? And so we were just having a conversation with the regulators theother day and then we had this discussion about the use of data andhow much data we could potentially have. And is that a risk. And I said no,absolutely not. We're, we're taking the same amount of data than any otherfinancial institution would if they just go apply for a long, we're justmaking that data actionable, which is very different. Right? So most bankswill go look at data and they want to have all the data and maybe even gowork with a company cleanse and categorize that data and presented tothe executive board or the actual board members and say, hey look, this is whatour customers look like. Okay. But what I do with that, Right. And that's theproblem is we have the data, we understand the markets and we try tobreak this analysis as opposed to take this day to make it actually and bringit back into an insightful dashboard for the customer, insightful dashboardfor the bankers so that both sides understand where along that financialjourney the customer is. Right? So the way we look at it is can we take thedata, Can we put it in front of the customer? Allow them to understand cashflow better, allow them to understand the ebbs and flows of their businessand then inject that, you know, education component as well. Where werethat true advisor that guide to the customer to say, okay, well at thispoint we think that you'd be prime to get alone or maybe access to uh, Youknow, some additional funds because your business is in the top 5%, you'reright for growth, right. Maybe they don't know that. Maybe they'requestioning that or maybe they do, but they just don't know to go ask for aloan or they're scared to go ask for a loan because there's also thatcomponent. And so for us, it's how do you combine the partnerships with theFin techs? How do you combine the data that you have with the front userinterface. Right. But it starts with actually building the architecture andinfrastructure on the back side to make sure you can deliver on that. I thinkyou're hitting on something that's very back to this point here of human, youmentioned fear, fear of getting the...

...loan, fear of even applying the loan.So therefore I don't do anything and I continue to struggle. What's theopportunity for financial brands and Fintech to collaborate to eliminatethose fears? Do you think Derek? I think it comes down to financialinstitutions making a decision around what they want to be really good atwhat they want to own and what they want to partner on. And I think thebest organizations I've seen, they clearly signal and say, hey, we expectthis vendor to come in and own this portion of our business. So you own thefront end user interface, you own data analytics, you own customer acquisitionand you help basically help us better serve our customer base. We've goteverything from there, the compliance, the security, the personal relationship.But you know, just partner with us go do your thing. Well Fintech in supportof us and in support of our customer needs. I think that's the model movingforward. You know, community banks are and banks in general are a bitstretched with having to kind of be all things to all people. Um, and I thinkwe're probably gonna move into a world where it's a bit more vertical andwe're gonna rely upon Fintech visitors to help us service those verticalniches that we care most about. So Corey before you mentioned this idea offear is a small business owner or the fear of applying for a loan because ofthe fear of rejection of getting approved for that loan. But fear isalso something that we internally out of financial brand we have to managebecause changes, hard changes, scary change is sometimes painful. I'mcurious what is your experience of just managing change personally. How are youdealing with this as you're starting up locality and then what has thatexperience been historically for you as well? Yeah, so that was one of theprimary conversations we had when we started building team, you know, we, wehad this founders group and we were all pretty much on the same page. We knewexactly what we wanted to do. We understood that there was gonna behurdles, there was gonna be difficulties. There was gonna be thingsthat we thought we were going to do that. We then inevitably change, Right?But as you start to bring more people on, how do you make sure that theyunderstand the necessity of change over time? The iteration is going to be keyfor our business, right? That day one product is not going to be the bestversion of the product. We're going to have. That, you know, 90 day productisn't gonna be the best version of the product gonna have. It's gonna continueto get better if we iterated. And so the first thing we realize is we haveto de risk failure, right? The, this this concept of if I'm wrong, if I goselect this vendor, I go sign this contract, I make this change I executeon this loan and it doesn't work. Then my job's at risk. You know, or orsomeone's gonna get upset or I'm the weak link of the, of the group. And thefirst thing we said was, let's sit down with the entire group of people that wehave. Let's get every single employee, let's go through a culture day. Allright, let's go sit down. Let's look at all of our behavioral, uh, statistics,everything. So we did all the exams and everything and then started having aconversation based on everyone's personalities and said, okay, look,this is what we're gonna expect of you, but we also expect you to challengewhat we do. We expect you to challenge everything that you're doing and justunderstand that there's no way we're gonna give you a leash. Yeah. This isultimately going to hurt you, right? You have all the ability to go besuccessful and none of the ability to really fell and failure is the fertileseeds from which new growth springs and new I think is the older that we get,we get conditioned to fear failure because if you think about as akindergartener, as a first grader, as a second grader, we're still learning,we're still exploring and the future is bright. But then we go through and weget a bad grade on a test and then you're like, oh, there's somethingwrong. You're talking a lot about culture here and empathy internally andsupporting and getting really clear of what the future you're looking to buildas an organization and then supporting one another. Let's come over to theincumbent side Renee Uh, we're at a...

...large organization that's a big ship toturn and if you're going to collaborate with fintech, fintech naturallyoperates differently. They're operating from a sense of optimization, 90 daysprints. If you will, How do you transform that cultural conversation atan incumbent who has 100 125 years of legacy behind them, what do we do there?Yeah, I have a mantra, progress, not perfection. I mean I'm one of thoseright, I strive to be perfect and I think adopting an agile growth mindsetis really important. Consider yourself a scientist, test a theory, test ahypothesis. If you fail fail fast and hopefully fail a lot. I mean that'spart of the learning and understand that when we need to get something outto market it can't be perfect and it will never be perfect. So what is it,what's that minimum viable product that we need to get out? How do we test itto ensure that it's meeting the needs of our customers and how is thattranslating in to us for business? So again, I just think people are the mostimportant part of this and it is a cultural shift and so therefore youreally need to help them along that journey. A couple thoughts on that.When you mention progress, progress is greater than perfection because as youlook ahead towards the future it is so easy to get overwhelmed at all of thesethings that we have to do, it's the impossible mountain that we have toclimb. And when you look at that mountain, you begin to question what'sthe point? But when you look behind from where you've come from, thatbuilds your courage that builds your momentum that builds your confidence tocontinue to commit. I want to come back to the point here about focus becauseit does take courage to focus and what is courage, courage is doing the rightthing, not in the absence of fear but facing fear itself and continuingforward? One of the things that you have noted before was you can look at afinancial brand website, look at their navigation menu, talk to me about someof the complexities. I'm a small business owner, I'm navigating this, Isee all of these options, all of this choice, but then I go look at say asquare or a Paypal, it's much more simplified. You're gonna need to giveme a couple of minutes because this one, this one may take a minute. So the justdo that. Right? So have your cold shower moment with your employees andsay in your board and say, hey, would you go to our website and tell me whereI can find the solution? Just give them that little challenge. Right, navigatedown on the menu. You see this whole portfolio products and services and sayput yourself in the small business owners, shoes and consumer shoes. Um Iwant you to go sign up for this service, Open an account with us, use thisproduct or service, but I don't think enough financial institutions havetheir employees do that, use their own banking products. Shut off access incore two balances and make them use the mobile banking app. Does anybody in ourinstitution have a small business on the side, sign up for this product, usethis service, educate our team about it, make your senior executives go into thelobby and talk to people regularly when they come in. Hey, what do youchallenge with, what do you face with them? Which banking parks are you using?What's wrong with them? What's broken? The analogy I give, financialinstitutions quite regularly is you would never leave impediments in yourphysical branch lobby to get in the door or to get access to service or tosign up for a product or service. Yet your digital solution is littered withthem literally littered with them. You go to a Fintech solution and they havethe ability to focus in and they can just say, we're going to hear we'rehere to solve this one problem, we're going to do it really, really well. AndI think financial institutions and this is a cultural thing the mountain toclimb. Oftentimes as an RFP because the RFP is basically, it's a history bookof all the things we did in the past...

...that vendors have to first satisfybefore we can move forward it's broken. And so instead a financial institutionsshould say, hey, I care about small business, this is a priority. I've metwith customers. We know what their pain points are. This is the experience wewant to create. If you're a vendor. If you can come in and help us solve thisthing, that's our highest priority here is our prototype. That's when an RFPshould be. And then if you could do these other things. Great. But if not,we're going to leave the legacy in the past. And if that makes 5% of ourcustomers unhappy. then that's the challenge. You have to let them go, Yes,you can't maintain the past if you want to build the future. Well, that's agood point to. And so as we were talking right, you're saying like, howdo you go to the speed of the Fintech or get the bank to ramp up the way theylook at things. Banks never look at things that this singular outcomeperspective, right? They want to look at this in the totality of the businessand their month by month, quarter by quarter. And instead of looking at,okay, what are we trying to accomplish? What is this singular outcome that wecan then communicate internally to our employees? So everyone understands,look, if we all know what we have to do, it's a lot easier to start to figureout how do we do it right? It's completely frustrating as a Fintech or,you know, I worked in core banking technology and digital banking and yougo through this process and you have this long drawn out conversation aboutthese three or four features. And then you ask the question how many peopleuse this, right? You don't know, but we've always had it isn't thatimportant. And that's a great point because you talked about, you know,asking your board, asking your senior leadership team, go find this on thewebsite, Go through that shopping experience, I can tell you 85-92% offinancial brands have never secret shopped their website. And when weconduct studies against, say an incumbent versus a Fintech, the Fintechtraditionally scores higher because of the simplicity, they're notoverwhelming. There's just enough to move them to nudge them in the rightdirection. So you're starting a new bank and it's not every day that we getto start a bank, which is a big undertaking. What are the big lessonsthat you're learning? Because you're applying a lot of this thinking, you'refocused on a niche, you're working towards a bigger purpose. You'recommunicating that purpose internally as a North Star. So as an organization,everyone knows where you're going and growing together, you're leaving thepast behind to create something new. What have been the big lessons thatyou've learned through this experience. I think one of the big keys for us isunderstanding how easy it is to go back to comfortable, Right? And so westarted talking about first principle concepts and we were saying, hey, we'regonna build this thing from scratch, right? What's ideal? Alright? We lookat deposits, what's ideal? We look at cash flow management, what's ideal,right? So on and so forth. But then we get to certain areas and we, we hit aroadblock, we hit something, it's tough and everyone's like, well, let's justgo pull this other platform. We know we've used this before. It's gonna be,it's gonna work Well, that's not really what we're out setting out to do, right?So this ability force to create that officials see this better customerexperiences. We're gonna have to get through those things. And so it'smaking sure that every single day that we are challenging ourselves, right,that we're not letting those temptations to go back to these otherways of doing things because that's how they were done. And then making surethat everything they were doing moving forward is to this specific again, thatoutcome, that singular outcome. And so for us, it's too to allow localbusinesses to maximize their potential. So if anything that we do doesn't dothat right? If we go back to a traditional loan process, because weknow we can get through the loan processing, the credit analysis tounderwriting, and we go back to that, but it didn't create any kind of valuefor that local business to maximize their potential, then we didn't do whatwe said we were gonna do, right? And so that's important for us. And and that'sone of the things I've learned is even with a bunch of people who, I meanthink about it. Everybody who joined our team literally jumped off a cliffinto this opportunity to like to your...

...point, you don't start bank every dayand then we're still, you know, making sure that are having that difficulty,right? And so I can only, you know, just exacerbates what it wasn't theselarger institutions what you and I think that's a good point to makebecause accountability, accountability so that we don't fall back on oldpatterns. We don't fall back on old belief systems. What is a great wayparticularly at an incumbent, you got a lot of legacy, you've got a lot ofhistory. How can you hold each other accountable so that you don't fall backand continue for to make progress, make progress greater than perfection, right?Corey hit on it. You have to have a plan and you have to have that NorthStar and in my experience it's put the client in the center of everything thatwe do and you go back and you test it. Is that helping the client? And we alsoneed to rethink how we institute change within our organizations. Typically wehave those business leaders help us with that process. But what I found inmy experience, they just rebuild the same widget the same process. So wehave to stop that. And if we're truly wanting to put the client in the center,then we have to look at experience first and we have to rely on theexperts for what's needed through the process. But we have to re imagine wehave to think differently and we have to document that, stick to your plan,adapt as required and look for ways to be daring, different and smart to meetthe client, how when and where they want to be met. I like that. Put peopleat the center of all of your thinking, put people at the center of all of yourdoing and I see Fintech has done that more from an operational standpointhuman center design. If you will jobs to be done. Derek. I'm curious what isa commonly held belief on the relationship between financial brandsand Fintech that others in the industry have, but you just disagree with. Yeah,that that's a long list. Probably I'll hit on this one that I think we rest onour laurels a little bit too much around. People want to connect withpeople and people want personal service. I think that's true when they're in amoment of need potentially. But actually people just want stuff to work,you know, and they want to know that it's built for them and it's going tosolve their problem and so we knew there's here's a here's a very starkcontrast. Go to Square's website and look at the way they literally theirdesign, put the business owner at the center of everything they do. Itsbusiness owners spaces, it's them in action. It's spoken to them in theworkflow of the business owner. Are you here to collect money? Are you here topay your people are you building for the future? Go to a bank's website onsmall business checking and you know what it is, what product you want? It'stransactional. Right? And so you say, as financial institutions, we say thatwe want a personal connection with business owners. But yet all we do isspeak in transactions, small business checking is okay, you're going to paythis dollar per month, you can do this many transactions, we're going tocharge you these fees for these types of transactions if you want to waivethose fees. Do these things, do these transactions that small businesschecking, it's broken, it doesn't have the customer in the center of that atall. It's thinking from the inside out, it's saying this is our accountanalysis routine. This is how we set up small business checking. Thereforethat's how we're going to relate it to our customer base. And that's a greatpoint because when you look at this idea of the transaction, it's very cold.It's not very human. It's not even personal. It's just an exchange. Butwhen you begin to think about putting the transformation of people, thetransformation of small businesses over the transaction, that's where the realvalue creation comes and that can come from collaborating, collaboratingfinancial brands and Fintech instead of...

...competing Renee I'm curious how can wetransform that conversation internally. A lot of conversations that we mighthave with ourselves that we Fintech is the competition? No. Fintech is thecollaborator. It is the who to our how right? So I have been a part of a lotof focus groups and it was really interesting for me last year goingthrough, we're trying to maximize the small business journey and another ahamoment we had a small business owner say no, me, no. All of me know who I amas a person. I think we as a traditional financial brands get veryused to uh separation of church and state when it comes to commercial right,business owner and we don't talk personal business, But small businessthat's inextricably linked. And this person said I'm an entrepreneur, thisisn't the only idea I have, you've never even asked me so power. So when Ithink about the opportunity with fintech and traditional financialbrands, how do we leverage that? Right. How do we maximize that? How do weleverage the technology and the tools and the resources. So when we're havingthose human to human moments, we can make a matter. Um and then I have myown internal focus group with my two digital natives and my my 13 year oldentrepreneur said to me recently, he's a Bitcoin miner and started his ownbusiness. I will never need a bank. How did that make you feel Whoa, It didn'tmake me feel very good. And so I started asking questions, he's savvy,right? And so he's got this figured out, I'm gonna go where I need to go to getwhat I need done. Right. And I think that's key because he's empowered, he'sin control, he can google, he can find what he needs and that has transformedthat relationship. Once again, I'm curious as we look ahead towards thefuture and I'll change all progress begins with a small, simple step. Itdoesn't have to be this massive transformation. A lot of times when youthink about massive transformation, it's one of the reasons that 60-85% ofdigital transformation initiatives fell in the first place because there's notthe clarity of why we're doing, this that begins the pushback internally ofdon't move my cheese. I'm comfortable where I've been for those listening and watching andI'd like to get an opinion from all of you on this. What would be that keyrecommendation and that small step, that small start to begin to makeprogress going forward. You're going through this Corey, let's start withyou. What's that one small thing that they can do? I think it isaccountability, right? Is creating that accountability inside the organizationso that they understand that ownership of a department, right? Isn't justownership, right? It's not a positional thing, right? It's accountability tothat thing. And for me, I think the recommendation I have is a discussionthat needs to be happiness other organizations is how do we start tochange the infrastructure and the architecture of the organization aswell as the technology stacks to support this idea that we're going tohave constant change, We're gonna have all these things that's gonna come out,we're gonna have a version of the product that's an M V P that's going tobe iterated on. And so when we were starting out, we were kind of met withthe dilemma of all right, if we're gonna go in this modern direction andwe want to go build this modern infrastructure and architecture, ourcore banking solution couldn't also be this very static harden system that isstill gradually modernizing, right? It needed to be something that was moreflexible. So when we started looking at all the vendors were like, oh, this isvery scary, right? Because not all of them have a lot of proven points and wewere challenged with, do we then just...

...go sign back with this traditional coresystem and just get rolling? We're like, no, we can't. We gotta make sure webuild that architecture infrastructure properly. And so when we startedworking with Nimbus, it was like this light bulb, right? We started workingwith their engineers, we started working with their marketing team, westart working their product teams on what this evolution is going to be. Andnow we've talked about this, the version of the product that we had inmind when we went into day one has gotten tremendously better throughthose conversations, those collaborations, but the ability for usto be able to execute on that is key. That's a great point and Renee I'd liketo come back to you as well to you, Derek on that of getting that outsideobjective perspective because it's so easy to get trapped in the bottle, youcan't see anything outside. You only know what you know and I hear that alot of times from financial brand leaders we just don't know this or wedon't know that. I said no hard feelings that's why training that's whyeducation is so critical to future growth. How can we get that externalaccountability that external guidance and what does that play? What does thatlook like rene? I think uh financial brands have to start thinking more likea brand and less about I'm a bank and this is the way I've always done it andbe open to that. I think we see that there's more adoption of digital rulescoming in but we have to be willing to have crucial conversations and we haveto get comfortable being uncomfortable and when we have those conversationsit's business not personal, it's not about the ownership and the way we'vealways done things operations our I. T. Doesn't drive the bus it's the clientyou know and how do we make that? How do we maximize that? Because if we helpsmall business be successful we will be successful. Absolutely. Absolutely. Andyou talk about small business being successful. Financial brands beingsuccessful, Derek I want to come back to you, what would be that small steprecommendation that you would make for someone looking to make progress onthis journey growth. Here we have a phrase or saying that audiobooksproximity create sympathy. So go talk to your business, customers, walk intheir shoes, go find out their challenges. Don't be overlyprescriptive, it doesn't have to be a scripted conversation, It could be verycasual and just ask them about their business. How do you get paid? Likewhat are your, what are your growth needs? Um, reach out then and say toyour employees and staff and start to train them on what the competitionreally looks like. Call into your organization and say, hey, I'm abusiness owner just got started. I need to accept payments from customers. Howcan you help me and see what your employees say? You'd be shocked at thereferrals that they give to the new competition quite frankly. Um look at alittle bit of your data, pull a sample of 1000 small business owners and seehow many incoming deposits are coming from third party solutions and thenlastly Had your team download and use those 3rd party solutions andunderstand what you need to be if you really want to compete in that market.I think if you do those things, you'll quickly see that things have to changeand then it's going to be up to you. Do you want to build the plan and executeupon that? Or are you willing to abdicate or basically allow those thirdparties to kind of win the day with the business owner? I can't help but thinkas you're talking through those recommendations, you talk about goingout and just talking, having a conversation. When was the last timethat you were listening? Thinking, having these discussions with smallbusiness owners. That's a key takeaway right here. So as you're talkingthrough those ideas, I can't help but think about the opportunities to starta podcast. That's a great way to just get in and have these conversations tolisten to learn to document because now it becomes a collaborative endeavorbetween a financial brand and the small businesses within the communities thatthey serve rene, I want to come and end with you. Key insight, keyrecommendations, something small that...

...someone can apply to begin to makeprogress going forward here. Growth mindset be open to change, be open andwilling to listen, We can do hard things. Yeah. As Renee said, this isthe conversation that we have to have and there's no better time to have thisconversation than now. So as you continue to move forward along yourdigital growth journey, continue to develop and maintain a growth mindset.Look at things through an empathetic. I as you put people at the center of allof your thinking and all of your doing? Most importantly be sure that youcreate space and time to go all in on small business as you commit to alwaysask good questions, listen to their answers and learn from observation.Don't forget you can always hop over to nimbus dot com forward slash smbfireside to subscribe and unlock access to the other conversations in thisseries focused on empowering and elevating small to midsize businesseswhile sharing the videos with a friend or colleague you think might find valuein the insights that you've gained today until next time and as always bewell, do good and make your bed. Thank you for listening to another episode ofbanking on digital growth with James robert ley brought to you by Nimbus whois on a mission to bring the people process and technology together tocreate new routes to growth for financial brands and enable them todeliver outcomes. To learn more about how you can collaborate with Nimbus tomaximize your future digital growth potential visit www dot nimbus dot comuntil next time, be well and do good.

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