Banking on Digital Growth
Banking on Digital Growth

Episode · 7 months ago

146) #NewStartsNow: Compose a Symphony of Simplicity for Your Customers w/ BaaS

ABOUT THIS EPISODE

Why navigate the complexities of alliances and BaaS offerings?

Because your customers want simplicity.

And with brands and FIs working in concert, you can give your customers a symphony of simplicity.

That’s why today’s guest, Sarah Howell, is so passionate about her role as Chief Alliance Officer at NYMBUS: Bringing together both sides of the embedded finance equation, ultimately, makes life simpler for the end-user.

In this episode, we discuss:

- The purpose of banking as a service — and why it’s a smart move in a disruptor-filled financial landscape

- What FIs and brands should know before partnering to maximize their opportunities in embedded finance

- Why a better finance world for all starts with removing friction and orchestrating a symphony of simplicity

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.

I want a better world, right? I want, I think we all do and I think we want a world where friction has been removed and that our lives are not so segmented, but it's a, it's a symphony of simplicity and that's what I think we're creating with embedded finance foreign users. Yeah. Mhm. You're listening to banking on digital growth with James robert ley who believes there is no better time than now to educate and empower financial brands to gain a fresh perspective around future growth opportunities. That's why today's episode is part of the new starts now series brought to you by Nimbus who offers a complete set of tech tools and services, all designed and engineered to empower you and your financial brand to maximize your future growth potential greetings and hello, I am James robert ley and welcome to the 146 episode of the banking on Digital Growth podcast. Today's episode is part of the new starts now series and I'm excited to welcome Sarah Howell to the show. Sarah is the chief alliance officer and head of banking as a service at Nimbus, bringing together banks, credit unions, fin techs and brands to create even more value for each other and consumers through collaboration in what she calls a symphony of simplicity. Welcome to the show, Sarah, it is so good to have you on today. Thank you. It's fabulous to be here. Thank you so much for having me before we get into this idea of bob's banking as a service always like to start things off on a positive note what is going well for you right now personally, professionally, it's always your pick, what's one good thing happening? Oh, I've got a daughter that planning a wedding, so we've got a wedding in our future next year, we're hoping that Covid will settle down and we'll be able to have a beautiful wedding and just enjoying the new life here in florida, which my husband, I just recently moved from florida from denver colorado to florida. Well, congratulations on both fronts, both on the upcoming pending wedding as well as on the move. And I think that's when you look at that, it's changed right? You know, new beginnings move. It's a new beginning, there's new opportunities and I think that's where we're at right now, when it comes to financial services, when it comes to banking, when it comes to just brands for that matter. There's a lot of New things that have transpired within the past couple of years really in the last 18 months and sometimes it can feel very overwhelming. But then there's also a lot of new opportunities to create to capture and that's where I want to focus things on, particularly when it comes to this point of vast banking as a service, you know, as this industry needs another acronym, let's...

...simplify this for the dear listener, what is banking as a service? Mhm. Well, I think it's an overused word to be very hard transparent, I think it just helps. It is it is the effort to help a non chartered entity to offer financial product. That's the most simplistic way that I can speak to it. Now there are different business models associated with vase and I can get into that in at nauseam. But I think in the most simplistic form it's helping a non fee become somebody that can act and look and feel like a charter entity and that gets me excited because this idea of brands offering and creating value in new ways to their audience, to their customers, to their communities. Um it really is unique and I'm curious for the financial brands, the banks and credit unions who are listening, how might Bass be either misrepresented or misunderstood historically. Like you said, it's an overused word. It's an overused acronym. Where might there be some confusion that we need to clear up? I like in Bass to my role in alliances and I like in alliances to parenting. When my kiddos were little, I was kind of the end all be all and I was the, you know, my husband, their world revolved around us, but we said mattered as they got into a very disruptive season in their life, which was the teenage years. Our voice abated a bit and other folks became very prominent in their life and I could have been I could see them as a threat. All right, can look at the surrounding um disruptive environment that my teenage girls were in and realized that I needed other voices speaking into their life. And I think very similarly, um what's occurring and the financial industry now is very disruptive and it's very much like how my teenagers were and I first saw other voices in their life as threats. And I think if we're not careful the financial industry, traditional players, credit unions, banks, we can see those other voices ak brands or thin text as a threat. But when we realize the ecosystem that everything is being disrupted, whether that's technology, whether that's red changes, whether that's social, so social reforms everything in our world is so disrupted now and to have an additional voice speaking into that end user, whether that's a business, whether that's a consumer and that they're going to to seek a financial product that maybe I don't own or maybe they can't get from me as a as a traditional financial institution. Instead of seeing that as a threat, let's see it as an opportunity. How do we help create some level of consistency and surround that end user with financial products that...

...are going to meet their needs, whether we're doing it directly or we're doing it indirectly through a brand relationship. That's a great analogy, the idea of parenting and kids. I've talked many times on this podcast, my wife and I we have 11975 and we're starting to see that that idea of some other voices influence, particularly at the older level and to your point, I think it's just going to get louder. But I think that also creates some variety and different perspectives. And so looking at it not as a competitive threat but as a growth opportunity. I like the idea of Alliance, I like the idea of collaboration really from the lens of abundance. What what might be some of these opportunities here both for, we'll call them brands as well as incumbents from looking at banking as a service. Looking at collaboration. Looking at Alliance, where might there be some of the biggest opportunities in your mind? Well, I think for a brand you have a captive audience, you've already got a group of individuals that are committed to your brand and you've got brand equity that you can leverage on multiple fronts. And maybe that's for your existing product offering, whether you're a SaAS technology provider are you're a retail, um, you know, merchant that has a great following leveraging that to provide additional benefit to your customers. I think it just deepens relationships now doesn't mean that you have to pivot from your core business to become a banker and neo bank. No, and and that's why I think there's so much opportunity in creating an ecosystem of experienced financial providers, banks, credit unions that know this industry really, really well and partnering them with brands and and Syntex in a way that allows both to succeed in life, which is ultimately kind of what we want for our kids, right? That's your end goal. Well, its growth, its growth because like we're all getting better together. There's the old thinking that a rising tide raises all ships. And when I think about this idea of alliance and collaboration, you've made a very unique perspective here. Brands already have the audience or what I like to say, brands already have built in community, they have built in affinity. I think just a couple of the top of my mind, like an R E I for example, a chewy dot com, you know, a lot of connection to the brand, what the brand stands for, What does that look like bringing, bringing everyone together so that we all grow together, What does that look like? Practically applied here just once again kind of demystify some of this in the mind of the listener. Yeah, well, I think here at numbers, when we look at there's opportunity for education on both fronts. So brands that want to lower the various of entry to get into the financial services, There's an education path, how do you do it? You know, what do I need to...

...think about, what are, you know, how do I how do I launch a financial product? And then on the other side there's a lot of banks out, there especially in the sub 10 billion range because then Durbin provided opportunity and I think if you want to look for the first instance of embedded finance or bad, you're gonna look in the prepaid realm? All all that's why you see, uh just a multiplicity of, of suburban banks playing in the bad space. But what if you're above 10 billion in assets size and you want to play in the best space? Um, what if you're a credit union and you've got to fill the membership consideration and you want to play in the best space? So, you know, we look at it as education on both fronts. We want to lower the varies eventually for both parties, the brands and the financial institutions that want to play in this space. But we realize there's education on both sides. That's a great point about education because, you know, uh and I wrote about this in banking on digital growth a lot of times were held back by fear, there's the four fears that are right about in the very first one that we have to address when we're looking at new growth opportunities is the fear of the unknown and the fear of the unknown. The best way to overcome it is to help the unaware become aware of what the opportunities are to begin with in the first place. And that's where training, that's where education is really core and central. And I think training education going forward, there's going to be new opportunities that if we're not aware, we might miss the boat. And I want to touch on this because on the flip side opportunities, let's talk roadblocks. What are some of the roadblocks? Maybe some of the challenges historically around banking as a service. You've used embedded finance, even embedded Fintech. Where might some of the roadblocks be that we need to think about historically that could either a prevent us from moving forward with confidence or be hold us back all together. Yeah, great, great question. And this is, I think we talked a little bit about this before, but this is what I saw a lot in my, my prior role at visas that I was working with brands and in text that we're embedding financial products and they'd go to a bass provider that offered one financial products and they were really good at embedding card products. Right? Um, but then they would come back to me and they'd say Sarah now I want to offer deposit accounts and savings accounts and uh, oh I want to do bill pay And so I was introducing them to other players in the ecosystem. And I was like, wait a minute you're evolving to become a neo bank number one. So let's just like, let's, let's call it for what it is and are there cheaper routes to market for you because every time I introduce you to a new tech provider that, that's going to be an impediment to your, that's going to impact your unit economics, it's going to be an impediment to your growth every time I introduce you to a new financial institution because of the way that the regulatory landscape is positioned, whatever accounts you launch on that, on that F. I. R. Going to belong to that. If I so you've got three different f. i.s Supporting your...

...customer base. Now, I have unknowingly introduced you to too much, right? And now you can't have a 360 view of your customer in a way that you might want to. And so it was those mistakes I made early on that brought me to members to understand, okay there, how do I position brands and context in a way that's going to empower their great strategy. So, I want to I want to touch on that, you know, you take the brand on one side, you take the F I. On the other side, you're talking about complexity here. What are ways to simplify that complexity? To eliminate the overwhelm so that it's something that I would say is a bit more digestible. It's a bit more doable in the mind. I think the mind, you know, we anything that's complex, we tend to steer away from anything that is simple, We tend to be drawn towards what is the simple path forward, if you will for for these opportunities here, I kind of liken it back to the analogy is I've opened up with parenting, you know, ultimately, the the goal of parenting is to work ourselves out of a job and you know to create an individual or to be a part of an amazing persons growth strategy in life so that they can become a value to the rest of the world. And so I looked very much at what we're doing here at Nimbus in the same light is that I want to, I want to be able to partner brands and fin techs and notifies with really good financial institutions utilizing our technology stack. But let them have that direct relationship. I do not want to be in the mix. I want to, I want to empower them for growth and we're providing a tech stack that allows them to do that, but I don't want to be an incumbent and manage the bank relationship on their behalf. What a day I want to dive deep. I want to dive deep on both sides of this equation. I want to I want to go down the path of the brand first. So I'm at a brand, I see some opportunity around this idea of offering financial services to my customers and my community, my audience. What are the things that I need to be aware of that could hold us back from moving forward on that angle over there. How can we address some of those concerns early and often have a direct relationship with your financial institution most as providers will manage that relationship on your behalf and that's that that can become an impediment to growth because like I said earlier in the eyes of regulators, that account that's opened up at that financial institution belongs to that financial institution. So if you want to unwind that program, it gets really messy. So having that direct relationship, that's something that we should be thinking about early...

...and often. So that's on the brand side. On the flip side as the brand. I'm hearing about this, what are the biggest opportunities that we could probably capture early on? Um maybe it's value creation, maybe it's access to data. What are some of those early opportunities on the brand side when it comes to offering banking as a service or embedded finance here. I think it drives better adoption deeper, deeper loyalty to your brand and it just depends on what you're trying to create. Right? I worked with a lot of B two B saAS companies and so always finding the embedded financial flows, whether you were doing trade, credit lending or something, you know, or just doing invoice factoring. It drives a deeper engagement, the more financial products you can offer if you're a retail brand you always want to look for. What's the probability of the flip meaning? What's the probability that my existing customer will start to look to me for financial products. And so I think that the benefit there is definitely loyalty, deeper engagement, but also the data aspect. 100%. I mean within reason, right? Of course, of course. And then on the other side of the table we've got the traditional bank credit union who can provide this collaborative path and opportunity from, from your point of alliance here. What are some of the roadblocks that we need to think about on that side of the equation? Yeah. So I always know that the further you are from the end customer the greater the risk. So a lot of banks will start off having a direct relationship with the brand or Fintech themselves and get into it realize there's a lot that I have to do to help teach them banking and teach them about passing due diligence and all the compliance regulatory stuff. And that's a lot of heavy lifting and so you have to scale a lot in order to do that and be ready for that. But that's where you see most banks when they first pivot into the space, that's the business model that they use banks that have been in it for a while realized that that's what, that's a tough business model to staff for and you take a lot of bet on a brand that may not ever materialized. And so what you see those those banks that have been doing this for a while will work with program managers where they are kind of letting that program manager have that direct relationship with the Fintech puts them further away from the end customer but it's an op straight off, right? It's a so if I'm hearing you correctly, it almost comes back to what you're making on the other side around the brand, knowing that in knowing that financial institution on the other side, getting close, not being separated, but it's really the collaborative opportunity to bring people together on a closer spectrum, let's let's say on the the the institution bank credit. And inside we talked about roadblocks being a little...

...bit further away opportunities on the other side, big opportunities that we could, we could get excited about here for the bank or credit union side. Exactly. Oh definitely. Just a new route to market is kind of how we like to call it a nimbus, you're you're going to have a direct route to market which could be your own individual financial brand, or you can set up a digital brand or you can really support another brand through, kind of an indirect sales channel. That's really how it would look at it from a business perspective. Today's episode of banking on digital growth is brought to you by Nimbus who believes in creating even better financial services for all better access, better experiences, better value, all while supporting the entire customer journey. And how do they do this, 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 transform what is and create what's next? Learn more at Nimbus dot com. And I see that like coming back to this idea of, you know, a sub $10 billion dollar institution and they're looking for growth opportunities here. Maybe it's beyond the traditional community that they're in locally. What does that path look like like? Because now you're really opening up a whole new world of thinking and a whole new world of opportunity that might be overwhelming. It might be too much because it's like, I don't even know where to begin with this, what does that look like? And this has been a great conversation so far. Let's get real practical going forward. I'm a community institution. I see this opportunity, I'm excited. How do I even start? Like just by thinking with this here? So it's not so overwhelming. Yeah. No. Well I think the first thing you do is you continue to listen to, you know, great podcasts like making on digital growth and others that are speaking about this space because the more there's so much knowledge out there that you could just garner just simply by listening to the, you know, great, great podcast, reading great content. There's newsletters I subscribe to, the one thing I would say is that this space moves so fast and so much is happening and there's so much VC money being poured into it all the time that you really have to say, what are my guard rails as a financial institution and narrow your focus on where your risk appetite lies. Does your risk appetite only lie with, you know, card products, which are easy for the interchange revenue? Do you want to get into a little bit more where you can make a little bit more money in the lending side? Because as fintech and, and brands embedded finance has matured, it starts off in card and then it goes to lending and now I'm seeing a much greater demand for, For financial...

...institutions that are willing to play in the lending space. So if I'm, if I'm a bank or credit union, the next best steps, number one continuous education, continuous learning. I would say maybe two keeping an open mind to what new, possible paths to growth could look like to begin with as well. But then also getting really clear about what that level of risk looks like. Those guys. I think your guard rails. Um, I would say bumpers on a bowling alley, uh, to keep us to keep us down down the middle of the lane and so we don't get in the gutter, you mentioned card product that can graduate into maybe lending, you're seeing a lot of areas. There. Anything else on just, you know, the next best steps for a bank or credit union and an institution. If you will to continue to move forward with courage with confidence. I would say get really close with your risk and compliance person. um and help make sure that they are very well educated so that you're not just educating yourself, but you're educating them because it is ultimately their job to protect your charter and you want them, you want them to do their job well and there are certain there are certain flows, say financial flows that are going to put charter at risk more than others. So nowhere where you are with that, it's going to be very similar to what you would allow or not allow for your own direct customers, but gauge that internal appetite and bring the rest of the organization along with you in this journey. Super important. Great point on the risk side of things, compliance getting close with them internally but educating them as well because once again what they don't know could be that factor of fear. That's a prevention from moving forward with courage with confidence. So there's that training, education, we're hearing this pattern now. But then I think you bring up another interesting point bringing the entire organization along because could could that possibly create some factions internally and we don't want to see that we want collaboration to begin with internally to Can you speak to this point here? Oh yeah, I can see firsthand because I would have syntax and I would have bank sponsors that did only one vertical, They only sponsored 11 aspect and I was trying to bring them new business, but they were like, nope, that's the secretary of the organization. Unfortunately, the bigger organization in the heart of the collaboration, So try and go in through maybe your innovation lab if they're working cross functionally do some a lot of times I'll see, you know, bad as strategies evolving from those theories, but they couldn't scale because you had to create a compelling value proposition for the other business silos at the bank. So if you're a smaller bank, it's a lot easier. And then if you're a larger bank, make sure that you're working cross functionally because it really does take whether it's small business lending or retail or commercial card or all of those different entities recognizing what the vision is and how we play in the by...

...space and where we plan, where we don't play and back to those guard rails, no what you, what you're willing to do and what you're not because the successful banks have seen in this space have that very well defined. That's a fantastic point about size. And I've seen it firsthand myself, the larger the organization, the harder it is to bring new ideas in and really get them to legs and to give them life. And that's where I hear a lot of, you know, smaller institutions, they limit to me saying, oh, we're too small and I'm like, no, that, that that's your competitive advantage because you can be more nimble, you can be more quick and bring this type of thinking, not just in a certain area, like you said, an innovation lab, to remember going over to Italy a few years ago, and working with an innovation lab with the, you know, top 15 european bank over there, it was like 300 people, you know, just an innovation. It was, it was, but they had so many great ideas, but then to bring that out through multiple countries, I mean, it's a whole different type of an experience versus a being maybe your community institution or regional, it's easier to bring this thinking throughout. So that's a great point, getting that that by and getting that alignment throughout the organization. Otherwise, what happens if, if it, if it just kind of stays stuck, what does, what does that future look like that, so that we can prevent that from happening? Yeah, well, I think uh I had a bank that I was very close with big regional bank, um and I had several Fintech center on them, and they kept growing, The Fintech kept growing, or the brand's kept growing and the bank was not was not growing with them, even though there was opportunity for them to scale out, they just they were only offering one thing and that's okay if that's all you want to offer, but I go go back to the point of the community banks, I do feel like there is an agility with the smaller F. I. S that allows them to grow with the context and the branch, because ultimately there is the risk of outgrowing you, and so you wanna, when you enter this space do it with growth in mind, these guys will grow, you want them to grow, But let's go together, that's a great point. It's it's collaborative growth, you're on a journey together, you're not doing this by yourself, and that's why I think coming back to the some of the roadblocks, you're talking about getting to know each other well on both sides of this, and let's flip to the other side. Now, let's flip to the brand side, I'm a brand who's listening to this, where do I begin? Once again, because I see a lot of opportunity, this kind of outside of my comfort zone a bit, where can I begin, what should my first steps be going forward? I feel like if you, are you a traditional quick question, are your traditional brand? Are you a new neo bank brand or a new startup? Let's play, let's play, acknowledges, startup, let's play both. Let's play boast. So, to begin with,...

I'm going to be a traditional brand, I'm a retail brand, let's say I've got to pay, You know, a large customer base. Uh you know, I've been around for 30, 40, 50 years, let's just say, where can I begin this journey here. Great, great question. So a lot of the retail brands started off in their embedded finance journey with cards right? Like your co branded credit card is one of the first examples of kind of a badass offering. But the big difference is that most of that data and information belongs at the bank and the bank manages that whole program for you. So ask yourself, do I want to take on more responsibility to manage some of these financial products and do I want to go back to that bank? What's that relationship that I have with my co branded credit card bank provider? Do I want to go back to them and talk to them about, You know, scaling two additional financial products? I think it's important to bring those guys along or at least give them the opportunity because it goes back to what I was talking about in the eyes of regulators, those customers, those accounts belong to that guy. So if I'm going to create a 360 view of my customer, I either need to create a good data lake and get manage my own data or I need to have that banks by um yeah, so going back, having some conversations, we've already got a start in there. Maybe it's like that branded card perspective, but let's maybe explore what this could look like going forward. So conversations would be a great start, you think definitely and I would actually go back and say talk to your internal people that are working on that program and get their feedback and their thought because they they're in the quick and dirty down and dirty every day and they know how the program is working, whether or it's not they know financial services, they just picked it up vicariously by managing that program. So you actually have financial savvy folks in your organization to tap their brains, get them exposed to other ways of thinking about embedding additional financial products into your brand. Great point. So now now we're gonna take this. So now I'm in sass, I'm tech. What are these opportunities here? Where can I begin looking and exploring this idea of, of collaboration through bass, through banking as a service, through embedded finance. What does that look like? Where can I start there? I think, I think to ask companies have some of the best opportunities, um I love to always work in the south companies and trying to figure out there's a financial flow, there's a financial flow, you need to capitalize on it. You need somebody in your organization or a consultant who can look at your technology stack and at your customer base and identify a financial flow for you or you can make, I mean, maybe you can do it yourself. But I would start to say, okay, did did you ever realize that dispersing, you know, on one side of their marketplace, they had customers right? And they needed to solve for their financial needs. But then they also had drivers and they need to solve for their financial needs that they do that initially did. They...

...know initially all the financial flows that existed across their marketplace. No, but as you grow, you start to see these things and so of sass marketplace companies have a huge opportunity. That's a great point about Uber because I'm thinking about lift and how like even lift on boards, their drivers. And one of the things that they're offering is rewards. They're offering, you know, faster payments. They're offering a seamless account opening, like with the QR code and it's really all integrated into that lift experience. So there's there's a kind of internal HR play. I'm even seeing that with brands like, like gusto too. And so it's a whole new level of just thinking of, of of where and so you made an interesting point, you know, getting someone to maybe come in and just explore this from a different lens at a different angle to help walk around the bottle, walk around the glass because I think sometimes we just get so inside the glass that you can't really see anything from the outside. So that objective, external view, anything else to get started on this because it sounds like you get really excited in this particular area here. I do. Yeah, that's what I used to do in previous roles. And it is so exciting because that is the essence of embedded finance, right? Like that is the essence of creating an experience that surrounds the end user with simplicity like you have to know and and I think that's the key. It's it's it's surrounding the end user putting people at the center of all of the thinking, all of the doing regardless of if you're at a bank or credit union or a retail brand or SAs we have to remember this is all about people and simplifying their lives. And so the ways that we can do that is through connection. It's through conversation, it's through collaboration and through connection conversation, collaboration. This is how we build community. Um and looking at it through a sense of growth, abundance. Final question here and sarah, thank you so much for the thinking. I'm excited about the future here. As you look ahead. If you could just distill everything down. What are you most hopeful about? What are you most excited about when it comes to banking as a service? When it comes to embedded finance? When it comes to alliances? I want a better world, right. I want, I think we all do and I think we want a world where friction has been removed um and that our lives are not so segmented. It's a symphony of simplicity and that's what I think we're creating with embedded finance foreign users and it takes all of us to do it. A symphony of simplicity. I love that. That is something that you know, I'm going to remember this when a symphony of simplicity, that's sara all the credit goes to you on that. Thank you for the conversation. Thank you for this last thought on a symphony of...

...simplicity. If someone wants to just continue to explore this thinking with you this symphony of simplicity, what's the best way that they can connect and collaborate and and just have some good conversations with you together? What's the best way from the reach out and say hello? Yeah so they can connect with me on linkedin. Would love to hear from everyone. Um also you can reach me in my work email at s Powell at Nimbus dot com connect with Sarah learned from sarah. A symphony of simplicity. I'm going to remember this one for a very long time. Sarah, thank you so much for joining me on another episode of banking on digital growth. This has been a lot of fun thank you. I've enjoyed it. I appreciate the time as always and until next time be well. Do good and make your bed. Thank you for listening to another episode of banking on digital growth with James robert ley brought to you by Nimbus who is on a mission to bring the people process and technology together to create new routes to growth for financial brands and enable them to deliver outcomes to learn more about how you can collaborate with Nimbus to maximize your future digital growth potential visit www dot nimbus dot com until next time, be well and do good, mm. Mhm.

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