Banking on Digital Growth
Banking on Digital Growth

Episode · 1 year ago

94) #ExponentialInsights: How Embedding Fintech Better Serves Your Customers


Most people have probably heard of embedded finance by now, but how many have heard of embedded Fintech?

My guest today, Derik Sutton, Vice President of Marketing at, is one expert sounding the alarm to make sure more financial brands do. He joined the show to explain how embedded Fintech can help financial brands better serve SMBs.

In this episode, we discuss:

- Why banks should embed Fintech services

- How small business payments are changing

- Why financial brands need to reach out more

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.

The first answer they say is like, yeah, you can apply for merchant services and you're like, well what's merchant services? Well, you know, like if you have a minimum balance with us or history and you can pay 2 50 a month for this terminal, like we give you this physical thing and then you're like, well I'm like a consultant, I travel around or I go mow yards, I'm a contractor. So like how do I plug the physical thing in my truck, You know? And they're like, well, yeah, it's really not built for you. Okay, well how can I accept payments online? Have you tried people? Mm. Mhm Yeah. You're listening to banking on digital growth. With James robert. Lay a podcast that empowers financial brand, Marketing sales and leadership teams to maximize their digital growth potential by generating 10 times more loans and deposits. Today's episode is part of the exponential insight series where James robert interviews the industry's top marketing sales and fintech leaders, sharing practical wisdom to exponentially elevate you and your team. Let's get into the show greetings and hello I am James robert, ley and welcome to the 94th episode of the Banking on Digital Growth podcast. Today's episode is part of the exponential insight series and I'm excited to welcome Derek sent into the show. Derek is the VP of Marketing at Auto Books where he is working to help financial brands understand how to best serve the smb market. Welcome to the show Derek, Hey James robert, great to be here man, it's been too long, It has, it has been too long and this is actually a great follow up to episode number 93 where we had the conversation with Karen Mina, hands over boss insights about how financial brands can use digitally create value for small business and that's also one of mine and then Ron Shevlin is top opportunities, four financial brand growth in 2021 episode 57. He noted this, I discussed this personally an episode number 55 framed around the top 12 digital marketing sales trends for financial brands in 2021. Before we get there. What is something that you're excited about right now, either personally or professionally? What's good? Yeah, so man, that's a good question personally and professionally. So personally, um loving the fact that things are opening up kind of big time family vacation plan this summer and so personal things first, like I can't wait to go, like we're going to hawaii, so it's the wife and his 20th anniversary. We always said that on the 20th we're taking the whole family to Hawaii because that was like our jam before kids, like we want our kids to experience that, that's what I'm looking forward to on the personal side more than anything as you can imagine on the work side man, like small businesses hot you know, and hopefully for you know, you use a small business owner like thankful it is, you know in banking because for far too long it's been cold ice cold and like businesses have been left out and underserved and consumers got all the shine with neo banks and like that kind of got the gloss and the PFM and you know all of that. And then commercial and Treasury was always white gloved and and handle through extensive branch networks and and well taken care of there and you know, business owners were kind of left fending for themselves and they weren't quite fish nor fowl, you know, not quite consumer, not quite Treasury and they kind of just found themselves kind of wanting inside of banking and so I'm happy that they're getting their shine and we're helping out. And that's one of the reasons why I listed this as a top 12 opportunity for growth in 2021. And I think we'll see this trend over probably the next 2 to 35 years because it's like anything, we're starting this, we're going to get some groundswell behind it. Thinking about Hawaii, you know, it's like a wave. We're just the wave is just starting out and we're going to be able to ride that wave. Happy anniversary by the way, 20 years, my wife and I 15 years this year and we are we're not going to Hawaii, but we're actually going to Wimberley texas. We're going out to the hill country and...

...doing a little glamping, there's a new place called Spoon Mountain, highly recommend it to anyone listening. They brought in three safari tents from South Africa and set it up on their property. So beautiful place, beautiful experience. I can't wait to go in a couple of weeks. So all the best, all the best to you and your family as you're heading out to Hawaii this year. So I guess we need to start travel tips podcast coming up here like you and I can just like grip on this. It sounds like we definitely could because my wife and I, we you know my first time believe it or not out of the country, I was 24 weeks, it was our honeymoon. We we got married and we went down to ST Lucia for our honeymoon and stayed at a little boutique resort called Ladera and you gotta remember this was 2000 and six and I remember doing some, I read about this in the book, doing some exploring of where we're gonna stay. Our dream was to go to bora bora and so being newlyweds, we didn't make it that we actually made it there in 2010 for our first baby moon. But 2000 and six, you know, newlyweds, you know, company was getting started up, we went to ladera in ST Lucia and had a fantastic experience and started traveling, you know, 2 to 3 times a year and then we had kids and started taking the kids and then once we had our third kid, I'm like, you know what, we're going to the pause button on the travel. Our last trip was yeah, go ahead and glamping, you know like that, that's the thing right? You go from board to board a glamping in Wimberley, that's just that's just the role of a parent it is and life becomes much more, I think simplified. And our last trip was valentine's day 2020, we picked the kids up from school and we went out to Disneyland California and I'm so grateful we did when we did because the world shut down about two weeks later, but we made a tremendous amount of family memories together there. Dude, that's awesome. So one more interesting travel and the story tailoring off that because like our lives are like Simpatico, we were scheduled to go to Disneyland the week of like the whole shutdown thing. So like we were basically on our way and like you said, at least you got it in ahead of time and as you and I were talking before, we were both in Galveston texas the same time, same day, probably within a couple of miles of each other. And so we definitely, we need that, we need that travel podcast. But I'm gonna come back to talking about embedded banking, thinking about embedded banking, the work that you guys are doing over at auto books. What is embedded banking? Let's start there for the dear listener with the definition because I think we'll use that for some context into today's conversation. Yeah, sure. So I'm going to go into the topic of embedded banking and then I'm going to transition to embedded Fintech and I kind of like pull those two together. So embedded banking is this whole movement of software as a service companies. So think about generally available applications to consumers that then have banking services integrated or embedded within them. So whether that be a bank account, whether that be payments, whether that be integrated lending, think about a nontraditional banking entity providing something of value to an end consumer through an app through a website. But having banking like integrated or tied into that very directly. And so what happens is the reason for this movement James robert is because if you look at the valuation of software companies and their ability to basically monetize a user base, it's capped out by their total addressable market times the monthly software revenue they're going to charge. And then what rate of penetration they get on that addressable market, right? That software as a service business, that's the revenue model and that's where they're judged from evaluation perspective, the minute those companies plug in payments or banking, the valuation in the opportunity goes up significantly. So you take every existing user you can then monetize them 4 to 5 times more just on your existing user base by plugging in payments or plugging in banking. That's why the Airbnb s of the world, the Ubers of the world, the beautiful chick...

...fil a app. All of these companies that have designed consumer experiences around what they have to offer, integrating banking payments, lending capabilities because it increases the overall value of the service offering the revenue, the valuation of the company is so forth and so on. So that's embedded banking. Now, if embedded banking is true, right? And it is it's a trend, it's not going away. If embedded banking is true where you can go out and build a product, Fly will and deliver a solution of value to an end consumer and then you you in that fly, will you take from I want to make it really convenient, easy for somebody to order food on the go and then the next thing that's natural to that is so I might as well go ahead and capture the payment and then add loyalty rewards, etcetera. That's a product fly, will and sass. So if that is true, then the inverse can be true as well. And that's what I call embedded Fintech and Ron Chevron's been riding on that here recently as well. And so the inverse is that is saying, okay, I'm a bank or credit union, I have a customer base, have a tama total addressable market of customers and products and services integrated inside of what I offer as a financial institution. And I basically have the ability to create almost like a checking fly will run account fly will for a for an in consumer. Right? And so if I look at embedded Fintech as something that I can plug into my banking product, My fly will. The inverse is true for financial institutions as well. So our hypothesis is, okay, I'm a financial institution. I have small businesses as small business checking account. What's the next natural thing that a small business needs within that checking account? Well, they need the ability to accept payments and execute bill payments and reconcile the transaction. Maybe get access to a P. And L. Statement or what have you? Well, if those things are true and likely that the business owner needs then banks should be able to embed fintech services into their offering and deliver even more value to their addressable market. I like that. I did adding value, exponential value and the idea of the fly. Well, I can't help but think about hubspot and how hubspot with SAAS software as a service. You know, they started out and marketing automate, it was actually more blogging, then they added some marketing automation, then they added the Crm than the CMS and then the service component. Now they just added the operations component And it's it's adding exponential value along the way. Had some really good conversations about banking as a service with Christopher Danvers and episode 88 with with Nathan Baumeister over an episode 79. And when I think about this, this idea of the fly will specifically for business services, what might be some of those specific opportunities to really get embedded deeper with a small business or midsize business relationship. So I could go really deep on this one and wide. So this this is this is where the heart of the matter is. So probably the number one neglected capability inside small business banking today is helping business owners accept payments from customers. So, you know, as an industry were obviously very well equipped and have four since the dawn of banking offered accounts the ability to ledger and keep track of of of a balance right. And then over time we've made it to where you can pay bills and move money very very simply and easily like added in bill pay transfers, external transfers capabilities like that. But when it comes to the deposit, we've always kind of rested on our laurels and making of really being related to like okay what deposits take place in the branch. And we're building around that cash deposits, check deposits. And so that was really how businesses got capital into their account. For the most part, I'm talking about small businesses and micro businesses and so really the way to deposit funds, the business owner for small business owner with the bank is cash or check. Now...

...there are capabilities to do a ch batch injuries and wire management and positive pay and all those things that really applies to hold different category of business customers. So the next most logical thing is saying, okay well if there is an evolution of banking services and how people transact today which is moving to digital right? So now even though a person comes to my my house and most my yard the request for payment is definitively moving from in person to online right digitizing of invoices requesting payments virtually Venmo, paypal square etcetera. So if that's true then banking's next evolution of what's the next thing inside that That checking fly well making it easy for small businesses to accept online payments has to be in there. If not then all you're doing is becoming the record of entry. You're making it easy to move people. Let people move money out of their institution I. E. Bill pay. You support some level of digitizing an old vestige of yesteryear which remote check the composite capture right? You enable them to do that. But when it comes to how the world is moving and where transactions are moving specifically from a depository standpoint of receivables that's really not included in traditional banking services today, which is, which is, you know, ironic. So what's happening is companies like Paypal Square, Shopify quickbooks. Everybody else is recognizing that. And they're recognizing this flood of moved to e commerce and digitizing of receivables and payments and they made it real easy for businesses to onboard into their service. And then the second like literally the second that I on board in the Papal Square or what have you, they are looking to disinter mediate my banking relationship, right? They're sending me push notifications of like, hey keep your money here, don't you know, wait days of delay to transfer your money back to your bank. Oh you want in real time. Here's the feet. Hey why do you need a bank account? Here is a real time business debit card you can use right now spend out of your account here is access to a line of credit, instant line of credit over time. So they're immediately looking at this intermediate. And then the ironic thing about all that is you call the front line staff of a bank and you say, hey I'm a small business owner, I've been with you guys for for several years now. I have a lot of customers asking if they can pay by credit card or debit card, can you help? And the first answer they say is like yeah you can apply for merchant services and you're like well what's merchant services? Well You know like if you have a minimum balance with us or history and you can pay 250 a month for this terminal, like we give you this physical thing and then you're like, well I'm like a consultant, I travel around or I go mow yards, I'm a contractor. So like how do I plug the physical thing in my truck, You know? And they're like, well, yeah, it's really not built for you. Okay, well how can I accept payments online? Have you tried paypal? Literally we do secret shopping and they lose the relationship or it's like death by 1000 cuts. And I had this exact conversation is a great echo to the sort of perspective that we, I was talking with Karen an episode number 93 because I talked about for example, Quickbooks, I talked about Shopify, I talked about for example, Gusto. Gusto runs our HR over here and now they're offering financial services almost direct to employee even from a and it's just, it's so fascinating to see this, the split and you're right, Paypal Square, we begin to lose that relationship. And so how can we overcome some of that? What holds financial brands back from making a commitment to say, instead of, have you heard of Paypal? Have you heard of Square? Don't go there, we can bring this here. What holds some of that thinking back or that that action back from saying, well, here's a path forward for you. Sure. So I think that comes back to the definition of embedding Fintech and why that's important moving forward quite frankly. And so what, what holds a lot of financial institutions back? Let's be clear, like a lot of your strategic...

...roadmap is built by the vendors that you partner with. It just is. And so if vendors don't have the right solution or they don't have the capability for you to plug in your a bit hamstrung and what you can do and go to market with. And so where I think embedded fintech becomes important is because these, you know, these larger core in digital vendors or recognizing it, I give them all the credit I came from that world and it's changing for the good. They're recognizing that they can't possibly build and deliver everything for every f. I. And for every use case. And so companies like you two are creating their marketplace so that fintech companies can say go to Q. Two as market players can do integration into there S. D. K. And deploy their their financial services app out to the wider base of marketplace customers. And no other digital banking providers are doing the exact same thing now. And so as a fintech company like authentic that wants to partner with banks, What we want to do is embedded not only the technology inside of the f because that's one piece of it. Product procurement, technology integration, compliance, safety, security, making sure that things are on the lights are on and people can use the app. That's step one, step two is saying, okay, but now we need to go to market now, we need to educate people on this new capability and feature that we have and you you preach this, but for whatever reason, financial institutions just they aren't aggressive. I'll just say they're just not aggressive enough with that. And it's almost as if, you know, they feel like they're going to offend their customer base by telling them about the services that they offer. I was going to ask like I agree, because it's a very passive reactive stance. The financial brands taking the marketplace and I'm advocating take a proactive stance, lean into people's problems, lean into their pain points, offer the cures, the prescriptions. But what holds them back from taking that proactive stance moving forward? Because I think you use the word they're afraid they're going to offend someone. Why is that? I think it's a little bit of it's a vestige of, let's just say it's like the DNA of banking almost to where they're so used to doing business in person, in person conversations. And so when you're in person, sometimes selling is a little bit awkward, you know, quite frankly. And so like if that's in your D. N. A. And how you build a company in an organization, you know, you kind of build around like, well, you know, we're their bank, They don't want to I hear this pretty often like they don't want to just hear from us about every little thing. Like they just want to know that their account is in good standing, everything is working. They don't want to hear from their bank on a regular basis. And I'm like, you know what I talked to a lot of business customers and they kind of, do you know, they actually really do they want to know how you can help them because they're out there trying to piece together all these solutions and figure out how to just do business more efficiently. And then you're in the boardroom saying, you know what? I don't think we need to send that many marketing messages out to our customer base because they don't want to hear from us. And like I think that we're just like ships passing in the night a little bit. Yeah. Technology has transformed our world and digital has changed the way consumers shop for and buy financial services forever Now consumers make purchase decisions long before they walk into a branch. If they walk into a branch at all, but your financial brand still wants to grow loans and deposits, we get it. Digital growth can feel confusing, frustrating and overwhelming for any financial brand marketing and sales leader, but it doesn't have to because James robert wrote the book that guides you every step of the way along your digital growth journey, visit www dot digital growth dot com to get a preview of his best selling book, banking on digital growth or order a copy right now for you and your team from amazon inside you'll find a strategic marketing manifesto that was written to transform financial brands and it is packed full of practical and proven Insights you...

...can start using today to confidently generate 10 times more loans and deposits now back to the show. Yeah, I agree. And to that point, episode number 83 with Marcus Sheraton Great Book, they ask you answer and it really flips the perspective of, you know, it's not about promoting or marketing from the old world sense of product pushing, it's what we teach which is to help first to sell second and that ideology, that belief system has to be owned from the top down and from the bottom to the top. Otherwise like you said, it's kind of ships passing in the night and we dabble in this a little bit when you look at this idea of digital communication and the concern is overly communicating. You talked about doing secret shopping, we're doing digital secret shopping as well for financial brands a lot, probably more right now on the consumer side have started to move over into the S. And B. Space slightly as I think more awareness is gained into the opportunities. But I'm gonna give you some perspective for the dear listener when it comes to this recent study, bottom of the funnel secret shopping, looking at the application on the consumer side, the same could be done on the S. And B. Side. But on the consumer side we looked at a credit union, we looked at a local competitor of this credit union And then we looked at chime and we had real consumers go through the application process on the credit union side and the local competitor side normal 60-70 abandon it because of some friction and frustration there. Like we're not going to move forward chime. 100 conversion rate on it. Number two we did a 30 day follow up to the experience, doing memory recall. Out of these three digital experiences which communicated with you what is top of mind right now, 100% definitively said chime. We said, how many how many pieces of digital communication did you receive, i e email tax etcetera. On average, 9-11 email communications in the 1st 30 days. Do you feel that was annoying or frustrating, know why? Because they were guiding us to the next step. Here's what to do. Have you considered this? And so it was more education, Learning about the product, diving deeper. And so 9 to 11 pieces of email communication. No one founded annoying and it created the top of memory recall. Why helping first selling second. Okay, so let's go deep on this because this is like your once again we're in this, we're in this lane and like we're here. So when we do embedded Fintech, like I said, it's the product and it's the go to market and the go to market implementation is basically marketing as a service, You know, so it's an email automation campaign, it's outbound calling an education, its frontline staff training and it's all to basically put out what you just said. And so our email automation system has a sin of close to 11 emails in that same 30, 30 day period, right? But they're written from the perspective of interviews from the businesses, understanding their pain and what they're trying to accomplish in their daily workflows and writing these emails in a way that resonate with the business owner that don't communicate. Banky's okay. So I'm gonna back up one second. There is supply side marketing and there's demand side marketing. Supply side is, hey, these are all the things we can offer you. This is the bullet pointed list of features. My kind of running joke is you go to a small business checking account, it's like, here's all the things we're going to charge you for and here's how to avoid those charges, like one away the market. Like here's all your fees. Oh, but you can avoid these fees if you do these things all related to money, right? And so it's all basically you're saying, okay, here's like this kind of bait and switch kind of marketing that I'm putting in front of you and oh, by the way, if you want to make sure you...

...avoid these fees without a spreadsheet and start doing the math. And like, let's, let's kinda like, see where we're at versus demand side marketing, demand side marketing says, okay, what's, what's coming in from the customer's perspective? How are they looking at the account? What is their daily workflow? How are they going to resonate inside of this um service offering? And how can you create it to say the customer has demand for your service. So like if you kind of look at square, doesn't do like a, like a great job at it, but they do an okay job on demand side. So if you're a banker and you want to go like kind of like, what am I looking at? Go look at your small business checking account, beat your list and then go to square and go to like banking services or financial services or whatever they call it and they have things like move money, yep. You know, so like I need to move money right, okay, how do I need to move money? I get paid in person, I get paid remotely. There's like there are three or four different options, but they're looking at from the perspective of if I'm a business customer coming in and look at these services, how do they relate to it? That's the demand side marketing. So all of our demand marketing goes out and it says okay from the place of the business owner. Like we literally have an email that the subject line is, I didn't know payments would be brain surgery or I don't want payments to be brain surgery. Why? Because that's what customers told us, right? Like understanding how to stitch together a system of requesting payment, getting paid, reconciling the transaction, keeping up my books, feels like brain surgery over and over. It kept coming up. So you know what? We write an email that says that you know, who loves it? Business owners, They, they love it. And so like what happens is they come back and well, I love to show this to the banks. And they were like, well, you just send a lot of emails and we're like, yeah, but you know what happens when we send emails, concentrated shopping, that's what I call it. So, concentrated shopping. So if they just log into digital bank, if you just wait for the world to come around to you, right, like I'm either gonna walk into the branch and you may or may not tell me about this, or I'm gonna log into digital banking, you may or may not serving an add on this. Those are ad hoc shopping events. It's like people are walking through this busy mall every day and they may walk by the window and they never really like kind of like look at what's going on. You hope that they kind of come into your store, right? And have an intentionality into buying something, What email marketing does. And even a little bit of outbound calling is it creates a concentrated shopping event. It basically says, hey, here's what I have to offer into an email inbox and the subject line is basically looking into the window. And then if they decided to open up the email, that's just that's them deciding to go in and shop, what happens is you forced everybody to make that decision about, I mean they're gonna go in and shopper. I'm not. Yeah. And if they shop like I do, sometimes it takes them multiple times to go into the store to make the decision. And so what we see in our email system is businesses will come back to the email 30 times, 20 times 15 times. And then we also, we write these longer form conversion, copy written emails because they tell that story, they take them through that journey And they will we have like 75 read rates on our nose which is unheard of because they're they're coming back and they're like dude that's your reading my mail here because like I have this pain, I need to read this and come back to it because business owners, small business owners are super busy, like you're busy right? Like your calendar is booked from 8 to 5. Like you have to like come back and read this stuff late at night, you know, and that's what happens, this is brilliant. And two things one marketing as a service, you're taking the pain of the F. I. Off from having to go to market and you're using this expertise in this knowledge that you've gained through research and insights. And it all comes down to really I think two things one what we call human centered growth, i. E. Human centered design and the number to the consumer persona. The empathy, map those questions, concerns those hopes and dreams and playing off of those and you're right, this idea of great brain surgery using the words that you hear...

...over and over and over again and addressing that. And it's funny because when I make these recommendations to financial brands of like leaning into people's pain points, for example, getting a business loan doesn't have to feel painful, totally. They're like why do we want to? You know, that's negative, it's a negative connotation. I said no, because you're like literally through that word, you're empathizing with that person's pain and you're like, like no it doesn't. And so I think that this is where the training and education there's a tremendous opportunity and it's not a massive mindset shift, it's just almost like, you know, just looking at the world slightly different Stepping into the business owners shoes because you never understand someone until you walk a mile in their shoes and and then you're keeping that attention, they're coming back, you know 25-30 times looking at that email and now you're getting into a blue ocean opportunity for financial brands, both on the consumer as well as on the business commercial side. And that's the consideration stage of the buying journey because there's a lot of information that goes in. There's a lot of decisions. We're actually starting to explore what is called Kobe, K. O L. B. E. Cathey Kobe. And how her research can help inform marketing and sells behavior. Because what Kobe looks at is four areas of the brain. It's actually the connective part of the brain because you have I. Q. Which her father wonder look studied with the Wonderlic exam. So there's that there's so that's intelligence. Then you have the emotional side of the brain where you get like disk and Myers Briggs and then you've got Kathy Colby who's been studying the cognitive part of the brain, which is what I would typically say is the os the operating system of the brain. And there's one of four areas there and one of them is called fact finder. How much information does someone need before they feel confident enough to make a decision to move forward forward with. And then when you think about entrepreneurs and business owners, they tend to trend high in another area called Quick Start. And so this is something to that. I think it helped maybe make some informed decisions at an internal level because now you know more of the operating system of the business owner and how they're consuming information, how they're making decisions and then use that to support them to guide them forward on these journeys fascinating stuff. Man, I'm excited for you guys. Yeah, that's right. It's man, that's that's some cool stuff. So the, so the operating system, the brain totally like that that resonates with us big time. So I think, I think the thing is what I always try to communicate to financial institutions is, yeah, this, this may feel weird. May feel awkward from what you've traditionally done, but if they came into your branch and you had a conversation, our emails actually communicate in a way that you would as as a person, You know, it's not just like a stock image with three or four features and then like our my kind of joke is like in 75 disclosure, you know like that's the average email marketing message. It's like most of the content here is like legal, you know? Which is okay like we're banks like we need to do that and I'm not saying like to do this in an un compliant or unsafe way. It's just saying like meet the user the customer where they're at and like help them make progress against your financial institution and it's okay to be communicative with them. You know like we show the results, you know like the people opting out and unsubscribing super super low and we hear from from customer after customer, you know like I never heard from my bank until they had auto books and then you guys reached out and man like you hit me at just the right time and that's the point like that's the point of like good engagement of marketing is you want to hit the hit the person at the time that they need it, you know, and that's the reason to be persistent quite frankly. And that's where the proactive nature of all of this comes because I kind of laugh. Uh, someone on linked in today, I had messaged them just to check in to see what was going on and they replied back there like, do... have a microphone in my office? Because we were just talking about what I had reached out to them for. And I kind of chuckled and I sent them a loom video. I said, no, no microphone, but a lot of it is just you're being aware of like the digital buying signals, um, and tracking that and then use utilizing that to make those informed offers. I want to ask, thinking about everything that we've talked around about, you know, embedded banking, embedded fintech, the, the SNB marketplace. What is a common belief that other leaders in this industry have it financial brands that you might just passionately disagree with, what might be holding them back here? Yeah. So I would say the, we talked about a little bit the marketing side, but like positioning of their products I think is one of the biggest mrs, and we've actually gone through recently. So I'll give you a little heads up. But like we've been going through a learning exercise with a lady named April Dunford who wrote a book called obviously awesome. And so she's basically a positioning expert. And so April is working with us to help us better understand how financial institutions should position their products, specifically small business checking. And so if I look at the landscape and it's something I've been looking at for the past year. If you look at account listings and features and like how financial institutions describe their products, it's largely undifferentiated, they're effectively all the same. And so I think what's happened in this whole movement to digital is we're very supply side oriented, meaning that here's all the things that we can offer. Let's figure out a way to get all those things up on a website and listed out for people and hope that they basically find something that that you know, they need. And so like little things where like they go to small business checking and we list out feature names really kind of built from what we call the product, inside core banking back in the day and eventually it made its way into digital banking. It makes little to no sense to the average business owner. If you ask them what's positive pay mean, like do you know what positive means, how long you've been in this industry? That's baker knees, man. Yeah banker knees. It's like it's like L. T. V. And you know we've even seen like a P. Y. Throw people off because they're like they're going to charge me a percentage for me. No we're gonna pay you money to keep your money here and so you're you're right april Dunford, we gotta get we gotta get her as a guest on the show because I think that'll be a really fun conversation. I'm gonna give a shout out to uh Louisiana Federal Credit Union because they've done a tremendous job. They've been in our program for probably five or six years and we've had a couple of their team members as guests on this show just talking about the experiences. But when it comes to positioning their business products, they have actually done something to where they have built and developed what is called the complete Guide to exponential business growth. And it is a meaty subject matter book, it's an e book you download and its position as constantly grow your business in Louisiana. So there's some good s ceo love to that. Cool is that and they're doing a fantastic job moving forward. I want to derek, there's been a lot of fun. I wanna get really practical here at the very end because I think all massive change and transformation begins with one small, simple step, one micro commitment that someone can make listening today. What would that small, simple step or micro commitment be that you would recommend them move, move forward with. Sure. I would just say recognize that small businesses are not multi employee shops. You know don't necessarily have the needs that you...

...hear from the common business owner that you served through a ch batch origination Wire Management Treasury. It's like the way you used to think about small business banking. I think if you actually look at the data, so 31.7 million small businesses in the U. S. Big opportunity 81% don't have any employees, Single sole proprietors. In addition that there's a growing number of independent workers, 40 41.1 million independent workers. So if you think about that category and they live largely between retail and basic small business. So the one thing to walk away from is I need to learn about small businesses right? I need to understand their pain points and how digital transformation for them is impacting their banking relationship. Because last year We had a 45 adoption of E Commerce last year in 2020 45 growth. It's been year over year 15%. So last year three times as many people moved into e commerce and moved away from traditional branch and retail shopping. What does that mean? That is a huge shift in technology behavior specifically with payments that is not going away. It will not revert in. Business owners had to, I'm a storyteller show san Antonio texas. There's a small consult income or consulting company that does training for kiddos with reading disorders, dyslexia and things like that. They used to go in person to meet with the kiddos, they would do the therapy session and then they would collect a check from the parents. They had three or four consultants. They would go around the community and do this the next day when the people went in to check in the office, they bring the check, the office manager would take the check to the bank later that day, get deposited and that was their workflow, right? Covid hits. They can't go in person. Right? So what do they have to do? Like you said, they're entrepreneurs, they have this operating system like we'll have to figure it out. So they started setting up zoom sessions with these parents and the kiddos and they did their therapy sessions there. But then what was broken the way they got paid. So thankfully for them and US Auto Books was installed, their financial institution. They adopted our solution. They now send digital invoices to the parents to get paid. Okay, It gets better. So now their business model has changed because they said, you know what we found, we can do more sessions per day doing it this way, we still have the same relationship. So once a month we go on person and meet with the kiddos and do a once a month thing, but the other three sessions are all digital. We have now signed up all these parents for auto pay, we have to worry about the trip to the branch, right? So it's this year reinvented how they may not have ever changed that. They may not have recognized that was that broken quite frankly. But last year changed for people the way they accept payments and they're not going backwards, they're going to find ways like, oh this is more efficient. So the one thing financial institutions better understand business customers what they're going through, secondly, they need to get paid. I don't have a metal business out there that doesn't need to get paid. You can either be at the forefront of that or you can not, there will be winners, There will be losers, Cash is king and maybe soon to be crypto is king. So we'll see, we'll see where that goes, Derek, This has been an absolute blast to have this conversation. Thank you so much. I'm grateful for the insights that you've shared, the knowledge that you've shared. If someone wants to continue this conversation and discussion, what is the best way for them to reach out and say hello to you? Yeah, just email me Derek D E R I K So forget my parents for the, for the weird misspelling D E R I K at auto Books dot co or twitter linkedin on twitter at Derek the E R I K. Sutton man, I feel you with that name because people always like is it James James robert? Nope, it's two first names and when I was in trouble at home it was James robert Williams. So I feel you man. Hey derek, thank you so much for joining me on another episode of Banking on digital growth.

This has been fun, awesome. Thanks for having me as always in 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 like what you hear, tell a friend about the podcast and leave us a review on apple podcasts, google podcasts or Spotify and subscribe while you're there to get even more practical improvement insights, visit www dot digital growth dot com to grab a preview of James roberts, best selling book banking on digital growth Or order a copy right now for you and your team from Amazon inside you'll find a strategic marketing and sales blueprint framed around 12 key areas of focus that empower you to confidently generate 10 times more loans and deposits until next time, be well and do good.

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