Banking on Digital Growth
Banking on Digital Growth

Episode · 5 months 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 merchantservices? Well, you know, like if you have a minimum balance with us orhistory and you can pay 2 50 a month for this terminal, like we give youthis physical thing and then you're like, well I'm like a consultant, Itravel around or I go mow yards, I'm a contractor. So like how do I plug thephysical thing in my truck, You know? And they're like, well, yeah, it'sreally not built for you. Okay, well how can I accept payments online? Haveyou tried people? Mm. Mhm Yeah. You're listening to banking ondigital growth. With James robert. Lay a podcast that empowers financial brand,Marketing sales and leadership teams to maximize their digital growth potentialby generating 10 times more loans and deposits. Today's episode is part ofthe exponential insight series where James robert interviews the industry'stop marketing sales and fintech leaders, sharing practical wisdom toexponentially elevate you and your team. Let's get into the show greetings andhello I am James robert, ley and welcome to the 94th episode of theBanking on Digital Growth podcast. Today's episode is part of theexponential insight series and I'm excited to welcome Derek sent into theshow. Derek is the VP of Marketing at Auto Books where he is working to helpfinancial brands understand how to best serve the smb market. Welcome to theshow 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 episodenumber 93 where we had the conversation with Karen Mina, hands over bossinsights about how financial brands can use digitally create value for smallbusiness and that's also one of mine and then Ron Shevlin is topopportunities, four financial brand growth in 2021 episode 57. He notedthis, I discussed this personally an episode number 55 framed around the top12 digital marketing sales trends for financial brands in 2021. Before we getthere. What is something that you're excited about right now, eitherpersonally or professionally? What's good? Yeah, so man, that's a goodquestion personally and professionally. So personally, um loving the fact thatthings are opening up kind of big time family vacation plan this summer and sopersonal 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 the20th we're taking the whole family to Hawaii because that was like our jambefore kids, like we want our kids to experience that, that's what I'mlooking forward to on the personal side more than anything as you can imagineon the work side man, like small businesses hot you know, and hopefullyfor you know, you use a small business owner like thankful it is, you know inbanking because for far too long it's been cold ice cold and like businesseshave been left out and underserved and consumers got all the shine with neobanks and like that kind of got the gloss and the PFM and you know all ofthat. And then commercial and Treasury was always white gloved and and handlethrough extensive branch networks and and well taken care of there and youknow, business owners were kind of left fending for themselves and they weren'tquite fish nor fowl, you know, not quite consumer, not quite Treasury andthey kind of just found themselves kind of wanting inside of banking and so I'mhappy that they're getting their shine and we're helping out. And that's oneof 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 becauseit's like anything, we're starting this, we're going to get some groundswellbehind it. Thinking about Hawaii, you know, it's like a wave. We're just thewave 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 weare 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 newplace called Spoon Mountain, highly recommend it to anyone listening. Theybrought in three safari tents from South Africa and set it up on theirproperty. So beautiful place, beautiful experience. I can't wait to go in acouple of weeks. So all the best, all the best to you and your family asyou're heading out to Hawaii this year. So I guess we need to start travel tipspodcast coming up here like you and I can just like grip on this. It soundslike we definitely could because my wife and I, we you know my first timebelieve it or not out of the country, I was 24 weeks, it was our honeymoon. Wewe got married and we went down to ST Lucia for our honeymoon and stayed at alittle boutique resort called Ladera and you gotta remember this was 2000and six and I remember doing some, I read about this in the book, doing someexploring of where we're gonna stay. Our dream was to go to bora bora and sobeing newlyweds, we didn't make it that we actually made it there in 2010 forour first baby moon. But 2000 and six, you know, newlyweds, you know, companywas getting started up, we went to ladera in ST Lucia and had a fantasticexperience and started traveling, you know, 2 to 3 times a year and then wehad kids and started taking the kids and then once we had our third kid, I'mlike, you know what, we're going to the pause button on the travel. Our lasttrip was yeah, go ahead and glamping, you know like that, that's the thingright? You go from board to board a glamping in Wimberley, that's justthat's just the role of a parent it is and life becomes much more, I thinksimplified. And our last trip was valentine's day 2020, we picked thekids up from school and we went out to Disneyland California and I'm sograteful 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 thatbecause like our lives are like Simpatico, we were scheduled to go toDisneyland the week of like the whole shutdown thing. So like we werebasically on our way and like you said, at least you got it in ahead of timeand as you and I were talking before, we were both in Galveston texas thesame time, same day, probably within a couple of miles of each other. And sowe definitely, we need that, we need that travel podcast. But I'm gonna comeback to talking about embedded banking, thinking about embedded banking, thework 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 thinkwe'll use that for some context into today's conversation. Yeah, sure. SoI'm going to go into the topic of embedded banking and then I'm going totransition to embedded Fintech and I kind of like pull those two together.So embedded banking is this whole movement of software as a servicecompanies. So think about generally available applications to consumersthat then have banking services integrated or embedded within them. Sowhether that be a bank account, whether that be payments, whether that beintegrated lending, think about a nontraditional banking entity providingsomething of value to an end consumer through an app through a website. Buthaving banking like integrated or tied into that very directly. And so whathappens is the reason for this movement James robert is because if you look atthe valuation of software companies and their ability to basically monetize auser base, it's capped out by their total addressable market times themonthly software revenue they're going to charge. And then what rate ofpenetration they get on that addressable market, right? Thatsoftware as a service business, that's the revenue model and that's wherethey're judged from evaluation perspective, the minute those companiesplug in payments or banking, the valuation in the opportunity goes upsignificantly. So you take every existing user you can then monetizethem 4 to 5 times more just on your existing user base by plugging inpayments or plugging in banking. That's why the Airbnb s of the world, theUbers of the world, the beautiful chick...

...fil a app. All of these companies thathave designed consumer experiences around what they have to offer,integrating banking payments, lending capabilities because it increases theoverall value of the service offering the revenue, the valuation of thecompany is so forth and so on. So that's embedded banking. Now, ifembedded 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, Flywill and deliver a solution of value to an end consumer and then you you inthat fly, will you take from I want to make it really convenient, easy forsomebody to order food on the go and then the next thing that's natural tothat is so I might as well go ahead and capture the payment and then addloyalty rewards, etcetera. That's a product fly, will and sass. So if thatis true, then the inverse can be true as well. And that's what I callembedded 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, Ihave a customer base, have a tama total addressable market of customers andproducts and services integrated inside of what I offer as a financialinstitution. And I basically have the ability to create almost like achecking fly will run account fly will for a for an in consumer. Right? And soif I look at embedded Fintech as something that I can plug into mybanking product, My fly will. The inverse is true for financialinstitutions as well. So our hypothesis is, okay, I'm a financial institution.I have small businesses as small business checking account. What's thenext natural thing that a small business needs within that checkingaccount? Well, they need the ability to accept payments and execute billpayments 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 thatthe business owner needs then banks should be able to embed fintechservices into their offering and deliver even more value to theiraddressable market. I like that. I did adding value, exponential value and theidea of the fly. Well, I can't help but think about hubspot and how hubspotwith SAAS software as a service. You know, they started out and marketingautomate, it was actually more blogging, then they added some marketingautomation, then they added the Crm than the CMS and then the servicecomponent. Now they just added the operations component And it's it'sadding exponential value along the way. Had some really good conversationsabout banking as a service with Christopher Danvers and episode 88 withwith Nathan Baumeister over an episode 79. And when I think about this, thisidea of the fly will specifically for business services, what might be someof those specific opportunities to really get embedded deeper with a smallbusiness or midsize business relationship. So I could go really deepon this one and wide. So this this is this is where the heart of the matteris. So probably the number one neglected capability inside smallbusiness banking today is helping business owners accept payments fromcustomers. So, you know, as an industry were obviously very well equipped andhave four since the dawn of banking offered accounts the ability to ledgerand keep track of of of a balance right. And then over time we've made it towhere you can pay bills and move money very very simply and easily like addedin bill pay transfers, external transfers capabilities like that. Butwhen it comes to the deposit, we've always kind of rested on our laurelsand making of really being related to like okay what deposits take place inthe branch. And we're building around that cash deposits, check deposits. Andso that was really how businesses got capital into their account. For themost part, I'm talking about small businesses and micro businesses and soreally the way to deposit funds, the business owner for small business ownerwith the bank is cash or check. Now...

...there are capabilities to do a ch batchinjuries and wire management and positive pay and all those things thatreally applies to hold different category of business customers. So thenext most logical thing is saying, okay well if there is an evolution ofbanking services and how people transact today which is moving todigital right? So now even though a person comes to my my house and most myyard the request for payment is definitively moving from in person toonline right digitizing of invoices requesting payments virtually Venmo,paypal square etcetera. So if that's true then banking's next evolution ofwhat's the next thing inside that That checking fly well making it easy forsmall businesses to accept online payments has to be in there. If notthen all you're doing is becoming the record of entry. You're making it easyto 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 remotecheck the composite capture right? You enable them to do that. But when itcomes to how the world is moving and where transactions are movingspecifically from a depository standpoint of receivables that's reallynot included in traditional banking services today, which is, which is, youknow, ironic. So what's happening is companies like Paypal Square, Shopifyquickbooks. Everybody else is recognizing that. And they'rerecognizing this flood of moved to e commerce and digitizing of receivablesand payments and they made it real easy for businesses to onboard into theirservice. And then the second like literally the second that I on board inthe Papal Square or what have you, they are looking to disinter mediate mybanking relationship, right? They're sending me push notifications of like,hey keep your money here, don't you know, wait days of delay to transferyour money back to your bank. Oh you want in real time. Here's the feet. Heywhy do you need a bank account? Here is a real time business debit card you canuse 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 thisintermediate. And then the ironic thing about all that is you call the frontline staff of a bank and you say, hey I'm a small business owner, I've beenwith you guys for for several years now. I have a lot of customers asking ifthey can pay by credit card or debit card, can you help? And the firstanswer they say is like yeah you can apply for merchant services and you'relike well what's merchant services? Well You know like if you have aminimum balance with us or history and you can pay 250 a month for thisterminal, 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 acontractor. 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, wellhow can I accept payments online? Have you tried paypal? Literally we dosecret shopping and they lose the relationship or it'slike death by 1000 cuts. And I had this exact conversation is a great echo tothe sort of perspective that we, I was talking with Karen an episode number 93because I talked about for example, Quickbooks, I talked about Shopify, Italked about for example, Gusto. Gusto runs our HR over here and now they'reoffering financial services almost direct to employee even from a and it'sjust, it's so fascinating to see this, the split and you're right, PaypalSquare, we begin to lose that relationship. And so how can weovercome some of that? What holds financial brands back from making acommitment to say, instead of, have you heard of Paypal? Have you heard ofSquare? Don't go there, we can bring this here. What holds some of thatthinking back or that that action back from saying, well, here's a pathforward for you. Sure. So I think that comes back to the definition ofembedding Fintech and why that's important moving forward quite frankly.And so what, what holds a lot of financial institutions back? Let's beclear, like a lot of your strategic...

...roadmap is built by the vendors thatyou partner with. It just is. And so if vendors don't have the right solutionor they don't have the capability for you to plug in your a bit hamstrung andwhat you can do and go to market with. And so where I think embedded fintechbecomes important is because these, you know, these larger core in digitalvendors or recognizing it, I give them all the credit I came from that worldand it's changing for the good. They're recognizing that they can't possiblybuild and deliver everything for every f. I. And for every use case. And socompanies like you two are creating their marketplace so that fintechcompanies can say go to Q. Two as market players can do integration intothere S. D. K. And deploy their their financial services app out to the widerbase of marketplace customers. And no other digital banking providers aredoing the exact same thing now. And so as a fintech company like authenticthat wants to partner with banks, What we want to do is embedded not only thetechnology inside of the f because that's one piece of it. Productprocurement, technology integration, compliance, safety, security, makingsure that things are on the lights are on and people can use the app. That'sstep one, step two is saying, okay, but now we need to go to market now, weneed to educate people on this new capability and feature that we have andyou you preach this, but for whatever reason, financial institutions justthey aren't aggressive. I'll just say they're just not aggressive enough withthat. And it's almost as if, you know, they feel like they're going to offendtheir customer base by telling them about the services that they offer. Iwas 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 aproactive stance, lean into people's problems, lean into their pain points,offer the cures, the prescriptions. But what holds them back from taking thatproactive stance moving forward? Because I think you use the wordthey're afraid they're going to offend someone. Why is that? I think it's alittle bit of it's a vestige of, let's just say it's like the DNA of bankingalmost to where they're so used to doing business in person, in personconversations. And so when you're in person, sometimes selling is a littlebit 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 ofbuild around like, well, you know, we're their bank, They don't want to Ihear this pretty often like they don't want to just hear from us about everylittle thing. Like they just want to know that their account is in goodstanding, everything is working. They don't want to hear from their bank on aregular basis. And I'm like, you know what I talked to a lot of businesscustomers and they kind of, do you know, they actually really do they want toknow how you can help them because they're out there trying to piecetogether all these solutions and figure out how to just do business moreefficiently. And then you're in the boardroom saying, you know what? Idon't think we need to send that many marketing messages out to our customerbase because they don't want to hear from us. And like I think that we'rejust like ships passing in the night a little bit. Yeah. Technology hastransformed our world and digital has changed the way consumers shop for andbuy financial services forever Now consumers make purchase decisions longbefore they walk into a branch. If they walk into a branch at all, but yourfinancial brand still wants to grow loans and deposits, we get it. Digitalgrowth can feel confusing, frustrating and overwhelming for any financialbrand marketing and sales leader, but it doesn't have to because James robertwrote the book that guides you every step of the way along your digitalgrowth journey, visit www dot digital growth dot com to get a preview of hisbest selling book, banking on digital growth or order a copy right now foryou and your team from amazon inside you'll find a strategic marketingmanifesto that was written to transform financial brands and it is packed fullof practical and proven Insights you...

...can start using today to confidentlygenerate 10 times more loans and deposits now back to the show. Yeah, Iagree. And to that point, episode number 83 with Marcus Sheraton GreatBook, 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 productpushing, it's what we teach which is to help first to sell second and thatideology, that belief system has to be owned from the top down and from thebottom to the top. Otherwise like you said, it's kind of ships passing in thenight and we dabble in this a little bit when you look at this idea ofdigital communication and the concern is overly communicating. You talkedabout doing secret shopping, we're doing digital secret shopping as wellfor financial brands a lot, probably more right now on the consumer sidehave started to move over into the S. And B. Space slightly as I think moreawareness is gained into the opportunities. But I'm gonna give yousome perspective for the dear listener when it comes to this recent study,bottom of the funnel secret shopping, looking at the application on theconsumer side, the same could be done on the S. And B. Side. But on theconsumer side we looked at a credit union, we looked at a local competitorof this credit union And then we looked at chime and we had real consumers gothrough the application process on the credit union side and the localcompetitor side normal 60-70 abandon it because of some friction andfrustration there. Like we're not going to move forward chime. 100 conversionrate on it. Number two we did a 30 day follow up to the experience, doingmemory recall. Out of these three digital experiences which communicatedwith 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 eemail tax etcetera. On average, 9-11 email communications in the 1st 30 days.Do you feel that was annoying or frustrating, know why? Because theywere guiding us to the next step. Here's what to do. Have you consideredthis? And so it was more education, Learning about the product, divingdeeper. And so 9 to 11 pieces of email communication. No one founded annoyingand 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 Isaid, it's the product and it's the go to market and the go to marketimplementation is basically marketing as a service, You know, so it's anemail automation campaign, it's outbound calling an education, itsfrontline 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 thatsame 30, 30 day period, right? But they're written from the perspective ofinterviews from the businesses, understanding their pain and whatthey're trying to accomplish in their daily workflows and writing theseemails 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 marketingand there's demand side marketing. Supply side is, hey, these are all thethings we can offer you. This is the bullet pointed list of features. Mykind of running joke is you go to a small business checking account, it'slike, here's all the things we're going to charge you for and here's how toavoid 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 ofbait and switch kind of marketing that I'm putting in front of you and oh, bythe way, if you want to make sure you...

...avoid these fees without a spreadsheetand start doing the math. And like, let's, let's kinda like, see wherewe're at versus demand side marketing, demand side marketing says, okay,what's, what's coming in from the customer's perspective? How are theylooking at the account? What is their daily workflow? How are they going toresonate inside of this um service offering? And how can you create it tosay the customer has demand for your service. So like if you kind of look atsquare, doesn't do like a, like a great job at it, but they do an okay job ondemand side. So if you're a banker and you want to go like kind of like, whatam I looking at? Go look at your small business checking account, beat yourlist and then go to square and go to like banking services or financialservices 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 movemoney? I get paid in person, I get paid remotely. There's like there are threeor four different options, but they're looking at from the perspective of ifI'm a business customer coming in and look at these services, how do theyrelate to it? That's the demand side marketing. So all of our demandmarketing 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 knowpayments 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 tostitch together a system of requesting payment, getting paid, reconciling thetransaction, keeping up my books, feels like brain surgery over and over. Itkept 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 happensis they come back and well, I love to show this to the banks. And they werelike, well, you just send a lot of emails and we're like, yeah, but youknow what happens when we send emails, concentrated shopping, that's what Icall it. So, concentrated shopping. So if they just log into digital bank, ifyou just wait for the world to come around to you, right, like I'm eithergonna walk into the branch and you may or may not tell me about this, or I'mgonna 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 thisbusy mall every day and they may walk by the window and they never reallylike kind of like look at what's going on. You hope that they kind of comeinto your store, right? And have an intentionality into buying something,What email marketing does. And even a little bit of outbound calling is itcreates a concentrated shopping event. It basically says, hey, here's what Ihave to offer into an email inbox and the subject line is basically lookinginto the window. And then if they decided to open up the email, that'sjust that's them deciding to go in and shop, what happens is you forcedeverybody 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 multipletimes to go into the store to make the decision. And so what we see in ouremail system is businesses will come back to the email 30 times, 20 times 15times. And then we also, we write these longer form conversion, copy writtenemails because they tell that story, they take them through that journey Andthey will we have like 75 read rates on our nose which is unheard of becausethey're they're coming back and they're like dude that's your reading my mailhere because like I have this pain, I need to read this and come back to itbecause business owners, small business owners are super busy, like you're busyright? Like your calendar is booked from 8 to 5. Like you have to like comeback and read this stuff late at night, you know, and that's what happens, thisis brilliant. And two things one marketing as a service, you're takingthe pain of the F. I. Off from having to go to market and you're using thisexpertise 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 humancentered growth, i. E. Human centered design and the number to the consumerpersona. The empathy, map those questions, concerns those hopes anddreams and playing off of those and you're right, this idea of great brainsurgery using the words that you hear...

...over and over and over again andaddressing that. And it's funny because when I make these recommendations tofinancial 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 whydo 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'reempathizing with that person's pain and you're like, like no it doesn't. And soI think that this is where the training and education there's a tremendousopportunity and it's not a massive mindset shift, it's just almost like,you know, just looking at the world slightly different Stepping into thebusiness owners shoes because you never understand someone until you walk amile in their shoes and and then you're keeping that attention, they're comingback, you know 25-30 times looking at that email and now you're getting intoa blue ocean opportunity for financial brands, both on the consumer as well ason the business commercial side. And that's the consideration stage of thebuying journey because there's a lot of information that goes in. There's a lotof 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 sellsbehavior. Because what Kobe looks at is four areas of the brain. It's actuallythe connective part of the brain because you have I. Q. Which her fatherwonder look studied with the Wonderlic exam. So there's that there's so that'sintelligence. Then you have the emotional side of the brain where youget like disk and Myers Briggs and then you've got Kathy Colby who's beenstudying the cognitive part of the brain, which is what I would typicallysay is the os the operating system of the brain. And there's one of fourareas there and one of them is called fact finder. How much information doessomeone need before they feel confident enough to make a decision to moveforward forward with. And then when you think about entrepreneurs and businessowners, they tend to trend high in another area called Quick Start. And sothis is something to that. I think it helped maybe make some informeddecisions at an internal level because now you know more of the operatingsystem of the business owner and how they're consuming information, howthey're making decisions and then use that to support them to guide themforward 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 theoperating system, the brain totally like that that resonates with us bigtime. So I think, I think the thing is what I always try to communicate tofinancial institutions is, yeah, this, this may feel weird. May feel awkwardfrom what you've traditionally done, but if they came into your branch andyou had a conversation, our emails actually communicate in a way that youwould as as a person, You know, it's not just like a stock image with threeor 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 ofthe content here is like legal, you know? Which is okay like we're bankslike we need to do that and I'm not saying like to do this in an uncompliant or unsafe way. It's just saying like meet the user the customerwhere they're at and like help them make progress against your financialinstitution and it's okay to be communicative with them. You know likewe show the results, you know like the people opting out and unsubscribingsuper super low and we hear from from customer after customer, you know likeI never heard from my bank until they had auto books and then you guysreached out and man like you hit me at just the right time and that's thepoint like that's the point of like good engagement of marketing is youwant to hit the hit the person at the time that they need it, you know, andthat's the reason to be persistent quite frankly. And that's where theproactive nature of all of this comes because I kind of laugh. Uh, someone onlinked in today, I had messaged them just to check in to see what was goingon 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 Ikind of chuckled and I sent them a loom video. I said, no, no microphone, but alot 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 informedoffers. I want to ask, thinking about everything that we've talked aroundabout, you know, embedded banking, embedded fintech, the, the SNBmarketplace. What is a common belief that other leaders in this industryhave it financial brands that you might just passionately disagree with, whatmight be holding them back here? Yeah. So I would say the, we talked about alittle bit the marketing side, but like positioning of their products I thinkis one of the biggest mrs, and we've actually gone through recently. So I'llgive you a little heads up. But like we've been going through a learningexercise with a lady named April Dunford who wrote a book calledobviously awesome. And so she's basically a positioning expert. And soApril is working with us to help us better understand how financialinstitutions should position their products, specifically small businesschecking. And so if I look at the landscape and it's something I've beenlooking at for the past year. If you look at account listings and featuresand like how financial institutions describe their products, it's largelyundifferentiated, they're effectively all the same. And so I think what'shappened in this whole movement to digital is we're very supply sideoriented, meaning that here's all the things that we can offer. Let's figureout a way to get all those things up on a website and listed out for people andhope that they basically find something that that you know, they need. And solike little things where like they go to small business checking and we listout feature names really kind of built from what we call the product, insidecore banking back in the day and eventually it made its way into digitalbanking. It makes little to no sense to the average business owner. If you askthem what's positive pay mean, like do you know what positive means, how longyou'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. Throwpeople 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'reright april Dunford, we gotta get we gotta get her as a guest on the showbecause I think that'll be a really fun conversation. I'm gonna give a shoutout to uh Louisiana Federal Credit Union because they've done a tremendousjob. They've been in our program for probably five or six years and we'vehad a couple of their team members as guests on this show just talking aboutthe experiences. But when it comes to positioning their business products,they have actually done something to where they have built and developedwhat is called the complete Guide to exponential business growth. And it isa meaty subject matter book, it's an e book you download and its position asconstantly grow your business in Louisiana. So there's some good s ceolove to that. Cool is that and they're doing a fantastic job moving forward. Iwant to derek, there's been a lot of fun. I wanna get really practical hereat the very end because I think all massive change and transformationbegins with one small, simple step, one micro commitment that someone can makelistening today. What would that small, simple step or micro commitment be thatyou would recommend them move, move forward with. Sure. I would just sayrecognize that small businesses are not multi employee shops. You know don'tnecessarily have the needs that you...

...hear from the common business ownerthat you served through a ch batch origination Wire Management Treasury.It's like the way you used to think about small business banking. I thinkif 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. Inaddition that there's a growing number of independent workers, 40 41.1 millionindependent workers. So if you think about that category and they livelargely between retail and basic small business. So the one thing to walk awayfrom is I need to learn about small businesses right? I need to understandtheir pain points and how digital transformation for them is impactingtheir banking relationship. Because last year We had a 45 adoption of ECommerce last year in 2020 45 growth. It's been year over year 15%. So lastyear three times as many people moved into e commerce and moved away fromtraditional branch and retail shopping. What does that mean? That is a hugeshift in technology behavior specifically with payments that is notgoing away. It will not revert in. Business owners had to, I'm astoryteller show san Antonio texas. There's a small consult income orconsulting company that does training for kiddos with reading disorders,dyslexia and things like that. They used to go in person to meet with thekiddos, they would do the therapy session and then they would collect acheck from the parents. They had three or four consultants. They would goaround the community and do this the next day when the people went in tocheck in the office, they bring the check, the office manager would takethe check to the bank later that day, get deposited and that was theirworkflow, right? Covid hits. They can't go in person. Right? So what do theyhave to do? Like you said, they're entrepreneurs, they have this operatingsystem like we'll have to figure it out. So they started setting up zoomsessions with these parents and the kiddos and they did their therapysessions there. But then what was broken the way they got paid. Sothankfully for them and US Auto Books was installed, their financialinstitution. They adopted our solution. They now send digital invoices to theparents to get paid. Okay, It gets better. So now their business model haschanged because they said, you know what we found, we can do more sessionsper day doing it this way, we still have the same relationship. So once amonth we go on person and meet with the kiddos and do a once a month thing, butthe other three sessions are all digital. We have now signed up allthese 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 lastyear changed for people the way they accept payments and they're not goingbackwards, they're going to find ways like, oh this is more efficient. So theone thing financial institutions better understand business customers whatthey're going through, secondly, they need to get paid. I don't have a metalbusiness out there that doesn't need to get paid. You can either be at theforefront 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 seewhere that goes, Derek, This has been an absolute blast to have thisconversation. Thank you so much. I'm grateful for the insights that you'veshared, the knowledge that you've shared. If someone wants to continuethis conversation and discussion, what is the best way for them to reach outand say hello to you? Yeah, just email me Derek D E R I K So forget my parentsfor the, for the weird misspelling D E R I K at auto Books dot co or twitterlinkedin on twitter at Derek the E R I K. Sutton man, I feel you with thatname because people always like is it James James robert? Nope, it's twofirst 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 anotherepisode of Banking on digital growth.

This has been fun, awesome. Thanks forhaving 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 growthwith James robert. Ley like what you hear, tell a friend about the podcastand leave us a review on apple podcasts, google podcasts or Spotify andsubscribe while you're there to get even more practical improvementinsights, visit www dot digital growth dot com to grab a preview of Jamesroberts, best selling book banking on digital growth Or order a copy rightnow for you and your team from Amazon inside you'll find a strategicmarketing and sales blueprint framed around 12 key areas of focus thatempower you to confidently generate 10 times more loans and deposits untilnext time, be well and do good.

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