October 11, 2021 • 48 mins
In our season two kickoff, Ernest sits down with Dion Lisle of Forty Grand to discuss the impact of Fintech on banking institutions, and how collaboration between these two entities ultimately leads to greater efficiency and better service. Also discussed: addressing common misconceptions around digital adoption in the banking space, and why customer outcome and experience should always trump traditional banking processes.
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Episode Transcript
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Ernest Rolfson (00:00):
Hey, this is Ernest Rolfson, the CEO and
founder of Finexio. Welcome toB2B Cashflow Conversations, the
podcast dedicated to sharinginsights and innovations in
business to business payments,working capital and cash flow
management, and FinTechentrepreneurship. In each
episode, my guests and I tacklequestions in the ever evolving
world of FinTech and payments.
An industry that's rapidlyevolving and of great interest
(00:22):
to investors and businessesalike. Looking forward to having
this conversation.
Today we've got Dion Lisle,Managing Partner at Forty Grand
and a thought leader in FinTechfor over 20 years. Dion recently
merged his advisory firm Facerewith investment bank MJC
(00:43):
partners to launch Forty Grand,a consulting firm focused on
driving value for communitybanks by delivering FinTech
focused innovation. Dion,welcome to the podcast.
Dion Lisle (00:55):
Great to see again, Ernest. It's it's nice to
reconnect. It's been way toolong. I love what you're doing
at Finexio.
Absolutely. What vineyard do youhave there in the in the
background?
Oh, so it's funny. I haveslotted doors and they look like
they're moving on video. So Ihad to cover it. And that is
just a random Sonoma County fallvineyard picture. Just to
(01:17):
prevent the moving slats oncloset doors.
Lovely. So you're someone Ienjoy being around and chatting
with so much that I haven'ttalked to you in several years.
Yeah, exactly. Exactly. Yeah, inorder to get away from me.
(01:39):
That's right. That's right. Butyou're always a good time and
have something very interestingto say. So before we get into
what you're doing now, why don'tyou share just kind of how you
got involved in this payments,space? And we'll hear about how
you're a leader in it today,which you are, but always good
to get some of the backstory.
(02:01):
I appreciate that. I'm probablyone of the few who came into
payments and banking viainformation security. So I
started in an obscure technologycalled PKI, private key
infrastructure, very technical,and I was with a company that
needed a vertical expert to getthem deeper into banks. And so I
looked at the technology andstarted to think about how to
(02:23):
apply it for digital signatureson treasury wire transfers,
letters of credit, trade,finance. And I became that
expert just by attending silos,AFP and other bank events. You
got to remember and we didn'talways have Money 2020 and, and
Finovate. We used to have tomeet bankers, you know, where
(02:44):
they actually hung out. Andthere was no, there was no
FinTech back then. So I became avertical expert around trade,
treasury and payments.
You started multiple startupsand multiple consulting firms.
You started Facere essentially,to be the Rosetta Stone between,
you know, banks and FinTechstartups. You know, banks
(03:06):
really, as you know, have achallenge navigating this this
FinTech arena, I guess, tell usabout that analogy or, or what
is this barrier that you and Iknow well, but perhaps others
don't?
I stumbled upon the RosettaStone analogy when I was doing a
podcast at Money 2020 Europewith JP Nichols. And I happen to
just blurt that out because mydaughter had the Rosetta Stone.
(03:29):
She was learning Hindi at thetime and became fluent. So it
works. But to that point, yeah.
So I stumbled upon the RosettaStone between banks and finte
hs. And you and I both know, weve dealt with the big banks
I'm one of the unusualpeople. I've been in big ban
(03:49):
, Citibank data biggest paymens processor. And I've been in
inTech startups, early employeeight, nine or 10, and a coup
e startups, some more succesful than others. And I realized
there was a huge language barrir. And but not only language b
cadence, the way they operte, the way they look at
hings, the way they talkhings, everything between th
se two worlds, like two giant gars that just couldn't match
(04:11):
right? And I thought, you know,but they need each other, and I
ever really bought into the fintchs gonna eliminate banks. I
never believed that narratie. And I'm glad to see most
eople that are past that. But Ireally wanted to be the Rosetta
tone quite literally between thse two disparate worlds and help
them work together to deliveretter value for customers, wh
ther they be b2b or b2c.
(04:41):
Well, what are some of thespecific barriers to digital
adoption that you've seen?
asking how you overcome them isis probably too simple of a
question, but maybe how have youhelped navigate or overcome some
of these things? And what aresome of the most typical
barriers that you're seeing?
Yeah, I think my favoriteexpression I heard a while back
is "culture eats technology forlunch", right? Yeah, it's always
(05:04):
down to people, right? You and Iboth know that it's hard to get
people to understand the valueof technology and how it
improves their work. If theykeep pushing back. I've worked
on a project in Italy a coupleyears back with trade finance
group, but we're doing thispretty complex blockchain trade
finance letter credit thing. Andthe ladies, they're all ladies
who ran the letter of creditoperation kept holding back
(05:27):
everything like no, we're notgoing to tell you how we do
that. No, we're not going totell you how to do that. And
when it turned out, they wereafraid of being replaced before
they could retire. They were all50 something and they thought,
look, I've worked for this bigbank, and I just want to retire
as you know, some letter orcredit person. And we never got
them over the hurdle ofunderstanding we were there to
help make their job better. Sonow when I really look at
(05:50):
things, I really start with thepeople and I really try to get
them to understand, we're hereto help make your job better.
We're not here to replace you.
Digital is a tool for you tooffer better service. I tell
community banks all the time,personal service plus digital
equals concierge service. That'swhat I want bankers to
understand more than anything.
So a lot of these places willparticularly in the community
(06:13):
backspace. They're coming inwith a low tech note, tech
environment. to a large degreeis that fair to say?
It's almost worse because whatthey come in with is a we do
whatever if I ask jack Henrytell us to do environment, which
is actually worse, becausethey're they're almost captive
audience to that very narrowview of technology.
(06:34):
Absolutely. Well, congrats onforming Forty Grand. Tell us a
bit about you know that what wasthe inspiration there? And I
guess the value you're trying tobring to community banks with
that with that formation? Is itmore of the same? is there is
there some other element herearound FinTech oriented digital
technology for banks?
Yes and no. So you know, Irealized two things one, after
(06:58):
Facere, three plus years, and Ion onboarding with the mega
banks was the hardest part ofthat job. The actual work was
fantastic. Once you were onboard, I hated the onboarding.
Yeah, many banks don't have thatissue. And I met Mike and
Carlton, my partners in FortyGrand. They run MJC partners and
investment bank for communitybanks. And what they're doing is
(07:20):
they're in the boardroom talkingmerger, acquisition divesture.
subordinated debt, really great,high level financial stuff. And
they kept getting well whatabout FinTech? What was what
should we do like, you know,some bank just don't air quoting
FinTech or digital ortechnology. And these are banks
between call 250 300 million and5 billion they don't have the
(07:41):
CTO Chief Digital Officercertainly don't have a CTO nor
should they. And their IT teamis literally a guy or gal with a
USB token going around updatingwindows on laptops and
notebooks, like very low techfootprint to your point. And we
realize this is an opportunityto help these bags add value to
their footprint with digitalright. And so rather than work
(08:05):
with the large banks, I reallybrought to 40 grand this focus
on Let's help these banks getdigitally fit. They don't need
to digitally transform, theydon't need a giant PwC Accenture
program.
So the digital transformation,change the whole back office, go
to the cloud, we've got toeverything is upside down.
(08:26):
Exactly, exactly. I even wrote ablog about this digital
transformation is too big tosucceed, right. And it magazine
called digital transformation.
They said 80% of all digitaltransformations fail later.
That's like Car and Driversaying it sucks to drive a car.
Like that's a horrible way tolook at digital transformation.
And yet, that's the reality,which is why I always talk about
(08:48):
one process at a time, getdigitally fit in onboarding, get
digitally fit that love mission.
Right?
Ernest Rolfson (08:57):
I understand. So it's almost like driving up the
value for them by being morelaser focused and bringing in I
don't want to say a pointsolution but a purpose built
solution for the specific bankpain point.
Dion Lisle (09:16):
Yeah, that because I don't want them to think too
narrow. But also I don't wantthem to think boil the ocean
wide. It's about fixing aprocess, a method, getting your
customers engaged digitally, aswell as the personal service,
that community banks rightfullytake a lot of pride on.
Ernest Rolfson (09:32):
What's the benefit here to the end user, to
the corporates, to the CFOs? Andhow much would you say the banks
think about that? And I'd loveto hear to you know, how do you
view engaging with you andengaging with FinTech more
broadly, you're one of thewhispers in the industry, how
does that help impact the bankas well? Ultimately, yeah, so
(09:54):
see how much you think about theend user and Endor your bet your
customers, these banks, thinkabout that. That'd be of
interest. To how that plays intothings?
Dion Lisle (10:03):
Fair question. I like to say all they're obsessed
with is their end userexperience, but their board of
directors, they have profitmargins that they have to meet
and all of that. But I will saythis community banks think a lot
about their small businesscustomers, they really feel
connected to them. And I thinkthis period of time, this
pandemic has shown us the valueof local, the value of our local
(10:26):
business, I know I've started toshop at a local market instead
of the whole foods. I have alocal don't judge me liquor
store, it is pandemic time. So Ihave a local liquor store I go
to.
Only gonna judge you if you'reat the liquor store, eight times
a week, otherwise, we're nojudgement. Otherwise, you're in
a judgment free zone.
(10:48):
Perfect. This guy's great. And Igo in, and he's like, hey, Dion,
how you doing? Hey, you askedabout the relationship.
And this is the bank, the banksare investing more in the
relationship.
Yes, they are. Particularly mostof the banks I work with talk to
see, evaluate the SMB, theyreally want to find that perfect
(11:14):
balance, and their idealcustomer is high net worth plus
SMB million dollars net worth,and they have a two to $3
million local business. That'sjust a sweet spot. But those
customers are now demandingdigital, it's no longer enough
to go into the bank, shakehands, say, Hey, Mike, how's
your business? Good to hear?
The customers want more digitaltools? That's, and the bank is
(11:38):
driving a balance between makingthese customers happy. And to
your point. They're not runninga charity. They're running a
bank and yeah, their drive forprofit margin as well here.
That's right. So to summarizethis element here, it's really
not about cost takeout, is whatI'm hearing. I mean, that may
(12:00):
drive some of it. You've talkedabout some efficiency, but it
really is, it sounds likeinvesting in growth, investing
in capability, investing incustomer retention,
satisfaction, less about I want,I'm trying to save a nickel and
cut some headcount here,although I think you were gonna
say something there.
Well, so they have somethingthey call efficiency ratio,
(12:22):
which, which I kind of like,which is just, we want to grow
the business, but maintain ftease. I've not met anyone who
says I want to get rid ofanyone. It's mainly about I've
got 48 FTS, full time employees,I just want to make them more
efficient. I want to go frombeing a $500 million institution
to $800 million institution likenot adding anyone. Well, the
(12:44):
only way you fill that gap isdigital.
Well, we'll keep talking aboutthis. I wanted to say, is there
a unique way you have to workwith these smaller banks. And as
I understood it, you've got afew different frameworks, the
paid framework, the fastframework, in terms of driving
innovation with folks, is theresomething unique that you found
is working with these types ofinstitutions that need to engage
(13:08):
in a unique way in this area?
Yeah, so I tell them, I said,Listen, you know, you're a great
bag, you've done a lot of goodstuff, you don't have a Chief
Digital Officer, digital is oneof the most important things
now. I am your outsourced ChiefDigital Officer, all things
digital, I'm going to give youvaluation recommendation and
architecture and help you buildthat digital footprint that you
(13:30):
need. The paid frameworkactually built that for larger
institutions. But it worksperfectly here. And that's
parallel, agile, innovationdelivery. And the key is
parallel. I work in parallelwith the bank, I'm outside
pushing the project, you'reinside being a bank or doing
bank stuff. And it's agile, it'sfast, it's responsive, but it's
innovation delivery, because oneof the things I really started
(13:53):
consulting to avoid isinnovation theater, right? We've
all seen the innovation theater,oh, this is such a great project
bubble never gets to market. I'mnot interested in that I want to
deliver. Now the fast theflexible, autonomous, specific,
timely architecture that'sunique to community banks. And
really, this is a statement thatI want you to break away from
(14:13):
FiOS and jack Henry's roadmap.
Yeah, not rip and replace theirservices or their their system.
But just break away and hollowthe core, build some services
around that you can later decideif you want to.
Yes, we're starting to work withbanks now ourself. You might
have seen Bank of Californiainvested here recently. So we're
working with those folks.
There's a number of other banks,we're talking to you that have
(14:36):
come to us and they're like, welove what you're doing. We love
your digital tools aroundaccounts payable. We want to
offer more of these capabilitiesto our customers. We would love
to do more of this off of ourown rails or integrating our own
products or, hey, we have anidea. We want to bring in real
time payments, how can yousupport that and we're kind of
like well, what are your coreproviders? Provide you what how
(14:59):
can you? What tools and servicesdo you have to be able to expose
to a FinTech to make it easy,and let's talk about what the
timeframe is and what theconstraints are. And, you know,
you share that with these guys.
And they're kind of likescratching their heads and then
haven't really considered thatand know how to know how to
(15:19):
leverage that.
So it's funny you say that. I'llbuild on that. So I got an RFP
RFI from the bank for a new ripand replace core. All the
checkboxes, wires ach blah,blah, blah, just checkbox. This
is this is great who you send itto jack Henry FiOS, DCI said,
Well, what about a cloud? Bassprovider? Banking is certainly,
(15:39):
they're like, Dion, we wouldn'tknow who to send it to. We don't
know what we don't know. So fairenough. That's exactly what
Forty Grand is designed to do isfill in that gap.
I think it is pretty hard tofind out what new things are
there. Right? Especially if inyour banker world, you can go to
those conferences, do you seethe banks wanting to or needing
to do the bleeding edge, or Iguess what's the maturity level
(16:03):
of the types of solutions youcan bring in that are even
palatable, because it's, itfeels like and I'm in this camp,
so I don't want to speak for youbut the FiOS is jack Henry's of
the world, or not probably thebest place that these folks need
to be looking for. If theyreally want to do something that
is, you know, 2021 standard, youknow, that's really gonna have,
(16:25):
if they run it really want tomaximize delight. It's not going
to be with those big players atall.
I can tell you, you're spot on,the fact is, if you think of the
classic McKinsey three, horizon,one, two and three, you know,
call it 12-18-24-36 months,whatever, right? The fact is,
most of them are here. They'retheir horizon, one, maybe
(16:47):
horizon two, maybe a couplesurprise areas that I've heard
from bankers, they're notlooking at blockchain. They
wouldn't even know what to thinkabout it right now. But back to
your point about theconferences. Do you know what
the number one conference is forcommunity bankers? It is called
Aoba. Acquire or be acquired.
That is their number one. Thatis their annual conference that
(17:08):
they all live to go to now thinkabout what that says about
community banks live or die. Imean, that's where these banks
are, yeah, yes. help to preventbeing on the bottom of that food
chain when the ayoba conferencehappens. They want to be the top
of that food chain. Right? Andto your point, FiOS Jack Henry,
all lovely people, blah, blah,blah, all that, but those people
(17:30):
are not going to help you getout of horizon 122. They're not
even at horizon one yet now. SoI really try to help them see
that. They're perfectly keepyour core, keep working with it,
hollow it work around. And thatsounds like what you're talking
to your bags about as well.
So I think it's the only paththat makes the path you're
(17:53):
recommending is the only paththat really makes any sense, to
be honest, which is exactly whatelse would you do. The only
other thing is rip and replacethe whole thing, which is not
palatable for a lot of thesefolks.
You know, it's funny, you lookat CEOs of the banks I'm talking
to and there's a bell curve,there's an absolutely older
bankers forward looking ready tomake changes. And there are some
(18:15):
that are like, you know, what,I'm five years from retirement,
What are the areas that they'rein the most need of call it
I don't want to be responsiblefor a referee place that goes
badly wide bell curve there. Butwhat I am finding is the middle
of the bell curve is where theyreally need the help. They're
really open to it, but they'renot quite sure how to make it
out. Those are the folks that Iget most excited about. Those
are the opportunities I enjoy.
(18:38):
modernization or the areas wherethey're in the most pain right
now.
It's the basics. It's digitalonboarding, it's it's just right
onboarding, loan origination,treasury services, their stack
is--Why, you know, it's a wiresystem. That's astronauts, it's,
you've seen it, I know, you'veseen this. And, and it is a
(19:00):
matter of just getting them tounderstand there are tools out
there. And to your point, you'respot on. I had a banker said,
Hey, I'm going to Finovate Isaid, Great. When we got back,
he's like, I don't know what tosay I'm overwhelmed. There was
so much there. Like, I don'teven know how to put this.
Which is where you would fit in.
Unknown (19:19):
I would hope that I could help them make sense of
that. Absolutely.
Dion Lisle (19:22):
Mm hmm. I guess that's really interesting. So
how do you go about identifyingwhat the right solutions are the
right partners to bring in? Andwhat do you look for? Or is it
is it completely, that you havea couple of key vendor
relationships that you you know,feel like you can rely on bring
(19:44):
to customers, given that some ofthese areas tend to repeat
themselves? Or how do you how doyou think about that?
Yeah, really what I start with,and I've added this to the paid
process is at the front of thegap analysis. Here's where you
are, here's the bank. You wantto be What's that gap? And then
stack order those to say, well,onboarding luck, that's where
(20:05):
the relationship starts. You gotto improve onboarding. Let's
digitize onboarding first.
Second, let's look at yourTreasury stack. What are you
offering now? Well, that'swoefully insufficient. What's
next? What's next? And thenprioritizing that. But the other
step that I've added, honestly,is a process audit. The number
of banks where I've sat withtheir wire person, where their
(20:26):
lending team or whatever thecase may be said, well, you have
48 steps here. Why is that?
Well, we've always done it thatway. I'm like, No, you're not
allowed to say you've alwaysdone it that way. What is this
step? What is this? And when youbreak down the process, it's
amazing how many banks 10 yearold process never questioned.
And I can't imagine, earnest inour line in FinTech world,
(20:50):
nobody's gonna accept theprocess for 10 years with no
changes. We're even auditing andasking the question,
Not if you're on a real, not ifyou're at a real startup, for
real? Yeah.
Unknown (21:01):
Exactly. Yeah. Yeah, it's all about efficiency.
Dion Lisle (21:04):
So they don't even stop to ask the question,
essentially. Exactly.
Because they're busy running inthe back, I get it. And no, and
and I was talking about theother day, the bank started to
assign these tasks to people inthe bank. And I'm like, Well,
what about their day job? Theyalready had it. eight hour, 10
hour day job? How are you gonnado that? Are you?
(21:26):
Sure. Well, it's it's just youdon't you don't you know, it's
everything's when you're at thetop. Let's say everything seems
easy. Oh, you can't fit that intoo? Oh, you can't do that as
well. What? You know what Imean, it's not realistic. So
it's the same thing like what wetell, right, our solution is
about digitizing accountspayable payments. And well, you
(21:50):
could have your staff do thisthemselves. But you've got to
onboard, like 2000 vendors topay. And so your staff could
just I guess, pick up the phoneand do that. But when do they
have time to do that? Aren'tthey? Aren't they employed doing
something for you already? Andthen are they trained to do
that? Do they want someone onyour team have the competency
(22:11):
and training to be able to havea thorough negotiated
conversation around a number ofelectronic payment options for
someone-- costs, speed, securityefficiency and be able to
navigate and complete enrollmentaround that?
That's right. Yeah, anoperations person is not your
best innovation driver, right?
Operations people are very goodat rinse and repeat events,
(22:32):
right? And look at thestatistics. I wish I had pulled
this up. The number ofaccounting finance departments
that don't close at the end ofthe month, end of the quarter,
because they're behind, it'smost of them. Right? And why?
Because they're using Excel,they're using outdated tools.
The bank information is notcoming in cleanly. It's not
Yeah, it's not scrubbed data.
(22:54):
There's no data, hygiene, all ofthis stuff and to you and I were
like, Well, why would you dothat? We've always done that
that was the answer. Wronganswer. Let's, let's stop the,
you know, the hamster wheeladdress that and give you tools.
So that it's not a horrible endof the month, end of the
quarter?
I think two areas around this, Iwanted to kind of tease out I
guess what have you seen havingthe biggest impact on your
(23:17):
customers on these banks so far?
Or even in the last three years,let's say and you've been
engaged in the space force? Imean, forever. Yeah. And so
you've got a lot of war stories,but I guess what is making a big
impact and or accelerating theimpact and would love to hear
to, if anything, to yourknowledge impact on the end
customers and users? And? And ifso, what is that? What do you
(23:38):
think that might be?
It's pretty basic. And I, Ioften talk to bankers about data
and they say, Yeah, okay, I hearBig Data, Data warehouse. Data
to me is you enter it once. Andit's done. Right. And what most
people don't realize is thenumber of times they enter data
(23:59):
and re enter data, I sat with awire transfer person, where she
took a PDF of a wire request andkeyed it all in I'm like, now
what do I request from Why? Whyis that data entered here? And
again, and then confirm thatYes. Right. So my thing is,
that's the number one thing ifyou think of data as enter once
(24:21):
use many, that would solve ahuge percentage of what I'm
seeing as the biggest efficiencyproblem. And they're just used
to it. This woman lovely womandoing a great job and rarely
made mistakes. Rarely in wiretransfers isn't enough. That's
(24:42):
got to be five nines like youcan never get right. I mean,
yeah, you're in the payments,you know that.
Im thinking of Gattica--coolmovie, maybe that was 2001,
right where they've got rooms ofpeople, right and you're taking
drugs and you're bioengineered.
So you never have a badkeystroke, and whatever and
that's, you know, they werelike, What? Why did something go
wrong in payments? What you meanthat one payment was screwed up?
(25:04):
And it's like, well, I'm atthese banks. They don't actually
have robots working for them atthese banks just wires or it's
actually people. And maybe 1.5%of the time something will get
screwed up.
Well look at say that. Rememberthe Citibank one that just short
(25:27):
time ago? Half a billiondollars? They were like yeah.
Yeah, so we accidentally sentyou half a billion. Just send me
just send that back. That'd beawesome. And yeah, awkward.
Did you read about it? So Iblogged about it. I remember
(25:48):
well, that.
Well, no, it was for that bondpayment. If you were I think it
was a bond payment, and theythey ended up not getting some
of the money back. Right. Andthey were holding it.
Money did not come back. Yeah.
Everyone says, Oh, they lost it.
No. But what they did was theyhold garbage bonds for a decade
at a loss rate. And they lostand you know, we'll come back to
(26:09):
working capital, they lost theability to use that working
capital. And three people had tosign off on that transaction to
those were not employees. Here'sa process question for you. How
do you allow a half billiondollar process to be signed off
by two non employees of Citibankusing a system and I looked at
the screenshots. Ernest, youguys like, Oh, my God, this
(26:33):
stuff was from the 80s. had tobe.
Green screen. Nonsense.
Yeah. Really? Nonsense. Yeah.
But but but now look at acommunity bank that Citibank,
they have billions in IT budget.
And this has happened. Now let'sgo to our friends at the
community back. What do they do?
It's the worst, if worse, if notsame. It's just on a smaller
(26:57):
scale less room forsmaller scale, same issues.
That's it? Yeah.
So are the smaller banks, okay,with I don't know, perhaps
ceding some control of some ofthese things to, let's say,
third parties and or relying onthings that they didn't build
themselves or these newprocesses. Because like, I think
(27:19):
on one hand, the bank may say,oh, but we've got a tighter
control on this, because Wandais the one that's looking at it
eyeballing entering it in.
Honestly, it's a bell curve.
Like I meet banks like that, butmost of them are in the middle
of this, like, we get it. Weknow we're dated, we're
antiquated. work with us on ourbudget and our timescale so that
we can break out of that. Andjust like when I used to sell
(27:41):
the big banks, like discoverscity and others, you find that
champion, you know, you findsomebody that gets it and wants
to make the change.
How are they thinking abouttechnology and it and risk and
mitigation around that andbringing new solutions to
customers? And we're certainlywhite labeled by different folks
I'm sure some of the banksyou're working with are just
(28:03):
straight up turnkey, adoptingdifferent tools that are out
there. Is this a stumblingblock? Or banks, especially
smaller banks, are they moreflexible and loose around this?
are they thinking about it in ain a way that's pragmatic and
can make it work? Are they arebanks after all, so they are
heavily regulated and havecertain compliance things that
they're unable to be flexibleon? But I guess what are they?
(28:23):
What are they being flexible on?
What what has been creativelyadopted to make things work?
Yeah, the outsource thing is nopushback, because they've been
outsourcing their core to jack,Henry FiOS and others for
decades, right? So the outsourcequestion, unlike the big shops,
(28:45):
never been an issue, okay, thecompliance piece is just a
matter of they want to get inthere and really see how it
works. And what are the touchpoints? And where can they
influence it and that type ofthing. But as far as like the
actual outsource and all of thatnon issue, little pushback on
the cloud, but that's just lackof knowledge. They just don't
understand it. But but thatpart's not been the issue.
(29:09):
Are they concerned about themand their safety? Or their
compliance? Or and to whatextent is it more that they care
about their customers the CFOsthat they're working with and
those businesses or is it bothor is that nuanced? Not
I you know what I will say thisabout community banks, I find
they talk about their customers,both retail and mainly b2b much
(29:31):
more than the big banks did.
It's much more about ourcustomers need this. Our
customers asked us this. We needto deliver this to our
customers. I will say enjoy thatchange, going from the big shops
to the community banks, they'remuch more our service matters.
Our reputation matters. This iseverything does our customers.
Happiness matters.
And we're talking about the bigboys we're talking about like
(29:53):
the top five biggest thingsright they just is the blanket
statement. I think people wouldagree. Care less bout service
care less about customers andmore like what commodity thing
can we push out there?
It's its quarterly resultsright? It's all about luck when
you're when you're city whenyou're be evey when you're
JPMorgan. There, they all do aokay job. I was opening my own
(30:16):
personal so I switched Facere'sbank account over, and I opened
with a big bank to remainnameless. And I went into the
bank and they said, Oh, thebankers out for the afternoon.
The teller offered to help mefill out all the paperwork, open
the account all good. Went home,got a text, you have to come
back. Oh, I missed something.
Come back why is this? She said,Oh, because you did it with the
(30:47):
teller not with me, the banker.
And I said, that sounds like ayou problem, not a me problem.
You had all the information. Youjust want to follow your process
for your purposes. So that youthe banker, protects your job, I
was actually kind of reallydisappointed. It was about their
process, not my outcome. And youcould feel it, you can tell
(31:07):
that's exactly what happened.
Yeah, no, they don't care aboutyour time.
I'm a small business person, andthey're gonna have me come all
the way back into the bank toredo what I had done, because
the person who did it correctly,thank you person. Isn't the
person according to theirprocess, their flowchart?
Shouldn't it be the outcome?
Right now? Not the process theoutcome? Yeah, it was compliant.
(31:30):
We didn't break any compliancerules. Sure. And yet they made
me redo it all.
Sure. No, I get it. I get it.
Let's talk about what elseyou're finding interesting. And
what's happening around FinTechand payments. And I think this
is highly related to both whatI'm doing what you're doing. But
you're writing a lot. You'reblogging about cash flow and
(31:51):
cash flow management solutionsaround that you've recently
wrote something about APautomation and b2b payments, you
touched on it. It wasn't yourfirst but it was I think it was
in your top three areas that youare kind of helping these banks
navigate with was around theneed for more robust digital
Treasury solutions. So what'swhat's going on with this whole
(32:15):
Treasury cash flow WorkingCapital Management, b2b payments
space? How are these banksthinking about this? What are
you interested in about thisexciting about? Or what are you
promoting or pushing any, youknow, maybe narratives that
these banks should be thinkingabout? navigating? Given I think
competition is kind of heatingup or anyway, investment
(32:36):
interest in capabilityinterested in minimum is enough?
Yeah, yeah. No, underinvestedarea, right. Right. The first
thing I discovered was Imentioned to a banker. I said,
No, you know, there are programsand I worked on a project that
first day that we failed fulldisclosure, we were trying to
get our SMBs to give us theirdata and process it and make
(32:58):
recommendations all that for avariety of reasons fail. But I
mentioned this to a banker, he'slike, Oh, my God, I could
actually see my customersQuickBooks, pull it in, analyze
it and make predictions in thefuture. I said, Yeah, that is
now doable. It's not rocketscience. But if you're used to
(33:18):
going out to your customer sitewith a notebook and taking
notes, coming back to the officetype, I mean, this is literally
what they do. And but they likedthat they liked that personal
service. And what I'm tellingthem is, you can do that you can
do exactly. That's it. How muchbetter would you be as banker,
if you had your customers 90days of QuickBooks, or even a
year of QuickBooks data, thatright in your systems analyze
(33:42):
and say, Hey, you know what,Bob, your business is up into
the right, you should getanother truck for your
Electrician Business. Let's do aworking capital loan that gets
you that truck, those trucksover $100,000. They're not
cheap. Let's do this. And here'show you can pay for it. Here's
the kind of loan we could getyou. This guy was like, What?
That's possible. I'm like, it'snot even hard. This is this is
(34:04):
basic stuff, right? And theywere just blown away. I don't
know what you don't know, right?
I mean, that's the theme thatI'm finding with community
bankers. They want to do theright thing they're trying to,
but they're using very manual,very personal methods, instead
of digital plus personal todeliver concierge. They're
starting to wake up to that. Andthat's what excites me. Those
are the kinds of things that Ilove.
(34:25):
I think the education here isdigital tools enable more rich
personal interactions andactual, more meaningful customer
engagement, and better and moreaccurate advice. That's right,
especially in the predictiveside, leveraging trends and
analytics. That's right. You donot need AI or machine learning
(34:49):
to get to the core of what a $10million business needs to be
successful or one of thesecouple billion dollar banks and
below.
That's exactly I was telling youabout. Yeah, it's the basics. I
rent in Moran. And I moved herea little while ago you're
You're still in Moran, right?
Yeah, to give you a largeselling or
(35:09):
location away. Well, silent onthe town.
Yes, but but Moran's lovely butI rent and my bank offers me
refi all the time and I'm like Idon't own you can see I don't
have a mortgage payment everymonth you don't need an AI bot
from you know StanfordUniversity run it on a Cray
supercomputer to go, Hey, thisguy writes a check to a person
(35:30):
every month for this amount andclearly doesn't have a mortgage.
You know what, let's stopoffering him refi. Let's offer
them something else. And yetthat basic knowledge that
context, bankers miss all thetime, whether it's b2b, or b2c
does matter. Bankers miss thisall the time. And you and I know
the tools are available, all yougot to do is look at the data.
(35:51):
And this is why I say back tothe first point data is
available, just look at getcomfortable with it.
They don't Well, they don't Imean, and again, they don't have
the tools in place to get accessto the systems is the problem,
right? It's like everything is asix month integration.
Everything is difficult.
Everything's a project. As youknow.
(36:12):
I'm working on a project nowwith the bank where they're
trying to get some FiOS data outof their system. And they're
struggling with it. I'm likeit's your data?
Is there more to talk about thattrend, or there's some other....
Or what I would say to communitybankers, let's start with a data
structure, a data strategy, adata schema, let's just get the
(36:35):
data hygiene going. And fromthere, you're going to see all
these possibilities open up. Sothat's one of the first things
is gap analysis, followed byprocess audit followed by a data
strategy, then everything'spossible.
You gave some really interestingexamples. And the banks we talk
to want to increase non interestincome. And yes, right and
(36:58):
generate that that's a bigdriver. Is that a big driver for
the customers you're engagingwith? And or do you see I think
this is kind of what I'mformulating, what I'm seeing is,
yeah, net interest income, allwell and good, they love to have
new alternative sources oradditional sources of revenue.
But at the end of the day, ifyou can put the bank closer to
(37:19):
doing more banker II stuff withthe client and or giving them
the data to your point to letthem better make a loan, they're
really happy. They really likethat, because that is really
what they know. But I think it'slike they say they want more fee
income, and they want to be ableto help customers with that. But
at the end of the day, don'tthey just want a closer
relationship to be able to makemore make more loans and make
(37:41):
sure they don't lose thosedeposits?
100% I mean, you're you're spoton growing deposits is one of
the keys and the one way theylook at it, and I'm trying to
help them understand the nuanceof this is they think, Oh
digital allows me to go out ofmy geographic area. Therefore
deposits grow because a biggergeographic area with 4800 and
something banks plus creditunions in North America, there's
(38:04):
not a lot of geographyuncovered. I think our companies
will look at it now. Well, maybeyou need to do a niche or a
vertical or this or that. That'snot about geography. It's not it
just get closer to yourcustomers, stickier services,
better services. And and by theway, I mean, there's so much
that small businesses spend theyspend 10s to hundreds of 1000s a
(38:26):
year on all these small businessservices, bookkeeping,
invoicing, accounts payablereceivable, factoring all the
stuff that you're a specialistin. And yet these banks sit
there and go, Oh, yeah, like no,we don't do any of that. Yeah,
exactly. Exactly. And yet, thethere's a study from FiOS oddly
and pays that shows SMBs wouldlove their banks to offer these
(38:50):
services. Nice I saw I saw datathat showed 66% of SMBs don't
believe their bank understandstheir business they don't why
because they don't look at thedata they don't look at anything
beyond Hey Bob let's handshakehave lunch, smoke cigar whatever
you know golf you know, butbusinesses move beyond that it's
digital now right on deck canget you that loan like boom,
(39:12):
digital online, no friction.
Banks have to learn that digitalplaybook not giving up the
personal I think their personalis hugely important and I think
they get that but how toimplement it. They get nervous.
You're you're pointing outsomething that's it goes up
really into the middle market aswell where I live although again
some of these banking partners Ihave you serve small businesses,
(39:35):
I certainly have very largechannel partners that are
dealing with small businessesare having gamut and if you've
got 1000s of customers, there'sgoing to be some smaller
businesses in there and smallerbusinesses need payments and
working capital management asmuch as anybody else. But it's
you raise it really thing is itlike if you're a CFO, and you
need help in around financialservices. The first call is
(39:58):
probably not to your bank. Thesedays, isn't that amazing? It's
not your bank, it's you're onthe Google. And you're looking
for some software thing. Andit's some subscription. Or
you're looking at youraccounting system, or maybe
you've adopted accounts payablesoftware or tierpoint. On Deck
is now provided, right? But noplatforms like that are
(40:20):
providing loans. And so wouldyou would agree with this
statement, or this generaltheme, that the bank is
basically at risk of beingdisintermediated?
Yeah. Now the funny thing abouta lot of banks I talked to they
go, Oh, I don't care about youknow, Shopify, or Amazon or
square capital. Those are theloans I don't care about. All I
care about is loans. Okay.
There's a great quote fromErnest Hemingway book that he
(40:43):
wrote, where he's, you know,character says, How did you go
bankrupt slowly at first, thenall of a sudden, with these
banks don't realize you letthese guys at big tech, eat the
edge of your business, andsuddenly your box is much
smaller, and you're lessimportant, and that stickiness
and that relationshipdeteriorates. Every time you let
the edge of that box getsmaller. What I'm encouraging is
(41:05):
no- be more integrated to yourbusiness customers, not just for
the big loans, because that'swhere the profit is, be there
when they need you. You know,what is the bank? But if not,
you know, and you know, GeorgeBailey classic, you know, it's a
wonderful life. It's it's thebanker that's there when you
need them.
Ernest Rolfson (41:25):
Right? That's the way it used to be.
Dion Lisle (41:29):
I think it can be I really, yeah.
Ernest Rolfson (41:32):
So what's next for you? in this industry? What
what are the plans for 40?
grand? What are some of theother trends you're seeing?
Where do you think communitybanking as a whole is going give
us some, you know, future futurestate? Where's, where's the
world headed?
Dion Lisle (41:51):
So I'm pretty excited. So I worked with the
folks at Money 2020 and they letme do a community bank workshop
on Sunday as the event opens.
And so I've got some folks outin October, this October live in
Las Vegas, it's gonna be great.
Excited to be back to it, right.
And we're gonna have somebodyfrom the clearing house, talk
about how community banks can doRTP. I'm going to talk with a
(42:13):
ModusBox, the founder ofModusBox, David Wexler, we're
going to talk about how bankscan evaluate a new bass platform
in the cloud, right? We're gonnahave somebody from Nidek Tammy
Banks, who knows communitybanks, really well talk about
how they can do Bitcoin, youknow, digital assets, community
banks can do this with nidek,right? And we're gonna have this
(42:35):
whole agenda the morning from 10to like, 1230. Just how
community banks can do moredigital, Nimbus is going to
present a couple others. And I'mreally excited about that,
because I think this is thefirst step to getting community
banks welcome in the money 2020community and environment,
getting them to understandtechnology is not scary digital
(42:56):
lean into it. I was at movemoov. The crew out there went to
their dev conference in Denvertwo weeks ago, fantastic. There
were only four bankers there.
Four. Now it's a it's a FinTechdev conference for bankers. Now
maybe they're intimidated,because I was in a session, they
pulled up code on the screen,and I was over the tips of my
(43:18):
skis.
Ernest Rolfson (43:18):
Yeah, that's well, that's not ideal.
Dion Lisle (43:21):
Well, for me, it's not. But what I liked about the
conference in general was thisfocus that and they open it with
developers are going to developthe future, let's work with
them. Let's not be afraid ofthat. The final thing that I'm
really excited about, honestly,of course, AI, ML data, blah,
blah, blah, low code, no codesystems, I think they have a ton
(43:44):
of potential for communitybanks, get a business analyst
gets really good at a low code,no code platform, and begin to
redo your process, right. Andthen you can update it
regularly. Everyone can buy intoit, it can be more of a team
sport, instead of justdelivering this technology that
no one understands.
Ernest Rolfson (44:01):
So like process, automation style back-end
business. Yeah, machine to humanto machine interactions.
Unknown (44:09):
Exactly.
Ernest Rolfson (44:10):
Third Party integrations.
Dion Lisle (44:11):
I use monday.com for everything. It's a no code
platform, and I'm not a coder,right? I coded in college and
basic and COBOL to show you howold I am. And then I just
decided that I'm not a coder.
But I have the business mind. Ilike the business analysis. I
like the process. Monday.comallows me to manage my own day
to day business very easily withno code. There are platforms
more sophisticated than Mondaythat a bank could use to deliver
(44:34):
these automations betweendepartments, between customers
and back office and that type ofthing. That I'm really excited.
Ernest Rolfson (44:44):
I wanted to ask Would it be okay if bigger banks
engaged in attended thatcommunity banking event at Money
2020 like And would it berelevant for them? What is the
unique element right now aboutcommunity banks, we have to
engage with them in a differentway. L
Dion Lisle (45:02):
Yeah, I mean, yeah, no, you bring up a good point. I
mean, it's Yeah, absolutelyrelevant for any banker who's
not yet doing digital assets,doing RTP. Looking at bass as a
service, it's relevant for anyand all of them. What also it's
good for is just getting thedialogue of FinTech to bank,
(45:25):
Rosetta Stone, get them talking,get them understanding the other
side of the aisle. I thinkthat's really key.
Ernest Rolfson (45:31):
That makes sense. Well, any parting
thoughts here? Before we wrapup, or anything we didn't touch
on that we really should have?
Dion Lisle (45:39):
you know, we should probably do another one in the
near future where you and I,we should probably talk more
than once every, like, fouryears or something?
Yeah, let's make a note of that.
Yeah, let's talk working capitalnext time and kind of what
Finexio is doing and how youhelp mid-tier businesses deliver
on that, because a lot of thebanks I've talked to, you know,
they focus on SMBs. But they goup to the mid tier, you know,
(45:59):
SMBs grow up.
No, no, that's what we'rehelping them. I mean, the banks
that we're working with rightnow is they serve a range of
customers. And we're workingwith more the bigger side of the
small side, if that makes sense.
We're not working with the miniones. And we do have investors
that are invested in on theboard of a number of community
(46:19):
banks. So we are able to gainand have dialogue around some of
these insights that you've beensharing. And the good news is, I
think what we hear from ourinvestors and that are sit on
these bank boards is similar towhat you're sharing in some of
these challenges. So always goodto be validating and, and
talking through these topicswith smart people, if they have
a 15% of their business is withsome of the larger clients. They
(46:42):
want to keep those largerclients, they want to serve
those larger clients, they wanta more robust tool set, they
want better, digital moderntools improve the consumer
experience, because they'reconcerned that maybe there's a
path of graduation away from thecommunity bank, to a chase to a
wells to a bank of america, andthey're like, Hey, I don't offer
(47:03):
accounts payable payments as aservice. I don't offer Working
Capital Management, I don't havedigital reporting that someone
is kind of showing them overhere, right. And so it's like,
it's almost that bells andwhistles component, that you
want to be relevant toeverybody. But the bank can't be
doing a custom build out to havesomething that's going to serve
all these. Some of thesecustomer needs are a little bit
(47:26):
different. And yeah, the bigbanks can get more away with it.
And the bigger banks can havededicated teams and resources
and Dev and products for alldifferent types and sizes of
customers. You can add a largercommunity bank.
Personal matters, but digitalcan be the difference maker
anzai encouraged community banksagain, here's your personal
(47:49):
service. You're known for it.
It's great. Here's digital,here's concierge service. Keep
working on that spectrum todeliver that better touch.
Again, Dion, thank you so much.
This was a convo with Deon Lisleat Forty Grand. Look, man,
always fun. This was great. Ilearned a lot. Hopefully the
audience learned a lot gotsomething of interest from it. I
(48:10):
know I did. Let's sit down. Ifwe can grab a coffee or
something at Money 2020 I willbe out there. That I'll be good
too. It'll be good to reconnectwith you sincerely. Thank you so
much, man.
Ernest Rolfson (48:27):
Thanks for listening to b2b cash flow
conversations. This is ErnestRolfson, the CEO and founder of
Finexio. I welcome yourquestions and comments. You can
reach me at podcast@fienxio.comYou can also find us on Twitter
@FinexioPayments. To subscribe,you can go to
Finexio.com/podcast. Be sure tocheck out my new episodes on
(48:49):
Apple podcasts, Spotify, orwherever else you listen to
podcasts. Thanks and talk withyou again soon.
Hey, this is Ernest Rolfson, the CEO and
founder of Finexio. Welcome toB2B Cashflow Conversations, the
podcast dedicated to sharinginsights and innovations in
business to business payments,working capital and cash flow
management, and FinTechentrepreneurship. In each
episode, my guests and I tacklequestions in the ever evolving
world of FinTech and payments.
An industry that's rapidlyevolving and of great interest
(00:22):
to investors and businessesalike. Looking forward to having
this conversation.
Today we've got Dion Lisle,Managing Partner at Forty Grand
and a thought leader in FinTechfor over 20 years. Dion recently
merged his advisory firm Facerewith investment bank MJC
(00:43):
partners to launch Forty Grand,a consulting firm focused on
driving value for communitybanks by delivering FinTech
focused innovation. Dion,welcome to the podcast.
Dion Lisle (00:55):
Great to see again, Ernest. It's it's nice to
reconnect. It's been way toolong. I love what you're doing
at Finexio.
Absolutely. What vineyard do youhave there in the in the
background?
Oh, so it's funny. I haveslotted doors and they look like
they're moving on video. So Ihad to cover it. And that is
just a random Sonoma County fallvineyard picture. Just to
(01:17):
prevent the moving slats oncloset doors.
Lovely. So you're someone Ienjoy being around and chatting
with so much that I haven'ttalked to you in several years.
Yeah, exactly. Exactly. Yeah, inorder to get away from me.
(01:39):
That's right. That's right. Butyou're always a good time and
have something very interestingto say. So before we get into
what you're doing now, why don'tyou share just kind of how you
got involved in this payments,space? And we'll hear about how
you're a leader in it today,which you are, but always good
to get some of the backstory.
(02:01):
I appreciate that. I'm probablyone of the few who came into
payments and banking viainformation security. So I
started in an obscure technologycalled PKI, private key
infrastructure, very technical,and I was with a company that
needed a vertical expert to getthem deeper into banks. And so I
looked at the technology andstarted to think about how to
(02:23):
apply it for digital signatureson treasury wire transfers,
letters of credit, trade,finance. And I became that
expert just by attending silos,AFP and other bank events. You
got to remember and we didn'talways have Money 2020 and, and
Finovate. We used to have tomeet bankers, you know, where
(02:44):
they actually hung out. Andthere was no, there was no
FinTech back then. So I became avertical expert around trade,
treasury and payments.
You started multiple startupsand multiple consulting firms.
You started Facere essentially,to be the Rosetta Stone between,
you know, banks and FinTechstartups. You know, banks
(03:06):
really, as you know, have achallenge navigating this this
FinTech arena, I guess, tell usabout that analogy or, or what
is this barrier that you and Iknow well, but perhaps others
don't?
I stumbled upon the RosettaStone analogy when I was doing a
podcast at Money 2020 Europewith JP Nichols. And I happen to
just blurt that out because mydaughter had the Rosetta Stone.
(03:29):
She was learning Hindi at thetime and became fluent. So it
works. But to that point, yeah.
So I stumbled upon the RosettaStone between banks and finte
hs. And you and I both know, weve dealt with the big banks
I'm one of the unusualpeople. I've been in big ban
(03:49):
, Citibank data biggest paymens processor. And I've been in
inTech startups, early employeeight, nine or 10, and a coup
e startups, some more succesful than others. And I realized
there was a huge language barrir. And but not only language b
cadence, the way they operte, the way they look at
hings, the way they talkhings, everything between th
se two worlds, like two giant gars that just couldn't match
(04:11):
right? And I thought, you know,but they need each other, and I
ever really bought into the fintchs gonna eliminate banks. I
never believed that narratie. And I'm glad to see most
eople that are past that. But Ireally wanted to be the Rosetta
tone quite literally between thse two disparate worlds and help
them work together to deliveretter value for customers, wh
ther they be b2b or b2c.
(04:41):
Well, what are some of thespecific barriers to digital
adoption that you've seen?
asking how you overcome them isis probably too simple of a
question, but maybe how have youhelped navigate or overcome some
of these things? And what aresome of the most typical
barriers that you're seeing?
Yeah, I think my favoriteexpression I heard a while back
is "culture eats technology forlunch", right? Yeah, it's always
(05:04):
down to people, right? You and Iboth know that it's hard to get
people to understand the valueof technology and how it
improves their work. If theykeep pushing back. I've worked
on a project in Italy a coupleyears back with trade finance
group, but we're doing thispretty complex blockchain trade
finance letter credit thing. Andthe ladies, they're all ladies
who ran the letter of creditoperation kept holding back
(05:27):
everything like no, we're notgoing to tell you how we do
that. No, we're not going totell you how to do that. And
when it turned out, they wereafraid of being replaced before
they could retire. They were all50 something and they thought,
look, I've worked for this bigbank, and I just want to retire
as you know, some letter orcredit person. And we never got
them over the hurdle ofunderstanding we were there to
help make their job better. Sonow when I really look at
(05:50):
things, I really start with thepeople and I really try to get
them to understand, we're hereto help make your job better.
We're not here to replace you.
Digital is a tool for you tooffer better service. I tell
community banks all the time,personal service plus digital
equals concierge service. That'swhat I want bankers to
understand more than anything.
So a lot of these places willparticularly in the community
(06:13):
backspace. They're coming inwith a low tech note, tech
environment. to a large degreeis that fair to say?
It's almost worse because whatthey come in with is a we do
whatever if I ask jack Henrytell us to do environment, which
is actually worse, becausethey're they're almost captive
audience to that very narrowview of technology.
(06:34):
Absolutely. Well, congrats onforming Forty Grand. Tell us a
bit about you know that what wasthe inspiration there? And I
guess the value you're trying tobring to community banks with
that with that formation? Is itmore of the same? is there is
there some other element herearound FinTech oriented digital
technology for banks?
Yes and no. So you know, Irealized two things one, after
(06:58):
Facere, three plus years, and Ion onboarding with the mega
banks was the hardest part ofthat job. The actual work was
fantastic. Once you were onboard, I hated the onboarding.
Yeah, many banks don't have thatissue. And I met Mike and
Carlton, my partners in FortyGrand. They run MJC partners and
investment bank for communitybanks. And what they're doing is
(07:20):
they're in the boardroom talkingmerger, acquisition divesture.
subordinated debt, really great,high level financial stuff. And
they kept getting well whatabout FinTech? What was what
should we do like, you know,some bank just don't air quoting
FinTech or digital ortechnology. And these are banks
between call 250 300 million and5 billion they don't have the
(07:41):
CTO Chief Digital Officercertainly don't have a CTO nor
should they. And their IT teamis literally a guy or gal with a
USB token going around updatingwindows on laptops and
notebooks, like very low techfootprint to your point. And we
realize this is an opportunityto help these bags add value to
their footprint with digitalright. And so rather than work
(08:05):
with the large banks, I reallybrought to 40 grand this focus
on Let's help these banks getdigitally fit. They don't need
to digitally transform, theydon't need a giant PwC Accenture
program.
So the digital transformation,change the whole back office, go
to the cloud, we've got toeverything is upside down.
(08:26):
Exactly, exactly. I even wrote ablog about this digital
transformation is too big tosucceed, right. And it magazine
called digital transformation.
They said 80% of all digitaltransformations fail later.
That's like Car and Driversaying it sucks to drive a car.
Like that's a horrible way tolook at digital transformation.
And yet, that's the reality,which is why I always talk about
(08:48):
one process at a time, getdigitally fit in onboarding, get
digitally fit that love mission.
Right?
Ernest Rolfson (08:57):
I understand. So it's almost like driving up the
value for them by being morelaser focused and bringing in I
don't want to say a pointsolution but a purpose built
solution for the specific bankpain point.
Dion Lisle (09:16):
Yeah, that because I don't want them to think too
narrow. But also I don't wantthem to think boil the ocean
wide. It's about fixing aprocess, a method, getting your
customers engaged digitally, aswell as the personal service,
that community banks rightfullytake a lot of pride on.
Ernest Rolfson (09:32):
What's the benefit here to the end user, to
the corporates, to the CFOs? Andhow much would you say the banks
think about that? And I'd loveto hear to you know, how do you
view engaging with you andengaging with FinTech more
broadly, you're one of thewhispers in the industry, how
does that help impact the bankas well? Ultimately, yeah, so
(09:54):
see how much you think about theend user and Endor your bet your
customers, these banks, thinkabout that. That'd be of
interest. To how that plays intothings?
Dion Lisle (10:03):
Fair question. I like to say all they're obsessed
with is their end userexperience, but their board of
directors, they have profitmargins that they have to meet
and all of that. But I will saythis community banks think a lot
about their small businesscustomers, they really feel
connected to them. And I thinkthis period of time, this
pandemic has shown us the valueof local, the value of our local
(10:26):
business, I know I've started toshop at a local market instead
of the whole foods. I have alocal don't judge me liquor
store, it is pandemic time. So Ihave a local liquor store I go
to.
Only gonna judge you if you'reat the liquor store, eight times
a week, otherwise, we're nojudgement. Otherwise, you're in
a judgment free zone.
(10:48):
Perfect. This guy's great. And Igo in, and he's like, hey, Dion,
how you doing? Hey, you askedabout the relationship.
And this is the bank, the banksare investing more in the
relationship.
Yes, they are. Particularly mostof the banks I work with talk to
see, evaluate the SMB, theyreally want to find that perfect
(11:14):
balance, and their idealcustomer is high net worth plus
SMB million dollars net worth,and they have a two to $3
million local business. That'sjust a sweet spot. But those
customers are now demandingdigital, it's no longer enough
to go into the bank, shakehands, say, Hey, Mike, how's
your business? Good to hear?
The customers want more digitaltools? That's, and the bank is
(11:38):
driving a balance between makingthese customers happy. And to
your point. They're not runninga charity. They're running a
bank and yeah, their drive forprofit margin as well here.
That's right. So to summarizethis element here, it's really
not about cost takeout, is whatI'm hearing. I mean, that may
(12:00):
drive some of it. You've talkedabout some efficiency, but it
really is, it sounds likeinvesting in growth, investing
in capability, investing incustomer retention,
satisfaction, less about I want,I'm trying to save a nickel and
cut some headcount here,although I think you were gonna
say something there.
Well, so they have somethingthey call efficiency ratio,
(12:22):
which, which I kind of like,which is just, we want to grow
the business, but maintain ftease. I've not met anyone who
says I want to get rid ofanyone. It's mainly about I've
got 48 FTS, full time employees,I just want to make them more
efficient. I want to go frombeing a $500 million institution
to $800 million institution likenot adding anyone. Well, the
(12:44):
only way you fill that gap isdigital.
Well, we'll keep talking aboutthis. I wanted to say, is there
a unique way you have to workwith these smaller banks. And as
I understood it, you've got afew different frameworks, the
paid framework, the fastframework, in terms of driving
innovation with folks, is theresomething unique that you found
is working with these types ofinstitutions that need to engage
(13:08):
in a unique way in this area?
Yeah, so I tell them, I said,Listen, you know, you're a great
bag, you've done a lot of goodstuff, you don't have a Chief
Digital Officer, digital is oneof the most important things
now. I am your outsourced ChiefDigital Officer, all things
digital, I'm going to give youvaluation recommendation and
architecture and help you buildthat digital footprint that you
(13:30):
need. The paid frameworkactually built that for larger
institutions. But it worksperfectly here. And that's
parallel, agile, innovationdelivery. And the key is
parallel. I work in parallelwith the bank, I'm outside
pushing the project, you'reinside being a bank or doing
bank stuff. And it's agile, it'sfast, it's responsive, but it's
innovation delivery, because oneof the things I really started
(13:53):
consulting to avoid isinnovation theater, right? We've
all seen the innovation theater,oh, this is such a great project
bubble never gets to market. I'mnot interested in that I want to
deliver. Now the fast theflexible, autonomous, specific,
timely architecture that'sunique to community banks. And
really, this is a statement thatI want you to break away from
(14:13):
FiOS and jack Henry's roadmap.
Yeah, not rip and replace theirservices or their their system.
But just break away and hollowthe core, build some services
around that you can later decideif you want to.
Yes, we're starting to work withbanks now ourself. You might
have seen Bank of Californiainvested here recently. So we're
working with those folks.
There's a number of other banks,we're talking to you that have
(14:36):
come to us and they're like, welove what you're doing. We love
your digital tools aroundaccounts payable. We want to
offer more of these capabilitiesto our customers. We would love
to do more of this off of ourown rails or integrating our own
products or, hey, we have anidea. We want to bring in real
time payments, how can yousupport that and we're kind of
like well, what are your coreproviders? Provide you what how
(14:59):
can you? What tools and servicesdo you have to be able to expose
to a FinTech to make it easy,and let's talk about what the
timeframe is and what theconstraints are. And, you know,
you share that with these guys.
And they're kind of likescratching their heads and then
haven't really considered thatand know how to know how to
(15:19):
leverage that.
So it's funny you say that. I'llbuild on that. So I got an RFP
RFI from the bank for a new ripand replace core. All the
checkboxes, wires ach blah,blah, blah, just checkbox. This
is this is great who you send itto jack Henry FiOS, DCI said,
Well, what about a cloud? Bassprovider? Banking is certainly,
(15:39):
they're like, Dion, we wouldn'tknow who to send it to. We don't
know what we don't know. So fairenough. That's exactly what
Forty Grand is designed to do isfill in that gap.
I think it is pretty hard tofind out what new things are
there. Right? Especially if inyour banker world, you can go to
those conferences, do you seethe banks wanting to or needing
to do the bleeding edge, or Iguess what's the maturity level
(16:03):
of the types of solutions youcan bring in that are even
palatable, because it's, itfeels like and I'm in this camp,
so I don't want to speak for youbut the FiOS is jack Henry's of
the world, or not probably thebest place that these folks need
to be looking for. If theyreally want to do something that
is, you know, 2021 standard, youknow, that's really gonna have,
(16:25):
if they run it really want tomaximize delight. It's not going
to be with those big players atall.
I can tell you, you're spot on,the fact is, if you think of the
classic McKinsey three, horizon,one, two and three, you know,
call it 12-18-24-36 months,whatever, right? The fact is,
most of them are here. They'retheir horizon, one, maybe
(16:47):
horizon two, maybe a couplesurprise areas that I've heard
from bankers, they're notlooking at blockchain. They
wouldn't even know what to thinkabout it right now. But back to
your point about theconferences. Do you know what
the number one conference is forcommunity bankers? It is called
Aoba. Acquire or be acquired.
That is their number one. Thatis their annual conference that
(17:08):
they all live to go to now thinkabout what that says about
community banks live or die. Imean, that's where these banks
are, yeah, yes. help to preventbeing on the bottom of that food
chain when the ayoba conferencehappens. They want to be the top
of that food chain. Right? Andto your point, FiOS Jack Henry,
all lovely people, blah, blah,blah, all that, but those people
(17:30):
are not going to help you getout of horizon 122. They're not
even at horizon one yet now. SoI really try to help them see
that. They're perfectly keepyour core, keep working with it,
hollow it work around. And thatsounds like what you're talking
to your bags about as well.
So I think it's the only paththat makes the path you're
(17:53):
recommending is the only paththat really makes any sense, to
be honest, which is exactly whatelse would you do. The only
other thing is rip and replacethe whole thing, which is not
palatable for a lot of thesefolks.
You know, it's funny, you lookat CEOs of the banks I'm talking
to and there's a bell curve,there's an absolutely older
bankers forward looking ready tomake changes. And there are some
(18:15):
that are like, you know, what,I'm five years from retirement,
What are the areas that they'rein the most need of call it
I don't want to be responsiblefor a referee place that goes
badly wide bell curve there. Butwhat I am finding is the middle
of the bell curve is where theyreally need the help. They're
really open to it, but they'renot quite sure how to make it
out. Those are the folks that Iget most excited about. Those
are the opportunities I enjoy.
(18:38):
modernization or the areas wherethey're in the most pain right
now.
It's the basics. It's digitalonboarding, it's it's just right
onboarding, loan origination,treasury services, their stack
is--Why, you know, it's a wiresystem. That's astronauts, it's,
you've seen it, I know, you'veseen this. And, and it is a
(19:00):
matter of just getting them tounderstand there are tools out
there. And to your point, you'respot on. I had a banker said,
Hey, I'm going to Finovate Isaid, Great. When we got back,
he's like, I don't know what tosay I'm overwhelmed. There was
so much there. Like, I don'teven know how to put this.
Which is where you would fit in.
Unknown (19:19):
I would hope that I could help them make sense of
that. Absolutely.
Dion Lisle (19:22):
Mm hmm. I guess that's really interesting. So
how do you go about identifyingwhat the right solutions are the
right partners to bring in? Andwhat do you look for? Or is it
is it completely, that you havea couple of key vendor
relationships that you you know,feel like you can rely on bring
(19:44):
to customers, given that some ofthese areas tend to repeat
themselves? Or how do you how doyou think about that?
Yeah, really what I start with,and I've added this to the paid
process is at the front of thegap analysis. Here's where you
are, here's the bank. You wantto be What's that gap? And then
stack order those to say, well,onboarding luck, that's where
(20:05):
the relationship starts. You gotto improve onboarding. Let's
digitize onboarding first.
Second, let's look at yourTreasury stack. What are you
offering now? Well, that'swoefully insufficient. What's
next? What's next? And thenprioritizing that. But the other
step that I've added, honestly,is a process audit. The number
of banks where I've sat withtheir wire person, where their
(20:26):
lending team or whatever thecase may be said, well, you have
48 steps here. Why is that?
Well, we've always done it thatway. I'm like, No, you're not
allowed to say you've alwaysdone it that way. What is this
step? What is this? And when youbreak down the process, it's
amazing how many banks 10 yearold process never questioned.
And I can't imagine, earnest inour line in FinTech world,
(20:50):
nobody's gonna accept theprocess for 10 years with no
changes. We're even auditing andasking the question,
Not if you're on a real, not ifyou're at a real startup, for
real? Yeah.
Unknown (21:01):
Exactly. Yeah. Yeah, it's all about efficiency.
Dion Lisle (21:04):
So they don't even stop to ask the question,
essentially. Exactly.
Because they're busy running inthe back, I get it. And no, and
and I was talking about theother day, the bank started to
assign these tasks to people inthe bank. And I'm like, Well,
what about their day job? Theyalready had it. eight hour, 10
hour day job? How are you gonnado that? Are you?
(21:26):
Sure. Well, it's it's just youdon't you don't you know, it's
everything's when you're at thetop. Let's say everything seems
easy. Oh, you can't fit that intoo? Oh, you can't do that as
well. What? You know what Imean, it's not realistic. So
it's the same thing like what wetell, right, our solution is
about digitizing accountspayable payments. And well, you
(21:50):
could have your staff do thisthemselves. But you've got to
onboard, like 2000 vendors topay. And so your staff could
just I guess, pick up the phoneand do that. But when do they
have time to do that? Aren'tthey? Aren't they employed doing
something for you already? Andthen are they trained to do
that? Do they want someone onyour team have the competency
(22:11):
and training to be able to havea thorough negotiated
conversation around a number ofelectronic payment options for
someone-- costs, speed, securityefficiency and be able to
navigate and complete enrollmentaround that?
That's right. Yeah, anoperations person is not your
best innovation driver, right?
Operations people are very goodat rinse and repeat events,
(22:32):
right? And look at thestatistics. I wish I had pulled
this up. The number ofaccounting finance departments
that don't close at the end ofthe month, end of the quarter,
because they're behind, it'smost of them. Right? And why?
Because they're using Excel,they're using outdated tools.
The bank information is notcoming in cleanly. It's not
Yeah, it's not scrubbed data.
(22:54):
There's no data, hygiene, all ofthis stuff and to you and I were
like, Well, why would you dothat? We've always done that
that was the answer. Wronganswer. Let's, let's stop the,
you know, the hamster wheeladdress that and give you tools.
So that it's not a horrible endof the month, end of the
quarter?
I think two areas around this, Iwanted to kind of tease out I
guess what have you seen havingthe biggest impact on your
(23:17):
customers on these banks so far?
Or even in the last three years,let's say and you've been
engaged in the space force? Imean, forever. Yeah. And so
you've got a lot of war stories,but I guess what is making a big
impact and or accelerating theimpact and would love to hear
to, if anything, to yourknowledge impact on the end
customers and users? And? And ifso, what is that? What do you
(23:38):
think that might be?
It's pretty basic. And I, Ioften talk to bankers about data
and they say, Yeah, okay, I hearBig Data, Data warehouse. Data
to me is you enter it once. Andit's done. Right. And what most
people don't realize is thenumber of times they enter data
(23:59):
and re enter data, I sat with awire transfer person, where she
took a PDF of a wire request andkeyed it all in I'm like, now
what do I request from Why? Whyis that data entered here? And
again, and then confirm thatYes. Right. So my thing is,
that's the number one thing ifyou think of data as enter once
(24:21):
use many, that would solve ahuge percentage of what I'm
seeing as the biggest efficiencyproblem. And they're just used
to it. This woman lovely womandoing a great job and rarely
made mistakes. Rarely in wiretransfers isn't enough. That's
(24:42):
got to be five nines like youcan never get right. I mean,
yeah, you're in the payments,you know that.
Im thinking of Gattica--coolmovie, maybe that was 2001,
right where they've got rooms ofpeople, right and you're taking
drugs and you're bioengineered.
So you never have a badkeystroke, and whatever and
that's, you know, they werelike, What? Why did something go
wrong in payments? What you meanthat one payment was screwed up?
(25:04):
And it's like, well, I'm atthese banks. They don't actually
have robots working for them atthese banks just wires or it's
actually people. And maybe 1.5%of the time something will get
screwed up.
Well look at say that. Rememberthe Citibank one that just short
(25:27):
time ago? Half a billiondollars? They were like yeah.
Yeah, so we accidentally sentyou half a billion. Just send me
just send that back. That'd beawesome. And yeah, awkward.
Did you read about it? So Iblogged about it. I remember
(25:48):
well, that.
Well, no, it was for that bondpayment. If you were I think it
was a bond payment, and theythey ended up not getting some
of the money back. Right. Andthey were holding it.
Money did not come back. Yeah.
Everyone says, Oh, they lost it.
No. But what they did was theyhold garbage bonds for a decade
at a loss rate. And they lostand you know, we'll come back to
(26:09):
working capital, they lost theability to use that working
capital. And three people had tosign off on that transaction to
those were not employees. Here'sa process question for you. How
do you allow a half billiondollar process to be signed off
by two non employees of Citibankusing a system and I looked at
the screenshots. Ernest, youguys like, Oh, my God, this
(26:33):
stuff was from the 80s. had tobe.
Green screen. Nonsense.
Yeah. Really? Nonsense. Yeah.
But but but now look at acommunity bank that Citibank,
they have billions in IT budget.
And this has happened. Now let'sgo to our friends at the
community back. What do they do?
It's the worst, if worse, if notsame. It's just on a smaller
(26:57):
scale less room forsmaller scale, same issues.
That's it? Yeah.
So are the smaller banks, okay,with I don't know, perhaps
ceding some control of some ofthese things to, let's say,
third parties and or relying onthings that they didn't build
themselves or these newprocesses. Because like, I think
(27:19):
on one hand, the bank may say,oh, but we've got a tighter
control on this, because Wandais the one that's looking at it
eyeballing entering it in.
Honestly, it's a bell curve.
Like I meet banks like that, butmost of them are in the middle
of this, like, we get it. Weknow we're dated, we're
antiquated. work with us on ourbudget and our timescale so that
we can break out of that. Andjust like when I used to sell
(27:41):
the big banks, like discoverscity and others, you find that
champion, you know, you findsomebody that gets it and wants
to make the change.
How are they thinking abouttechnology and it and risk and
mitigation around that andbringing new solutions to
customers? And we're certainlywhite labeled by different folks
I'm sure some of the banksyou're working with are just
(28:03):
straight up turnkey, adoptingdifferent tools that are out
there. Is this a stumblingblock? Or banks, especially
smaller banks, are they moreflexible and loose around this?
are they thinking about it in ain a way that's pragmatic and
can make it work? Are they arebanks after all, so they are
heavily regulated and havecertain compliance things that
they're unable to be flexibleon? But I guess what are they?
(28:23):
What are they being flexible on?
What what has been creativelyadopted to make things work?
Yeah, the outsource thing is nopushback, because they've been
outsourcing their core to jack,Henry FiOS and others for
decades, right? So the outsourcequestion, unlike the big shops,
(28:45):
never been an issue, okay, thecompliance piece is just a
matter of they want to get inthere and really see how it
works. And what are the touchpoints? And where can they
influence it and that type ofthing. But as far as like the
actual outsource and all of thatnon issue, little pushback on
the cloud, but that's just lackof knowledge. They just don't
understand it. But but thatpart's not been the issue.
(29:09):
Are they concerned about themand their safety? Or their
compliance? Or and to whatextent is it more that they care
about their customers the CFOsthat they're working with and
those businesses or is it bothor is that nuanced? Not
I you know what I will say thisabout community banks, I find
they talk about their customers,both retail and mainly b2b much
(29:31):
more than the big banks did.
It's much more about ourcustomers need this. Our
customers asked us this. We needto deliver this to our
customers. I will say enjoy thatchange, going from the big shops
to the community banks, they'remuch more our service matters.
Our reputation matters. This iseverything does our customers.
Happiness matters.
And we're talking about the bigboys we're talking about like
(29:53):
the top five biggest thingsright they just is the blanket
statement. I think people wouldagree. Care less bout service
care less about customers andmore like what commodity thing
can we push out there?
It's its quarterly resultsright? It's all about luck when
you're when you're city whenyou're be evey when you're
JPMorgan. There, they all do aokay job. I was opening my own
(30:16):
personal so I switched Facere'sbank account over, and I opened
with a big bank to remainnameless. And I went into the
bank and they said, Oh, thebankers out for the afternoon.
The teller offered to help mefill out all the paperwork, open
the account all good. Went home,got a text, you have to come
back. Oh, I missed something.
Come back why is this? She said,Oh, because you did it with the
(30:47):
teller not with me, the banker.
And I said, that sounds like ayou problem, not a me problem.
You had all the information. Youjust want to follow your process
for your purposes. So that youthe banker, protects your job, I
was actually kind of reallydisappointed. It was about their
process, not my outcome. And youcould feel it, you can tell
(31:07):
that's exactly what happened.
Yeah, no, they don't care aboutyour time.
I'm a small business person, andthey're gonna have me come all
the way back into the bank toredo what I had done, because
the person who did it correctly,thank you person. Isn't the
person according to theirprocess, their flowchart?
Shouldn't it be the outcome?
Right now? Not the process theoutcome? Yeah, it was compliant.
(31:30):
We didn't break any compliancerules. Sure. And yet they made
me redo it all.
Sure. No, I get it. I get it.
Let's talk about what elseyou're finding interesting. And
what's happening around FinTechand payments. And I think this
is highly related to both whatI'm doing what you're doing. But
you're writing a lot. You'reblogging about cash flow and
(31:51):
cash flow management solutionsaround that you've recently
wrote something about APautomation and b2b payments, you
touched on it. It wasn't yourfirst but it was I think it was
in your top three areas that youare kind of helping these banks
navigate with was around theneed for more robust digital
Treasury solutions. So what'swhat's going on with this whole
(32:15):
Treasury cash flow WorkingCapital Management, b2b payments
space? How are these banksthinking about this? What are
you interested in about thisexciting about? Or what are you
promoting or pushing any, youknow, maybe narratives that
these banks should be thinkingabout? navigating? Given I think
competition is kind of heatingup or anyway, investment
(32:36):
interest in capabilityinterested in minimum is enough?
Yeah, yeah. No, underinvestedarea, right. Right. The first
thing I discovered was Imentioned to a banker. I said,
No, you know, there are programsand I worked on a project that
first day that we failed fulldisclosure, we were trying to
get our SMBs to give us theirdata and process it and make
(32:58):
recommendations all that for avariety of reasons fail. But I
mentioned this to a banker, he'slike, Oh, my God, I could
actually see my customersQuickBooks, pull it in, analyze
it and make predictions in thefuture. I said, Yeah, that is
now doable. It's not rocketscience. But if you're used to
(33:18):
going out to your customer sitewith a notebook and taking
notes, coming back to the officetype, I mean, this is literally
what they do. And but they likedthat they liked that personal
service. And what I'm tellingthem is, you can do that you can
do exactly. That's it. How muchbetter would you be as banker,
if you had your customers 90days of QuickBooks, or even a
year of QuickBooks data, thatright in your systems analyze
(33:42):
and say, Hey, you know what,Bob, your business is up into
the right, you should getanother truck for your
Electrician Business. Let's do aworking capital loan that gets
you that truck, those trucksover $100,000. They're not
cheap. Let's do this. And here'show you can pay for it. Here's
the kind of loan we could getyou. This guy was like, What?
That's possible. I'm like, it'snot even hard. This is this is
(34:04):
basic stuff, right? And theywere just blown away. I don't
know what you don't know, right?
I mean, that's the theme thatI'm finding with community
bankers. They want to do theright thing they're trying to,
but they're using very manual,very personal methods, instead
of digital plus personal todeliver concierge. They're
starting to wake up to that. Andthat's what excites me. Those
are the kinds of things that Ilove.
(34:25):
I think the education here isdigital tools enable more rich
personal interactions andactual, more meaningful customer
engagement, and better and moreaccurate advice. That's right,
especially in the predictiveside, leveraging trends and
analytics. That's right. You donot need AI or machine learning
(34:49):
to get to the core of what a $10million business needs to be
successful or one of thesecouple billion dollar banks and
below.
That's exactly I was telling youabout. Yeah, it's the basics. I
rent in Moran. And I moved herea little while ago you're
You're still in Moran, right?
Yeah, to give you a largeselling or
(35:09):
location away. Well, silent onthe town.
Yes, but but Moran's lovely butI rent and my bank offers me
refi all the time and I'm like Idon't own you can see I don't
have a mortgage payment everymonth you don't need an AI bot
from you know StanfordUniversity run it on a Cray
supercomputer to go, Hey, thisguy writes a check to a person
(35:30):
every month for this amount andclearly doesn't have a mortgage.
You know what, let's stopoffering him refi. Let's offer
them something else. And yetthat basic knowledge that
context, bankers miss all thetime, whether it's b2b, or b2c
does matter. Bankers miss thisall the time. And you and I know
the tools are available, all yougot to do is look at the data.
(35:51):
And this is why I say back tothe first point data is
available, just look at getcomfortable with it.
They don't Well, they don't Imean, and again, they don't have
the tools in place to get accessto the systems is the problem,
right? It's like everything is asix month integration.
Everything is difficult.
Everything's a project. As youknow.
(36:12):
I'm working on a project nowwith the bank where they're
trying to get some FiOS data outof their system. And they're
struggling with it. I'm likeit's your data?
Is there more to talk about thattrend, or there's some other....
Or what I would say to communitybankers, let's start with a data
structure, a data strategy, adata schema, let's just get the
(36:35):
data hygiene going. And fromthere, you're going to see all
these possibilities open up. Sothat's one of the first things
is gap analysis, followed byprocess audit followed by a data
strategy, then everything'spossible.
You gave some really interestingexamples. And the banks we talk
to want to increase non interestincome. And yes, right and
(36:58):
generate that that's a bigdriver. Is that a big driver for
the customers you're engagingwith? And or do you see I think
this is kind of what I'mformulating, what I'm seeing is,
yeah, net interest income, allwell and good, they love to have
new alternative sources oradditional sources of revenue.
But at the end of the day, ifyou can put the bank closer to
(37:19):
doing more banker II stuff withthe client and or giving them
the data to your point to letthem better make a loan, they're
really happy. They really likethat, because that is really
what they know. But I think it'slike they say they want more fee
income, and they want to be ableto help customers with that. But
at the end of the day, don'tthey just want a closer
relationship to be able to makemore make more loans and make
(37:41):
sure they don't lose thosedeposits?
100% I mean, you're you're spoton growing deposits is one of
the keys and the one way theylook at it, and I'm trying to
help them understand the nuanceof this is they think, Oh
digital allows me to go out ofmy geographic area. Therefore
deposits grow because a biggergeographic area with 4800 and
something banks plus creditunions in North America, there's
(38:04):
not a lot of geographyuncovered. I think our companies
will look at it now. Well, maybeyou need to do a niche or a
vertical or this or that. That'snot about geography. It's not it
just get closer to yourcustomers, stickier services,
better services. And and by theway, I mean, there's so much
that small businesses spend theyspend 10s to hundreds of 1000s a
(38:26):
year on all these small businessservices, bookkeeping,
invoicing, accounts payablereceivable, factoring all the
stuff that you're a specialistin. And yet these banks sit
there and go, Oh, yeah, like no,we don't do any of that. Yeah,
exactly. Exactly. And yet, thethere's a study from FiOS oddly
and pays that shows SMBs wouldlove their banks to offer these
(38:50):
services. Nice I saw I saw datathat showed 66% of SMBs don't
believe their bank understandstheir business they don't why
because they don't look at thedata they don't look at anything
beyond Hey Bob let's handshakehave lunch, smoke cigar whatever
you know golf you know, butbusinesses move beyond that it's
digital now right on deck canget you that loan like boom,
(39:12):
digital online, no friction.
Banks have to learn that digitalplaybook not giving up the
personal I think their personalis hugely important and I think
they get that but how toimplement it. They get nervous.
You're you're pointing outsomething that's it goes up
really into the middle market aswell where I live although again
some of these banking partners Ihave you serve small businesses,
(39:35):
I certainly have very largechannel partners that are
dealing with small businessesare having gamut and if you've
got 1000s of customers, there'sgoing to be some smaller
businesses in there and smallerbusinesses need payments and
working capital management asmuch as anybody else. But it's
you raise it really thing is itlike if you're a CFO, and you
need help in around financialservices. The first call is
(39:58):
probably not to your bank. Thesedays, isn't that amazing? It's
not your bank, it's you're onthe Google. And you're looking
for some software thing. Andit's some subscription. Or
you're looking at youraccounting system, or maybe
you've adopted accounts payablesoftware or tierpoint. On Deck
is now provided, right? But noplatforms like that are
(40:20):
providing loans. And so wouldyou would agree with this
statement, or this generaltheme, that the bank is
basically at risk of beingdisintermediated?
Yeah. Now the funny thing abouta lot of banks I talked to they
go, Oh, I don't care about youknow, Shopify, or Amazon or
square capital. Those are theloans I don't care about. All I
care about is loans. Okay.
There's a great quote fromErnest Hemingway book that he
(40:43):
wrote, where he's, you know,character says, How did you go
bankrupt slowly at first, thenall of a sudden, with these
banks don't realize you letthese guys at big tech, eat the
edge of your business, andsuddenly your box is much
smaller, and you're lessimportant, and that stickiness
and that relationshipdeteriorates. Every time you let
the edge of that box getsmaller. What I'm encouraging is
(41:05):
no- be more integrated to yourbusiness customers, not just for
the big loans, because that'swhere the profit is, be there
when they need you. You know,what is the bank? But if not,
you know, and you know, GeorgeBailey classic, you know, it's a
wonderful life. It's it's thebanker that's there when you
need them.
Ernest Rolfson (41:25):
Right? That's the way it used to be.
Dion Lisle (41:29):
I think it can be I really, yeah.
Ernest Rolfson (41:32):
So what's next for you? in this industry? What
what are the plans for 40?
grand? What are some of theother trends you're seeing?
Where do you think communitybanking as a whole is going give
us some, you know, future futurestate? Where's, where's the
world headed?
Dion Lisle (41:51):
So I'm pretty excited. So I worked with the
folks at Money 2020 and they letme do a community bank workshop
on Sunday as the event opens.
And so I've got some folks outin October, this October live in
Las Vegas, it's gonna be great.
Excited to be back to it, right.
And we're gonna have somebodyfrom the clearing house, talk
about how community banks can doRTP. I'm going to talk with a
(42:13):
ModusBox, the founder ofModusBox, David Wexler, we're
going to talk about how bankscan evaluate a new bass platform
in the cloud, right? We're gonnahave somebody from Nidek Tammy
Banks, who knows communitybanks, really well talk about
how they can do Bitcoin, youknow, digital assets, community
banks can do this with nidek,right? And we're gonna have this
(42:35):
whole agenda the morning from 10to like, 1230. Just how
community banks can do moredigital, Nimbus is going to
present a couple others. And I'mreally excited about that,
because I think this is thefirst step to getting community
banks welcome in the money 2020community and environment,
getting them to understandtechnology is not scary digital
(42:56):
lean into it. I was at movemoov. The crew out there went to
their dev conference in Denvertwo weeks ago, fantastic. There
were only four bankers there.
Four. Now it's a it's a FinTechdev conference for bankers. Now
maybe they're intimidated,because I was in a session, they
pulled up code on the screen,and I was over the tips of my
(43:18):
skis.
Ernest Rolfson (43:18):
Yeah, that's well, that's not ideal.
Dion Lisle (43:21):
Well, for me, it's not. But what I liked about the
conference in general was thisfocus that and they open it with
developers are going to developthe future, let's work with
them. Let's not be afraid ofthat. The final thing that I'm
really excited about, honestly,of course, AI, ML data, blah,
blah, blah, low code, no codesystems, I think they have a ton
(43:44):
of potential for communitybanks, get a business analyst
gets really good at a low code,no code platform, and begin to
redo your process, right. Andthen you can update it
regularly. Everyone can buy intoit, it can be more of a team
sport, instead of justdelivering this technology that
no one understands.
Ernest Rolfson (44:01):
So like process, automation style back-end
business. Yeah, machine to humanto machine interactions.
Unknown (44:09):
Exactly.
Ernest Rolfson (44:10):
Third Party integrations.
Dion Lisle (44:11):
I use monday.com for everything. It's a no code
platform, and I'm not a coder,right? I coded in college and
basic and COBOL to show you howold I am. And then I just
decided that I'm not a coder.
But I have the business mind. Ilike the business analysis. I
like the process. Monday.comallows me to manage my own day
to day business very easily withno code. There are platforms
more sophisticated than Mondaythat a bank could use to deliver
(44:34):
these automations betweendepartments, between customers
and back office and that type ofthing. That I'm really excited.
Ernest Rolfson (44:44):
I wanted to ask Would it be okay if bigger banks
engaged in attended thatcommunity banking event at Money
2020 like And would it berelevant for them? What is the
unique element right now aboutcommunity banks, we have to
engage with them in a differentway. L
Dion Lisle (45:02):
Yeah, I mean, yeah, no, you bring up a good point. I
mean, it's Yeah, absolutelyrelevant for any banker who's
not yet doing digital assets,doing RTP. Looking at bass as a
service, it's relevant for anyand all of them. What also it's
good for is just getting thedialogue of FinTech to bank,
(45:25):
Rosetta Stone, get them talking,get them understanding the other
side of the aisle. I thinkthat's really key.
Ernest Rolfson (45:31):
That makes sense. Well, any parting
thoughts here? Before we wrapup, or anything we didn't touch
on that we really should have?
Dion Lisle (45:39):
you know, we should probably do another one in the
near future where you and I,we should probably talk more
than once every, like, fouryears or something?
Yeah, let's make a note of that.
Yeah, let's talk working capitalnext time and kind of what
Finexio is doing and how youhelp mid-tier businesses deliver
on that, because a lot of thebanks I've talked to, you know,
they focus on SMBs. But they goup to the mid tier, you know,
(45:59):
SMBs grow up.
No, no, that's what we'rehelping them. I mean, the banks
that we're working with rightnow is they serve a range of
customers. And we're workingwith more the bigger side of the
small side, if that makes sense.
We're not working with the miniones. And we do have investors
that are invested in on theboard of a number of community
(46:19):
banks. So we are able to gainand have dialogue around some of
these insights that you've beensharing. And the good news is, I
think what we hear from ourinvestors and that are sit on
these bank boards is similar towhat you're sharing in some of
these challenges. So always goodto be validating and, and
talking through these topicswith smart people, if they have
a 15% of their business is withsome of the larger clients. They
(46:42):
want to keep those largerclients, they want to serve
those larger clients, they wanta more robust tool set, they
want better, digital moderntools improve the consumer
experience, because they'reconcerned that maybe there's a
path of graduation away from thecommunity bank, to a chase to a
wells to a bank of america, andthey're like, Hey, I don't offer
(47:03):
accounts payable payments as aservice. I don't offer Working
Capital Management, I don't havedigital reporting that someone
is kind of showing them overhere, right. And so it's like,
it's almost that bells andwhistles component, that you
want to be relevant toeverybody. But the bank can't be
doing a custom build out to havesomething that's going to serve
all these. Some of thesecustomer needs are a little bit
(47:26):
different. And yeah, the bigbanks can get more away with it.
And the bigger banks can havededicated teams and resources
and Dev and products for alldifferent types and sizes of
customers. You can add a largercommunity bank.
Personal matters, but digitalcan be the difference maker
anzai encouraged community banksagain, here's your personal
(47:49):
service. You're known for it.
It's great. Here's digital,here's concierge service. Keep
working on that spectrum todeliver that better touch.
Again, Dion, thank you so much.
This was a convo with Deon Lisleat Forty Grand. Look, man,
always fun. This was great. Ilearned a lot. Hopefully the
audience learned a lot gotsomething of interest from it. I
(48:10):
know I did. Let's sit down. Ifwe can grab a coffee or
something at Money 2020 I willbe out there. That I'll be good
too. It'll be good to reconnectwith you sincerely. Thank you so
much, man.
Ernest Rolfson (48:27):
Thanks for listening to b2b cash flow
conversations. This is ErnestRolfson, the CEO and founder of
Finexio. I welcome yourquestions and comments. You can
reach me at podcast@fienxio.comYou can also find us on Twitter
@FinexioPayments. To subscribe,you can go to
Finexio.com/podcast. Be sure tocheck out my new episodes on
(48:49):
Apple podcasts, Spotify, orwherever else you listen to
podcasts. Thanks and talk withyou again soon.
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