Transcript
Speaker 2 – Lou Carlozo (the host)
OK, so here we are. It’s that time of year. Tell Santa to get out of line at Best Buy and start doing his thing, delivering the packages. You are getting ready to walk over to the stereo and perhaps destroy it after it plays Grandma got run over by a reindeer for the 50th time. Or maybe that’s your jam. Anyway we have the jam, the second annual Bankadelic Holiday Extravaganza. And we have some phenomenal guests here. The elves did not succeed in kidnapping them and putting them to work in Santa’s workshop. We need them here anyway, so here they are.
I’m going to introduce them very quickly. We have Kevin Hurwitz, the managing partner of Praxent, Eric Dotson, the EVP of Aptys, Nathan Baumeister, the CEO of Z Suite, Kelly Payne the CMO of Mocha Financial, Brad Seibert, the head of Proptech at Tavant, and Casey Scheer, Director of Marketing and Sales at BHMI.
I think what we’re going to do is just go down the line. I’ll call your name and you can tell me a little bit about what your companies do. A little bit about yourselves and what your favorite holiday song is? So, Kevin, why don’t we kick things off with you? Ho ho, ho. Here you go.
Speaker 1 – Kevin Hurwitz
That sounds good. Thank you. And first of all, thank you also for the opportunity to participate in this year’s episode. We really enjoyed the first annual installment last year, so. This is Kevin Harwood. As you mentioned, managing partner at Braxton, Braxton Partners, with fintech’s and financial institutions to improve their customer experience. Regarding my holiday song, because I am Jewish, I’d normally be obligated to pick our one and only holiday song dreidel. Dreidel, dreidel but I don’t really like that song, so instead I’m going to go with Bello Wood by Garth Brooks. It tells the true story of the Christmas years of 1914 for German and British soldiers spontaneously stopped fighting and Christmas Eve and started saying heroes to each other instead, I’m going to first tentatively from the trenches and then eventually face to face. Where they also exchanged gifts. So I highly recommend this song.
As we lay there. Our trench.
The silence broke into by a German.
So won’t you sing?
Speaker 2 – Lou Carlozo
And that’s a great song, although I’ll tell you what I grew up in a Jewish community. Cherry Hill, NJ, and treadle,treadle, treadle. I was a big hit. We like that one. Next up, Eric Dotson. Take it away, Lou.
Speaker 9 – Eric Dotson
Thanks for having me on. This is great to mix a little Christmas cheer in with the everyday work that we do. So I’m excited to be here today. My name is Eric Dotson and I’m the executive vice president at Apys Solutions and a co-founder of Aptys Solutions were fintech company specializing in the payment space providing solutions that help to streamline help to speed up and provide payment solutions to financial institutions of all sizes. So as far as song. I’ve always loved the Karen Carpenter version and rendition of I’ll be home for Christmas.
Speaker 2 – Lou Carlozo
That’s a sweet song, and I’m going to say this right now. I’m a huge Carpenters fan. I do have to say I haven’t heard that one in a while. So I’m going to have to go back to it, I have a collection of like several hundred Christmas songs, and now it’s the time of year I drive everyone I know crazy by playing them. But not Grandma got run over by a reindeer, apologies if that’s anybody’s favorite song and I’ve now shamed them. Kelly, you’re up.
Speaker 5 – Kelly Payne
Ohh thank you. Happy holidays everyone. I’m very happy to be here. With you all today. My name is Kelly Payne. I’m the chief marketing officer of Mocha Financial and we are a digital first next generation card-based payment platform provider and a program manager and we work with Community financial institutions. Banks and credit unions as well, as fintechs that want to issue their own cards. We’ve got physical cards, virtual cards, P2p, mobile app, desktop app we have an online payment assistant. Browser extension called Mia. That you can use when you’re shopping online. We’ve got single use cards or cards, have extensive card controls. Such as an. Immediate on off banks and credit unions need to refresh their debit card program and we are there to help them with that. And then there’s no shortage of people today who want their own debit card and we are that partner for them. Before I was at Mocha Financial, I was at a company called Kasasa with Nathan Baumeister and other fellow on the call. My favorite holiday song I’m going to have to go with Baby, It’s cold outside.
But baby, it’s cold outside.
Got to go away.
But baby, it’s cold outside.
Speaker 2 – Lou Carlozo
And you may not believe this, but there is no definitive consensus on who. Dean Martin is singing with on that recording. Some people say it’s Martina McBride, but that was a much later. Version that was done. Some people believe it’s one of The Andrews Sisters. Their voices isolated. Not so. The best that anyone has been able to figure out is it is a person named Marilyn Maxwell. And when your career is frozen in time like that. Baby, it is cold outside. And now we get a lineup of people. It’s pretty darn nice to have them back on the podcast for return appearances on this holiday extravaganza. Nathan Baumeister How are you buddy?
Speaker 3 – Nathan Baumeister
Great, Lou, its great to be back here. So, my name is Nathan Baumeister. I am the CEO of C-Suite Technologies. We have a digital escrow and sub accounting platform that’s used by financial institutions to help commercial clients that have those needs. You know my favorite holiday song, well I was on this last year, so I can’t use same one I used last year. So this year I’m going to go with O holy night. I love the inherent drama in the song. I love the message and I’m a sucker for acappella. So I’m going to go with the Pentatonix version.
Speaker 2 – Lou Carlozo
Wow, that’s beautiful.
Speaking of beautiful, beautiful person Brad Seibert, it has been a while and great to have you back on the podcast.
Speaker 7 – Brad Seibert
Thanks for having me and thanks for the compliment. It’s great to be here again. My name is Brad Seibert. I head up the prop tech division at Tavant. Tavant is a large AI powered lending platform for us this past year we had a couple of milestones. To be honest, the pandemic was some of the best years we’ve had in terms of growth. In 2021, we hit 32,000,000 transactions on one of our larger platforms. Our Fin connect platform that essentially, we power about one in four loans in the United States holistically. From a personal perspective, for those of you who know me. I am a Californian and I did things a little backwards. I decided to have kids and a family 1st and then after we had kids and a family we finally got married this past year and then when we talk about our favorite Christmas or holiday song. There’s something about The Nutcracker that brings me back to kind of being a kid and for many years I’d always changed. Over my ringtone on my cell phone, but Tchaikovsky’s Sugar Plum Fairy. It doesn’t sound like it has intensity, but when you play it it really builds up and that really gets me going and gets me into the holiday spirit. So, I’m a big holiday buff and kind of a holiday geek who loves getting into the spirit. So yeah, once again, Lou, thanks for having me.
Speaker 2 – Lou Carlozo
Indeed, and there’s nothing like seeing The Nutcracker live. If it’s a really good production, last certainly not least someone I loved having on the podcast. Casey Sheer is great to have you on the podcast again.
Take it away.
Speaker 8 – Casey Scheer
Thanks Lou. It’s great to be on Bankadelic again and I wanted to start out just by wishing everyone a safe and happy holiday season. And as you mentioned, my name is Casey Scheer and I’m the director of marketing and sales at BHMI. And we’re a software company that’s focused on the back-office processing of electronic payments and we’re best known as the creators of the Concourse Financial software suite. And what this software does is it does the tough stuff after a transaction or payment is authorized like settlement and funds movement. The reconciliation of transaction data, the calculation of fees, it also does the management of chargebacks and disputes as far as the holiday song. I didn’t have to think about that too hard because BHMI is headquartered in Omaha, NE. So of course, I had to pick a song from Mannheim Steamroller. I’ve been to a number of their concerts. I love their music and probably my favorite is their version of Deck the Halls.
Speaker 2 – Lou Carlozo
Now we come to the part of the podcast where we unwrap the gifts that have kept on giving 2021 yet another challenging year after 2020 and despite that so much to be thankful for. I would just love to go around the circle here and get some perspectives on that. So, anybody who wants to jump in.
Go for it.
Speaker 8 – Casey Scheer
Lou, this is Casey from BHMI. I can start. So, from an industry perspective, I think one of the most exciting things that happened this year is an explosive growth of real time P2P payments. So we found this particularly exciting because our solution Concourse is ideally suited for both traditional card based payments and also P2P payments. And what we’re finding is most legacy back-office systems are batch oriented and they’re not really designed or set up to handle real-time payments. But we made a decision to base Concourse from the ground up on a continuous based processing and rules-based architecture. So we’re pretty excited about how well our solution is kind of matching up with where the payments industry is heading.
And then on a personal note, I wanted to mention one of the most exciting things for 2021 is a holiday tradition that we have here at BHMI. And for years now, we’ve been creating these holiday videos with our corporate mascot. And his name is Max the bulldog and this year, we introduced his sister, his younger sister Maxine. And they went holiday shopping for all their four-legged friends. And then we got a lot of BHMIMI pets involved with this year’s video. And it was absolutely a joy to make, Lou. I know you’ve seen it and I wanted to offer out to anybody that’s listening to that if you also want to see it. Please feel free to visit our YouTube channel or go to the video section of our website BHMI.com it’s a fun video to watch.
Speaker 2 – Lou Carlozo
I love dogs. I got a corgi around here. He’s in his smoking jacket somewhere with his cigar and his copy of The Economist just kicking back.
Speaker 5 – Kelly Payne
This is Kelly Payne. I think one of the great things that’s happened this past year and the banking fintech industry is the move to digital and the significant uptick in usage of pretty much everything digital from mobile banking apps to digital wallets to virtual cards. Even how well some of these Neo Banks are doing. You are seeing somewhat of a slow steady increase in digital usage over the years. But the pandemic kind of accelerated that trend significantly. So we made some lemonade out of lemons. And I just think it’s exciting because competition breeds innovation and it’s causing banks and credit unions to kind of wake up and say we can’t just keep doing the same thing we’ve always been doing. We need something new. We need to evolve and luckily, we’re there to help them with that. So the move to digital and the uptick in usage of pretty much everything digital is a pretty exciting happening in this past year.
Speaker 1 – Kevin Hurwitz
This is Kevin. That’s actually in alignment with what I was going to put forward is the win for 2021, Kelly as well. We’ve seen a ton of digital banking and account opening Fintechs really doubled down on the customization and the extensibility of their products this year. So I think we’ve taken a huge step forward based on that increased demand that you mentioned that’s come from the pandemic. So we saw, for example Q2, Meridian, Lake, Narmi and Constellation just to name a few, that all released major updates this year to make their products easier to customize for banks as well as offer more pre built fintech integrations. I agree. I think that we’ve come a long way in just one year and response to pandemic.
Speaker 3 – Nathan Baumeister
This is Nathan or Z suite. Hearing Kelly and Kevin both talk a little bit about the increased adoption and digital channels is right on and it’s been very cool to see. I think to add to that, one of the things that I thought was awesome to see in 2021 is someone who cares a lot about the financial network within the United States between credit unions, community banks, regional banks, and mega banks. I was excited to see how many financial institutions put their money where their mouth was in regard to digital transformation and understanding that they need help in that digital transformation.
You know several years ago that Chip Mahan, Neil Underwood, and several others first put together Canopy a VC fund whose main limited partners were banks, typically relegated to the larger banks. But just this year, there’s three different funds that were announced with limited partners. Were community banks and regional banks, specifically, two of them had been funded and the third one is currently on its way. So, you have Fintop that partnered with JAM Partners. You have the ICBA that got together with Venture Center to put together bank tech ventures. You have Strand View Capital, Elizabeth Park, Capital Management all. Of which are. Looking at digital transformation and how these banks that don’t have the type of technology budgets that some of the mega banks do can get better aligned with fintech companies that are there to help them with their digital transformation and to not just see people talking about it in the space. But actually, doing something about it, I think it’s been awesome.
On a personal note, this year my wife and I welcomed our fourth child. We learned about it early in the year and then welcomed him just about a month ago. So that was exciting. There was a gap of seven years between our previous youngest and this one. So, it was a good way to restart and pretend like we feel young again.
Speaker 2 – Lou Carlozo
Well, we’ve got weddings. We’ve got new children; we’ve got a lot of abundance going on in 2021. Brad, I’d love to hear from you.
Speaker 7 – Brad Seibert
Ethan, I really liked what you said right there. I think for me, one of the biggest things I’ve seen is the hyper personalization of how payments are made. And so I spent a lot of my career with capital. One early on and our focus was putting a bank branch in your pocket. The mobile app could do everything but just Fast forward to where we all are today. Think about all of the holiday gifts you bought and the simplicity and the ease of time that it took for that transaction to happen. Whether you made that transaction by putting in one of your credit or debit cards. Whether you made it using PayPal, Amazon Pay, or any of these things. They all circle back to the hyper personalization and simplicity that the consumer wants in this instantaneous world that we work on. And so, Nathan I completely agree with what you say. Some of the larger banks have been able to capitalize on this and now some of the other players are realizing the value of Fintechs and what the Fintech can do to help them achieve this. But taking all of us out of the equation, if people just think about all the gifts you bought this year and then average duration of time. It could have been shorter than a commercial from when you shopped for something, saw what you wanted, picked out the size, put in your address and paid for it. And that 30 second commercial was over and two days later. It was delivered to your door. That is hyper personalized. Consumer centric transactions, right? There a lot of which this. Whole team and everyone on. This call supports. So that’s the one. Thing that you know personally, I’ve loved this Year’s flu.
Speaker 9 – Eric Dotson
Lou, this is Eric from Aptys Solutions and I think you know one of the things that’s interesting as I’ve seen this year. I think everybody’s touched on several different friends focused things that have happened in the industry. It’s kind of interesting. Is it the chicken or the egg, right? I don’t know which one came first, but it seems like there’s been over the past few years this change in the industry where it used to be everybody kind of saw each other in very competitively and there wasn’t a lot of collaboration.
Well, the industry’s changed and everybody’s come together in this collaborative environment to talk about “what are the things that I am struggling with, what are you doing to address that, and how can we better bring products and services that the consumer and business customers need to be better providers of financial services?”
And so, it’s just been a joy to see this collaborative environment where everybody’s working together. Everybody’s talking about the different things that are happening, looking at technology differently than they have in the past to bring new solutions and new ways of offering the financial service that. I mean, it’s really transforming the industry right now and that’s been kind of exciting to see.
From a personal perspective my own family has transformed, we’ve talked about a few additions and everything. I guess maybe I’ll age myself here. I have six children and my youngest one just moved on into the university and so I am an empty nester. For the first time in a long time, whoo-hoo. And that’s why I think my Christmas song was I’ll be home for Christmas because we do miss the kids. So, if they listen to this, I want them to know we miss them. But we’re having a lot of fun, just my wife and I here at home.
Speaker 2 – Lou Carlozo
Hear that, kids come home.
Now we’ve got all this joyousness personally, professionally going on. Things that we directly were involved in helping to make happen, but you know how it is, or at least how it is that the Carlos household, we open the gifts and 10 minutes later it’s like. OK, now what do you got? We’ve got a new year coming up. And we do want to look ahead, and we want to look ahead, hopefully. What might be the one thing that you are looking forward to in this new year that you think could be game changing?
Speaker 8 – Casey Scheer
Lou, I’ll start out. This is Casey with BHMI. And throughout this session, we’ve been talking a lot about the adoption of digital and mobile payments this year. We really saw a lot of business to consumer or B2C use cases. For example, my husband and I go to a lot of sporting events for our son. And we can now pay our entrance fees and concessions for all the P2P services like Venmo. So, I think we as consumers have obviously become very comfortable with using P2P and real-time payment methods. Now in 2022, I think we’re going to also see a significant rise in business to business or B2B use cases. You’ve probably heard a lot about the new message format standard ISO20O22 and what that’s allowed. It’s a very information rich message standard and it allows businesses the ability to remit and pay invoices using the real-time rails. So, what I’m excited to watch, and I think it’s going to be a trend during 2022. Is the growth of B2B. Payments using the real time rail. So I’m excited to watch that.
Speaker 5 – Kelly Payne
This is Kelly Payne with Mocha and one of the things I’m seeing in 2022 is the beginning of a shakeout in the card industry. Right now, you’ve got everybody trying to bring out their own debit card. Just everybody you know, not banks, not credit unions, fintech’s, affiliate groups, they see that they’ve got a big group that wants to get a card in their hands, and they want a piece of the interchange. But they’re not all going to make it. In fact, most of them are not going to make it because they have no idea how hard it is to get the card in someone’s hands since these are unaffiliated with the bank or credit union. You must load money into the card. You load money to a bank account, of course, but from the consumers perspective, you have to load money onto the card and then you have to give people to use the card and they have no idea how hard all that is. Just no idea. There’s a lot of money behind a lot of these companies, and they’re just not going to make it.
Speaker 9 – Eric Dotson
Hey, Lou, this is Eric Dotson from Aptys. One of the things I think we will see an acceleration of during 2022 is the realization that banks are becoming fintechs. They may not realize it. They may already be there and they don’t realize it. But they’re starting to realize we’re a technology company that does financial solutions for our customers and so because of that they’re embracing technology, they’re embracing solutions. They’re seeking it out faster than ever before and that’s why I think part of the collaboration that’s been ongoing is this realization that they have to be out there, the consumers want technology solutions so they have to be out there leading the charge offering technology solutions that they haven’t done in the past. And so I think that’s a great environment for developing new solutions and being able to see new things that will come to the table in 2022. So really excited about that.
Speaker 1 – Kevin Hurwitz
That’s consistent Eric, with what we’ve seen as well. So, in 2022 we expect to see things begin acting much more like product companies and then really leveraging their charters in two interesting ways. The first is launching niche digital first brands, you know, almost like digital branches that may have a different identity and appeal more to a national audience and maybe offering even specialized depository or lending products to that national audience.
And the other thing we’re seeing is that they’re using those bank charters to form those fintech partnerships you were just talking about, themselves becoming sponsor banks. And one cool example of that is a partnership that’s been struck between First Blvd. and Central Bank of Kansas City to form a NEO Bank, for example. That will serve the African American community. So we’re hoping to see those more kinds of innovation and partnerships reverse this downward trend that we’re all aware of. There were 2 to 300 banks, you know, closed down solar charters every year. We’re hoping that this kind of innovation will ultimately stem that tide.
Speaker 7 – Brad Seibert
Alright, this is Brad Seibert from Tabant again here. Wanted to talk a little bit about what we’re seeing in some of the trends. When it comes to predictive analytics and how predictive analytics really portrays many different aspects of what we’re doing these days. So, in the banking and fintech world we see how predictive analytics can determine someone’s lending credit worthiness. But not in the way that we used to. Credit scores are one thing they’ve been around for a long time. But they’re only one factor in determining whether someone should be given a loan to buy a new Honda or new Maserati. And so, we see a lot more actual AI and analytics going into predictive algorithms. The same way that these predictive algorithms are used by some of the big home companies such as open door and Zillow. And how they do their price models. It’s all about predicting, not the value of a person’s creditworthiness today.
But what it will be at a given point in the future and the same kind of algorithms are used to say 411 Willow St. might be worth $200,000 today, but all data shows it will be worth $280,000 in X number of months. And those are the things that are being used both in the home buying space for when Brad wants to put a bid in on 411 Willow St. The same way that they’re being used in the banking space and the fintech payment space. So we’ve evolved a lot more than just being a credit score driven society when it comes to payments. There are so many more variables that players are looking at to determine the likelihood of repaying and ultimately that is part of the American Dream. It’s the dream of homeownership, and it’s the dream of ultimately wanting more and so this concept of wanting more is borrowing money to get things today. Only if the company is lending you the money, believes you’re going to pay them back. So, AI’s really come in and made some dramatic changes there. It’s fascinating cause It cuts across a lot of industries, and we talked about it a lot. But when you just simplify it down to the home buying aspect or the creditworthiness aspect these are all things that are actually based on core banking and fintech transactions that someone has made over the course of their life. It’s very fascinating the way that things are changing. Nathan, I’ll pass it off to you.
Speaker 3 – Nathan Baumeister
Thank you. You know, as I listen to so many of the awesome things that everyone’s sharing in regard to the things that could be happening next year. I mean personally, I just get excited. You know, there’s been a lot of innovation from a digital perspective in B2C payments and seeing that going into B2B. And I would double down on that and say it’s even beyond just payments, B2C transactions B2C, things that consumers need to do kind of in the digital space and financial space are less complex than those things that businesses need to do for other businesses.
And there’s a lot of very complicated software that’s out there trying to get people to be more efficient with what they’re doing from that perspective. But across the board, all the different types of transactions that businesses need to do are much more complex. There’s been a huge move in getting that more to a digital transformation. But there’s no doubt there’s been more headway so far in the B2C side. And I think that the B2B day is coming very much so in the future also as we think of banks themselves really kind of doubling down on that niche strategy as Kevin talked about. He mentioned a couple of folks I know one of my good friends, John Watch started Nerve, which is a bank specifically for musicians. There are several great companies out there, but one of them that comes to mind is Nimbus, whose entire strategy is to help stand up digital banks. It’s digital banks and I think I saw a note the other day that they’ve brought in over 300 employees just this last year to boost their workforce because of all the demand. They’re seeing from that perspective and then the banks being challenged to think about being product companies and technology companies. We saw a big move by MDB this year where they actually bought a fintech company development shop so that they had those resources as well as that organization and culture within the bank itself. They could bring those resources in house. I don’t think that’s always going to be the model for everyone to use because I think there will be a space for technologists and tech companies that have a specialty to work alongside banks. But I think banks are thinking more and more, “Man, I need to have some of that talent within it myself.”
And the last thing from a broader point that I get really excited about is this broader idea of continuing on the digital transformation path of allowing machine to machine communication versus person to machine communication.
What do I mean by that?
Well, if you think super high-level online banking just took something where I’d have to go and talk to a teller instead of talking to a teller. I could just go on to a website and click some buttons and make it happen. Right. So, you went from a person to person type exchange to a person to machine type exchange. As you move to machine-to-machine type exchanges, that means people who are currently sitting in the intermediary between exchanges that aren’t really adding value to the transaction but just moving information from point A to point B can be overtaken by machines. And I know this is something that gets scary for a lot of people. But I would urge us to all think about it, especially since this is a holiday podcast. We’re trying to look at positivity, all the efficiencies that have happened within human society. Where there’s been huge gains of efficiency that have opened capacity to better humanity. And when they open capacity, maybe it’s something where they’re going to use that extra capacity to be able to do things that can add more value or provide more opportunity in space in people’s lives. Find ways to enjoy life more, to be with their family a little bit more, to indulge in some hobbies to play music as I know, Lou, you and I both share that particular passion. So, as we look and find more of these efficiencies. I just get so excited for that because it means that we’re able to open up more productive capacity. Again, whether it’s applied professionally or personally.
Speaker 2 – Lou Carlozo
That is a fantastic way to round up some incredible insights on this podcast. I’m so grateful to have all of you on here. And if I could offer my own parting shot that when we look ahead to 2022 it’s maybe to give ourselves some high fives and to pat ourselves on the back. We have been there during two very difficult years where people struggled to figure out how they were going to get something as basic as the bills paid or have access to money or get PPP loans. You all have been there. On the forefront of innovating and trying to figure out new ways to get services up and running and to innovate. You are making a difference. So, Nathan, to that point that you made, I just want to thank all of you for being on the podcast. Being part of making that difference and in ways indirect and direct making the holidays merrier and brighter for all the people you serve. Thank you so much.