Brian Fishbein: 00:00:00

How do we improve our APIs?

Brian Fishbein: 00:00:01

How do we make things simpler for customers?

Brian Fishbein: 00:00:04

How do we make this a better product overall for the folks

Brian Fishbein: 00:00:07

that we wanna work with?

Brian Fishbein: 00:00:09

That might mean that we expand into incremental customer bases.

Brian Fishbein: 00:00:12

We start to think about,

Brian Fishbein: 00:00:13

how do we better serve other financial institutions that might actually wanna

Brian Fishbein: 00:00:16

take advantage of our payments rather than necessarily just kind of like non-banks.

Brian Fishbein: 00:00:20

It's mostly just a lot of, let's put our heads down, let's

Brian Fishbein: 00:00:23

figure out how we kind of solve, continue to solve these problems.

Brian Fishbein: 00:00:26

Because there continue to be a lot of problems out there.

Brian Fishbein: 00:00:30

Tedd Huff - Fintech Confidential: Welcome to Fintech Confidential, bringing

Brian Fishbein: 00:00:32

you the people, tech, and companies that change how you pay and get paid.

Tedd Huff: 00:00:39

Welcome to Accrued the FinTech confidential series presented by Loan Pro.

Tedd Huff: 00:00:44

In this series, we're deconstructing the complexities

Tedd Huff: 00:00:46

of lending, exploring compliance, optimization, and modernization.

Tedd Huff: 00:00:51

Personalization through insightful conversations with industries.

Tedd Huff: 00:00:55

Best.

Tedd Huff: 00:00:55

I'm Tedd Huff and with my co-host Colton Pond.

Tedd Huff: 00:00:58

We're here to guide you through the intricate lending world.

Tedd Huff: 00:01:01

Whether you're deep into Lin Tech or just intrigued by how technology is reshaping

Tedd Huff: 00:01:07

lending, you are in the right place.

Tedd Huff: 00:01:09

Colton, welcome back man.

Colton Pond: 00:01:11

Thanks.

Colton Pond: 00:01:12

It's good to be here, Tedd.

Colton Pond: 00:01:13

I, I'm trying to have as many backgrounds in these episodes as possible.

Colton Pond: 00:01:17

So new background again today, but it's good to see you.

Tedd Huff: 00:01:20

in this episode, we're turning our attention to Column, a Beacon

Tedd Huff: 00:01:23

of innovation in the FinTech space.

Tedd Huff: 00:01:25

Born from Visionary Minds of William and Annie.

Tedd Huff: 00:01:28

Hockey.

Tedd Huff: 00:01:29

Before the husband and wife team joined forces, William gained his

Tedd Huff: 00:01:33

deep understanding of the FinTech space from being a co-founder of

Tedd Huff: 00:01:37

Plaid and a former Bain consultant.

Tedd Huff: 00:01:39

Thier journey took a pivotal turn when the strategic, strategic

Tedd Huff: 00:01:43

acquisition of NorCal Bank,,

Tedd Huff: 00:01:44

laying the groundwork for a bank designed for the digital age.

Tedd Huff: 00:01:48

Column shows what can happen when you blend the agility of FinTech with

Tedd Huff: 00:01:52

the solidity of a traditional bank.

Tedd Huff: 00:01:54

it's created for developers and builders in the FinTech arena, offering direct APIs

Tedd Huff: 00:01:59

to craft brand new financial products.

Tedd Huff: 00:02:02

and it sets up a fascinating discussion for today's episode

Tedd Huff: 00:02:05

as we explore Column's journey and Brian Fishbein critical role reveals how deep

Tedd Huff: 00:02:12

his finance background and innovation are reshaping the future of FinTech banking.

Tedd Huff: 00:02:17

We will uncover how Column blends traditional banking's robust

Tedd Huff: 00:02:20

framework with groundbreaking innovation and Brian's leadership.

Tedd Huff: 00:02:25

Investing in treasury also emerges as a key force in rewriting the playbook

Tedd Huff: 00:02:30

for credit sponsorship technology.

Tedd Huff: 00:02:32

Colton, I did my best of introducing Brian, but I know you've got a

Tedd Huff: 00:02:38

personal relationship with them.

Tedd Huff: 00:02:39

So I'd love for you to kind of fill in some of the blanks before he gives

Tedd Huff: 00:02:43

us his his falling into FinTech story.

Colton Pond: 00:02:45

I mean, what's awesome about this is, uh, so Brian, you are our first.

Colton Pond: 00:02:49

Episode talking about banking as a service industry, or credit sponsorship

Colton Pond: 00:02:53

or banking sponsorship, and what a great place to start with Column on

Colton Pond: 00:02:57

the innovation that y'all are doing.

Colton Pond: 00:02:58

I hear nothing but amazing things, uh, on what you are personally doing

Colton Pond: 00:03:03

at Column and with the broader team.

Brian Fishbein: 00:03:05

It's been super interesting.

Brian Fishbein: 00:03:06

I mean, I've been, been doing this in some form or fashion for a

Brian Fishbein: 00:03:10

little over a decade at this point.

Brian Fishbein: 00:03:12

Um, starting with kind of the traditional banking side where it was a lot of.

Brian Fishbein: 00:03:18

Looking at, you know, post origination, us buying loans, financing 'em, or

Brian Fishbein: 00:03:22

doing securitizations for some of the larger scale programs to then moving

Brian Fishbein: 00:03:26

to a more investing seat where we would look at earlier stage companies

Brian Fishbein: 00:03:29

and think about how do we wanna invest in equity or, or

Brian Fishbein: 00:03:32

actually acquire those companies.

Brian Fishbein: 00:03:34

And that all kinda led to, you know, spending a lot of time thinking about

Brian Fishbein: 00:03:37

credit and loan programs and how you kind of build and scale those in a.

Brian Fishbein: 00:03:40

It really makes sense and, you know, how do you access the ecosystem?

Brian Fishbein: 00:03:43

Who do you wanna be working with?

Brian Fishbein: 00:03:45

What are kind of the best in class, uh, companies to be working with?

Brian Fishbein: 00:03:48

you know, a lot of that experience indirectly kind and, you know,

Brian Fishbein: 00:03:51

frankly, directly shaped how we,

Brian Fishbein: 00:03:53

think about things here at Column, right?

Brian Fishbein: 00:03:55

When, uh, we start looking at new businesses and new lending products

Brian Fishbein: 00:03:58

and, and how do we build these credit programs in a way that actually makes

Brian Fishbein: 00:04:01

sense and is actually more aligned with, uh, the companies we wanna work

Brian Fishbein: 00:04:04

with, rather than, you know, how banks

Colton Pond: 00:04:06

Jumping right in If we look at the sponsor banking industry

Colton Pond: 00:04:10

or banking service industry, a lot has changed over the past year.

Colton Pond: 00:04:14

It.

Colton Pond: 00:04:14

I, I find it one of the most exciting times when things change

Colton Pond: 00:04:17

because that's when you know real innovation is happening.

Colton Pond: 00:04:20

And so for those that are listening and in the audience today that aren't familiar,

Colton Pond: 00:04:24

if you don't mind, give us a quick overview of the current sponsor banking

Colton Pond: 00:04:29

industry and then how Column's approaching the problem different and unique.

Colton Pond: 00:04:33

'cause y'all are truly, as Tedd said, as in his intro, uh,

Colton Pond: 00:04:36

a bank built for developers, which generally you don't hear.

Colton Pond: 00:04:39

Help us understand the industry and what you all are doing differently at Column

Brian Fishbein: 00:04:45

There, there's obviously been a lot going on.

Brian Fishbein: 00:04:47

Um, I wanna rewind for a second though, because I think it's super interesting to

Brian Fishbein: 00:04:50

actually think about kind of the history of sponsor banking and how people think

Brian Fishbein: 00:04:55

about it and, you know, what really is new and novel and different, right.

Brian Fishbein: 00:04:59

Um, sponsor banking, you know, a lot of people think about was kind of a post

Brian Fishbein: 00:05:03

GFC 2010 and onward type of, um, thing that banks started to fall into as they

Brian Fishbein: 00:05:09

look for other ways to drive revenue.

Brian Fishbein: 00:05:11

But really when you think about it, it, this goes back a lot farther.

Brian Fishbein: 00:05:14

Genesis, and it's probably even earlier than this, but if you think about

Brian Fishbein: 00:05:17

it, is kinda large corporates working with large financial institutions to

Brian Fishbein: 00:05:21

acquire customers in a different way.

Brian Fishbein: 00:05:23

And the, the very easy example of that is,

Brian Fishbein: 00:05:26

citi, you know, had a relationship with American Airlines starting in 1984 to,

Brian Fishbein: 00:05:31

you know, basically do sponsor banking.

Brian Fishbein: 00:05:33

We just think about it differently and.

Brian Fishbein: 00:05:35

The, the real difference here is you had massive scale because you had such

Brian Fishbein: 00:05:40

meaningful operational needs when you didn't have all of this technology

Brian Fishbein: 00:05:43

that the only people that could do it were the top five banks in the

Brian Fishbein: 00:05:46

country and the, you know, fortune 500.

Brian Fishbein: 00:05:49

If you fast forward to kind of post 2010,

Brian Fishbein: 00:05:53

what you saw with this proliferation was really more a function of, um.

Brian Fishbein: 00:05:58

Better technology enabling people to do things when they didn't have that

Brian Fishbein: 00:06:02

gigantic scale and actually access kind of the same sorts of distribution

Brian Fishbein: 00:06:06

channels that you saw historically.

Brian Fishbein: 00:06:08

Um, and so you see that kind of evolution occur where it's not just

Brian Fishbein: 00:06:11

credit cards anymore, you can start to think about offering term loans.

Brian Fishbein: 00:06:14

But you know, when we think about Column, and I'll get into this in a

Brian Fishbein: 00:06:16

little bit, there's a lot of other traditional financial products that

Brian Fishbein: 00:06:19

you can offer that folks have kind of.

Brian Fishbein: 00:06:21

Focused on from a niche perspective.

Brian Fishbein: 00:06:23

So if you think about like the Venmos of the world, right?

Brian Fishbein: 00:06:25

That is, you know, payments, which was traditionally a thing that was

Colton Pond: 00:06:28

Yeah.

Brian Fishbein: 00:06:30

um, and, and then kind of got disintermediated as companies

Brian Fishbein: 00:06:33

like that started to, uh, gain more traction because they had a better

Brian Fishbein: 00:06:37

experience and better technology.

Brian Fishbein: 00:06:38

Um, and so you've seen this kind of, not just in credit but across the board

Brian Fishbein: 00:06:42

and that has kind of carried through to today, where if you look over the

Brian Fishbein: 00:06:45

course of the last couple of years.

Brian Fishbein: 00:06:47

More and more banks have realized that the way to access their customer base and the

Brian Fishbein: 00:06:51

way to actually broaden their business is not necessarily by saying we're gonna stay

Brian Fishbein: 00:06:54

within kind of our geographic footprint or our swim lane, but we're going to

Brian Fishbein: 00:06:58

go more broadly and work with other folks who might have better distribution

Brian Fishbein: 00:07:02

channels, might be better at marketing, might know how to reach customers

Brian Fishbein: 00:07:05

in a way that we typically don't.

Brian Fishbein: 00:07:07

over the course of the last year, I think you've seen a lot more of the same, but

Brian Fishbein: 00:07:10

the, the difference has been how people think about these partnerships and how

Brian Fishbein: 00:07:14

people think about the risks related to them and how you actually manage them.

Brian Fishbein: 00:07:17

Right?

Brian Fishbein: 00:07:17

Like part of the fallout from SVB and some of the others.

Brian Fishbein: 00:07:22

I think about the impact on the sponsor banking industry has been,

Brian Fishbein: 00:07:25

you know, really how do banks actually understand the activities

Brian Fishbein: 00:07:28

that their end customers are doing?

Brian Fishbein: 00:07:29

Are there liquidity risks or other things related to those businesses

Brian Fishbein: 00:07:33

that people don't really understand?

Brian Fishbein: 00:07:35

so I think that's been, you know, super interesting to see because all it has

Brian Fishbein: 00:07:38

brought a lot of stuff that, you know, when we think about what we built, um,

Brian Fishbein: 00:07:42

and again, we can talk about it a little bit to the forefront in terms of how

Brian Fishbein: 00:07:45

we actually manage this relationships and make sure that not only can we,

Brian Fishbein: 00:07:48

you know, best serve our partners and our clients, but also make sure that

Brian Fishbein: 00:07:51

we're doing it in a way that, you know, will keep us around for the long term.

Tedd Huff: 00:07:55

as I hear you talk about the.

Tedd Huff: 00:07:58

The bank sponsorship or credit sponsorship side of the house.

Tedd Huff: 00:08:02

It really makes me think back.

Tedd Huff: 00:08:03

I mean, I, I've been in the industry for over 25 years and I've helped

Tedd Huff: 00:08:07

multiple banks and fintechs go through the process of saying, what does it

Tedd Huff: 00:08:13

take for us to sponsor the FinTech?

Tedd Huff: 00:08:16

What does it take for me to be sponsored?

Tedd Huff: 00:08:18

By the bank as a FinTech and really helping them navigate through that white

Tedd Huff: 00:08:22

space that isn't very well called out.

Tedd Huff: 00:08:25

And it's really was really cool when I was doing the research on

Tedd Huff: 00:08:29

Column to see how you've, you've simplified quite a bit of it,

Tedd Huff: 00:08:33

but it still has me wondering like, how are you specifically looking to innovate

Tedd Huff: 00:08:43

in the credit and lending space and.

Tedd Huff: 00:08:47

What was that aha moment that led you guys to really start to focus

Tedd Huff: 00:08:53

on the credit sponsorship piece?

Brian Fishbein: 00:08:57

I think The reality is.

Brian Fishbein: 00:08:59

Credit sponsorship is a core part of our business because when you think

Brian Fishbein: 00:09:02

about traditional finance, right?

Brian Fishbein: 00:09:05

Lending products are a core part of any bank or lender or you

Brian Fishbein: 00:09:10

know, financial company and even a lot of non-financial companies.

Brian Fishbein: 00:09:13

And so right from the jump when we acquired the bank, um, that was

Brian Fishbein: 00:09:17

always kind of in the cards in terms of how we were thinking about that.

Brian Fishbein: 00:09:21

The problem really became, you know.

Brian Fishbein: 00:09:23

Are we going to do it the same way that everybody else does it?

Brian Fishbein: 00:09:26

Or are we going to try to bring our technology to bear to um, really

Brian Fishbein: 00:09:32

kind of provide a better service and a better solution for folks?

Brian Fishbein: 00:09:35

And so, you know, that goes back to kind of how we think about

Brian Fishbein: 00:09:38

what our approach is and our differentiation is relative to others.

Brian Fishbein: 00:09:41

It really comes down to three things, right?

Brian Fishbein: 00:09:43

The technology is a core piece of it, and we've talked about

Brian Fishbein: 00:09:45

that a little bit, but like.

Brian Fishbein: 00:09:47

That is a driving factor in everything we do, both externally and internally

Brian Fishbein: 00:09:51

facing so that we can actually build these robust systems and serve our

Brian Fishbein: 00:09:55

customers in the way that we want.

Brian Fishbein: 00:09:56

So it's not just, oh, there's a really great API to originate a loan, but

Brian Fishbein: 00:09:59

there's all of the stuff behind that that says, are we doing this from

Brian Fishbein: 00:10:03

an appropriate risk perspective?

Brian Fishbein: 00:10:04

From an appropriate compliance perspective?

Brian Fishbein: 00:10:06

What else is actually happening behind the scenes to enable our customers

Brian Fishbein: 00:10:09

to reconcile, to manage their LMSs?

Brian Fishbein: 00:10:12

The LoanPros of the world.

Brian Fishbein: 00:10:13

In a way that doesn't break in a month when they try to do a

Brian Fishbein: 00:10:16

reconciliation for kind of their internal finance and accounting.

Brian Fishbein: 00:10:20

Um, and then the, the, the second thing as we think about it is really focused

Brian Fishbein: 00:10:24

on these direct relationships that we wanna have with our partners rather

Brian Fishbein: 00:10:27

than necessarily working through kind of other vendors or other software.

Brian Fishbein: 00:10:30

And that gets back to the technology, which is we built that for ourselves so

Brian Fishbein: 00:10:34

that we don't need to rely on other people with things that we don't necessarily

Brian Fishbein: 00:10:37

kind of fully understand when we want to originate these sorts of products.

Brian Fishbein: 00:10:42

and then kind of to your third point, credit in a nutshell is great and

Brian Fishbein: 00:10:46

you can really be super successful.

Brian Fishbein: 00:10:48

And we've seen that obviously with a lot of other banks in niche.

Brian Fishbein: 00:10:52

But kind of where we think our value is to a lot of these companies is much more

Brian Fishbein: 00:10:55

in the breadth of the offering, right?

Brian Fishbein: 00:10:57

Um, there are folks that only want to lend money and that's great, and we think

Brian Fishbein: 00:11:02

that we can serve those really well.

Brian Fishbein: 00:11:03

But at the end of the day, I think what we've seen a lot of

Brian Fishbein: 00:11:05

it and can talk about trends a.

Brian Fishbein: 00:11:08

Is folks that want to kind of broaden the customer relationship

Brian Fishbein: 00:11:11

and broaden that customer wallet.

Brian Fishbein: 00:11:12

And so what does that mean?

Brian Fishbein: 00:11:13

Expanding into other loan products, expanding into other financial

Brian Fishbein: 00:11:16

products like DDAs, offering money, movement services, et cetera.

Brian Fishbein: 00:11:20

And when you think about that, right, it's a holistic offering where we can say,

Brian Fishbein: 00:11:24

we can do loans, we can do um, payments, we can, we can offer a deposit account

Brian Fishbein: 00:11:29

that really starts to get people excited and really gets us excited when we.

Colton Pond: 00:11:32

Yeah, so I, I love lots of aspects of what you talked

Colton Pond: 00:11:35

about, Brian, and what, uh, Column is doing, and I, I really view Column

Colton Pond: 00:11:40

and, and the work that you're doing at Column is strategic moves in the.

Colton Pond: 00:11:44

Banking sponsorship industry.

Colton Pond: 00:11:46

Um, help us understand your view on how you see that experience, then

Colton Pond: 00:11:50

shaping what the future looks like and how, uh, that future of, of credit

Colton Pond: 00:11:56

sponsorship and lending technology and marrying that with compliance.

Colton Pond: 00:12:00

What does it look like, uh, moving forward?

Brian Fishbein: 00:12:02

I think a lot of it is really around how do we reduce a lot of

Brian Fishbein: 00:12:06

the kind of manual operational compliance and oversight requirements, right?

Brian Fishbein: 00:12:11

The, the reality is like, Originating a unsecured installment loan is not

Brian Fishbein: 00:12:17

a super challenging process that requires a lot of innovation, right?

Brian Fishbein: 00:12:21

The application process and the disbursement process

Brian Fishbein: 00:12:23

is kind of what it is.

Brian Fishbein: 00:12:24

And like anybody can do that.

Brian Fishbein: 00:12:26

And I don't think that that we would say there's like a ton of differentiation

Brian Fishbein: 00:12:30

on literally that ability, right?

Brian Fishbein: 00:12:32

I think you see the differentiation is really, you can access our APIs

Brian Fishbein: 00:12:35

to start doing things in real time.

Brian Fishbein: 00:12:37

your giving us

Brian Fishbein: 00:12:38

all of the data that you would otherwise be collecting and might be bashing and

Brian Fishbein: 00:12:41

sending at the end of the month through an Excel file or through some other means

Brian Fishbein: 00:12:45

in kind of real time such that we can say, yep, we have created a loan account

Brian Fishbein: 00:12:49

for this individual borrower that maps one-to-one with your internal systems.

Brian Fishbein: 00:12:54

and, we know that borrower is a good borrower and we can disperse funds,

Brian Fishbein: 00:12:57

and then you can start to say, okay, what do I build on top of it now that

Brian Fishbein: 00:13:00

I have this kinda real time insight and what can I start doing with that?

Brian Fishbein: 00:13:03

Well, if you just stop there, that's our loan origination business.

Brian Fishbein: 00:13:07

We can kind of do credit sponsorship and that's great, but then you can

Brian Fishbein: 00:13:09

start saying, okay, we have a servicer.

Brian Fishbein: 00:13:11

We integrated with Column already.

Brian Fishbein: 00:13:14

We have this kind of data model that maps to our own internal,

Brian Fishbein: 00:13:17

uh, processes pretty cleanly.

Brian Fishbein: 00:13:20

Well, when we start collecting money.

Brian Fishbein: 00:13:22

We can start really allocating that at the account level without having

Brian Fishbein: 00:13:25

a giant pool of servicing account.

Brian Fishbein: 00:13:27

And then we can start saying, okay, incremental complexity on that.

Brian Fishbein: 00:13:29

I have securitizations, I have loan buyers, I have other pockets

Brian Fishbein: 00:13:32

of capital where those are the actual owners of those cash flows.

Brian Fishbein: 00:13:36

When I want to, you know, I.

Brian Fishbein: 00:13:38

Um, make sure that I am cleanly allocating funds to the right place.

Brian Fishbein: 00:13:42

I can start doing that without having a person sitting in the middle

Brian Fishbein: 00:13:45

to kind of do all of that work.

Brian Fishbein: 00:13:47

And so that really addresses a lot of like operational concerns that frankly I've

Brian Fishbein: 00:13:50

seen When you think about what, what do a lot of people spend their time doing?

Brian Fishbein: 00:13:54

Because it's really important to get those sorts of things right.

Brian Fishbein: 00:13:56

But then you also start to see the other side, which is you have all this data

Brian Fishbein: 00:14:00

that enables such a rich, um, view of kind of the compliance and backend as well.

Brian Fishbein: 00:14:06

That also lets you start saying, well, if there are, uh, trends that become,

Brian Fishbein: 00:14:10

that become emergent, you know, we start noticing that adverse action letters

Brian Fishbein: 00:14:13

aren't being sent or something else.

Brian Fishbein: 00:14:15

You're not seeing that 90 days later you are seeing that kind of day one, Hey, we

Brian Fishbein: 00:14:20

saw these rejects, but we didn't see this other thing that was supposed to happen.

Brian Fishbein: 00:14:23

Let's make that in the bud before it becomes a real issue.

Brian Fishbein: 00:14:27

the idea is, you know, mitigate a lot of the risks that you would otherwise

Brian Fishbein: 00:14:30

need to mitigate through a lot of manual

Colton Pond: 00:14:32

Yeah, Tedd.

Colton Pond: 00:14:33

Tedd, we always come.

Colton Pond: 00:14:34

Consistent themes, right?

Colton Pond: 00:14:36

Real time data.

Colton Pond: 00:14:37

We talked about it.

Colton Pond: 00:14:38

Episode with Bast the importance of getting realtime data in a different

Colton Pond: 00:14:42

context, but it's same themes of like, how do we get access to that realtime data?

Tedd Huff: 00:14:47

Well, and then how do, how do we that data?

Tedd Huff: 00:14:50

How do we leverage that data comes up and what I think is really unique with, with.

Tedd Huff: 00:14:57

Columns approach.

Tedd Huff: 00:14:59

approaching it from a completely different direction than any of

Tedd Huff: 00:15:02

the guests we've talked to so far.

Tedd Huff: 00:15:04

'cause it's all about technology, it's all about the data.

Tedd Huff: 00:15:06

It's all about getting it and making it useful.

Tedd Huff: 00:15:10

I'd really like to understand Brian, like how are you guys using the technology

Tedd Huff: 00:15:16

and the technology partnerships to really reinvent the way credit programs and

Tedd Huff: 00:15:22

fintechs really support their customers?

Brian Fishbein: 00:15:25

It is a good question.

Brian Fishbein: 00:15:26

It's a lot it, it does come down to a lot of real time data sharing and real time

Brian Fishbein: 00:15:30

kind of integrations across folks, right?

Brian Fishbein: 00:15:32

I think when you start seeing.

Brian Fishbein: 00:15:35

Uh, batch processes or Excel file transfers or something else, you start to

Brian Fishbein: 00:15:41

risk losing, you know, either urgency in kind of the process because you need

Brian Fishbein: 00:15:46

to action on some piece of information more, uh, more quickly than you might

Brian Fishbein: 00:15:50

otherwise be able to, or, um, data loss because you, you know, there is a person

Brian Fishbein: 00:15:55

on the other end that is processing it.

Brian Fishbein: 00:15:56

When we think about it, you know, a really good example is.

Brian Fishbein: 00:16:00

Okay, you want to disperse loans to folks, you know, same day or in real time, right?

Brian Fishbein: 00:16:05

There are certain limitations of the payment system, but once you kind of

Brian Fishbein: 00:16:08

get past timing of if you want a loan at 11:00 PM at night, like, you know, it's

Brian Fishbein: 00:16:12

gonna be hard for you to get that wire.

Brian Fishbein: 00:16:14

You can start to say, well, if I'm receiving an Excel file next

Brian Fishbein: 00:16:18

day for the originations that were approved yesterday, right, the

Brian Fishbein: 00:16:21

soonest I can disperse is next day.

Brian Fishbein: 00:16:23

Whereas if we're saying we are directly integrated with your application

Brian Fishbein: 00:16:27

process, somebody walks in the door at 2:00 PM, fills in all their information

Brian Fishbein: 00:16:31

and it all looks good, and they're approved for a thousand dollars loan.

Brian Fishbein: 00:16:35

There's no reason why at 2 0 5 we can't actually be initiating that disbursement.

Brian Fishbein: 00:16:39

And so you start to think about, well, how do I create a better

Brian Fishbein: 00:16:42

customer experience for folks?

Brian Fishbein: 00:16:43

And it's through things like that, which, you know, again, come back to, we need to

Brian Fishbein: 00:16:47

know and we need to get this information for us to be able to action on it.

Brian Fishbein: 00:16:51

And so the question is, how do you actually kind of

Brian Fishbein: 00:16:52

drive through that process?

Brian Fishbein: 00:16:54

I think the second thing, um, is around some of, you know, the credit and

Brian Fishbein: 00:16:59

compliance aspects, which is right.

Brian Fishbein: 00:17:01

have a program where we agree on kind of what are we going to originate, what

Brian Fishbein: 00:17:05

does that box look like, et cetera.

Brian Fishbein: 00:17:07

And it's very easy for you to say, okay, we need to run manual

Brian Fishbein: 00:17:10

checks to confirm that all this is actually working as appropriate.

Brian Fishbein: 00:17:14

but, a lot of this stuff is very quantitative, right?

Brian Fishbein: 00:17:16

You can basically just set up rules in the background that say like, this is the box

Brian Fishbein: 00:17:19

that we're supposed to be operating in.

Brian Fishbein: 00:17:20

These are the types of customers that we're going to accept.

Brian Fishbein: 00:17:23

And very quickly screen and flag whether or not things are actually

Brian Fishbein: 00:17:27

working as they're supposed to.

Brian Fishbein: 00:17:28

If they're not, it enables you to quickly fix it versus end up in a situation where

Brian Fishbein: 00:17:32

you say, oh, we've actually originated loans that we didn't necessarily

Brian Fishbein: 00:17:35

think we wanted to, but because it was kind of a referral model, um.

Brian Fishbein: 00:17:40

We're backwards looking to try to solve that problem rather

Brian Fishbein: 00:17:43

than, um, addressing at home.

Colton Pond: 00:17:45

I love that.

Colton Pond: 00:17:46

So along those lines, Brian, uh, there's really, uh, three

Colton Pond: 00:17:51

consistent themes in this podcast series that we've heard from folks.

Colton Pond: 00:17:55

how do you drive optimization?

Colton Pond: 00:17:56

And everyone right now is like, how do I drive greater margins?

Colton Pond: 00:17:59

How do I drive profitability?

Colton Pond: 00:18:00

How do I drive efficiency in what I do?

Colton Pond: 00:18:03

if you wouldn't mind, would love to understand how Column's approach as

Colton Pond: 00:18:07

a sponsor bank with technology is helping the fintechs you partner with

Colton Pond: 00:18:12

drive differentiation and increase optimization of their credit program.

Brian Fishbein: 00:18:17

Yeah, so I think we've talked a little bit about optimization.

Brian Fishbein: 00:18:20

All of those things around data drive more operational efficiency,

Brian Fishbein: 00:18:23

People can spend their time doing more interesting things.

Brian Fishbein: 00:18:25

And so maybe I won't har harp on that too much.

Brian Fishbein: 00:18:28

Where I think there is a little bit, um, more interesting differentiation

Brian Fishbein: 00:18:32

really comes back to, well, if you've solved the technology aspect and we offer

Brian Fishbein: 00:18:37

this really flexible product, right?

Brian Fishbein: 00:18:39

From a technical's perspective, there's no limit to what you

Brian Fishbein: 00:18:42

can do with our offering, right?

Brian Fishbein: 00:18:44

You can pair different financial products together to create something that you

Brian Fishbein: 00:18:48

know, provides more value to the user.

Brian Fishbein: 00:18:49

You can offer both with a credit card and a loan in the same platform, and

Brian Fishbein: 00:18:53

let everybody kind of understand and view that without necessarily needing

Brian Fishbein: 00:18:56

multiple sponsor banks that don't necessarily talk to each other and

Brian Fishbein: 00:19:00

might have reconciliation issues.

Brian Fishbein: 00:19:02

And so you start to say, okay, if everything is technically, possible

Brian Fishbein: 00:19:06

from an engineering perspective.

Brian Fishbein: 00:19:08

Then how do we actually add that differentiation and it, it comes back

Brian Fishbein: 00:19:12

to, well, now we've got a lot of free time that our operations and compliance

Brian Fishbein: 00:19:16

folks internally at the bank have that they're not thinking about, okay, are we

Brian Fishbein: 00:19:20

actually doing what we think we're doing?

Brian Fishbein: 00:19:22

Or how do we need to be testing and managing this because we have all

Brian Fishbein: 00:19:25

this automated alerting and data, and so then it's okay, we talked

Brian Fishbein: 00:19:29

about this very vanilla product.

Brian Fishbein: 00:19:31

What do we want to add on top of it?

Brian Fishbein: 00:19:32

What are the things that we think we can do differently?

Brian Fishbein: 00:19:34

How can we get creative?

Brian Fishbein: 00:19:36

To actually meet the true customer need versus just saying, you know,

Brian Fishbein: 00:19:41

we have this program, this is how we do credit sponsorship, and

Brian Fishbein: 00:19:44

this is the box that we fit in.

Brian Fishbein: 00:19:45

And I think that's one of the interesting things about Column from a differentiation

Brian Fishbein: 00:19:49

perspective, is we've really invested in the people and the relationships such that

Brian Fishbein: 00:19:53

we don't necessarily say this is the box that every single one of our customers

Brian Fishbein: 00:19:58

and partners needs to operate within.

Brian Fishbein: 00:19:59

It is, okay, you want to do something a little bit differently.

Brian Fishbein: 00:20:02

You wanna structure this loan product with, you know, these sorts of terms.

Brian Fishbein: 00:20:06

we do that?

Brian Fishbein: 00:20:07

Is that within the bounds of, you know, the regulatory framework?

Brian Fishbein: 00:20:10

And if it is, then how do we do it?

Brian Fishbein: 00:20:13

Um, and I think that's different from, you know, what we've seen with

Brian Fishbein: 00:20:15

other sponsor banks where, you know, you might be a commercial lender,

Brian Fishbein: 00:20:19

but they also do consumer lending.

Brian Fishbein: 00:20:20

And so you have to comply with all the consumer rights as well because

Brian Fishbein: 00:20:23

it's really easy to standardize.

Brian Fishbein: 00:20:24

Right.

Brian Fishbein: 00:20:25

And I think that's just not the approach that we take when we think

Brian Fishbein: 00:20:28

about these programs because to.

Brian Fishbein: 00:20:30

That then prevents them from differentiating from others in the market.

Brian Fishbein: 00:20:33

Tedd Huff, Fintech Confidential - Host (Detached audio): As you talk about availability of data,

Brian Fishbein: 00:20:36

you talk about the flexibility of the use, like all of these things, the hairs

Brian Fishbein: 00:20:41

on the back of my neck start to stand up.

Brian Fishbein: 00:20:43

'cause I, I can only see, you know, your chief risk officer, your chief

Brian Fishbein: 00:20:47

compliance officer, just cringing a little bit every time you say it.

Tedd Huff: 00:20:51

But you know the story that that's been.

Tedd Huff: 00:20:54

Talked about both in our previous episodes and in the industry in

Tedd Huff: 00:20:58

general been how to, how do we balance between innovation and compliance?

Tedd Huff: 00:21:04

I mean,

Tedd Huff: 00:21:04

just today we had a, um, a consent order go out on a financial institution and

Tedd Huff: 00:21:13

they have two technology partners that are being massively impacted by it.

Tedd Huff: 00:21:18

And I would really like to understand how does Column navigate?

Tedd Huff: 00:21:22

This balance, especially with all of the regulatory things that go

Tedd Huff: 00:21:27

into between the commercial and the consumer that you just talked about.

Brian Fishbein: 00:22:06

Yeah, it's a, it's a really great question.

Brian Fishbein: 00:22:09

Um, it's very topical, obviously.

Brian Fishbein: 00:22:12

What I said about not just externally facing technology, but

Brian Fishbein: 00:22:16

internally facing technology, right?

Brian Fishbein: 00:22:18

And so we've developed a ton of things in-House that are like solely designed

Brian Fishbein: 00:22:23

to help our risk and compliance teams understand what's going on.

Brian Fishbein: 00:22:26

When you think about it relative to.

Brian Fishbein: 00:22:28

How some of the others have structured their programs in this space, right?

Brian Fishbein: 00:22:31

We create these products that are meant to give us the level of insight that,

Brian Fishbein: 00:22:38

our risk and our compliance people would expect without creating such

Brian Fishbein: 00:22:43

crazy obligations on our partners.

Brian Fishbein: 00:22:44

And again, that's because we have.

Brian Fishbein: 00:22:47

These APIs, um, that and, and, and, uh, data models that allow us to get that

Brian Fishbein: 00:22:53

granular and really help our partners when we think about kind of what is the

Brian Fishbein: 00:22:57

information that they're giving and what are they getting back from us, right?

Brian Fishbein: 00:23:00

And so, you know, what's a really concrete example?

Brian Fishbein: 00:23:02

If you think about,

Brian Fishbein: 00:23:03

some of the reconciliation issues that you might have seen in, in FBO accounts, for

Brian Fishbein: 00:23:07

example, where it's hard for the bank to figure out what the balances actually are.

Brian Fishbein: 00:23:11

The way that we think about it is fundamentally different, which is

Brian Fishbein: 00:23:14

it's not just a giant pot of money,

Brian Fishbein: 00:23:17

it is a pot of money that is very specifically allocated to specific

Brian Fishbein: 00:23:20

accounts where we will require within our data model to understand

Brian Fishbein: 00:23:23

kind of what are all of the,

Brian Fishbein: 00:23:26

end customers that people are working with, even if they're

Brian Fishbein: 00:23:28

not necessarily customers of the

Tedd Huff: 00:23:30

So as soon as you said pot of money, all I could think

Tedd Huff: 00:23:34

about was Lucky Charms and the Rainbow and he, me, pot of gold.

Tedd Huff: 00:23:39

Like that's, for some reason that's exactly where my brain went.

Tedd Huff: 00:23:42

But I'll, I'll let you finish it.

Tedd Huff: 00:23:44

Just.

Brian Fishbein: 00:23:44

But it's kinda right.

Brian Fishbein: 00:23:45

It's all, I mean, the marshmallows melt and dissolve and it all just like

Brian Fishbein: 00:23:48

mixes together and you have no, I mean, not to take the analogy too far, but

Brian Fishbein: 00:23:52

it, it's very hard to, uh, kind of disaggregate once you go down that path.

Brian Fishbein: 00:23:57

and it has all these knock on effects.

Brian Fishbein: 00:23:58

When you think about like, what does pass through insurance actually mean if you're

Brian Fishbein: 00:24:01

a customer with an FBO account, right?

Brian Fishbein: 00:24:03

If you hold more than $250,000, but you can't readily identify what,

Brian Fishbein: 00:24:08

who, whose funds those are at any given point in time, it's really

Brian Fishbein: 00:24:11

hard to say, well we think that we can actually insure these funds.

Brian Fishbein: 00:24:14

and so When you like kind of get down to it, right?

Brian Fishbein: 00:24:17

If you have a model where there is kind of this one-to-one

Brian Fishbein: 00:24:22

mapping and reconciliation.

Brian Fishbein: 00:24:23

You should never end up in a scenario where you're meaningfully off on a

Brian Fishbein: 00:24:27

dollar balance, or if you are, it's going to become apparent that day, not

Brian Fishbein: 00:24:31

months later, where you're, you can't really kind of like disaggregate and

Brian Fishbein: 00:24:35

untangle everything that happened.

Brian Fishbein: 00:24:37

what is the compliance and risk impact of that?

Brian Fishbein: 00:24:39

You get much better and richer insights into what's going on.

Brian Fishbein: 00:24:43

Which means like there are going to be really, really good actors,

Brian Fishbein: 00:24:45

or there might be some places where

Brian Fishbein: 00:24:47

customers need more attention and we can really focus on making sure that we're

Brian Fishbein: 00:24:50

addressing those rather than necessarily saying like, we have a checklist.

Brian Fishbein: 00:24:54

We're just gonna go through everybody because we don't

Brian Fishbein: 00:24:55

actually know who is who we

Tedd Huff: 00:24:57

It's interestingg you talk about the, the sub ledgering

Tedd Huff: 00:25:02

and the importance of that and making sure that it's all in real time.

Tedd Huff: 00:25:05

There have been a number of clients that I've worked with.

Tedd Huff: 00:25:07

When we went to talk to a bank about getting the sponsorship

Tedd Huff: 00:25:11

we were able to bring them, the technology, a partnerships to show

Tedd Huff: 00:25:15

that sub ledgering technology.

Tedd Huff: 00:25:16

But it's really nice to see that.

Tedd Huff: 00:25:19

Folks like Column are, are offering that as part of the service versus

Tedd Huff: 00:25:23

having to figure out who do I partner with, who do I build it with?

Tedd Huff: 00:25:27

How do I make sure it maintains compliance?

Tedd Huff: 00:25:29

There's a lot of different things that fall into that, but as you were

Tedd Huff: 00:25:32

talking about it, it's like, yeah, that that is a really hard part of the job.

Brian Fishbein: 00:25:37

Yeah, and I mean, to bring it back to credit, right?

Brian Fishbein: 00:25:40

If you think about kind of how loan servicers operate our, uh, fund

Brian Fishbein: 00:25:44

like models where there's just a, again, it's a, a pool of funds where

Brian Fishbein: 00:25:47

you're just dispersing kinda out of that without really understanding,

Brian Fishbein: 00:25:52

you know, necessarily, you know.

Brian Fishbein: 00:25:54

What money is allocated to whom until later, right?

Brian Fishbein: 00:25:59

You end up with this model where, um, it does create room for those right?

Brian Fishbein: 00:26:05

Did like the a thousand dollars that was supposed to get paid to

Brian Fishbein: 00:26:08

one investor actually go there or did it go somewhere else?

Brian Fishbein: 00:26:11

And when we think about it, this kind of more detailed, uh.

Brian Fishbein: 00:26:17

Tagging in our data model actually enables you to avoid those issues.

Brian Fishbein: 00:26:22

Does it represent a shift from how some other folks might do it?

Brian Fishbein: 00:26:25

Absolutely.

Brian Fishbein: 00:26:26

But do we think that ultimately it better serves our clients as well

Brian Fishbein: 00:26:29

as obviously, you know, ourselves for risk matter perspective?

Brian Fishbein: 00:26:32

Absolutely.

Brian Fishbein: 00:26:33

And you know, again, eliminates that need down the line for a person to

Brian Fishbein: 00:26:36

like spend their days untangling all this information because it

Brian Fishbein: 00:26:40

should already kind of prospectively work from a automated systems

Colton Pond: 00:26:44

And you, you hit the nail on the head there, Brian, in that there's

Colton Pond: 00:26:47

a lot of people that view innovation and compliance at odds with each other.

Colton Pond: 00:26:52

Uh, one of the, the themes we've seen is they don't need

Colton Pond: 00:26:54

to be at odds with each other.

Colton Pond: 00:26:56

They can, they can balance, uh,

Brian Fishbein: 00:26:58

okay.

Colton Pond: 00:26:59

um, so help.

Colton Pond: 00:27:01

If you were to speak to a Skepticist, someone that's a skeptic out there

Colton Pond: 00:27:05

and like, ah, I can't innovate because I need to drive compliance.

Colton Pond: 00:27:08

Uh, what are some of the advice and insights you would give?

Brian Fishbein: 00:27:11

The reality, uh, is that you know, uh, maybe this is a

Brian Fishbein: 00:27:17

unfair thing to say, but that statement you know, more a function of you

Brian Fishbein: 00:27:24

needing to kind of put in more work in terms of what you want to do, right?

Brian Fishbein: 00:27:28

The regulatory environment isn't actually as strict as everybody.

Brian Fishbein: 00:27:32

Makes it out to be on some metrics, are certain things that

Brian Fishbein: 00:27:36

you always have to do, right?

Brian Fishbein: 00:27:37

If you lend to a consumer, you have to give them a truth and lending statement.

Brian Fishbein: 00:27:41

But like once you get beyond those requirements, more about, you

Brian Fishbein: 00:27:45

know, we need to actually treat this customer fairly and while we

Brian Fishbein: 00:27:51

offer them a financial product.

Brian Fishbein: 00:27:53

And if like, that's the philosophy with what you're offering, which is

Brian Fishbein: 00:27:56

we have somebody out there who has a demand for this type of product and

Brian Fishbein: 00:28:00

we think we can offer in a clear way.

Brian Fishbein: 00:28:02

There's no reason why you can't Right.

Brian Fishbein: 00:28:05

And I think that's like the, the core of it, which is you might run into

Brian Fishbein: 00:28:09

other people who say, I can't innovate because is this checklist of several

Brian Fishbein: 00:28:13

thousand things and the bank do it.

Brian Fishbein: 00:28:16

Maybe that is, you know, more of a limiting factor.

Brian Fishbein: 00:28:18

I think that's what we try to shy away from when we think about kind of, this

Brian Fishbein: 00:28:20

is not one all, but you know, we every day have conversations between our.

Brian Fishbein: 00:28:27

Legal risk and compliance people talking to customers who say like,

Brian Fishbein: 00:28:30

here's the way that I wanna do it.

Brian Fishbein: 00:28:31

Here's this tweak.

Brian Fishbein: 00:28:32

Here's this thing that I think would be like super interesting and why

Brian Fishbein: 00:28:35

we think our customers need it.

Brian Fishbein: 00:28:36

And you know, our response is always like, okay, like let's iterate on that.

Brian Fishbein: 00:28:40

Let's figure out how we can actually do that the right way rather than.

Brian Fishbein: 00:28:43

You know, we can't do it.

Brian Fishbein: 00:28:45

And sometimes you actually say like, okay, somebody has an idea.

Brian Fishbein: 00:28:47

And like, we actually can't do that.

Brian Fishbein: 00:28:48

Like, that would be against the law.

Brian Fishbein: 00:28:50

can't, you can't all, uh, get a hundred percent hit rate.

Brian Fishbein: 00:28:53

But I think the answer is the first answer from our, our team and like, this is what

Brian Fishbein: 00:28:57

we really try to agree with our culture and, and kind of how we've hired out is

Brian Fishbein: 00:29:00

it's not, no, it's like how do we do that?

Brian Fishbein: 00:29:04

Right?

Brian Fishbein: 00:29:04

Maybe this exact iteration doesn't work, but something close

Brian Fishbein: 00:29:07

to it

Tedd Huff: 00:29:08

Well, that comes into the the yes but type philosophy, right?

Tedd Huff: 00:29:11

Not a no because, but a yes, but philosophy and you know.

Tedd Huff: 00:29:16

For those fintechs that are, are listening to you, Brian, and, and

Tedd Huff: 00:29:20

looking at the website and seeing all these great technology offerings

Tedd Huff: 00:29:24

you guys have, and they're thinking, I love what Brian's saying and I

Tedd Huff: 00:29:28

love what Column is, is offering and I want them to be my sponsor bank.

Tedd Huff: 00:29:35

important is it for them to combine the tech, their technology,

Tedd Huff: 00:29:39

and the personalization and, but also at the same time.

Tedd Huff: 00:29:43

What's the likelihood of them having you become their sponsor bank?

Brian Fishbein: 00:29:49

I think it depends on exactly what they're trying to do.

Brian Fishbein: 00:29:52

We, uh, we work with a lot of people and we are continuing to

Brian Fishbein: 00:29:58

onboard people every single day.

Brian Fishbein: 00:30:00

Um, and there are very, very simple use cases, right, where we have folks

Brian Fishbein: 00:30:06

who just wanna open a bank account for their own personal use to user APIs

Brian Fishbein: 00:30:10

because they do high volumes of payment.

Brian Fishbein: 00:30:12

Um, and then there are extremely complex use cases and I think, you

Brian Fishbein: 00:30:16

know, when we think about kind of those complex use cases and the complexity

Brian Fishbein: 00:30:20

of the product, right, the expectation set, obviously scales as well.

Brian Fishbein: 00:30:24

And so if you are, you know, a, um, business that wants to offer.

Brian Fishbein: 00:30:31

A, you know, non-traditional lending product to subprime consumers.

Brian Fishbein: 00:30:37

I think there's going to be, you know, a, a higher level of discussion and a

Brian Fishbein: 00:30:40

higher level of scrutiny applied to we think about entering into that sort of

Brian Fishbein: 00:30:44

partnership relative to a very basic, you know, I want to pay my bills, right?

Brian Fishbein: 00:30:50

Um, you know, when we think about kind of like what is our qualification and, and

Brian Fishbein: 00:30:54

how do we think about our customer set?

Brian Fishbein: 00:30:56

Uh, we work with companies that are, you know, on the smaller scale and are

Brian Fishbein: 00:30:59

still kind of building out their, um, product and building out, you know,

Brian Fishbein: 00:31:03

their team.

Brian Fishbein: 00:31:03

And then we work with, you know, very, very mature organizations that

Brian Fishbein: 00:31:07

already know how they're supposed to do everything and this is their, you know,

Brian Fishbein: 00:31:10

for their fourth or fifth bank partner.

Brian Fishbein: 00:31:11

Um, but I mean, apart from kind of the usual suspects, which is like.

Brian Fishbein: 00:31:17

We don't support crypto today.

Brian Fishbein: 00:31:18

We don't support cannabis today.

Brian Fishbein: 00:31:20

Things like that where I think you start to get into more regulatory

Brian Fishbein: 00:31:24

considerations than necessarily like product considerations, right?

Brian Fishbein: 00:31:28

In terms of what that business actually looks like.

Brian Fishbein: 00:31:30

everything that we put on our website is, are things that we

Brian Fishbein: 00:31:33

do with customers every day,

Tedd Huff: 00:31:34

it was fun.

Tedd Huff: 00:31:35

Um, going through and, and looking at it.

Tedd Huff: 00:31:38

I remember looking at Column long ago and then just seeing the, the.

Tedd Huff: 00:31:45

Distance that you guys have come, how far you've taken it so far.

Tedd Huff: 00:31:49

And there's been a lot that has changed since the inception of

Tedd Huff: 00:31:53

Column, and obviously you can't keep doing the same thing and expecting

Tedd Huff: 00:31:58

the same, or, better results.

Tedd Huff: 00:32:00

So I would love to understand, you know, from, from your perspective and

Tedd Huff: 00:32:05

the strategic direction of Column.

Tedd Huff: 00:32:09

What do you see as trends in lending and technology with fintechs and banks and

Tedd Huff: 00:32:17

what they're gonna need to prepare, not just for 2024, but for the years to come?

Brian Fishbein: 00:32:23

When we think about kind of, uh, the future, right?

Brian Fishbein: 00:32:27

I.

Brian Fishbein: 00:32:27

For us, it's a lot more of continuing to build out the, the technology

Brian Fishbein: 00:32:33

that we've already started on.

Brian Fishbein: 00:32:34

How do we improve our APIs?

Brian Fishbein: 00:32:36

How do we make things simpler for customers?

Brian Fishbein: 00:32:38

How do we make this a better product overall for the folks

Brian Fishbein: 00:32:42

that we wanna work with?

Brian Fishbein: 00:32:43

and That's just gonna be

Brian Fishbein: 00:32:44

a continuous challenge for us to always be upleveling ourselves.

Brian Fishbein: 00:32:49

You know, that might mean that we expand into incremental customer bases.

Brian Fishbein: 00:32:52

We start to think about, you know, how do we better serve other financial

Brian Fishbein: 00:32:55

institutions that might actually wanna take advantage of our payments rather than

Brian Fishbein: 00:32:58

necessarily just kind of like non-banks.

Brian Fishbein: 00:33:01

That's like when we think about our internal roadmap, it's, it's mostly

Brian Fishbein: 00:33:05

just a lot of, let's put our heads down, let's figure out how we kind of

Brian Fishbein: 00:33:08

solve, continue to solve these problems.

Brian Fishbein: 00:33:10

Because there continue to be a lot of problems out there.

Brian Fishbein: 00:33:12

We are by no means offering every single financial product that a

Brian Fishbein: 00:33:15

traditional bank can offer yet.

Brian Fishbein: 00:33:17

I think we've kind of just scratched the surface.

Brian Fishbein: 00:33:19

But I think when you think about kind of the industry more broadly, right?

Brian Fishbein: 00:33:21

There's, there's two paths at this point, right?

Brian Fishbein: 00:33:24

There are folks out there who have made their entire business.

Brian Fishbein: 00:33:28

Credit sponsorship and these lending partnerships, and

Brian Fishbein: 00:33:31

that's really great business.

Brian Fishbein: 00:33:32

And you can, you can look at their call reports and you can

Brian Fishbein: 00:33:34

see, um, how well they're doing by kind of just focusing on that.

Brian Fishbein: 00:33:37

And I think that's going to continue, right?

Brian Fishbein: 00:33:39

There's always gonna be folks out there that say like, this is our swim lane.

Brian Fishbein: 00:33:42

We know what we're really good at and we're going to continue to do that.

Brian Fishbein: 00:33:45

And then I think what you're gonna see is kind of the alternative, which is.

Brian Fishbein: 00:33:48

A recognition that there are businesses out there where lending is not their sole

Brian Fishbein: 00:33:51

business, or having multiple bank partners is not actually the optimal path for 'em.

Brian Fishbein: 00:33:55

And how do we actually start driving more of that consolidation where,

Brian Fishbein: 00:33:59

you know, you're not working with seven bank partners, you're only

Brian Fishbein: 00:34:02

working with a couple across products.

Brian Fishbein: 00:34:05

The flip side of that, of course, is everyone kind of recognizes

Brian Fishbein: 00:34:08

that there's now a bunch of concentration risk in the industry.

Brian Fishbein: 00:34:11

And so while you want your banks to offer multiple products, I

Brian Fishbein: 00:34:14

think you're gonna start seeing redundancy in the fact that there's,

Brian Fishbein: 00:34:17

two or three banks that do all of these things for these customers, because

Brian Fishbein: 00:34:21

they're really going to be focused on, well, if one of them suddenly can't

Brian Fishbein: 00:34:24

operate or needs to scale down, or, you know, god forbid, shuts down, um, how

Brian Fishbein: 00:34:29

do we continue operating our business?

Brian Fishbein: 00:34:32

That redundancy trend is then gonna drive more competition, most likely, right?

Brian Fishbein: 00:34:37

As you start to see other banks that can,

Brian Fishbein: 00:34:39

generate incremental earnings and generat incremental revenue streams.

Brian Fishbein: 00:34:42

Not necessarily by saying, we're going to lean into this all the

Brian Fishbein: 00:34:45

way, but we can, um, start being one of a stable of banks and, uh, kind

Brian Fishbein: 00:34:50

of managing our programs that way.

Brian Fishbein: 00:34:52

It's gonna be pretty interesting to watch as kinda the industry involves

Brian Fishbein: 00:34:55

the, the, you know, kind of thing in the background for all of this is of course

Brian Fishbein: 00:34:59

the regulatory environment and how people are going to, um, you know, actually react

Brian Fishbein: 00:35:04

to more banks getting into this space.

Brian Fishbein: 00:35:06

What banks are going to leave and what sort of consolidation that

Brian Fishbein: 00:35:09

drives in terms of the business.

Brian Fishbein: 00:35:11

Because I think, you know, at least what we've seen over the

Brian Fishbein: 00:35:13

last year is the regulatory activity has certainly stepped up.

Brian Fishbein: 00:35:17

And I think you're gonna kind of continue to see that scrutiny

Brian Fishbein: 00:35:19

regardless of, you know, what happens in the broader political ecosystem.

Brian Fishbein: 00:35:22

The change that the OCC and the FDIC and the Fed doesn't

Brian Fishbein: 00:35:26

necessarily happen overnight.

Brian Fishbein: 00:35:27

And so, um, it's been pretty clear the stance that, you know, folks have taken

Brian Fishbein: 00:35:32

so far on these sorts of partnerships and what regulators expect from banks.

Brian Fishbein: 00:35:38

Um, but that doesn't necessarily mean that next year is gonna

Brian Fishbein: 00:35:41

be the same thing or that

Brian Fishbein: 00:35:42

, you know, it's not going to cause, uh, ripples in the ecosystem when

Brian Fishbein: 00:35:45

the regulators tell Their, their banks that they have to do things

Brian Fishbein: 00:35:49

a certain way and you know, what does that mean for all companies

Colton Pond: 00:35:51

yeah, I love that.

Colton Pond: 00:35:52

And Brian, several things you brought up there tie into what the future looks like.

Colton Pond: 00:35:56

One of the things we love to do on these episodes is to take a step.

Colton Pond: 00:36:01

3, 5, 10 years in the future, hop in like a DeLorean with Marty McFly.

Colton Pond: 00:36:06

Let's go into the future and let's look at what sponsor

Colton Pond: 00:36:10

banking looks like in five years.

Colton Pond: 00:36:12

I would love your perspective on what it looks like and how it

Colton Pond: 00:36:15

evolves and changes, um, and what those, those themes look like.

Brian Fishbein: 00:36:20

Yeah, definitely.

Brian Fishbein: 00:36:21

I mean, the short answer is this is not going away, and I think it's

Brian Fishbein: 00:36:26

unrealistic to think that's the case.

Brian Fishbein: 00:36:28

The reality is financial technology companies exist for a reason.

Brian Fishbein: 00:36:33

They have clearly shown that, you know, they do a better job of

Brian Fishbein: 00:36:37

serving certain customer segments than traditional banks, right?

Brian Fishbein: 00:36:41

And you can kind of pick your niche or, or what have you, but you,

Brian Fishbein: 00:36:44

you see this across the board.

Brian Fishbein: 00:36:46

And I think, you know, as you think about kind of the banking space

Brian Fishbein: 00:36:50

more broadly, traditional banking in kind of the branch in your hometown.

Brian Fishbein: 00:36:56

That's probably not going away either.

Brian Fishbein: 00:36:58

There's always going to be a cohort of the population you know, wants

Brian Fishbein: 00:37:01

to continue to engage that way.

Brian Fishbein: 00:37:03

But I think you're going to see a larger percentage of the population

Brian Fishbein: 00:37:06

that is growing towards a more tech native, higher expectation set for what

Brian Fishbein: 00:37:11

services should look like when they engage with their financial, um, uh,

Brian Fishbein: 00:37:16

institutions similar to what you've seen with other sorts of software, right?

Brian Fishbein: 00:37:20

Um, and so I think what you're gonna end up seeing is that.

Brian Fishbein: 00:37:23

The space only gets bigger and only starts to kind of continue to take

Brian Fishbein: 00:37:29

market share from what you might think of as traditional banks, which is going

Brian Fishbein: 00:37:33

to continue to drive, you know, the.

Brian Fishbein: 00:37:36

Interest from banking institutions in serving these sorts of customers, rather

Brian Fishbein: 00:37:41

than necessarily saying, we're going to stick to our tried and true strategy.

Brian Fishbein: 00:37:44

And so ultimately I think what you're gonna need to see is some sort of

Brian Fishbein: 00:37:47

shift from a technology perspective for banks to catch up so that not

Brian Fishbein: 00:37:51

necessarily they can serve, you know, end customers, but so that they can

Brian Fishbein: 00:37:54

serve these folks that are distributing financial products and services in the

Brian Fishbein: 00:37:58

way that these customers actually want.

Brian Fishbein: 00:38:03

I think that's gonna be, you know, super interesting to see over the

Brian Fishbein: 00:38:05

course of the next five years.

Brian Fishbein: 00:38:07

But I think the flip side of it, which is, you know, what we've

Brian Fishbein: 00:38:11

seen today is the very, very niche businesses that say we're only going

Brian Fishbein: 00:38:14

to focus on X, Y, Z customer segment.

Brian Fishbein: 00:38:17

Those are going to start to consolidate, right?

Brian Fishbein: 00:38:20

It's very hard to say we're gonna run a single product lender that doesn't do

Colton Pond: 00:38:25

yeah,

Brian Fishbein: 00:38:26

um,

Colton Pond: 00:38:27

focus on people that love,

Colton Pond: 00:38:29

focus on people that love cats, right?

Colton Pond: 00:38:32

Like,

Brian Fishbein: 00:38:33

yeah,

Colton Pond: 00:38:33

yeah.

Brian Fishbein: 00:38:36

Um, and don't get me wrong, that product could still

Brian Fishbein: 00:38:39

be valuable and that customer segment could still be valuable.

Brian Fishbein: 00:38:42

But I don't think that is like the end all, be all in terms of

Brian Fishbein: 00:38:44

how you can run a business just because the reality is the financial

Brian Fishbein: 00:38:47

system is so large and really, I.

Brian Fishbein: 00:38:49

In order to have viable businesses, you do have to operate at

Brian Fishbein: 00:38:51

some level of scale, right?

Brian Fishbein: 00:38:53

Um, and so I think you see there's going to be more folks who say, you know,

Brian Fishbein: 00:38:58

we have these three different kind of customer segments or business lines,

Brian Fishbein: 00:39:02

you know, what else do we need to add?

Brian Fishbein: 00:39:04

And who else out there can we add it to, or, you know, sell to in order

Brian Fishbein: 00:39:08

to actually kind of make this all make sense at a corporate level,

Brian Fishbein: 00:39:12

even if the unit economics are.

Tedd Huff: 00:39:14

So Brian, before we, we.

Tedd Huff: 00:39:16

Close up for the day.

Tedd Huff: 00:39:17

I've, I've been blown away by, by how you guys are at Column, looking at

Tedd Huff: 00:39:24

not only the, the sponsorship, but the technology and the compliance.

Tedd Huff: 00:39:27

I mean, there's, there's so many things that you guys have pulled together.

Tedd Huff: 00:39:31

Do you have a closing statement for us?

Tedd Huff: 00:39:33

You wanna make sure the audience hears that?

Tedd Huff: 00:39:36

Maybe we didn't touch on that.

Tedd Huff: 00:39:37

You're like, I just gotta tell 'em this.

Brian Fishbein: 00:39:39

We've talked about a lot, but I, I think the closing statement is

Brian Fishbein: 00:39:42

really, you know, we are out here to serve kind of the financial community writ large

Brian Fishbein: 00:39:49

and try to provide the best technology out there to enable folks to, to grow

Brian Fishbein: 00:39:54

their own businesses and to support them.

Brian Fishbein: 00:39:56

Right?

Brian Fishbein: 00:39:57

We, our long term success in the way that we think about our business is.

Brian Fishbein: 00:40:01

Totally predicated on being able to serve this customer set rather than

Brian Fishbein: 00:40:05

necessarily, you know, the traditional banking that you might see from others.

Brian Fishbein: 00:40:08

And so, you know, uh, really just want to hammer home the point that that's

Brian Fishbein: 00:40:13

kind of all we're, we're focused on building and doing out there.

Tedd Huff: 00:40:15

Brian, I I want to thank you, um, for, for taking the time

Tedd Huff: 00:40:20

out to sit down with us to, answer the questions and, and really, uh,

Tedd Huff: 00:40:25

participate in, in this discussion.

Colton Pond: 00:40:29

Yeah.

Brian Fishbein: 00:40:30

Absolutely.

Brian Fishbein: 00:40:31

I appreciate you guys having me

Colton Pond: 00:40:32

brian, thanks for coming.

Colton Pond: 00:40:33

The future is exciting.

Colton Pond: 00:40:34

Tedd, like, buckle up, giddy up.

Colton Pond: 00:40:36

Let's go.

Colton Pond: 00:40:37

Uh, big things are coming.

Colton Pond: 00:40:39

I, I'm excited in the role.

Colton Pond: 00:40:41

I sit in looking at what's, what's upcoming, especially

Colton Pond: 00:40:44

in the sponsor making space.

Tedd Huff: 00:40:46

You know, the big, the big things that I took away

Tedd Huff: 00:40:48

from from today's conversation really are data is a gold mine.

Tedd Huff: 00:40:55

Compliance is.

Tedd Huff: 00:40:56

Not an option.

Tedd Huff: 00:40:58

And the last, but not least, the way that banking has always been done

Tedd Huff: 00:41:05

can't continue to be done that way.

Tedd Huff: 00:41:08

And those are the three things that I took away from today's discussion.

Colton Pond: 00:41:14

Agreed.

Brian Fishbein: 00:41:16

Yeah.

Tedd Huff: 00:41:17

well, what I wanna do is.

Tedd Huff: 00:41:22

Thank you everybody that has made it this far into the episode.

Tedd Huff: 00:41:26

will continue to invite more industry leaders to have discussions like this to

Tedd Huff: 00:41:31

really dive in to what the world of Lin Tech is throughout this entire series.

Tedd Huff: 00:41:37

And if you haven't already, go ahead and subscribe.

Tedd Huff: 00:41:40

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Tedd Huff: 00:41:47

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Tedd Huff: 00:41:49

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Tedd Huff: 00:41:53

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Tedd Huff: 00:41:55

And last but not least, share with your friends and colleagues so they can

Tedd Huff: 00:41:59

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Tedd Huff: 00:42:01

As we wrap up today's episode, I've got one last thing for you.

Tedd Huff: 00:42:05

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Tedd Huff: 00:42:09

know it's a complex battlefield.

Tedd Huff: 00:42:11

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Tedd Huff: 00:42:16

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Tedd Huff: 00:42:21

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Tedd Huff: 00:42:26

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Tedd Huff: 00:42:28

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Head on over to gethawkai.

Tedd Huff: 00:42:39

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how you fight fraud and financial crime.

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