Wise up your Fintech: To Do What Fintechs Do Best

Robert Keil: 00:00:00

And I think we've just scratched the surface as to

Robert Keil: 00:00:03

what all is possible when you embed banking products in that B2B , B2B2C

Robert Keil: 00:00:09

setting And, um, the use cases that keep emerging are just fascinating.

Robert Keil: 00:00:15

What ultimately to happen is

Robert Keil: 00:00:17

the dust is going to settle the real use cases for.

Robert Keil: 00:00:21

What we call days, banking as a service will emerge and it will

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solve real world problems because the technology will be available.

Robert Keil: 00:00:28

The understanding is there.

Robert Keil: 00:00:30

People learn from the mistakes that have been made.

Robert Keil: 00:00:34

And that's where the real excitement comes in.

Robert Keil: 00:00:38

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

Robert Keil: 00:00:41

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

Tedd Huff: 00:00:47

Welcome to Accrued, the Fintech Confidential series presented by LoanPro.

Tedd Huff: 00:00:52

In this series, we're deconstructing the complexities of lending and exploring the

Tedd Huff: 00:00:57

compliance, optimization, modernization, and personalization through insightful

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conversations with the industry's best.

Tedd Huff: 00:01:06

I'm Tedd Huff, along with my co host Sarah Howell, stepping in for Colton today.

Tedd Huff: 00:01:13

And we're here to guide you through the intricate lending world, whether

Tedd Huff: 00:01:16

you're deep in Lintech or just intrigued how the technology is reshaping Lindi.

Tedd Huff: 00:01:22

You're right in the right place.

Tedd Huff: 00:01:23

And now let's dive into another episode.

Tedd Huff: 00:01:27

Of Accrued

Tedd Huff: 00:01:29

so robert i'm super happy to have you on as you and i were talking before we

Tedd Huff: 00:01:33

hit the uh The record button the last time you and I sat down personally

Tedd Huff: 00:01:37

face to face was at money 2020 last year So i'm really glad that we have

Tedd Huff: 00:01:41

this opportunity to find out what's what's happening over there at finnwise

Robert Keil: 00:01:45

likewise, and even though it's only October, right?

Robert Keil: 00:01:49

When 2020 happened, a ton has happened since.

Robert Keil: 00:01:53

And I think anyone that follows the industry news sees there's new

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things happening every week that affect what we do and how we do it.

Robert Keil: 00:02:02

it's a little bit of a crazy time.

Robert Keil: 00:02:04

It's also, in my opinion, a very exciting time because, well, what's

Robert Keil: 00:02:08

happening is Headwind's for some.

Robert Keil: 00:02:11

For others, and I would count us among that.

Robert Keil: 00:02:13

It's really a tailwind.

Tedd Huff: 00:02:15

Because Sarah is new to the show, I want to give the audience

Tedd Huff: 00:02:19

kind of a little bit of a background of who she is before I dive into who

Tedd Huff: 00:02:22

Robert is and what the bank's doing.

Tedd Huff: 00:02:24

But let me dive in first with Sarah.

Tedd Huff: 00:02:26

So Sarah is the vice president of partnerships at LoanPro where she

Tedd Huff: 00:02:31

leverages her extensive experience in fostering collaboration between

Tedd Huff: 00:02:35

financial institutions and fintechs.

Tedd Huff: 00:02:38

Her expertise and leading partner programs at Visa and Infinite has

Tedd Huff: 00:02:43

prepared her to drive growth through innovative strategies at LoanPro.

Tedd Huff: 00:02:47

Welcome Sarah to the show.

Sarah Howell: 00:02:50

Thanks so much for the introduction, Tedd Excited to be here.

Sarah Howell: 00:02:53

Robert, great to have you on the show.

Sarah Howell: 00:02:55

Looking forward to all that you have to share with our audience.

Robert Keil: 00:02:58

Likewise good to see you too

Tedd Huff: 00:03:00

In today's episode, we're putting the spotlight on fin wise bank, a

Tedd Huff: 00:03:05

leader in the lending as a service space.

Tedd Huff: 00:03:07

Robert Kyle, the chief FinTech officer for fin wise has dedicated his career

Tedd Huff: 00:03:12

to revolutionizing sponsor banking.

Tedd Huff: 00:03:14

Enhancing visibility and providing control for FinTech partners

Tedd Huff: 00:03:18

through innovative programs.

Tedd Huff: 00:03:20

Today's journey is going to showcase how FinWise leverages technology alongside

Tedd Huff: 00:03:25

with traditional banking principles to offer groundbreaking solutions.

Tedd Huff: 00:03:29

Their commitment to compliance, innovation, and empower the FinTech

Tedd Huff: 00:03:33

partnerships sets the stage for what we're going to be talking about today.

Tedd Huff: 00:03:38

Robert will be sharing his insights from his extensive background and the pivotal

Tedd Huff: 00:03:42

role that he has taken at FinWise in shaping the future, of FinTech banking.

Tedd Huff: 00:03:47

As we explore how FinWise Bank helps FinTech brands disrupt the

Tedd Huff: 00:03:51

traditional banking model, we'll uncover Robert's transformative

Tedd Huff: 00:03:55

impact in driving compliance and innovation in the FinTech ecosystem.

Sarah Howell: 00:04:00

Robert, it's so great to have you on.

Sarah Howell: 00:04:02

Great to see you again.

Sarah Howell: 00:04:03

I know when we first met, uh, you were at Sutton Bank, which has such a great

Sarah Howell: 00:04:08

history in the sponsor bank space.

Sarah Howell: 00:04:10

Uh, but I know that your career didn't start at Sutton and I know that you,

Sarah Howell: 00:04:14

you're going to do some great things.

Sarah Howell: 00:04:15

You are doing great things at FinWise, but give us a little history about

Sarah Howell: 00:04:18

your career path and trajectory.

Robert Keil: 00:04:20

Yeah, so my background in banking goes back almost 40 years.

Robert Keil: 00:04:26

I think in September, it's 40 years ago that I started in, in banking over

Robert Keil: 00:04:30

in Europe, where I grew up and did my schooling and, uh, got the degree that

Robert Keil: 00:04:35

was needed if you wanted to be the CEO of a financial institution, and that

Robert Keil: 00:04:40

included everything that German banks do, uh, things like import, export financing,

Robert Keil: 00:04:45

running around on the Trading floor of the stock exchange to, um, commercial

Robert Keil: 00:04:51

banking, consumer banking, and so on.

Robert Keil: 00:04:54

But eventually, you know, I ended up in the U.

Robert Keil: 00:04:56

S.

Robert Keil: 00:04:57

30 some years ago, and initially, nobody knew to do with my banking

Robert Keil: 00:05:02

background, it while to get back it.

Robert Keil: 00:05:06

But, um, I was then in the, in the late 90s, I got back into banking in

Robert Keil: 00:05:11

particular, and in 99 into payments and, um, spend initially a few years at what

Robert Keil: 00:05:19

became Wells Fargo, focusing on ATM debit processing for banks and credit unions.

Robert Keil: 00:05:25

And then from there left to spend 17 years at US bank along financial doing

Robert Keil: 00:05:31

the same was a couple other niche markets.

Robert Keil: 00:05:34

At a leadership role there, um, eventually left, and that led me through,

Robert Keil: 00:05:40

uh, over one detour to, to Fiserv.

Robert Keil: 00:05:44

And that's how I became an almost involuntary participant

Robert Keil: 00:05:48

in the world of fintech.

Robert Keil: 00:05:50

Because what happened is the role for which I was hired at Fiserv.

Robert Keil: 00:05:54

Didn't quite materialize, wasn't vetted with the CEO at the time.

Robert Keil: 00:05:59

And then people tried to figure out what do we months work about 6 months work,

Robert Keil: 00:06:05

when that was done, someone said, well, you know, there's these companies like

Robert Keil: 00:06:08

chime that are popping up money line.

Robert Keil: 00:06:11

Can you figure out if there's something we have that we could sell to them?

Robert Keil: 00:06:15

And.

Robert Keil: 00:06:16

Honestly, I didn't want to do that.

Robert Keil: 00:06:17

Right.

Robert Keil: 00:06:18

But at the same time, I didn't want to change jobs again.

Robert Keil: 00:06:20

So I kind of bit the bullet.

Robert Keil: 00:06:22

They gave me 1 employee and together we sat like, what do we do?

Robert Keil: 00:06:25

Right?

Robert Keil: 00:06:26

We don't even know what a FinTech really is.

Robert Keil: 00:06:28

And so we started to look at what do we have?

Robert Keil: 00:06:32

What could be, you know, reposition a little bit, take some Fiserv solutions,

Robert Keil: 00:06:36

glue them together differently.

Robert Keil: 00:06:37

And I guess I wouldn't just, I would say to my surprise, it really, really

Robert Keil: 00:06:42

took off and the team grew really fast and got exposure to some really

Robert Keil: 00:06:47

good names, but also the banks in the industry and when some changes that

Robert Keil: 00:06:52

Fiserv happened and I decided to make a career change, I ended up with Sutton

Robert Keil: 00:06:59

for a little bit, but then when Finwise reached out to see if I had

Robert Keil: 00:07:03

an interest of moving them from just lending as a service to the full range,

Robert Keil: 00:07:08

of a FinTech solutions from the bin sponsorship and payments as a service, uh,

Robert Keil: 00:07:13

I kind of found my forever home, right?

Robert Keil: 00:07:16

Because it's the right culture.

Robert Keil: 00:07:17

That's, uh, doing things correctly, but also scalable.

Robert Keil: 00:07:22

And, uh, so it was kind of the perfect match

Sarah Howell: 00:07:25

That's awesome.

Sarah Howell: 00:07:25

Yeah,

Tedd Huff: 00:07:29

coming from traditional bank banking and all of the different

Tedd Huff: 00:07:33

pieces from investments to the commodity piece of it and being

Tedd Huff: 00:07:37

on the floor and then getting into

Tedd Huff: 00:07:41

Fiserv and being asked to figure this thing out.

Tedd Huff: 00:07:44

I think it would have given you a different perspective of what is really

Tedd Huff: 00:07:48

needed for a sponsor bank relationship.

Tedd Huff: 00:07:51

what ends up happening a lot of times with a lot of my consulting clients,

Tedd Huff: 00:07:54

they ask me, Hey, what makes a sponsor bank, not just good, but truly stand out.

Tedd Huff: 00:08:01

And I'd love for you to break down for us how Finwise is cutting through that

Tedd Huff: 00:08:05

noise in the sponsor banking world.

Robert Keil: 00:08:07

Based on something that happened earlier this

Robert Keil: 00:08:09

week, it may sound a little.

Robert Keil: 00:08:11

Humorous, but the answer to that is don't be a BaaS,

Robert Keil: 00:08:16

because BaaS banking as a service, I think, has gotten a reputation of

Robert Keil: 00:08:22

of practices on how not to do it.

Robert Keil: 00:08:25

Right?

Robert Keil: 00:08:25

I mean, for too long.

Robert Keil: 00:08:26

What we've seen is there's some fintech that Stands up a program in

Robert Keil: 00:08:31

many ways, does whatever they want and then finds a bank that basically

Robert Keil: 00:08:34

says, yeah, I sponsored this,

Robert Keil: 00:08:37

but doesn't really have to line of sight and control that is needed.

Robert Keil: 00:08:41

And so it's this, you know, rent a bank type setup that, um, is often associated

Robert Keil: 00:08:47

with BaaS and in order to do it, right.

Robert Keil: 00:08:51

I think the proper way to do it is really.

Robert Keil: 00:08:54

Embedded banking, meaning you take bank products, bank services,

Robert Keil: 00:08:59

bank solutions and embed them into a 3rd party ecosystem because

Robert Keil: 00:09:05

legally compliance ways in every way, shape or form those products

Robert Keil: 00:09:09

that are offered are the right?

Robert Keil: 00:09:11

So we are responsible for it and so um

Robert Keil: 00:09:15

it's not going to be enough.

Robert Keil: 00:09:17

Uh, to just say, I'll fill out some paperwork and I sponsor the issuance

Robert Keil: 00:09:21

of a card and I review a couple of disclosures and cardholder agreements.

Robert Keil: 00:09:28

You really need to take the bank solutions embedded into a 3rd

Robert Keil: 00:09:31

party ecosystem so your fintech partner can build the UI around it.

Robert Keil: 00:09:36

But again, you have to controls and, uh, uh, the line of sight

Robert Keil: 00:09:41

that you need to really stand in front of a regulator and outline.

Robert Keil: 00:09:44

We know what's going on, and, uh, that is ultimately

Robert Keil: 00:09:48

the key, in my opinion.

Robert Keil: 00:09:49

I

Tedd Huff: 00:09:49

So you you, mentioned, you know, the, the embedded piece of it,

Tedd Huff: 00:09:53

how is Finwise cutting through the noise?

Tedd Huff: 00:09:55

I mean, we talked about the noise.

Tedd Huff: 00:09:56

We talked about all the noise around BaaS, but how are you cutting through

Tedd Huff: 00:10:00

that, that noise that's going on?

Robert Keil: 00:10:02

In most cases, a sponsor bank and their oversight, they sample, right?

Robert Keil: 00:10:07

Send me 50 loans, send me loans, and then manually relationship But

Robert Keil: 00:10:11

especially in a large relationship, if you do millions of loans every year,

Robert Keil: 00:10:17

It's virtually impossible to manually do statistically relevant review,

Robert Keil: 00:10:21

So that sets you up for trouble.

Robert Keil: 00:10:24

So what FinWise did is it built this platform and

Robert Keil: 00:10:27

when we approve a FinTech partner, talk about the process, you know,

Robert Keil: 00:10:32

so that pick the right We approve

Robert Keil: 00:10:35

We approve and review every aspect of that program, right?

Robert Keil: 00:10:39

Underwriting models, terms, conditions, everything.

Robert Keil: 00:10:43

Um, when the partners then go out and do their customer acquisition,

Robert Keil: 00:10:47

they really do a form of, I would call it pre underwriting.

Robert Keil: 00:10:51

They apply the approved standards and then all the applicable data gets

Robert Keil: 00:10:56

ingested into our own platform by API.

Robert Keil: 00:10:58

And we re underwrite the law, making sure the partner stuck to

Robert Keil: 00:11:03

the agreed upon, uh, guidelines.

Robert Keil: 00:11:05

And so if you have a loan that doesn't meet that now it spits out and you

Robert Keil: 00:11:10

review it, if you actually still approve it, well, then you document

Robert Keil: 00:11:13

it as an exception to the credit policy, but you can literally say

Robert Keil: 00:11:18

rightfully to a regulator I've seen.

Robert Keil: 00:11:21

Every single loan, it has gone through the filter and then on top of that, right?

Robert Keil: 00:11:27

So that's the technology piece.

Robert Keil: 00:11:28

That's important.

Robert Keil: 00:11:29

But we argument that was the human insights where every quarter we do an

Robert Keil: 00:11:33

on site visitation with our partners.

Robert Keil: 00:11:36

Sometimes it's virtual, but 1 quarter we focus on all things.

Robert Keil: 00:11:39

1 quarter.

Robert Keil: 00:11:41

It's all things compliance.

Robert Keil: 00:11:42

Then it's a quarter of it.

Robert Keil: 00:11:43

So.

Robert Keil: 00:11:45

You're not just looking at every loan, but you're keeping your finger

Robert Keil: 00:11:48

on the tab just to make sure, um, there's nothing, nothing else.

Robert Keil: 00:11:52

That already taught us how technology is important.

Robert Keil: 00:11:56

And so now, as we're expanding into the sponsorship of card programs

Robert Keil: 00:12:00

or payment solutions, right?

Robert Keil: 00:12:03

May that be ACH and wire and RTP and FedNow and RPPS and a few others.

Robert Keil: 00:12:09

We're putting those into an open banking platform where we

Robert Keil: 00:12:13

have ledgering capabilities.

Robert Keil: 00:12:15

So we can take checking accounts.

Robert Keil: 00:12:17

We can take savings accounts.

Robert Keil: 00:12:19

We can take those payment rails, embed them in a third party ecosystem.

Robert Keil: 00:12:24

But in order to do that, you got to go through our KYC, nothing

Robert Keil: 00:12:29

happens till you pass our KYC.

Robert Keil: 00:12:31

We will do the transaction monitoring, right?

Robert Keil: 00:12:34

We don't delegate that.

Robert Keil: 00:12:35

And so that gives you a lot of that line of sight and control

Robert Keil: 00:12:39

that is just so critical.

Robert Keil: 00:12:40

And that has often been neglected.

Tedd Huff: 00:12:42

That's a lot different than what we've seen over the years with

Tedd Huff: 00:12:46

the traditional bank sponsorship model.

Tedd Huff: 00:12:50

So that's a, that's definitely a unique approach.

Sarah Howell: 00:12:54

Are you guys system of record in that?

Sarah Howell: 00:12:56

Are you guys system of record in that, um, that ladder, the

Sarah Howell: 00:12:59

deposit side and payment side

Robert Keil: 00:13:01

We can be.

Robert Keil: 00:13:02

Um, so, uh, you know, there's some we limit ourselves when it comes

Robert Keil: 00:13:07

to, like, for example, to card processing to a small number of, uh,

Robert Keil: 00:13:12

processors, and in some cases, they don't have ledger and capability.

Robert Keil: 00:13:16

So, in those cases, in our platform, we will have the ledger.

Robert Keil: 00:13:21

It's basically a digital core, um, and do that in other cases.

Robert Keil: 00:13:26

Uh, if, you know, the card processor has is approved by us and they

Robert Keil: 00:13:32

have the ledger and capabilities that went through our review and

Robert Keil: 00:13:35

we feel comfortable having them be,

Robert Keil: 00:13:38

the system of record and, uh, tie us in for the other pieces still means, though,

Robert Keil: 00:13:43

you've got to use my KYC before you

Sarah Howell: 00:13:46

that's I love the, the using technology to enforce

Sarah Howell: 00:13:51

kind of compliance and controls.

Sarah Howell: 00:13:52

And it sounds like the approach that FinWise is taking is a little bit

Sarah Howell: 00:13:56

different than some in the industry, but how are you seeing that benefit FinWise

Sarah Howell: 00:14:00

and then some of the FinTechs that you

Robert Keil: 00:14:35

yeah.

Robert Keil: 00:14:35

So when you look at the world of FinTech, right, a lot of

Robert Keil: 00:14:39

what's happening right now is.

Robert Keil: 00:14:42

Because what, what I just described

Robert Keil: 00:14:46

wasn't possible, right?

Robert Keil: 00:14:47

I mean, when, when you look at the early fintechs, that's what they wanted.

Robert Keil: 00:14:51

They wanted to have basically a customized version of the bank's

Robert Keil: 00:14:55

core, but the bank's are all 1990s building for, here's a building.

Robert Keil: 00:15:02

Come on in, give me money and we deposit it or money and we'll loan it to

Robert Keil: 00:15:06

you right

Robert Keil: 00:15:07

It's not designed for, for customizing and taking it elsewhere.

Robert Keil: 00:15:11

And that's what.

Robert Keil: 00:15:12

As a result of that has given burst it is very patchwork ecosystem and,

Robert Keil: 00:15:18

um, and that's ultimately where we solve some operational issues.

Robert Keil: 00:15:22

When you look at some fintechs right now, the way they function is, let's

Robert Keil: 00:15:26

say they have a credit card program.

Robert Keil: 00:15:29

They have a sponsor bank for that, and maybe that bank even helps with some

Robert Keil: 00:15:33

ACH when it comes to loan payments, but then they have another vendor for

Robert Keil: 00:15:37

KYC, um, or some other LoanProducts.

Robert Keil: 00:15:42

Let's say it's, it's a lending product and they want to disperse

Robert Keil: 00:15:45

a loan via push to card, right?

Robert Keil: 00:15:47

It'd be a direct transaction.

Robert Keil: 00:15:49

Well, then with another bank, a different tech and all that.

Robert Keil: 00:15:53

And by the all said and They deal with four different stacks, three or

Robert Keil: 00:15:58

four different and yet nobody has a clear line of sight into where's the

Robert Keil: 00:16:03

money coming from, where is it going, because it's so cobbled together.

Robert Keil: 00:16:07

And so by being in many ways the one stop shop, or it could be a two stop

Robert Keil: 00:16:11

shop, like so, and when we partner with LoanPro, you're kind of the The one end

Robert Keil: 00:16:16

that takes care of the loan servicing.

Robert Keil: 00:16:18

We're kind of the rest.

Robert Keil: 00:16:19

You have two tech stacks, one bank.

Robert Keil: 00:16:21

So now, operationally, it's easier, but then also to keep the program safe

Robert Keil: 00:16:27

on the compliance side is a whole lot easier just right We see it all right.

Robert Keil: 00:16:32

and that's where you make a

Sarah Howell: 00:16:34

100 percent and they've been on the flip side

Sarah Howell: 00:16:36

from a LoanPro perspective.

Sarah Howell: 00:16:37

If that fintech grows so big and you don't want to support every new, you

Sarah Howell: 00:16:42

know, lending product that they roll out, they can plug in a different,

Sarah Howell: 00:16:45

a different sponsor bank as well.

Sarah Howell: 00:16:47

So that they can continue to grow and you can continue to stick

Sarah Howell: 00:16:51

within your, you know, bank policy

Robert Keil: 00:16:54

Exactly.

Robert Keil: 00:16:55

That's there.

Robert Keil: 00:16:56

But even there, I'll throw, you know, 1 qualifier, you know, I've often said

Robert Keil: 00:17:00

to Fintech, you need to have more than 1 bank, um, for, you know, it's just.

Robert Keil: 00:17:06

Smart, but for us as a bank, honestly, we're kind of picky as to who would

Robert Keil: 00:17:12

you potentially choose because you can become quickly collateral damage

Robert Keil: 00:17:17

these days.

Robert Keil: 00:17:18

And, uh, if if a partner were to choose the wrong bank, we definitely would would

Robert Keil: 00:17:25

have to have some some discussions there.

Tedd Huff: 00:17:27

Well, and even, even this morning is, is, uh, today we're

Tedd Huff: 00:17:32

recording this on Friday, March 1st.

Tedd Huff: 00:17:33

So just kind of put that in perspective, but like this morning,

Tedd Huff: 00:17:37

It was announced that another banking as a service provider has been

Tedd Huff: 00:17:41

removed from from their sponsor bank.

Tedd Huff: 00:17:44

We don't have any details yet, but we can kind of assume based upon past

Tedd Huff: 00:17:49

behaviors of what actually happened there.

Tedd Huff: 00:17:53

And, you know, with that being said, The only constant that we're seeing in this

Tedd Huff: 00:17:59

industry is that it just keeps changing day to day, sometimes hour to hour.

Tedd Huff: 00:18:05

it keeps changing

Tedd Huff: 00:18:07

in the space of sponsor banking and FinTech collaborations.

Tedd Huff: 00:18:12

How, how has FinWise riding this wave of change and shaping the future of the

Tedd Huff: 00:18:17

landscape, especially as you mentioned,

Tedd Huff: 00:18:20

you guys are pretty particular on who you bring in.

Tedd Huff: 00:18:25

How are you, how are you staying on top of that wave without falling behind?

Robert Keil: 00:18:29

You take some tried and proven core banking principles, you

Robert Keil: 00:18:35

take, um, a disciplined approach that's sometimes hard because human nature

Robert Keil: 00:18:41

takes you, uh, in a different direction.

Robert Keil: 00:18:44

But, uh, here's what I mean by that.

Robert Keil: 00:18:46

So tried and true banking principles, when you take

Robert Keil: 00:18:50

the issues that have been experienced and you condense it down, 80, 90

Robert Keil: 00:18:54

percent of it comes down to this.

Robert Keil: 00:18:57

Do you know who you're doing business with, and are they

Robert Keil: 00:19:00

who they say they are, right?

Robert Keil: 00:19:01

So that's the KYC component.

Robert Keil: 00:19:03

If you can make sure that you know that and can prove it to a regulator,

Robert Keil: 00:19:08

you're in pretty good shape.

Robert Keil: 00:19:10

The other pieces are where's the money coming from and where is it going, right?

Robert Keil: 00:19:15

In other words, is anything that runs through you money laundering or not?

Robert Keil: 00:19:20

And so that's that line of sight component.

Robert Keil: 00:19:22

If you just cover those bases.

Robert Keil: 00:19:24

You already set yourself apart, and so whatever you do, that has to

Robert Keil: 00:19:30

really go through your mind, right?

Robert Keil: 00:19:32

Is it that?

Robert Keil: 00:19:33

And then maybe a third piece that's a more FinTech specific

Robert Keil: 00:19:37

principle is, is the sniff test.

Robert Keil: 00:19:40

I've used that a couple of times in example.

Robert Keil: 00:19:43

If a FinTech brings the program to you, is something you would actually offer in your

Sarah Howell: 00:19:48

that's good.

Robert Keil: 00:19:49

I've used as an example, the idea of tipping.

Robert Keil: 00:19:53

I'm a hundred percent certain there's not going to be a single bank in the

Robert Keil: 00:19:56

country that says, you know what?

Robert Keil: 00:19:58

Come on in, we're going to loan you money.

Robert Keil: 00:20:00

We're not going to charge you interest.

Robert Keil: 00:20:01

Just give me a tip, right?

Robert Keil: 00:20:04

That wouldn't happen.

Robert Keil: 00:20:06

So if you would never offer it in your branch, why would you sponsor it?

Robert Keil: 00:20:10

it is your product, now,

Robert Keil: 00:20:13

the other part when I talked about, you got to fight human nature, right?

Robert Keil: 00:20:17

If you're in business, you typically have that strong urge, the customer's right.

Robert Keil: 00:20:21

I want to make my customers happy.

Robert Keil: 00:20:23

And that's where there is often a fundamental misunderstanding.

Robert Keil: 00:20:27

Too many banks that jumped into this without thinking it through, viewed

Robert Keil: 00:20:32

the FinTech as a customer, right?

Robert Keil: 00:20:34

And the FinTech wants,

Tedd Huff: 00:20:37

Fintech gets, yeah.

Robert Keil: 00:20:38

The fintech is not a customer.

Robert Keil: 00:20:39

The fintech is a vendor, is a vendor of the bank that

Robert Keil: 00:20:43

services the bank's customers.

Robert Keil: 00:20:45

It happens to be a vendor that pays for the privilege.

Robert Keil: 00:20:48

But they are a vendor.

Tedd Huff: 00:20:49

Robert, would you say that the percent perspective has shifted from

Tedd Huff: 00:20:54

being a customer to now I'm extending my.

Tedd Huff: 00:20:59

My charter out into the world versus I'm allowing you to send me customers and

Tedd Huff: 00:21:06

money.

Robert Keil: 00:21:06

well, let's put it this way, uh, for the team at fin wise, which

Robert Keil: 00:21:11

is something that really attracted me.

Robert Keil: 00:21:13

That has always been the mindset, right?

Robert Keil: 00:21:15

The bank is offering its solutions through, um, a fintech partner,

Robert Keil: 00:21:20

an increasing number of banks has woken up to the fact that yes, the fintech is a

Robert Keil: 00:21:24

vendor and, but here's where that affects.

Robert Keil: 00:21:27

The mindset, right?

Robert Keil: 00:21:29

Um, what do you do with a vendor that doesn't perform?

Robert Keil: 00:21:32

Well, you sometimes give them a chance or two, but then

Robert Keil: 00:21:34

ultimately you fire them, right?

Robert Keil: 00:21:36

now human nature is, well, they're paying me money, I want the revenue.

Robert Keil: 00:21:39

No.

Robert Keil: 00:21:40

If they're not performing, you gotta fire

Tedd Huff: 00:21:43

the old adage of some revenues better than no revenue is Not always a

Tedd Huff: 00:21:47

good one to talk about it in the face

Sarah Howell: 00:21:50

I think the banks are starting to have the power

Sarah Howell: 00:21:51

differential in the relationship.

Sarah Howell: 00:21:53

Now, when you had so much B.

Sarah Howell: 00:21:55

C.

Sarah Howell: 00:21:55

Money going into the industry, the fintechs really did a lot of times,

Sarah Howell: 00:21:59

especially, you know, with smaller banks, they had that power differential.

Sarah Howell: 00:22:03

And so now is a great time, at least in my opinion, for banks to start to rise up.

Sarah Howell: 00:22:08

Take that power differential back, um, and and really start

Sarah Howell: 00:22:12

helping shape the industry in a way that's going to protect it.

Sarah Howell: 00:22:16

But I would be, I would welcome your thoughts on that.

Sarah Howell: 00:22:18

Robert.

Robert Keil: 00:22:19

One of the things going on right now, Or what it reminds me is.

Robert Keil: 00:22:23

the dot com bubble in the 90s and right time you right?

Robert Keil: 00:22:27

There was a time you had a power point and maybe you had a

Robert Keil: 00:22:30

domain didn't have to be live.

Robert Keil: 00:22:32

Here's thirty million dollars go, right?

Robert Keil: 00:22:35

And then all of a sudden

Robert Keil: 00:22:37

the dot com bubble blew up and you saw in the newspaper things

Robert Keil: 00:22:42

are the Internet's going away.

Robert Keil: 00:22:43

It's a fad.

Robert Keil: 00:22:44

It's it's dead, right?

Robert Keil: 00:22:46

But what really happened is the real use cases started to emerge

Robert Keil: 00:22:50

because the Internet itself.

Robert Keil: 00:22:52

Was here to stay,

Robert Keil: 00:22:53

Nobody back then envisioned that stream all of our entertainment video Internet

Robert Keil: 00:22:58

that we would do video conference calls voice over IP and so on and something

Robert Keil: 00:23:04

similar is going on with BaaS, right?

Robert Keil: 00:23:06

3 years ago.

Robert Keil: 00:23:06

I have a nice PowerPoint here a hundred million dollars go and then,

Robert Keil: 00:23:11

crazy stuff

Tedd Huff: 00:23:11

I can't believe I missed that by the way.

Tedd Huff: 00:23:13

Like I can't believe I missed that, that era.

Tedd Huff: 00:23:15

I miss both of them now.

Robert Keil: 00:23:20

and, uh, but I think like the

Robert Keil: 00:23:23

Internet banking as a service of FinTech relationships are here to stay.

Robert Keil: 00:23:27

There's that, you know, toothpaste is out of the tube.

Robert Keil: 00:23:30

But now the real use cases are starting to emerge and just like there's many

Robert Keil: 00:23:34

players in the Internet days that.

Robert Keil: 00:23:36

Blue up early.

Robert Keil: 00:23:38

Now, the real use cases are coming out and And out how to do this right.

Robert Keil: 00:23:43

And,

Robert Keil: 00:23:44

as we've already seen, you mentioned some of the news.

Robert Keil: 00:23:46

Yeah, there's some victims now, right?

Robert Keil: 00:23:48

Sometimes it's fintech.

Robert Keil: 00:23:49

Sometimes it's banks that are exiting the space.

Robert Keil: 00:23:52

So that cleanup is going on and it will go on for a little bit longer.

Robert Keil: 00:23:56

I think we have not nearly seen the end of it.

Robert Keil: 00:23:58

But when it's all said and done, there will be a much healthier ecosystem,

Robert Keil: 00:24:03

and it's an ecosystem that will solve real world problems, not some of the

Robert Keil: 00:24:07

gimmicky products that are solutions looking for a problem, but real stuff.

Robert Keil: 00:24:12

And that's ultimately exciting, right?

Tedd Huff: 00:24:14

Well, and every, every story has, you know, that, that hurdle, that

Tedd Huff: 00:24:20

big piece that you have to get through.

Tedd Huff: 00:24:22

And, you know, we, we've talked about all the great things that, that FinWise

Tedd Huff: 00:24:25

is doing and the direction you're going and you're enabling the technology.

Tedd Huff: 00:24:28

But I'd really like to understand, you know, what are some of the challenges

Tedd Huff: 00:24:32

that you're facing as a sponsor bank?

Tedd Huff: 00:24:36

Hey, Ted Huff here.

Tedd Huff: 00:24:37

Ever thought about how you could streamline your application

Tedd Huff: 00:24:40

and underwriting process?

Tedd Huff: 00:24:42

Well, let me introduce you to UNDER.

Tedd Huff: 00:24:43

Why keep using the outdated methods of PDFs when you can

Tedd Huff: 00:24:48

digitize them effortlessly?

Tedd Huff: 00:24:50

All you gotta do is upload the PDF, send it out for digital signature, and

Tedd Huff: 00:24:54

voila, you're set for the digital age.

Tedd Huff: 00:24:56

Are you curious how to make that happen?

Tedd Huff: 00:24:59

Head over to under.

Tedd Huff: 00:25:00

io forward slash FTC and get started for free.

Tedd Huff: 00:25:04

It's really that simple.

Tedd Huff: 00:25:06

How are you guys turning those challenges into

Tedd Huff: 00:25:09

victories?

Robert Keil: 00:25:10

here's maybe fundamentally the biggest challenge, and I've

Robert Keil: 00:25:13

seen that not just at Finwise, but in my years in the industry,

Robert Keil: 00:25:16

I've sometimes said FinTechs, heavy on the tech, light the fin, right?

Robert Keil: 00:25:21

That's, uh, sometimes the, the big, big issue.

Robert Keil: 00:25:25

And when, when you really think it through.

Robert Keil: 00:25:27

The fintechs as technology companies have often goals that are directly

Robert Keil: 00:25:31

opposed to the goals of a bank.

Robert Keil: 00:25:34

A fintech is valued by the number of subscribers, number of customers.

Robert Keil: 00:25:38

So they want to drive those numbers up.

Robert Keil: 00:25:40

Some of them are stolen identities.

Robert Keil: 00:25:43

Who cares?

Robert Keil: 00:25:43

It's the subscriber, right?

Robert Keil: 00:25:44

It meets their mission.

Robert Keil: 00:25:46

The goal of the bank is totally different.

Robert Keil: 00:25:49

And, um, that philosophical difference is maybe the biggest challenge, right?

Robert Keil: 00:25:56

And somewhat related to that is.

Robert Keil: 00:25:58

Fintechs as technology companies tend to apply a lot of common sense, right?

Robert Keil: 00:26:02

Because they come from a world where one plus one equals one.

Robert Keil: 00:26:05

That's just makes sense.

Robert Keil: 00:26:07

You look at banking regulation, sometimes there is no common

Robert Keil: 00:26:11

sense, but it's still the law.

Robert Keil: 00:26:13

You have from some of the technology leaders statements like, well, you

Robert Keil: 00:26:16

know, if there are rules, go break them.

Robert Keil: 00:26:19

That's fine in the technology world,

Tedd Huff: 00:26:21

Move fast,

Robert Keil: 00:26:21

to

Tedd Huff: 00:26:22

move and break

Robert Keil: 00:26:23

you're in

Robert Keil: 00:26:23

trouble rule,

Sarah Howell: 00:26:24

Can't do it.

Robert Keil: 00:26:25

you're in trouble.

Robert Keil: 00:26:26

You cannot do it.

Robert Keil: 00:26:27

And so to get those philosophies aligned is ultimately, um, the biggest

Robert Keil: 00:26:33

challenge.

Sarah Howell: 00:26:34

And specifically regarding regulatory challenges and risk management,

Sarah Howell: 00:26:38

you talked about a couple of things earlier, um, KYC that you own end

Sarah Howell: 00:26:42

to end, AML checks that are 100%.

Sarah Howell: 00:26:45

Um, what are some of the other compliance and operational efficiencies that you guys

Sarah Howell: 00:26:50

have put in place that have really, um, increased the high standards of compliance

Robert Keil: 00:26:54

some of the things that we do, and to be honest, of our partners

Robert Keil: 00:26:58

don't love it, that's still what it is.

Robert Keil: 00:27:01

Um, you know, if they use some sort of model, And especially when it comes

Robert Keil: 00:27:06

to lending, find the deployment of AI.

Robert Keil: 00:27:10

Which in itself is fine, but that can get you into hot water it comes to

Robert Keil: 00:27:14

fair lending regularly So our partners have to regularly get their models

Robert Keil: 00:27:19

tested by knowledgeable third parties.

Robert Keil: 00:27:21

That's not cheap, but to make sure that you're not accidentally

Robert Keil: 00:27:25

violating lending rules.

Robert Keil: 00:27:28

stakes a table stakes.

Robert Keil: 00:27:30

even though we We have all these, you know, uh, site visits that I mentioned,

Robert Keil: 00:27:35

our partners have to get once a year from a knowledgeable party, a PSA

Robert Keil: 00:27:39

audit, a compliance audit, an IT audit.

Robert Keil: 00:27:42

So there's just constantly checking, checking, right?

Robert Keil: 00:27:45

We check, they, Fintech partners are the first line of defense, and

Robert Keil: 00:27:49

then there's an external look at it.

Robert Keil: 00:27:51

And if you keep doing that, if something's not right, you catch it when it's this

Robert Keil: 00:27:55

small, not when it's this big, right?

Robert Keil: 00:27:57

This is one of those things where you take technology where you can, but

Robert Keil: 00:28:01

then also use some of the, the human insights to keep the technology in check

Sarah Howell: 00:28:07

It's almost like you're sub, you really are sub delegated or

Sarah Howell: 00:28:10

deputized regulators for the FDIC and the Fed and for the OCC and

Sarah Howell: 00:28:14

those roles that you're playing.

Robert Keil: 00:28:16

It really is, you know, the, the, the panel was on early in the week.

Robert Keil: 00:28:19

It was, was the CEO of a Canadian bank that has somewhat of a similar model.

Robert Keil: 00:28:25

He has been doing it for a long time and he actually.

Robert Keil: 00:28:28

Called it providing regulation partners.

Robert Keil: 00:28:31

So, his, his

Tedd Huff: 00:28:32

that's an interesting way to

Tedd Huff: 00:28:33

put it.

Robert Keil: 00:28:34

um, and, and to some degree, uh, yeah, you could argue.

Robert Keil: 00:28:39

We're kind of the regulators of the fintechs it upon us

Robert Keil: 00:28:43

to make sure we do right way.

Sarah Howell: 00:28:44

could start charging the regulators with this type of a model.

Robert Keil: 00:28:48

No, just

Robert Keil: 00:28:49

no, no.

Robert Keil: 00:28:50

We work with them.

Robert Keil: 00:28:53

And

Sarah Howell: 00:28:54

Oh, I'm not going to be invited back to the show.

Tedd Huff: 00:28:59

Getting us all in trouble here, Sarah.

Sarah Howell: 00:29:00

I'm kidding.

Sarah Howell: 00:29:02

Um,

Tedd Huff: 00:29:03

one of the things that, um, you know.

Tedd Huff: 00:29:05

I, I hear you talk about all the regulators and regular, Um,

Tedd Huff: 00:29:09

regulation as a service, I think is what you called it, or the Canadian

Robert Keil: 00:29:13

well, that's what

Tedd Huff: 00:29:13

the Canadian banker called

Robert Keil: 00:29:15

Canadian

Tedd Huff: 00:29:16

Yeah.

Tedd Huff: 00:29:16

You know, looking at it from that perspective, there's, There's a lot of

Tedd Huff: 00:29:20

technology you mentioned that is in a lot of places that end up in the human hands

Tedd Huff: 00:29:24

with so many technology changes.

Tedd Huff: 00:29:27

And, you know, I'll throw out the, the wonderful buzzword of good old

Tedd Huff: 00:29:32

AI, whatever you want to put in what bucket you want to put that in.

Tedd Huff: 00:29:37

When you look at that, how are, how are you guys staying ahead?

Tedd Huff: 00:29:40

How are you guys staying innovative?

Tedd Huff: 00:29:43

And can you share how you're leveraging the technology to stay ahead?

Robert Keil: 00:29:48

it starts with the non technical part, which is in this business.

Robert Keil: 00:29:53

Compliance is at the core of it, right?

Robert Keil: 00:29:55

It has to be first.

Robert Keil: 00:29:56

So when you look at what is needed to demonstrate appropriate

Robert Keil: 00:30:00

compliance, then you can start looking at the various functions

Robert Keil: 00:30:03

and look at what can be automated, you know, at least at this point.

Robert Keil: 00:30:08

Once you identify those areas, you can look at, does it make

Robert Keil: 00:30:11

sense for us to build it?

Robert Keil: 00:30:13

Like we did with our LoanProcessing platform, you can look at, do we

Robert Keil: 00:30:17

have someone build it for us or do we deploy an existing solution?

Robert Keil: 00:30:21

based on cost and timing, you make the decision.

Robert Keil: 00:30:24

What makes the most sense?

Robert Keil: 00:30:27

Now, we're fortunately now living in a, in a time when.

Robert Keil: 00:30:33

You can keep your platforms more scalable right?

Robert Keil: 00:30:36

With, you know, and cloud and A.I.

Robert Keil: 00:30:40

And whatnot else,

Robert Keil: 00:30:41

which helps for the future.

Robert Keil: 00:30:42

We're not necessarily in the traditional bank or world where it's 1990s.

Robert Keil: 00:30:47

Technology was a ton of spaghetti code.

Robert Keil: 00:30:49

If you make a change here, 5 things break over there.

Robert Keil: 00:30:53

Everything is a little bit more modular and that in itself helps.

Robert Keil: 00:30:56

Right?

Robert Keil: 00:30:57

in our platform that we're standing up to a zero trust based platform was

Robert Keil: 00:31:02

a dual ledger where you constantly have your checks in the system, the

Robert Keil: 00:31:06

checks and balances where you can, um,

Robert Keil: 00:31:10

do things that make it easier and quicker to reconcile and

Robert Keil: 00:31:14

keep your finger tab and, um.

Robert Keil: 00:31:18

AI will be great.

Robert Keil: 00:31:19

You just have to make sure since actually the regulations pretty clear

Robert Keil: 00:31:23

on when you use a model when you use AI,

Robert Keil: 00:31:26

what requirements does it have to meet.

Robert Keil: 00:31:28

And so AI by itself is something that can really make a difference.

Robert Keil: 00:31:33

But I sometimes I'm a little bit of a wet blanket on AI because yeah.

Robert Keil: 00:31:40

What AI, in my opinion, does is

Robert Keil: 00:31:42

it's never going to be smarter than its creators, right?

Robert Keil: 00:31:46

It's just going to do what the creators do faster and quicker.

Robert Keil: 00:31:50

And so the quality of an AI really depends on the quality of the creator of the AI.

Robert Keil: 00:31:57

if there is a flaw in there, what an AI will do is it will magnify it, right?

Robert Keil: 00:32:01

So there's a certain risk there.

Robert Keil: 00:32:02

If something is not done right, then.

Robert Keil: 00:32:06

Things can really break, right?

Robert Keil: 00:32:07

And I remember as an example, not pertaining to banking,

Robert Keil: 00:32:11

but I remember there was some early test with some conversational AI where.

Robert Keil: 00:32:15

All of a sudden, after some questioning, the felt that the Holocaust was a

Robert Keil: 00:32:19

great you Just because you tricked it and it reflected incorrect thinking.

Robert Keil: 00:32:25

And those are the dangers where you really have to make sure when you deploy it,

Robert Keil: 00:32:30

you really got to make sure it's doing more of the right things and faster.

Robert Keil: 00:32:35

But not all of a sudden magnifying a mistake.

Tedd Huff: 00:32:38

When I look at AI being used in banking and payments,

Tedd Huff: 00:32:44

identifying abnormalities, the ability to To do the, the data crunching,

Tedd Huff: 00:32:52

the ability to do the identification of how things have changed.

Tedd Huff: 00:32:57

I think all of that is fantastic.

Tedd Huff: 00:32:59

But the one thing that, that we can't get even at a generative AI.

Tedd Huff: 00:33:04

what it lacks is the ability to do, uh, assessment of relevance

Tedd Huff: 00:33:11

and assessment of impact.

Tedd Huff: 00:33:13

Because all it's doing is looking just at the data and

Tedd Huff: 00:33:17

saying, what does the data say?

Tedd Huff: 00:33:19

Doesn't matter what.

Tedd Huff: 00:33:20

What the context was in a lot of cases, and that comes down also

Tedd Huff: 00:33:24

to what you were talking about.

Tedd Huff: 00:33:25

It's only as good as the creator, and we don't quite yet have enough control

Tedd Huff: 00:33:30

over the creation to give it that that.

Tedd Huff: 00:33:35

view of relevance.

Robert Keil: 00:33:38

Exactly.

Robert Keil: 00:33:38

That's exactly the point, right?

Robert Keil: 00:33:40

I mean, I talked a couple of times here recently to our CTO.

Robert Keil: 00:33:44

And when it comes to things like auto reconciliation of

Robert Keil: 00:33:47

everything going on, right?

Robert Keil: 00:33:48

His big point is before we can automate that

Robert Keil: 00:33:52

we have to understand how to do it by hand, right?

Robert Keil: 00:33:54

If you don't it by hand manually, then automate it.

Robert Keil: 00:33:59

that's when it comes down to like identifying

Robert Keil: 00:34:02

abnormalities and whatnot else.

Robert Keil: 00:34:04

You really got to make sure you identify the right ones.

Robert Keil: 00:34:07

Yeah, you can identify a bunch of irrelevant abnormalities, and then

Robert Keil: 00:34:10

you spend your time investigating those that are, you know, outliers

Robert Keil: 00:34:16

and don't necessarily right

Tedd Huff: 00:34:19

And I, and I, I jumped way ahead.

Tedd Huff: 00:34:22

Um, just because it was something that was in my head.

Tedd Huff: 00:34:25

Um, but you know, one of the things that you've, you've mentioned a

Tedd Huff: 00:34:27

couple of times that you guys have built some of your own technology,

Tedd Huff: 00:34:31

and that seems to be a theme in just about everybody that we've been

Tedd Huff: 00:34:33

talking to is that they built a piece of the technology where they feel

Tedd Huff: 00:34:37

that they have the expertise and the understanding, but they've outsourced

Tedd Huff: 00:34:41

other things and then they plugged in other pieces and just really, but Kept

Tedd Huff: 00:34:46

control over the inputs and the outputs.

Tedd Huff: 00:34:50

I'd really like to understand how these services and solutions.

Tedd Huff: 00:34:57

are going to drive lenders and fintechs forward.

Robert Keil: 00:35:04

As the LoanPro team knows, I'm a big fan of them, um, because it.

Robert Keil: 00:35:09

Allows for customization while still operating in a, in a safe environment.,

Robert Keil: 00:35:15

right, wrong and different.

Robert Keil: 00:35:16

A lot of the things that are pertaining they're to banking,

Sarah Howell: 00:35:20

Mm-Hmm.

Robert Keil: 00:35:21

still pretty outdated, right?

Robert Keil: 00:35:23

So, you know, it's not that long ago when I had to open somewhere a bank

Robert Keil: 00:35:27

account and I walked away an inch of papers were printed out, It's

Robert Keil: 00:35:35

like, that's still what you have.

Robert Keil: 00:35:37

And while we're nowhere near yet to have it all digital with

Robert Keil: 00:35:42

deploying technology, the way we do.

Robert Keil: 00:35:45

We can automate a lot more of that eliminate manual steps.

Robert Keil: 00:35:50

And in the end, that's that's what fintechs want.

Robert Keil: 00:35:53

Right?

Robert Keil: 00:35:53

I mean, with their technology, they're really good about.

Robert Keil: 00:35:57

Customizing solutions that that meet users needs,

Robert Keil: 00:36:01

doing things in a way that are more intuitive.

Robert Keil: 00:36:05

Right?

Robert Keil: 00:36:05

And if we're enabling them to do that by bringing the right technology to

Robert Keil: 00:36:10

them, then that's mission accomplished.

Robert Keil: 00:36:13

Right?

Robert Keil: 00:36:13

And that's where I think the synergy of the bank and

Robert Keil: 00:36:16

fintech ecosystem really lies.

Robert Keil: 00:36:19

Banks traditionally, I think it's fair to say.

Robert Keil: 00:36:21

Not good at marketing, right?

Robert Keil: 00:36:23

Not very good at innovation.

Robert Keil: 00:36:25

it's pretty shocking how, uh, with a few exceptions, you look at mobile

Robert Keil: 00:36:30

banking apps pretty darn clunky.

Robert Keil: 00:36:33

It's like you feel like you need to use an owner's manual just to figure out

Robert Keil: 00:36:37

some basic functions that you want to do.

Robert Keil: 00:36:39

Whereas you look at a lot of the fintech created apps intuitively, you know, a

Robert Keil: 00:36:43

child just look at this and it works

Robert Keil: 00:36:47

If we can enable the Fintech's to do what they do best by giving them at

Robert Keil: 00:36:51

least the back end, the plumbing, then I think the mission is accomplished.

Sarah Howell: 00:36:57

or if the bank or if the fintech

Sarah Howell: 00:36:58

gives the bank line of sight Direct line of sight into that system so that you

Sarah Howell: 00:37:03

can have a good understanding what's

Sarah Howell: 00:37:06

happening from a compliant perspective I think it's it takes everybody in

Sarah Howell: 00:37:09

the ecosystem working together to create good good compliance standards

Robert Keil: 00:37:14

at The same time, that's also the challenge that

Robert Keil: 00:37:16

some of the banks have, right?

Robert Keil: 00:37:18

I mean, most of the sponsor banks out there.

Robert Keil: 00:37:20

Or smaller and often don't have the technical expertise.

Robert Keil: 00:37:25

I mean, I feel really blessed to have

Robert Keil: 00:37:26

the team that we have, which was Richard Thiessen as our CTO that

Robert Keil: 00:37:31

can build stuff and be top modern.

Robert Keil: 00:37:34

I know from first hand experience, not every bank has that, right?

Robert Keil: 00:37:38

And, um, doesn't quite know how to get there, but ultimately.

Robert Keil: 00:37:41

They got to figure that out if they want to be survivors and this thing.

Tedd Huff: 00:38:48

you've mentioned a number of things about how you guys are doing things

Tedd Huff: 00:38:53

differently, how you're moving forward with technology, not just yours, but

Tedd Huff: 00:38:57

through partnerships that we've discussed like LoanPro and a handful of others,

Tedd Huff: 00:39:02

looking at Um, I'm going to ask You to pull out Your crystal ball, sit it

Tedd Huff: 00:39:08

down in the middle of the table and give us your perspective of what future

Tedd Huff: 00:39:14

trends and opportunities are on the horizon for sponsor banks like yourself

Tedd Huff: 00:39:20

and the fintechs when collaborating together in a harmonious manner,

Robert Keil: 00:39:27

So, yeah, my crystal ball, um, that

Robert Keil: 00:39:31

that changes every couple of months these days right?

Robert Keil: 00:39:33

Uh, based on

Robert Keil: 00:39:34

how fast things are changing, but here's where I think.

Robert Keil: 00:39:39

It's headed, we'll see a lot less collaboration between

Robert Keil: 00:39:43

banks and fintechs on anything pertaining to consumer programs.

Robert Keil: 00:39:48

Um, there's a number of reasons for that.

Robert Keil: 00:39:51

You know, a lot of it is the change in VC money, because I think it has become

Robert Keil: 00:39:57

very apparent that consumer programs.

Robert Keil: 00:40:00

A much harder to make profitable, lower volumes and, and, and often

Robert Keil: 00:40:05

whose pursuit are segments that are not necessarily a profitable banking customer.

Robert Keil: 00:40:10

Right?

Robert Keil: 00:40:10

And so sooner or later, that falls apart.

Robert Keil: 00:40:13

But I still see in the small business, mid sized business community, a very large

Robert Keil: 00:40:19

underserved market, you know, I've had some, some, some LLCs where I have some

Robert Keil: 00:40:25

rental properties and opening a, okay.

Robert Keil: 00:40:29

Business account was the bank for that.

Robert Keil: 00:40:31

It was shocking.

Robert Keil: 00:40:32

I mean, it's like 1990s.

Robert Keil: 00:40:34

There's like no tools and it was a pretty big bank that really helped

Robert Keil: 00:40:39

me make things easier for myself.

Robert Keil: 00:40:41

If you are a fortune 500 company, and you have one of the top 5 banks customize

Robert Keil: 00:40:46

some sort of, uh, corporate card program.

Robert Keil: 00:40:49

So, yeah, you're in good shape.

Robert Keil: 00:40:51

But if you're not fortune 500, it gets really hard to have a banking product that

Robert Keil: 00:40:57

makes your operational efficiency better

Robert Keil: 00:41:00

that's where it's underserved.

Robert Keil: 00:41:03

There's a lot of opportunity.

Robert Keil: 00:41:04

And, um, That's where, you know, some opportunities are there, but

Robert Keil: 00:41:10

then there's other opportunities that are not necessarily fitting

Robert Keil: 00:41:15

that fintech description, right?

Robert Keil: 00:41:18

Because right now, everyone thinks of fintech as a neobank of sorts, but

Robert Keil: 00:41:23

there is, um, a whole lot of other use cases where banking products.

Robert Keil: 00:41:30

Can make or enable a, a real business.

Robert Keil: 00:41:34

So let me give you an example.

Robert Keil: 00:41:37

You know, there's some of the food pickup and grocery pickup, uh,

Robert Keil: 00:41:43

services out there that at 1 point, when they started out had a problem.

Robert Keil: 00:41:48

And that was when they had the driver that was supposed to pick up something, right?

Robert Keil: 00:41:52

Let's say it was a food.

Robert Keil: 00:41:55

They got hungry and said, you know what?

Robert Keil: 00:41:56

Throw in an order of wings for myself.

Robert Keil: 00:41:58

Now you had an accounting nightmare, right?

Robert Keil: 00:42:00

It's like, how do I take the personal expense out?

Robert Keil: 00:42:03

But then also, how do you prevent the situation that someone shows

Robert Keil: 00:42:06

up at the wrong restaurant and then tries to pick up the wrong order?

Robert Keil: 00:42:09

solutions have been created there.

Robert Keil: 00:42:12

Where, you know, you give the drivers a prepaid card, corporate card, but

Robert Keil: 00:42:17

it's inactive until they are at the place with the right GPS coordinates.

Robert Keil: 00:42:22

And then you fund it in real time down to the penny so

Robert Keil: 00:42:26

that they cannot add anything.

Robert Keil: 00:42:27

And then, ideally, on the back end, you automatically integrate it into the bank

Robert Keil: 00:42:32

system, so it feeds GL or whatever else

Sarah Howell: 00:42:35

Perfect

Robert Keil: 00:42:36

Right.

Robert Keil: 00:42:37

food delivery or grocery delivery company might not view itself as a fintech,

Robert Keil: 00:42:42

but they need these products by someone and then these banking

Robert Keil: 00:42:46

products and able to real business.

Robert Keil: 00:42:48

Right.

Robert Keil: 00:42:49

They're not in the business of making interchange.

Robert Keil: 00:42:51

They're in the business of picking up stuff and delivering it.

Robert Keil: 00:42:55

And I think we've just scratched the surface as to what all is possible when

Robert Keil: 00:42:59

you embed banking products in that B2B B2B2C setting And, um, the use cases

Robert Keil: 00:43:07

that keep emerging are just fascinating.

Robert Keil: 00:43:10

I mean, even you take the healthcare sector, it is amazing how antiquated money

Robert Keil: 00:43:16

moves in the healthcare industry, right?

Robert Keil: 00:43:18

And you occasionally see someone that.

Robert Keil: 00:43:20

Knows the space and takes technology and understands if we bundle in some banking

Robert Keil: 00:43:25

services, we really That's headaches.

Robert Keil: 00:43:28

That's it's ultimately going to be heading Now, there is still a few use cases,

Robert Keil: 00:43:34

in my opinion, in the consumer world, where the right combination of bank and

Robert Keil: 00:43:38

fintech will solve real world problems.

Robert Keil: 00:43:41

But in a profitable way, going to give all of those away I've got to keep of

Robert Keil: 00:43:46

ourselves stuff for sauce ourselves.

Robert Keil: 00:43:49

But, um, they're still there.

Robert Keil: 00:43:51

You just got to be more more selective

Sarah Howell: 00:43:53

I'm hearing you say it's headed to B2B, which I 100 percent agree.

Sarah Howell: 00:43:56

Um, and you know, eliminating first party, party fraud scenarios, which

Sarah Howell: 00:44:01

is like the delivery driver experience that you talked about, but it really is

Sarah Howell: 00:44:04

safeguarding those B2B embedded financial flows that we could really focus on too.

Sarah Howell: 00:44:11

And I think just even having As you have ERP systems that are moving down

Sarah Howell: 00:44:15

market to become like operating systems for specific business verticals, like

Sarah Howell: 00:44:20

a veterinary clinic operating system or a chiropractic clinic operating system.

Sarah Howell: 00:44:25

There's so many opportunities to embed financial products

Sarah Howell: 00:44:27

into those types of systems.

Robert Keil: 00:44:29

But even if you take, um, you know, it's a little bit the other

Robert Keil: 00:44:32

side of the world of payments, but when you look at a provider like toast,

Robert Keil: 00:44:36

they initially created a point of sale system specific to restaurants.

Robert Keil: 00:44:40

And then all of a sudden that became your order management system and the

Robert Keil: 00:44:43

online ordering and whatnot else.

Robert Keil: 00:44:46

And they just focused on that segment and then did more than just moving money and

Robert Keil: 00:44:51

created a very profitable, good business.

Robert Keil: 00:44:53

Right.

Robert Keil: 00:44:54

um,

Tedd Huff: 00:44:54

which is.

Tedd Huff: 00:44:55

very similar to mind body.

Tedd Huff: 00:44:56

Mind body did the exact same thing with the self wellness, Arena as well.

Sarah Howell: 00:45:01

it's horizontal integration for these SAS technology

Sarah Howell: 00:45:05

companies that focus on a specific

Robert Keil: 00:45:08

Exactly.

Sarah Howell: 00:45:09

but as they go to those different horizontals, as they scale,

Sarah Howell: 00:45:12

like having a bank partner that helps them be like, okay, that's an embedded flow.

Sarah Howell: 00:45:17

That's an embedded flow.

Sarah Howell: 00:45:18

We can automate that.

Sarah Howell: 00:45:19

Um, it really, I think that just creates such value from a sponsor

Sarah Howell: 00:45:23

bank perspective to a growing fintech.

Robert Keil: 00:45:25

Probably 6 months or a year from now, the crystal ball might

Robert Keil: 00:45:29

show something different what ultimately to happen is like we said, right?

Robert Keil: 00:45:34

The dust is going to settle the real use cases for.

Robert Keil: 00:45:38

What we call days, banking as a service will emerge and it will

Robert Keil: 00:45:42

solve real world problems because the technology will be available.

Robert Keil: 00:45:46

The understanding is there.

Robert Keil: 00:45:48

People learn from the mistakes that have been made.

Robert Keil: 00:45:51

And that's where the real excitement comes in.

Robert Keil: 00:45:54

Right

Tedd Huff: 00:45:54

Well, that is a great statement to end today's episode

Tedd Huff: 00:46:00

of Accrued, a Fintech Confidential series presented by LoanPro and

Tedd Huff: 00:46:06

Robert as always, man, I always love the conversations with you and

Tedd Huff: 00:46:10

I'm so happy to have had you on.

Tedd Huff: 00:46:12

So thank you for taking time out of your busy day.

Robert Keil: 00:46:15

Thanks for having me.

Robert Keil: 00:46:16

It was fun.

Robert Keil: 00:46:17

flow.

Robert Keil: 00:46:18

And I'm sure we'll discussions as time goes on.

Tedd Huff: 00:46:22

If you haven't already subscribed to the podcast, YouTube

Tedd Huff: 00:46:26

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Tedd Huff: 00:46:30

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Tedd Huff: 00:46:33

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Tedd Huff: 00:46:36

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Tedd Huff: 00:46:47

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

Tedd Huff: 00:46:51

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Tedd Huff: 00:46:55

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