Tedd Huff - Host: 00:01:22

Derek welcome to the show.

Tedd Huff - Host: 00:01:24

You are the first guest whose company is focused on helping the

Tedd Huff - Host: 00:01:27

financial institutions be successful.

Tedd Huff - Host: 00:01:30

And

Tedd Huff - Host: 00:01:30

I'm excited to learn more about your FinTech journey and how it

Tedd Huff - Host: 00:01:34

led you to join AutoBooks in 2018.

Derik Sutton - AutoBooks:

: 00:01:39

Thanks for having me, Tedd.

Derik Sutton - AutoBooks:

: 00:01:40

Yeah, really, really happy to be here.

Derik Sutton - AutoBooks:

: 00:01:42

And at AutoBooks, we love talking about small business banking and

Derik Sutton - AutoBooks:

: 00:01:46

most importantly, like how we.

Derik Sutton - AutoBooks:

: 00:01:48

Small businesses get paid and financial institutions stay

Derik Sutton - AutoBooks:

: 00:01:51

ahead of the competition.

Derik Sutton - AutoBooks:

: 00:01:52

So let's dive in.

Tedd Huff - Host: 00:01:54

So I noticed that you spent some time at Banno and Wade.

Tedd Huff - Host: 00:01:57

Arnold was one of our first guests here on FinTech confidential, but

Tedd Huff - Host: 00:02:01

wait, I'm, I'm skipping way ahead.

Tedd Huff - Host: 00:02:03

So I'm guessing you fell into FinTech, like most of my guests.

Derik Sutton - AutoBooks: 00:02:11

I actually was recruited by a

Derik Sutton - AutoBooks: 00:02:14

family friend right outta college.

Derik Sutton - AutoBooks: 00:02:16

And so I was going to college.

Derik Sutton - AutoBooks: 00:02:18

I played soccer and was pretty dead set on being a college soccer coach.

Derik Sutton - AutoBooks: 00:02:23

And I got asked to be an internship for a community bank,

Derik Sutton - AutoBooks: 00:02:28

data processing company, Tedd.

Derik Sutton - AutoBooks: 00:02:29

And if you don't know what that means, I didn't either for the

Derik Sutton - AutoBooks: 00:02:32

first two years I was there and was a, was it literally an intern?

Derik Sutton - AutoBooks: 00:02:37

Did everything from helping.

Derik Sutton - AutoBooks: 00:02:38

Banks move off of serial connected environments to network connected

Derik Sutton - AutoBooks: 00:02:42

environments, move off of dumb terminals to, network connected PCs that had a

Derik Sutton - AutoBooks: 00:02:49

new gooey interface and helped process items in the data center, run updates

Derik Sutton - AutoBooks: 00:02:56

on a Unix file processing system.

Derik Sutton - AutoBooks: 00:02:59

And you.

Derik Sutton - AutoBooks: 00:03:00

Just continued to stay there and just ended up being in financial services.

Derik Sutton - AutoBooks: 00:03:06

And then along the way got really interested in digital banking and helped

Derik Sutton - AutoBooks: 00:03:11

a company called CSI build and launched their first digital banking platform.

Derik Sutton - AutoBooks: 00:03:16

From there I met Wade, Arnold and Wade was running Banano and building

Derik Sutton - AutoBooks: 00:03:21

really like a next generation digital platform for financial

Derik Sutton - AutoBooks: 00:03:25

institutions was had the pleasure of being part of that team for a while.

Derik Sutton - AutoBooks: 00:03:29

Was acquired into Jack Henry, stayed at Jack Henry for a while, had a great

Derik Sutton - AutoBooks: 00:03:33

time there and then ended up starting my own product and design agency

Derik Sutton - AutoBooks: 00:03:37

that eventually led me to AutoBooks.

Derik Sutton - AutoBooks: 00:03:39

So kind of all long and winding tale, but that's, how I got into it.

Tedd Huff - Host: 00:03:43

So with your career and experience your career

Tedd Huff - Host: 00:03:47

and product and experience, what have you learned the most?

Tedd Huff - Host: 00:03:52

The relationship between financial institutions and user experience

Tedd Huff - Host: 00:03:58

that has surprised you the most.

Derik Sutton - AutoBooks: 00:04:00

I actually really, really love to talk about this.

Derik Sutton - AutoBooks: 00:04:02

So here's the, crux of it.

Derik Sutton - AutoBooks: 00:04:04

So what I love about product and experience, and now I've actually evolved

Derik Sutton - AutoBooks: 00:04:08

into marketing and see it as, kind of one and the same in many ways, but here's,

Derik Sutton - AutoBooks: 00:04:13

what's happened in banking financial institutions and really the technology

Derik Sutton - AutoBooks: 00:04:18

companies that, that power them like the, core companies that you hear about in

Derik Sutton - AutoBooks: 00:04:22

market they got their dominance because they had this geographic advantage.

Derik Sutton - AutoBooks: 00:04:28

And the geographic advantage was they built really great service and experiences

Derik Sutton - AutoBooks: 00:04:33

around people, walking into physical locations, having an interaction with

Derik Sutton - AutoBooks: 00:04:38

people that really cared about the progress they were trying to make, had

Derik Sutton - AutoBooks: 00:04:43

empathy and concern for their financial wellbeing, and generally wanted to

Derik Sutton - AutoBooks: 00:04:47

see the best for their community.

Derik Sutton - AutoBooks: 00:04:49

They wanted their communities to thrive and therefore the people

Derik Sutton - AutoBooks: 00:04:52

within those communities, they have a vested interest in them thriving.

Derik Sutton - AutoBooks: 00:04:55

What's happened over time is that has not left really community

Derik Sutton - AutoBooks: 00:05:00

mid-market regional banking.

Derik Sutton - AutoBooks: 00:05:02

But what's happened is, we've built out the digital banking channels

Derik Sutton - AutoBooks: 00:05:05

and those have started to mature.

Derik Sutton - AutoBooks: 00:05:07

We've, as an industry really placed an emphasis on having

Derik Sutton - AutoBooks: 00:05:12

customers interact through digital.

Derik Sutton - AutoBooks: 00:05:14

And it's not just that we wanna have them interact through digital.

Derik Sutton - AutoBooks: 00:05:16

Customers, want to interact through digital.

Derik Sutton - AutoBooks: 00:05:19

, but what happens is, is when customers basically just focus on leveraging

Derik Sutton - AutoBooks: 00:05:23

digital to get access to information, that removes the physical connection

Derik Sutton - AutoBooks: 00:05:28

between the banker and that customer.

Derik Sutton - AutoBooks: 00:05:31

And what happens in, the loss of that physical interaction is the

Derik Sutton - AutoBooks: 00:05:34

loss of connectivity to the market connectivity, to the customer.

Derik Sutton - AutoBooks: 00:05:38

You don't get to see the problem on their face.

Derik Sutton - AutoBooks: 00:05:41

or the delight, that they may have in your banking experience.

Derik Sutton - AutoBooks: 00:05:44

And so everything starts to become grayed out if you will.

Derik Sutton - AutoBooks: 00:05:46

what I believe to be most important and valuable in product today, for

Derik Sutton - AutoBooks: 00:05:51

banking is getting banks out of the boardroom and back on main street.

Derik Sutton - AutoBooks: 00:05:56

And what I mean by that, Tedd is even though you prioritize digital

Derik Sutton - AutoBooks: 00:05:59

banking, your team, if you're in a financial institution, or if you

Derik Sutton - AutoBooks: 00:06:03

work for a technology company that powers financial institutions.

Derik Sutton - AutoBooks: 00:06:06

You have to get back in front of the customer and understand at the end of that

Derik Sutton - AutoBooks: 00:06:10

mobile app, there's a person, you know, there's Tedd Huff on the other end of

Derik Sutton - AutoBooks: 00:06:13

that line, we've gotta go back out and, and talk to those customers, understand

Derik Sutton - AutoBooks: 00:06:17

their needs, their wants the progress.

Derik Sutton - AutoBooks: 00:06:19

They're trying to make, interview them and let that inform what

Derik Sutton - AutoBooks: 00:06:23

we build and do as an industry.

Tedd Huff - Host, Fintech Confidential:

: 00:06:25

WOW!

Tedd Huff - Host, Fintech Confidential:

: 00:06:26

That is, amazing.

Tedd Huff - Host, Fintech Confidential:

: 00:06:28

I'm a technology first type guy, which you probably guessed.

Tedd Huff - Host, Fintech Confidential:

: 00:06:31

I can't remember the last time I physically walked in.

Tedd Huff - Host, Fintech Confidential:

: 00:06:34

Actually I can, it was in 2019 chase bank forced me to go into the bank

Tedd Huff - Host, Fintech Confidential:

: 00:06:40

to change my address on my Account.

Tedd Huff - Host, Fintech Confidential:

: 00:06:42

Which I thought was just, it was crazy.

Tedd Huff - Host, Fintech Confidential:

: 00:06:44

but that's the, , that's the world that we live in, lived in period, past tense.

Tedd Huff - Host, Fintech Confidential:

: 00:06:51

I'm curious.

Tedd Huff - Host, Fintech Confidential:

: 00:06:52

what was the biggest reason that you decided to join AutoBooks,

Tedd Huff - Host, Fintech Confidential:

: 00:06:55

especially with, that perspective?

Tedd Huff - Host, Fintech Confidential:

: 00:06:57

What was it.

Tedd Huff - Host, Fintech Confidential:

: 00:06:59

That got you excited about joining AutoBooks?

Derik Sutton - AutoBooks: 00:07:01

I was, working at, Jack Henry CSI before

Derik Sutton - AutoBooks: 00:07:04

that being part of the Banno team.

Derik Sutton - AutoBooks: 00:07:05

I had experience working with financial institutions and helping to really

Derik Sutton - AutoBooks: 00:07:10

craft and build out their digital banking, roadmaps, and strategy.

Derik Sutton - AutoBooks: 00:07:13

one of the things that, quite frankly, if I'm just being honest was a little

Derik Sutton - AutoBooks: 00:07:17

uneasy for me at times was, how much of the responsibility there was on

Derik Sutton - AutoBooks: 00:07:22

our team to craft the strategy for, all these financial institutions.

Derik Sutton - AutoBooks: 00:07:26

And I love community banks and credit unions, and I, I

Derik Sutton - AutoBooks: 00:07:29

just love the whole market.

Derik Sutton - AutoBooks: 00:07:30

what I realized was I was getting really pretty good at, at building a story and

Derik Sutton - AutoBooks: 00:07:34

a strategy and a roadmap that appealed the financial institutions, but I

Derik Sutton - AutoBooks: 00:07:38

didn't necessarily know as much about their customers as I would've liked and

Derik Sutton - AutoBooks: 00:07:43

understand really what they were looking for and the progress they were trying to.

Derik Sutton - AutoBooks: 00:07:48

It was more like we were building Tedd.

Derik Sutton - AutoBooks: 00:07:50

this is kind of an indictment on the industry.

Derik Sutton - AutoBooks: 00:07:51

If it will, I was building towards, RFPs designed and constructed by

Derik Sutton - AutoBooks: 00:07:56

consultants more than anything else.

Derik Sutton - AutoBooks: 00:07:58

And so my whole shift out of that industry at that time was really around,

Derik Sutton - AutoBooks: 00:08:02

Hey, I, I kind of just wanna reset.

Derik Sutton - AutoBooks: 00:08:04

I'd like to go on my own for a minute and see what it may look

Derik Sutton - AutoBooks: 00:08:08

like, actually going out and practice what I preach, if you will.

Derik Sutton - AutoBooks: 00:08:11

so I started to consult with companies on user research, hearing from customers, and

Derik Sutton - AutoBooks: 00:08:17

then coming back with the recommendations about what a product should or should not

Derik Sutton - AutoBooks: 00:08:20

do based upon what the customer wanted.?

Derik Sutton - AutoBooks: 00:08:23

I joined the AutoBooks team as building my own agency and meeting.

Derik Sutton - AutoBooks: 00:08:26

The CEO, co-founder Steve, Robert.

Derik Sutton - AutoBooks: 00:08:28

We really just clicked on, that conversation.

Derik Sutton - AutoBooks: 00:08:31

And then we since added, team members that are even deeper into that than

Derik Sutton - AutoBooks: 00:08:35

I could ever care or imagine to be.

Derik Sutton - AutoBooks: 00:08:37

And we all just clicked on that.

Derik Sutton - AutoBooks: 00:08:39

rather than getting wrapped around the latest thing that we could build doesn't

Derik Sutton - AutoBooks: 00:08:43

mean that we should be building it.

Derik Sutton - AutoBooks: 00:08:45

we're really just trying to focus on,

Derik Sutton - AutoBooks: 00:08:47

Hey, we've got the, the core of a problem of small businesses have a pain.

Derik Sutton - AutoBooks: 00:08:52

And a small business's pain point is cash flow.

Derik Sutton - AutoBooks: 00:08:54

it's the hottest of the, of the stoves.

Derik Sutton - AutoBooks: 00:08:57

If they reach their hand out, right.

Derik Sutton - AutoBooks: 00:08:58

It's, they're gonna get burned on that real bad.

Derik Sutton - AutoBooks: 00:09:01

82% of small businesses fail because of cash flow problems.

Derik Sutton - AutoBooks: 00:09:05

if they have this pain point, as a team, most all of our energy and

Derik Sutton - AutoBooks: 00:09:08

effort is focused on helping them with that pain point first and foremost.

Derik Sutton - AutoBooks: 00:09:12

There's a lot of features and capabilities we could build in our current solution

Derik Sutton - AutoBooks: 00:09:16

that do things that bankers think our solution should do At a high level.

Derik Sutton - AutoBooks: 00:09:21

That doesn't mean that the end customer cares about that thing.

Derik Sutton - AutoBooks: 00:09:24

that's a delicate balancing act.

Derik Sutton - AutoBooks: 00:09:25

what you have to do in this industry, I believe it is grooming very, very focused

Derik Sutton - AutoBooks: 00:09:30

and intentional on talking to customers.

Derik Sutton - AutoBooks: 00:09:33

and letting them drive what we build and do, because that is the only way to

Derik Sutton - AutoBooks: 00:09:38

maintain relationships with customers.

Derik Sutton - AutoBooks: 00:09:40

Because if you don't do that, you're just in an arms race with the biggest

Derik Sutton - AutoBooks: 00:09:44

technology providers in the country.

Derik Sutton - AutoBooks: 00:09:45

And that's probably a losing battle.

Tedd Huff - Host: 00:09:48

What is the AutoBook's origin story.

Tedd Huff - Host: 00:09:51

And how has the vision evolved in order to achieve the mission of being

Tedd Huff - Host: 00:09:56

able to enable the small businesses through their financial institutions?

Derik Sutton - AutoBooks: 00:10:00

AutoBooks was founded by Steve Robert, Aaron

Derik Sutton - AutoBooks: 00:10:02

Schmid They were also co-founders of another business called bill highway.

Derik Sutton - AutoBooks: 00:10:07

our origin story kind of goes back there.

Derik Sutton - AutoBooks: 00:10:09

they were, partnered up and they were working with a, with

Derik Sutton - AutoBooks: 00:10:12

another entrepreneur at the time.

Derik Sutton - AutoBooks: 00:10:14

they digitized sorority dues.

Derik Sutton - AutoBooks: 00:10:15

where, young women were needing to pay their sorority dues and really their

Derik Sutton - AutoBooks: 00:10:19

parents were needing to pay them.

Derik Sutton - AutoBooks: 00:10:21

But the parents were having an issue.

Derik Sutton - AutoBooks: 00:10:23

I give a check or cash to my daughter.

Derik Sutton - AutoBooks: 00:10:26

It gets lost, it gets forgotten.

Derik Sutton - AutoBooks: 00:10:28

It gets, you know, delayed all of a sudden she's behind on her sorority dues.

Derik Sutton - AutoBooks: 00:10:32

And then she can't attend this event.

Derik Sutton - AutoBooks: 00:10:34

Or, you know, there, there's some kind of unintended consequences just

Derik Sutton - AutoBooks: 00:10:38

because, Hey, like we're all in college.

Derik Sutton - AutoBooks: 00:10:39

And getting checks and paying sorority dues, maybe worth the

Derik Sutton - AutoBooks: 00:10:42

top priority at the time right?

Derik Sutton - AutoBooks: 00:10:44

Can't imagine.

Derik Sutton - AutoBooks: 00:10:45

and so they basically just figured out a way to start to digitize how do you do

Derik Sutton - AutoBooks: 00:10:48

all of the, rollups of all these local chapters into a national organization

Derik Sutton - AutoBooks: 00:10:52

and adhere to all the accounting needs and, you know, the reconciliations

Derik Sutton - AutoBooks: 00:10:56

of the payments and the returns and, all the GL entries required into that

Derik Sutton - AutoBooks: 00:10:59

and, and tracking of, outstanding receivables, et cetera, et cetera.

Derik Sutton - AutoBooks: 00:11:03

they built a very successful business that wasn't, venture backed, but

Derik Sutton - AutoBooks: 00:11:06

they just bootstrapped their way into this business over, 15 years

Derik Sutton - AutoBooks: 00:11:09

eventually First Data ended up acquiring it, which then Fiserv bought that

Derik Sutton - AutoBooks: 00:11:13

and then it kind of got rolled out.

Derik Sutton - AutoBooks: 00:11:15

So through all that, they always had this, understanding that small

Derik Sutton - AutoBooks: 00:11:19

businesses and businesses themselves could also take advantage of this.

Derik Sutton - AutoBooks: 00:11:22

because they were a small, that became a medium to larger business of it, in

Derik Sutton - AutoBooks: 00:11:27

a customer of a financial institution.

Derik Sutton - AutoBooks: 00:11:29

And many of the tools that they would've liked to have had as part of

Derik Sutton - AutoBooks: 00:11:32

their banking experience didn't exist.

Derik Sutton - AutoBooks: 00:11:34

they felt like they had some of the components, quite frankly, of that,

Derik Sutton - AutoBooks: 00:11:37

could be integrated inside of a bank.

Derik Sutton - AutoBooks: 00:11:39

And so they started some high level conversations with large.

Derik Sutton - AutoBooks: 00:11:42

Financial institutions at the beginning.

Derik Sutton - AutoBooks: 00:11:44

this is a, a tough, tough, tough world to kind of crack into

Derik Sutton - AutoBooks: 00:11:47

those ended up falling apart.

Derik Sutton - AutoBooks: 00:11:49

But what came out of that was the research or the understanding of like,

Derik Sutton - AutoBooks: 00:11:53

okay, like there's actually these companies that power, most of the

Derik Sutton - AutoBooks: 00:11:56

financial institutions in the country.

Derik Sutton - AutoBooks: 00:11:58

What if we decided instead to kind of go to the biggest financial institutions

Derik Sutton - AutoBooks: 00:12:03

first, but what if we partner.

Derik Sutton - AutoBooks: 00:12:05

With these other organizations and became really great partners and

Derik Sutton - AutoBooks: 00:12:08

said, Hey, we wanna just integrate our app and capabilities inside

Derik Sutton - AutoBooks: 00:12:12

your visual banking platform so that you can make it available to your

Derik Sutton - AutoBooks: 00:12:15

thousands of banks and credit unions.

Derik Sutton - AutoBooks: 00:12:17

that maybe a better distribution model and a faster way to get

Derik Sutton - AutoBooks: 00:12:21

to the small business customer.

Derik Sutton - AutoBooks: 00:12:23

So that's where we're at today.

Derik Sutton - AutoBooks: 00:12:24

We, lead with this partner first mentality.

Derik Sutton - AutoBooks: 00:12:26

We just wanna be embedded and integrated inside of, digital banking

Derik Sutton - AutoBooks: 00:12:31

so that we can reach as many micro and small businesses as we possibly can.

Tedd Huff - Host: 00:12:35

AutoBooks has partnered last count that I saw was

Tedd Huff - Host: 00:12:38

nearly a hundred financial institutions like credit unions and banks.

Tedd Huff - Host: 00:12:43

What does that number look like today?

Tedd Huff - Host: 00:12:44

And any big names you can drop?

Derik Sutton - AutoBooks: 00:12:46

Yeah, Tedd, we gotta get you some

Derik Sutton - AutoBooks: 00:12:47

updated data information here.

Derik Sutton - AutoBooks: 00:12:48

So that was the last press release we did was, um, actually in, in sometime

Derik Sutton - AutoBooks: 00:12:52

in 2020, we had a hundred customers.

Derik Sutton - AutoBooks: 00:12:54

It took us, you know, kind of 2017 to 2020 to get to a hundred customers.

Derik Sutton - AutoBooks: 00:13:00

One of those customers was TD bank.

Derik Sutton - AutoBooks: 00:13:02

So top 10 bank in the country, we've got a, a great partnership with them.

Derik Sutton - AutoBooks: 00:13:05

Through those first 100, what we found was, you know, we can continue

Derik Sutton - AutoBooks: 00:13:09

to go bank to bank or credit union to credit union and, and onboard them.

Derik Sutton - AutoBooks: 00:13:13

Or we could go to their technology partners like Jack Henry AQ2 and

Derik Sutton - AutoBooks: 00:13:19

CSI and alchemy and FIS and others and say, Hey, why don't we do more

Derik Sutton - AutoBooks: 00:13:24

of a, mass enablement, strategy?

Derik Sutton - AutoBooks: 00:13:26

So what would it look like?

Derik Sutton - AutoBooks: 00:13:27

Jack Henry or FIS, if we said, Hey, here's two compelling features

Derik Sutton - AutoBooks: 00:13:32

that we believe every micro, small business owner could benefit from.

Derik Sutton - AutoBooks: 00:13:36

Digital invoicing and online payment acceptance.

Derik Sutton - AutoBooks: 00:13:39

And if we are able to break those two features out of our platform and embed

Derik Sutton - AutoBooks: 00:13:44

those into your product experience, would you all be willing to enable

Derik Sutton - AutoBooks: 00:13:48

those for all of your customers?

Derik Sutton - AutoBooks: 00:13:51

So that now invoicing online payment acceptance becomes as ubiquitous as online

Derik Sutton - AutoBooks: 00:13:56

bill pay or mobile remote deposit capture.

Derik Sutton - AutoBooks: 00:13:59

the results were, yes, we would be willing to do that.

Derik Sutton - AutoBooks: 00:14:01

So now at this time, close to 500 financial institutions live on the

Derik Sutton - AutoBooks: 00:14:05

application and at the end of 2022, close to a thousand financial institutions live.

Derik Sutton - AutoBooks: 00:14:10

we'll be able to 10 X, our, implementation by really thinking

Derik Sutton - AutoBooks: 00:14:14

about it in this way, Tedd.

Derik Sutton - AutoBooks: 00:14:16

this is the one thing I wanna get across to FinTech vendors and

Derik Sutton - AutoBooks: 00:14:18

financial institutions is we have this opportunity now in the industry.

Derik Sutton - AutoBooks: 00:14:22

Where the digital banking providers are making it, more and more simple to

Derik Sutton - AutoBooks: 00:14:27

connect to their digital platforms through SDKs and APIs, to be able to, make your

Derik Sutton - AutoBooks: 00:14:31

products and solutions available to a wide market of financial institutions.

Derik Sutton - AutoBooks: 00:14:35

They really need these, product capabilities.

Derik Sutton - AutoBooks: 00:14:37

So find ways to offer value, give value, to the partner, give value

Derik Sutton - AutoBooks: 00:14:42

to the financial institution.

Derik Sutton - AutoBooks: 00:14:44

And in return, get access to more customers that need your,

Derik Sutton - AutoBooks: 00:14:48

your products and services.

Derik Sutton - AutoBooks: 00:14:49

If you can find that opportunity and then have ways that the customer themselves can

Derik Sutton - AutoBooks: 00:14:54

upgrade, make progress on the application and you can kind of like build out

Derik Sutton - AutoBooks: 00:14:58

a, a long term monetization strategy.

Derik Sutton - AutoBooks: 00:15:01

We think that that's probably the default, um, method and model of distribution

Derik Sutton - AutoBooks: 00:15:05

moving forward in, in financial tehnology.

Tedd Huff - Host: 00:15:08

That has been a huge shift in the distribution model, it

Tedd Huff - Host: 00:15:11

started, in the small business software, where they used to have a separate

Tedd Huff - Host: 00:15:16

piece of hardware for each type of thing that they wanted to do, whether it was

Tedd Huff - Host: 00:15:20

they would have the, nice terminal thing on the counter for their gift cards.

Tedd Huff - Host: 00:15:23

And they'd have another one for their credit cards and they'd have

Tedd Huff - Host: 00:15:25

another one for their food stamps or E electronic benefits transactions.

Tedd Huff - Host: 00:15:30

And they'd have another one for God who knows what else.

Tedd Huff - Host: 00:15:33

And so they had all of those different things, which made it

Tedd Huff - Host: 00:15:35

very confusing, very hard for them to reconcile, and then comes in the

Tedd Huff - Host: 00:15:39

software provider that starts to say,

Tedd Huff - Host: 00:15:41

I'm gonna consolidate a lot of this for you in the process of

Tedd Huff - Host: 00:15:45

your day to day environment and giving you a better experience.

Tedd Huff - Host: 00:15:50

And then now you've started to see that move not from, that level to the

Tedd Huff - Host: 00:15:55

providers that, those software vendors.

Tedd Huff - Host: 00:15:57

Worked with now expanding that out.

Tedd Huff - Host: 00:16:00

Then you've got even that next layer that you just talked about, where

Tedd Huff - Host: 00:16:03

the core systems have started to realize that they can continue to grow

Tedd Huff - Host: 00:16:07

their businesses by exposing, this.

Tedd Huff - Host: 00:16:10

Interface, whether it be through APIs or SDKs they don't always have to be

Tedd Huff - Host: 00:16:15

the one to build the user interface.

Tedd Huff - Host: 00:16:17

I think they've started to realize that the exponential growth that

Tedd Huff - Host: 00:16:21

can happen just like what you just mentioned from a hundred to a thousand

Tedd Huff - Host: 00:16:24

financial institutions, by opening that up now, keeping some very tight

Tedd Huff - Host: 00:16:29

controls in place, but still opening it up in order for that to happen.

Derik Sutton - AutoBooks: 00:16:33

When everybody came to the physical location and

Derik Sutton - AutoBooks: 00:16:37

technology was built around that, Tedd.

Derik Sutton - AutoBooks: 00:16:39

the pace of innovation and the pace of change wasn't as

Derik Sutton - AutoBooks: 00:16:41

heightened as it is today.

Derik Sutton - AutoBooks: 00:16:43

It's just taken our industry some time to kinda like work through

Derik Sutton - AutoBooks: 00:16:45

that because, that's a change in how things were built and.

Derik Sutton - AutoBooks: 00:16:48

Fast forward now we're fully digital and other companies, other entrepreneurs

Derik Sutton - AutoBooks: 00:16:53

realized there were gaps in the market, for, small business owners, whether

Derik Sutton - AutoBooks: 00:16:57

it be a physical retail location or somebody that's just out in their

Derik Sutton - AutoBooks: 00:17:00

truck, doing service work all day.

Derik Sutton - AutoBooks: 00:17:02

so you start to see all these point solutions spring up and be built out

Derik Sutton - AutoBooks: 00:17:06

because, financial institutions couldn't possibly provide everything that,

Derik Sutton - AutoBooks: 00:17:10

those, , micro and small businesses need.

Derik Sutton - AutoBooks: 00:17:12

The downside to that is now these point solution providers are

Derik Sutton - AutoBooks: 00:17:16

building more and more capabilities in their app, and they're starting

Derik Sutton - AutoBooks: 00:17:19

to embed banking services.

Derik Sutton - AutoBooks: 00:17:22

you got this whole banking as a service movement.

Derik Sutton - AutoBooks: 00:17:24

Well, that's good for some of the banks that are providing, those services,

Derik Sutton - AutoBooks: 00:17:27

but it's not good if you're a community financial institution that doesn't

Derik Sutton - AutoBooks: 00:17:31

have a banking as a service strategy.

Derik Sutton - AutoBooks: 00:17:34

And now all of a sudden a business owner can not only get paid through Square,

Derik Sutton - AutoBooks: 00:17:39

but they can bank through Square.

Derik Sutton - AutoBooks: 00:17:40

They can get a loan through that application.

Derik Sutton - AutoBooks: 00:17:43

There's all these banking products that can directly compete against

Derik Sutton - AutoBooks: 00:17:46

you as a financial institution.

Derik Sutton - AutoBooks: 00:17:48

What we have to do as an industry is figure out, okay, do we care

Derik Sutton - AutoBooks: 00:17:53

about micro and small businesses?

Derik Sutton - AutoBooks: 00:17:55

You can ask yourself with this of any vertical inside

Derik Sutton - AutoBooks: 00:17:57

of your financial institution.

Derik Sutton - AutoBooks: 00:17:58

What solutions do we need to offer through our digital and

Derik Sutton - AutoBooks: 00:18:03

in person banking channels, what services do we need to have?

Derik Sutton - AutoBooks: 00:18:06

And then how are we gonna pursue making those products and services

Derik Sutton - AutoBooks: 00:18:10

available to our customers and members.

Derik Sutton - AutoBooks: 00:18:13

hopefully as an industry, we're starting to now say, we do care about micro and

Derik Sutton - AutoBooks: 00:18:18

small businesses because we care they're shifting away from getting paid in

Derik Sutton - AutoBooks: 00:18:22

person via cash and check into digital via digital invoicing, online payment,

Derik Sutton - AutoBooks: 00:18:28

acceptance, and at payment acceptance.

Derik Sutton - AutoBooks: 00:18:30

What are we gonna do about that?

Derik Sutton - AutoBooks: 00:18:31

thankfully now , there's a solution to market for thousands

Derik Sutton - AutoBooks: 00:18:34

of financial institutions.

Derik Sutton - AutoBooks: 00:18:35

It's called AutoBooks and reach out to us or one of your digital banking providers.

Derik Sutton - AutoBooks: 00:18:39

And we'll be happy , to talk to you.

Derik Sutton - AutoBooks: 00:18:41

So that's the shameless plug there, Tedd

Tedd Huff - Host: 00:18:44

no worries, man.

Tedd Huff - Host: 00:18:45

No worries.

Tedd Huff - Host: 00:18:46

You brought up a lot of great points and I wanna break this down into

Tedd Huff - Host: 00:18:51

probably three separate questions just, to really dive into the details.

Tedd Huff - Host: 00:18:56

Why should FIs look at bringing embedded invoicing and payment

Tedd Huff - Host: 00:19:00

acceptance into their product offering?

Tedd Huff - Host: 00:19:02

Especially if they think, Hey, there's already products out in the

Tedd Huff - Host: 00:19:05

marketplace that can solve for this.

Derik Sutton - AutoBooks: 00:19:07

Why financial institutions should

Derik Sutton - AutoBooks: 00:19:09

care about digital invoicing online payment acceptance, right?

Derik Sutton - AutoBooks: 00:19:12

Why should you care about, small micro businesses using Square

Derik Sutton - AutoBooks: 00:19:17

PayPal, Venmo, even QuickBooks online, to process their payments.

Derik Sutton - AutoBooks: 00:19:22

it's very simple.

Derik Sutton - AutoBooks: 00:19:23

You need to lock in their deposit, how they get paid.

Derik Sutton - AutoBooks: 00:19:26

You want the direct deposit relationship because you become their PFI or primary

Derik Sutton - AutoBooks: 00:19:30

financial institution you get first access to their deposit, you then can, upsell

Derik Sutton - AutoBooks: 00:19:36

them additional products and services.

Derik Sutton - AutoBooks: 00:19:37

Your retention rates go up, attrition rates go down, et cetera, et cetera.

Derik Sutton - AutoBooks: 00:19:41

What's the digital version or what's the version of that for

Derik Sutton - AutoBooks: 00:19:44

small and micro businesses.

Derik Sutton - AutoBooks: 00:19:46

So in consumer it's direct deposit it's automated, right?

Derik Sutton - AutoBooks: 00:19:49

For a smaller micro business that used to get paid in cash and check.

Derik Sutton - AutoBooks: 00:19:53

You got the direct deposit because you were the only place in their

Derik Sutton - AutoBooks: 00:19:56

community where they could take those cash and checks, deposit them and

Derik Sutton - AutoBooks: 00:20:00

get access to working capital, to pay bills or to run their business.

Derik Sutton - AutoBooks: 00:20:03

Now that the world's moved digital and it's moved online.

Derik Sutton - AutoBooks: 00:20:06

If, as a business owner, they can use a third party app to get paid.

Derik Sutton - AutoBooks: 00:20:11

That app now has first crack at that deposit.

Derik Sutton - AutoBooks: 00:20:15

They've actually locked in the direct deposit relationship.

Derik Sutton - AutoBooks: 00:20:18

So if you're a financial institution and you're saying, well, I

Derik Sutton - AutoBooks: 00:20:20

don't know that I need digital invoicing on my payment acceptance.

Derik Sutton - AutoBooks: 00:20:24

What I would say is, do you wanna lock in that direct deposit relationship

Derik Sutton - AutoBooks: 00:20:28

for a smaller micro business?

Derik Sutton - AutoBooks: 00:20:29

Do you want, when they get paid that money to flow directly back to your

Derik Sutton - AutoBooks: 00:20:34

organization and not a third party?

Derik Sutton - AutoBooks: 00:20:37

If the answer is yes, then you need the tools and capabilities

Derik Sutton - AutoBooks: 00:20:41

that enable or power a business owner to do just that with you.

Tedd Huff - Host: 00:20:48

How does AutoBooks enable these FIs to deliver the results

Tedd Huff - Host: 00:20:53

of locking them in to their customers?

Tedd Huff - Host: 00:20:56

Like what, what kinds of things do you guys offer to really help them

Tedd Huff - Host: 00:21:00

move that forward quickly and easily?

Derik Sutton - AutoBooks: 00:21:02

Yeah.

Derik Sutton - AutoBooks: 00:21:03

So what we offer is digital invoicing online and in-app payment acceptance,

Derik Sutton - AutoBooks: 00:21:08

and then an upgrade capability for the business owner to upgrade their payment

Derik Sutton - AutoBooks: 00:21:12

experience to accounting and cash flow.

Derik Sutton - AutoBooks: 00:21:14

Um, so here's the way it works.

Derik Sutton - AutoBooks: 00:21:16

Business owners have an immediate pain point.

Derik Sutton - AutoBooks: 00:21:18

They want to get paid.

Derik Sutton - AutoBooks: 00:21:19

They need cash flow support.

Derik Sutton - AutoBooks: 00:21:21

Um, the traditional paper based invoicing process takes anywhere from

Derik Sutton - AutoBooks: 00:21:26

27 to 41 days as a business owner.

Derik Sutton - AutoBooks: 00:21:29

Okay.

Derik Sutton - AutoBooks: 00:21:30

The median number of days of cash reserve a business has,

Derik Sutton - AutoBooks: 00:21:35

is anywhere from 18 to 27 days.

Derik Sutton - AutoBooks: 00:21:38

So if you're a small business owner and you have limited

Derik Sutton - AutoBooks: 00:21:42

or depleting cash reserves.

Derik Sutton - AutoBooks: 00:21:44

You need to get paid as often, and as quickly as you, as you possibly

Derik Sutton - AutoBooks: 00:21:49

can to build up that cash buffer.

Derik Sutton - AutoBooks: 00:21:51

If a physical process takes you over and extends you over your cash

Derik Sutton - AutoBooks: 00:21:56

reserve time, then you're constantly behind the, the cash flow curve.

Derik Sutton - AutoBooks: 00:22:00

And you're now you're starting to have to dip into credit cards or lines of credit.

Derik Sutton - AutoBooks: 00:22:04

You're paying interest on that , and you're behind quite frankly.

Derik Sutton - AutoBooks: 00:22:07

What we do is we help businesses simplify the way they get paid from their customer.

Derik Sutton - AutoBooks: 00:22:12

95% of our invoices are paid within five business days.

Derik Sutton - AutoBooks: 00:22:16

That's a net benefit to a customer.

Derik Sutton - AutoBooks: 00:22:19

A small business owner can quickly and easily enable that

Derik Sutton - AutoBooks: 00:22:22

feature inside digital banking.

Derik Sutton - AutoBooks: 00:22:24

Be approved in minutes and start sending digital invoices and accepting

Derik Sutton - AutoBooks: 00:22:27

online payments from their customers.

Derik Sutton - AutoBooks: 00:22:29

Within minutes.

Derik Sutton - AutoBooks: 00:22:30

Powerful, powerful capability.

Derik Sutton - AutoBooks: 00:22:32

We had literally, we get,, reports and we get stories from business owners.

Derik Sutton - AutoBooks: 00:22:36

Every day yesterday, we had a business owner reach out to their financial

Derik Sutton - AutoBooks: 00:22:39

institution, almost in a panic of like I've got a customer that no

Derik Sutton - AutoBooks: 00:22:42

longer wants to pay me through check.

Derik Sutton - AutoBooks: 00:22:44

I used to just get paid through check.

Derik Sutton - AutoBooks: 00:22:46

They said it has to be on a card and it's a $30,000 invoice.

Derik Sutton - AutoBooks: 00:22:49

Can you help me?

Derik Sutton - AutoBooks: 00:22:50

Okay.

Derik Sutton - AutoBooks: 00:22:51

That business owner tried to go to a third party app, but good luck getting a $30,000

Derik Sutton - AutoBooks: 00:22:56

limit in minutes from a third party app.

Derik Sutton - AutoBooks: 00:22:58

Their risk, appetite and algorithms are just different.

Derik Sutton - AutoBooks: 00:23:01

They have to be set up in, in a completely different way to justify that.

Derik Sutton - AutoBooks: 00:23:05

Here's the advantage of bank house we're directly embedded

Derik Sutton - AutoBooks: 00:23:08

in their digital banking.

Derik Sutton - AutoBooks: 00:23:09

They can, instantly turn it on for their customers.

Derik Sutton - AutoBooks: 00:23:12

Customer can instantly enroll.

Derik Sutton - AutoBooks: 00:23:14

We have all their back core data history and access to

Derik Sutton - AutoBooks: 00:23:18

their entire account portfolio.

Derik Sutton - AutoBooks: 00:23:20

Powerful story, Tedd.

Derik Sutton - AutoBooks: 00:23:21

So that business owner only had $6,000 in their checking account

Derik Sutton - AutoBooks: 00:23:26

that they wanted to get paid in.

Derik Sutton - AutoBooks: 00:23:28

That's a bit of a red flag.

Derik Sutton - AutoBooks: 00:23:29

Okay.

Derik Sutton - AutoBooks: 00:23:29

They've only got $6,000.

Derik Sutton - AutoBooks: 00:23:31

To cover a $30,000 invoice, but yet their total relationship with the financial

Derik Sutton - AutoBooks: 00:23:35

institution was well over $250,000.

Derik Sutton - AutoBooks: 00:23:38

Not something that you can do outside of the banking market very easily.

Derik Sutton - AutoBooks: 00:23:42

That's the advantage financial institutions have you have

Derik Sutton - AutoBooks: 00:23:44

the total relationship?

Derik Sutton - AutoBooks: 00:23:46

You just need the technology.

Derik Sutton - AutoBooks: 00:23:47

You just need the ability to say, Hey, business owner, I got you.

Derik Sutton - AutoBooks: 00:23:51

It's available in digital banking.

Derik Sutton - AutoBooks: 00:23:52

You can do it in minutes on your own, but, and here's the big, but

Derik Sutton - AutoBooks: 00:23:56

if you also need, our handholding.

Derik Sutton - AutoBooks: 00:23:58

Our support, you need us to request a higher limit.

Derik Sutton - AutoBooks: 00:24:02

We can help, right?

Derik Sutton - AutoBooks: 00:24:04

That's the big win for financial institutions.

Derik Sutton - AutoBooks: 00:24:05

That's a differentiating, here's the tech, but also here's this, kinda

Derik Sutton - AutoBooks: 00:24:09

loving, warm blanket of support surrounding the tech, that we're used

Derik Sutton - AutoBooks: 00:24:13

to, to providing that differentiates from that third party application.

Tedd Huff - Host: 00:24:20

How does third party app competition like Square

Tedd Huff - Host: 00:24:23

PayPal, Venmo, QuickBooks, et cetera, building essentially a headless

Tedd Huff - Host: 00:24:29

banking impact the banks and credit unions small business banking.

Derik Sutton - AutoBooks: 00:24:35

it's starting to have a, a big impact, quite frankly.

Derik Sutton - AutoBooks: 00:24:37

as business owners have had a need to get paid digitally and there

Derik Sutton - AutoBooks: 00:24:41

hasn't been a solution from financial institutions naturally they have to

Derik Sutton - AutoBooks: 00:24:44

turn to a solution to help them out.

Derik Sutton - AutoBooks: 00:24:46

They've adopted Square PayPal, even Venmo and QuickBooks is integrated

Derik Sutton - AutoBooks: 00:24:51

merchant processing as well to get paid digitally from their customers.

Derik Sutton - AutoBooks: 00:24:55

Here's the challenge for financial institutions while on the surface, all of

Derik Sutton - AutoBooks: 00:24:59

that started not from a sense of having a, this direct line of competition,

Derik Sutton - AutoBooks: 00:25:04

financial institutions thought about like, wow, they're just providing a service, but

Derik Sutton - AutoBooks: 00:25:07

the money comes right back to our account.

Derik Sutton - AutoBooks: 00:25:09

Over time, each of those providers has started to eat into the solutions

Derik Sutton - AutoBooks: 00:25:15

and the capabilities offered by a traditional financial institution.

Derik Sutton - AutoBooks: 00:25:18

So it started with payment acceptance.

Derik Sutton - AutoBooks: 00:25:20

And then it was quickly like, Hey, leave your money on our virtual wallet.

Derik Sutton - AutoBooks: 00:25:24

When you leave money on your virtual wallet, we're gonna give you access to a

Derik Sutton - AutoBooks: 00:25:27

business, realtime business debit card.

Derik Sutton - AutoBooks: 00:25:28

You can spend directly from the merchant wallet.

Derik Sutton - AutoBooks: 00:25:31

And then the more business you do with us, we're going to automate the

Derik Sutton - AutoBooks: 00:25:34

ability to give you access to lines of credit or working capital loans.

Derik Sutton - AutoBooks: 00:25:38

And so now there was a silent report put out at the end of 2019,

Derik Sutton - AutoBooks: 00:25:42

beginning of 2020, by Alenka Grealish that basically stated Square.

Derik Sutton - AutoBooks: 00:25:47

Is directly going after 80% of the revenue opportunity for a financial institution

Derik Sutton - AutoBooks: 00:25:52

in the small business customer base.

Derik Sutton - AutoBooks: 00:25:54

And that continues to grow higher.

Derik Sutton - AutoBooks: 00:25:56

So as these entities now become banks like Square, you have to look at

Derik Sutton - AutoBooks: 00:26:01

them as your financial institution as a direct competitor to you.

Derik Sutton - AutoBooks: 00:26:05

So here's the fun thing.

Derik Sutton - AutoBooks: 00:26:06

Tedd ask a financial institution, go look at all of your data,

Derik Sutton - AutoBooks: 00:26:11

any micro or small business.

Derik Sutton - AutoBooks: 00:26:14

Getting paid through PayPal Square, Venmo, QuickBooks, look

Derik Sutton - AutoBooks: 00:26:19

at the number of transactions.

Derik Sutton - AutoBooks: 00:26:20

Look at the number of customers.

Derik Sutton - AutoBooks: 00:26:22

Look at the dollar volume amount.

Derik Sutton - AutoBooks: 00:26:24

I promise you because we've done this for hundreds of financial institutions.

Derik Sutton - AutoBooks: 00:26:27

Now all of those totals will scare you.

Derik Sutton - AutoBooks: 00:26:30

It really should.

Derik Sutton - AutoBooks: 00:26:31

All of those totals, are much higher than your in-house merchant

Derik Sutton - AutoBooks: 00:26:35

processing solution, easily.

Derik Sutton - AutoBooks: 00:26:38

Here's the challenge.

Derik Sutton - AutoBooks: 00:26:39

Every one of your customers, that's now using one of those third

Derik Sutton - AutoBooks: 00:26:41

parties is a flight risk to your organization because once they get

Derik Sutton - AutoBooks: 00:26:47

paid through that organization, they are being retargeted and remarketed

Derik Sutton - AutoBooks: 00:26:51

and cross sold and upsold products and services that directly compete

Derik Sutton - AutoBooks: 00:26:55

against your financial institution.

Derik Sutton - AutoBooks: 00:26:57

You can see a decline in deposits coming back to your organization from active

Derik Sutton - AutoBooks: 00:27:02

customers using those third parties.

Derik Sutton - AutoBooks: 00:27:04

And you're also gonna start to see a declining number of cross sold

Derik Sutton - AutoBooks: 00:27:07

products because they're getting solutions powered by somebody else.

Tedd Huff - Host: 00:27:13

Yeah.

Tedd Huff - Host: 00:27:13

It's been really interesting to watch, these exterior companies,

Tedd Huff - Host: 00:27:19

like we mentioned, Square became a.

Tedd Huff - Host: 00:27:22

Financial institution, I think two, maybe three years ago, Stripe, which is the

Tedd Huff - Host: 00:27:28

API version of Square and they just, they just bought a bank, in California in order

Tedd Huff - Host: 00:27:35

to get their commercial banking license, so I see that continuing to happen and

Tedd Huff - Host: 00:27:41

I think that the financial institutions, if they're not doing what you just said.

Tedd Huff - Host: 00:27:47

By looking and seeing where the deposits are coming from.

Tedd Huff - Host: 00:27:50

They're definitely doing themselves a disservice.

Tedd Huff - Host: 00:27:53

Now this kind of leads me into, a slightly different topic, but

Tedd Huff - Host: 00:27:59

it really talks more about the digitization that has happened, with.

Tedd Huff - Host: 00:28:04

Such market volatility, the great resignation and the acceleration of

Tedd Huff - Host: 00:28:10

a remote workforce versus in person.

Tedd Huff - Host: 00:28:13

How are your clients and their customers using that as a way to succeed in

Tedd Huff - Host: 00:28:17

the marketplace versus using it as, something, that's holding them back?

Tedd Huff - Host: 00:28:21

Yeah.

Tedd Huff - Host: 00:28:21

A

Derik Sutton - AutoBooks: 00:28:21

couple of things about, the great resignation, and,

Derik Sutton - AutoBooks: 00:28:24

people starting their own businesses.

Derik Sutton - AutoBooks: 00:28:25

For one there's 30.7 million small businesses in the us economy, according

Derik Sutton - AutoBooks: 00:28:30

to the SBA, Something like 80% of those have less than four employees.

Derik Sutton - AutoBooks: 00:28:36

So the reality , is most small businesses in the country are just

Derik Sutton - AutoBooks: 00:28:39

like, you know, it's just you Tedd, or it's just me, sole proprietor.

Derik Sutton - AutoBooks: 00:28:43

In addition to that, there's , a growing number of people basically starting their

Derik Sutton - AutoBooks: 00:28:48

own independent, working opportunities.

Derik Sutton - AutoBooks: 00:28:50

So NBO partners tracks what they call the independent workforce and they

Derik Sutton - AutoBooks: 00:28:54

peg that at like close to 41 million.

Derik Sutton - AutoBooks: 00:28:57

Individuals.

Derik Sutton - AutoBooks: 00:28:58

And so what you're seeing is , there's this, just this growing market of

Derik Sutton - AutoBooks: 00:29:02

individual entrepreneurs that have a certain trait, , capabilities,

Derik Sutton - AutoBooks: 00:29:07

service that they can offer that people are willing to pay for.

Derik Sutton - AutoBooks: 00:29:11

And in some cases that could be full-time work.

Derik Sutton - AutoBooks: 00:29:13

In some cases, it could be a side Hustle, or part-time work.

Derik Sutton - AutoBooks: 00:29:17

So the barrier of entry's never been lower.

Derik Sutton - AutoBooks: 00:29:20

All of these entrants into this market need tools that satisfy their

Derik Sutton - AutoBooks: 00:29:24

needs as a smaller micro business.

Derik Sutton - AutoBooks: 00:29:26

They need to get paid.

Derik Sutton - AutoBooks: 00:29:27

They need to have, some kind of like digital marketing

Derik Sutton - AutoBooks: 00:29:29

capabilities potentially.

Derik Sutton - AutoBooks: 00:29:31

And then they need the ability to, account.

Derik Sutton - AutoBooks: 00:29:34

Their payments, they need some accounting, some many year tax

Derik Sutton - AutoBooks: 00:29:37

preps, some cash flow capabilities.

Derik Sutton - AutoBooks: 00:29:39

They need the right documentation to go get access to working

Derik Sutton - AutoBooks: 00:29:41

capital and lines of credit.

Derik Sutton - AutoBooks: 00:29:43

So as they wanna build their business,

Derik Sutton - AutoBooks: 00:29:45

although their ducks are in a row, if you will.

Derik Sutton - AutoBooks: 00:29:47

And so what our financial institutions are recognizing and seeing, there's this

Derik Sutton - AutoBooks: 00:29:50

new wave of the way, small businesses wanna bank with us, the tools they

Derik Sutton - AutoBooks: 00:29:55

need, and , how we can help them basically grow their business over.

Derik Sutton - AutoBooks: 00:29:59

And so what we do is we just offer, that path, right?

Derik Sutton - AutoBooks: 00:30:02

That on ramp of start digital, start with getting paid, and then we've got this

Derik Sutton - AutoBooks: 00:30:05

progression of features and capabilities.

Derik Sutton - AutoBooks: 00:30:08

We can take a, business owner through.

Derik Sutton - AutoBooks: 00:30:10

In addition to that, what you're finding is, is a lot of these micro

Derik Sutton - AutoBooks: 00:30:15

businesses are actually in consumer or personal banking products.

Derik Sutton - AutoBooks: 00:30:20

because things naturally started out of that.

Derik Sutton - AutoBooks: 00:30:22

So my sister-in-law is a perfect example of she started a photography business

Derik Sutton - AutoBooks: 00:30:27

and it started in evolved out of her personal checking account and it's

Derik Sutton - AutoBooks: 00:30:32

never left and she does, a healthy amount of revenue every year now.

Derik Sutton - AutoBooks: 00:30:36

It's all through personal checking, but she needs small business banking

Derik Sutton - AutoBooks: 00:30:41

tools, however, her financial institution, cuz she's not segmented

Derik Sutton - AutoBooks: 00:30:44

in a small business checking account.

Derik Sutton - AutoBooks: 00:30:46

Has really no way without looking at the data to know one that

Derik Sutton - AutoBooks: 00:30:50

she exists as a small business owner or two what to offer her.

Derik Sutton - AutoBooks: 00:30:54

So all of the marketing she gets is related to consumer banking,

Derik Sutton - AutoBooks: 00:30:59

but yet she's a small business.

Derik Sutton - AutoBooks: 00:31:01

That's one of the biggest challenges we have as an industry, we've been so tight

Derik Sutton - AutoBooks: 00:31:05

and rigid with account segmentation, that it makes it difficult to target

Derik Sutton - AutoBooks: 00:31:09

this audience segment with the right products, the right services at the.

Tedd Huff - Host: 00:31:14

wow.

Tedd Huff - Host: 00:31:15

I, hadn't even thought about, the segmentation that goes on I look at

Tedd Huff - Host: 00:31:21

it, How it's been underwritten for merchant services, how is it written

Tedd Huff - Host: 00:31:26

underwritten for ACH services, you know, and, and asking for those

Tedd Huff - Host: 00:31:30

services individually versus looking at the overarching relationship.

Tedd Huff - Host: 00:31:35

I was just working with a financial institution earlier this week, it's

Tedd Huff - Host: 00:31:38

really interesting to see how, when a financial institution segments like

Tedd Huff - Host: 00:31:43

that, how information doesn't get shared.

Tedd Huff - Host: 00:31:46

So you may have given all the same documentation to the, loan officer

Tedd Huff - Host: 00:31:52

that the, the business banker needs.

Tedd Huff - Host: 00:31:55

But because they don't talk to each other, you have to go through

Tedd Huff - Host: 00:31:59

the whole process all over again.

Tedd Huff - Host: 00:32:01

that can be very, very frustrating for a lot of people.

Tedd Huff - Host: 00:32:03

And I think that's also why some of these other entrants have really

Tedd Huff - Host: 00:32:06

started to, to pick up is because they store it all in one place.

Tedd Huff - Host: 00:32:10

Everybody accesses the same thing, the data is pulled from the same places.

Tedd Huff - Host: 00:32:14

And there isn't as much segmentation as what you were just mentioning.

Derik Sutton - AutoBooks: 00:32:17

Yeah, that's the industry perspective, right?

Derik Sutton - AutoBooks: 00:32:20

That was really well articulated.

Derik Sutton - AutoBooks: 00:32:21

So.

Derik Sutton - AutoBooks: 00:32:22

If we're bankers, if we're compliance people, we're underwriters,

Derik Sutton - AutoBooks: 00:32:25

we're technology providers.

Derik Sutton - AutoBooks: 00:32:26

We can talk all day long about mids, TIS lids, ACH, wire, treasury,

Derik Sutton - AutoBooks: 00:32:31

positive, pay all this stuff.

Derik Sutton - AutoBooks: 00:32:33

We can talk about all the risk we have and all the underwriting

Derik Sutton - AutoBooks: 00:32:36

and how difficult it is.

Derik Sutton - AutoBooks: 00:32:37

And Hey, we need to just put, we could put everybody in these nice, tiny

Derik Sutton - AutoBooks: 00:32:41

little segments, and we can force people to go into these segments

Derik Sutton - AutoBooks: 00:32:44

so we can make it easy on us.

Derik Sutton - AutoBooks: 00:32:46

And you know what?

Derik Sutton - AutoBooks: 00:32:46

The customer doesn't care about, how easy it is for us.

Derik Sutton - AutoBooks: 00:32:50

You're my sister-in-law, you're thinking about into your tax time

Derik Sutton - AutoBooks: 00:32:54

and you're realizing man, like my business is becoming, big enough that

Derik Sutton - AutoBooks: 00:32:58

I don't want, my personal expenses commingled my business expenses

Derik Sutton - AutoBooks: 00:33:03

in income and my bookkeeper and accountant is asking me to break these

Derik Sutton - AutoBooks: 00:33:07

things out so that I can maximize my deductions and really understand.

Derik Sutton - AutoBooks: 00:33:13

What I made this year is a business.

Derik Sutton - AutoBooks: 00:33:15

That's her problem, right?

Derik Sutton - AutoBooks: 00:33:16

So she's in this moment of need in the middle of the night, she clicks on

Derik Sutton - AutoBooks: 00:33:21

digital banking and it says, add account.

Derik Sutton - AutoBooks: 00:33:24

And she adds an account.

Derik Sutton - AutoBooks: 00:33:25

That's how her relationship into this account to start her business started.

Derik Sutton - AutoBooks: 00:33:29

Okay.

Derik Sutton - AutoBooks: 00:33:30

Didn't start from the perspective of, oh wow.

Derik Sutton - AutoBooks: 00:33:32

I need to go to my bank's website.

Derik Sutton - AutoBooks: 00:33:33

Look at this cheesecake factory menu of products and services.

Derik Sutton - AutoBooks: 00:33:37

Try to find what positive pay means.

Derik Sutton - AutoBooks: 00:33:39

Do my own Google research to understand.

Derik Sutton - AutoBooks: 00:33:41

Does that apply to me or not?

Derik Sutton - AutoBooks: 00:33:42

That's not the way she's thinking.

Derik Sutton - AutoBooks: 00:33:44

That's not the way in customers are thinking.

Derik Sutton - AutoBooks: 00:33:45

So that goes back to the whole thing of go out and talk to customers and

Derik Sutton - AutoBooks: 00:33:49

find out what are their pains and needs design, something that meets your

Derik Sutton - AutoBooks: 00:33:54

compliance, underwriting, and risk, but is simple for the end customer

Derik Sutton - AutoBooks: 00:33:59

to understand and make progress on.

Derik Sutton - AutoBooks: 00:34:02

We can't think about segmentation and nice tidy, verticals from the bank

Derik Sutton - AutoBooks: 00:34:07

perspective, that's, what's called supply side thinking we're only

Derik Sutton - AutoBooks: 00:34:10

thinking about what we can supply.

Derik Sutton - AutoBooks: 00:34:12

We're not thinking about the customer demand.

Derik Sutton - AutoBooks: 00:34:14

We gotta think about the customer demand.

Tedd Huff - Host: 00:34:16

It's funny you bring up the cheesecake factory menu.

Tedd Huff - Host: 00:34:19

just last week I was working on strategy with a company and,

Tedd Huff - Host: 00:34:23

we're really walking through it.

Tedd Huff - Host: 00:34:25

And I, I brought up, do we wanna offer a cheesecake factory menu or.

Tedd Huff - Host: 00:34:32

I'm west coast.

Tedd Huff - Host: 00:34:33

I've lived in the west on the west coast for almost 11 years

Tedd Huff - Host: 00:34:37

now, actually over 11 years.

Tedd Huff - Host: 00:34:39

And so I'm like, or do, and most of the guys are west coast too.

Tedd Huff - Host: 00:34:42

And I'm like, or do we wanna do In-N-Out where it's just a handful of items

Tedd Huff - Host: 00:34:46

and, you can make some tweaks, but you can't get chicken nuggets at In-N-Out.

Derik Sutton - AutoBooks: 00:34:53

I was like, he's going in and out burger for sure here.

Derik Sutton - AutoBooks: 00:34:55

That's, I think that's gonna be one of the hardest questions for

Derik Sutton - AutoBooks: 00:34:59

financial institutions to answer soon.

Derik Sutton - AutoBooks: 00:35:00

So do we, because we were in a community and we had to service all the needs

Derik Sutton - AutoBooks: 00:35:05

of the community, because customers were, coming to us and there we were

Derik Sutton - AutoBooks: 00:35:08

the only one of two or three games in.

Derik Sutton - AutoBooks: 00:35:11

We kind of had to offer everything, right?

Derik Sutton - AutoBooks: 00:35:12

Like we kind of had to be , the cheesecake factory, if you will.

Derik Sutton - AutoBooks: 00:35:15

I think that's changing, and so as digital progresses and people can go find

Derik Sutton - AutoBooks: 00:35:20

point solutions that quite frankly are better at solving individual problems.

Derik Sutton - AutoBooks: 00:35:23

I think financial institutions, especially community are going to

Derik Sutton - AutoBooks: 00:35:28

have to answer, ask themselves, do we really need to service this wide range

Derik Sutton - AutoBooks: 00:35:33

of customers or do we need to focus?

Derik Sutton - AutoBooks: 00:35:35

And so if we look at and we peel back our, financial.

Derik Sutton - AutoBooks: 00:35:39

where's 80% of our revenue coming from, that's where we gotta focus and the other

Derik Sutton - AutoBooks: 00:35:44

things need to go away, maybe it's a hard, default on offering some of those things.

Derik Sutton - AutoBooks: 00:35:49

And you send out the hard letters to your customers and saying you're deprecating

Derik Sutton - AutoBooks: 00:35:52

the service or the feature, in 30 days, or it's something a little bit softer,

Derik Sutton - AutoBooks: 00:35:56

but either way, I think those hard questions have to be asked and answered.

Derik Sutton - AutoBooks: 00:36:00

I've got a, I've got a bit of a suggestion.

Derik Sutton - AutoBooks: 00:36:03

I could give you Tedd, if you want it on.

Derik Sutton - AutoBooks: 00:36:04

Maybe how to address that.

Derik Sutton - AutoBooks: 00:36:06

Okay.

Tedd Huff - Host: 00:36:06

So you're, you're leading right into the next question.

Tedd Huff - Host: 00:36:09

if you could only give banks and credit unions, one piece of advice.

Tedd Huff - Host: 00:36:15

What would it be?

Derik Sutton - AutoBooks: 00:36:16

Okay.

Derik Sutton - AutoBooks: 00:36:16

Here's my piece of advice I've been, I've kind of been on this,

Derik Sutton - AutoBooks: 00:36:19

this soapbox for a while now.

Tedd Huff - Host: 00:36:21

so the, so, okay, well we'll let, just stay up there.

Tedd Huff - Host: 00:36:23

Yeah.

Derik Sutton - AutoBooks:

: 00:36:23

The soapbox is this.

Derik Sutton - AutoBooks:

: 00:36:24

If I'm in a financial institution and I'm running strategy or digital

Derik Sutton - AutoBooks:

: 00:36:29

strategy, or I'm, an operator, I'm asking my team to do the following.

Derik Sutton - AutoBooks:

: 00:36:34

I'm first.

Derik Sutton - AutoBooks:

: 00:36:35

I'm going to my board and I'm telling my board, I need

Derik Sutton - AutoBooks:

: 00:36:37

everybody to go open up a digital.

Derik Sutton - AutoBooks:

: 00:36:41

At our financial institution.

Derik Sutton - AutoBooks:

: 00:36:43

I do not want you to talk to anybody in our organization.

Derik Sutton - AutoBooks:

: 00:36:46

And I want you to just do the process on your own.

Derik Sutton - AutoBooks:

: 00:36:49

Okay.

Derik Sutton - AutoBooks:

: 00:36:49

Just go through it and just take some notes.

Derik Sutton - AutoBooks:

: 00:36:52

After you open up an account, I want you to activate bill pay or mobile

Derik Sutton - AutoBooks:

: 00:36:57

remote deposit capture or feature.

Derik Sutton - AutoBooks:

: 00:36:59

Download the app, start to use the product.

Derik Sutton - AutoBooks:

: 00:37:01

Just make some.

Derik Sutton - AutoBooks:

: 00:37:03

I then want to come back at our next board meeting.

Derik Sutton - AutoBooks:

: 00:37:06

I'd like everybody to talk about their experience.

Derik Sutton - AutoBooks:

: 00:37:08

Was it simple?

Derik Sutton - AutoBooks:

: 00:37:09

Was it easy?

Derik Sutton - AutoBooks:

: 00:37:09

Was it intuitive?

Derik Sutton - AutoBooks:

: 00:37:10

What did you think about it?

Derik Sutton - AutoBooks:

: 00:37:12

Okay, so Tedd, the reason I say to start with that is because that starts

Derik Sutton - AutoBooks:

: 00:37:16

to put empathy and it starts to seed strategy at the, board level for a

Derik Sutton - AutoBooks:

: 00:37:22

group of individuals that quite frankly, just have to, don't have to go through

Derik Sutton - AutoBooks:

: 00:37:25

the traditional customer process.

Derik Sutton - AutoBooks:

: 00:37:28

They got a different set of rules.

Derik Sutton - AutoBooks:

: 00:37:29

Give them empathy for what the common customer goes through.

Derik Sutton - AutoBooks:

: 00:37:31

then you could probably ask, your executive team, your strategic

Derik Sutton - AutoBooks:

: 00:37:34

team to do a bit of the same.

Derik Sutton - AutoBooks:

: 00:37:35

I would also challenge them to maybe go open up an account at chime or somewhere

Derik Sutton - AutoBooks:

: 00:37:39

else or Square, and then start to have some comparison between the two.

Derik Sutton - AutoBooks:

: 00:37:44

I would then say, after we do that, we're then going to go for the next

Derik Sutton - AutoBooks:

: 00:37:48

30 days and I'm gonna go talk to.

Derik Sutton - AutoBooks:

: 00:37:51

long interviews with at least 10 of our customers and just ask them

Derik Sutton - AutoBooks:

: 00:37:57

how they do their banking or what progress they're trying to make.

Derik Sutton - AutoBooks:

: 00:38:00

Don't be simple with the questions and say, Hey, how are we doing?

Derik Sutton - AutoBooks:

: 00:38:04

What do you think about our service?

Derik Sutton - AutoBooks:

: 00:38:05

What do you think about that?

Derik Sutton - AutoBooks:

: 00:38:06

No, go talk to them about how they run and manage their business.

Derik Sutton - AutoBooks:

: 00:38:09

What are they struggling with?

Derik Sutton - AutoBooks:

: 00:38:11

There's an old Japanese proverb.

Derik Sutton - AutoBooks:

: 00:38:12

You have to ask why five times to get to the real answer.

Derik Sutton - AutoBooks:

: 00:38:15

When somebody gives you an answer, ask why, when they give you that answer,

Derik Sutton - AutoBooks:

: 00:38:18

ask why, when they give you that answer, ask why and just keep peeling it back.

Derik Sutton - AutoBooks:

: 00:38:21

Come up with their actual pain.

Derik Sutton - AutoBooks:

: 00:38:24

The reality is most people are very nice and they're gonna give

Derik Sutton - AutoBooks:

: 00:38:26

you nice answers at the beginning.

Derik Sutton - AutoBooks:

: 00:38:27

If you've taken time to go meet with them or call them on the

Derik Sutton - AutoBooks:

: 00:38:29

phone, you've gotta peel back and you've gotta get to the honesty.

Derik Sutton - AutoBooks:

: 00:38:32

Okay.

Derik Sutton - AutoBooks:

: 00:38:33

So then have your team go and do deep interviews with at least 10 customers.

Derik Sutton - AutoBooks:

: 00:38:38

Record those, play those back, make those available to the.

Derik Sutton - AutoBooks:

: 00:38:41

Then use that information and say, all right, we're gonna go hire a

Derik Sutton - AutoBooks:

: 00:38:44

local, design firm or product team to come in and just prototype and

Derik Sutton - AutoBooks:

: 00:38:50

experience to solve that, pain.

Derik Sutton - AutoBooks:

: 00:38:52

Those 10 customers had a common pain point.

Derik Sutton - AutoBooks:

: 00:38:54

We're just gonna go prototype a solution to solve that low fidelity,

Derik Sutton - AutoBooks:

: 00:38:58

not, high fidelity, don't go spin, hundreds of thousands of dollars.

Derik Sutton - AutoBooks:

: 00:39:01

Just get, go prototype something out and then take that back to your

Derik Sutton - AutoBooks:

: 00:39:05

team and say, this is an example.

Derik Sutton - AutoBooks:

: 00:39:08

Of a way that we should be solving customer pain.

Derik Sutton - AutoBooks:

: 00:39:11

And then the next time your digital banking contract comes up for renewal

Derik Sutton - AutoBooks:

: 00:39:16

or mobile banking or frontline teller, whatever the thing is that

Derik Sutton - AutoBooks:

: 00:39:20

you prototyped and did, don't take in the traditional consultant, RFP that

Derik Sutton - AutoBooks:

: 00:39:26

has hundreds of features that nobody uses and use that as your benchmark

Derik Sutton - AutoBooks:

: 00:39:31

for what your solution should look.

Derik Sutton - AutoBooks:

: 00:39:33

use your customer's pain and the prototype and the solution you

Derik Sutton - AutoBooks:

: 00:39:37

designed around solving that as the guiding light to where you should go.

Derik Sutton - AutoBooks:

: 00:39:42

Because if you solve the most important things, the other

Derik Sutton - AutoBooks:

: 00:39:45

things don't matter as much, you cannot possibly build the future.

Derik Sutton - AutoBooks:

: 00:39:50

If you're focused on rebuilding the past and RFPs are simply a

Derik Sutton - AutoBooks:

: 00:39:54

documentary history of past features that aren't necessarily necessary

Derik Sutton - AutoBooks:

: 00:40:00

or needed by most customers today.

Tedd Huff - Host: 00:40:04

Wow.

Tedd Huff - Host: 00:40:05

That was some deep insight, man.

Tedd Huff - Host: 00:40:07

That, is fabulous.

Tedd Huff - Host: 00:40:09

We've talked about so much today . Is there anything that I missed

Tedd Huff - Host: 00:40:14

that you wanted to make sure the audience knows about AutoBooks or

Tedd Huff - Host: 00:40:18

heck even some of the financial institutions that may be listening.

Derik Sutton - AutoBooks: 00:40:21

I would just say at AutoBooks, we really do care

Derik Sutton - AutoBooks: 00:40:24

about, helping small and micro businesses make progress in their day to day life.

Derik Sutton - AutoBooks: 00:40:28

ultimately we would prefer they partner with their financial

Derik Sutton - AutoBooks: 00:40:32

institution to do that.

Derik Sutton - AutoBooks: 00:40:33

We wanna be, a provider, a piece of that.

Derik Sutton - AutoBooks: 00:40:36

we kinda have this, phrase that came to us from a mentor named Bob Mesta.

Derik Sutton - AutoBooks: 00:40:40

And Steve, our CEO actually talked about this recently.

Derik Sutton - AutoBooks: 00:40:42

We don't pretend that we're the full sandwich that the

Derik Sutton - AutoBooks: 00:40:45

business owner's going to eat.

Derik Sutton - AutoBooks: 00:40:46

We're just the mustard.

Derik Sutton - AutoBooks: 00:40:47

And we're perfectly content being the mustard inside of your financial

Derik Sutton - AutoBooks: 00:40:51

institution sandwich offering.

Derik Sutton - AutoBooks: 00:40:52

You guys have, you know, much more of the capabilities, the service and the

Derik Sutton - AutoBooks: 00:40:56

things that a business owner needs.

Derik Sutton - AutoBooks: 00:40:58

We just wanna augment and supplement that.

Derik Sutton - AutoBooks: 00:41:00

So it taste as good as possible.

Derik Sutton - AutoBooks: 00:41:02

We think that we've come up with a clever way.

Derik Sutton - AutoBooks: 00:41:05

To, make our app and services available to financial institutions, pretty simply.

Derik Sutton - AutoBooks: 00:41:09

you can go turn these things on, but there's one very, very

Derik Sutton - AutoBooks: 00:41:12

important thing that I like to stress to financial institutions.

Derik Sutton - AutoBooks: 00:41:15

It's not just about the tech, it's about the people, but it's also about

Derik Sutton - AutoBooks: 00:41:20

the marketing and you gotta make sure people understand you have the right

Derik Sutton - AutoBooks: 00:41:24

thing for them at the right time.

Derik Sutton - AutoBooks: 00:41:26

if you don't lean into marketing Facebook, Square QuickBooks, Venmo, PayPal.

Derik Sutton - AutoBooks: 00:41:32

They all are.

Derik Sutton - AutoBooks: 00:41:32

And when they market, they do a really good job about it.

Derik Sutton - AutoBooks: 00:41:35

And once they hook somebody, they reel 'em in.

Derik Sutton - AutoBooks: 00:41:37

it's okay to send some emails.

Derik Sutton - AutoBooks: 00:41:39

It's okay to post some social Mo posts.

Derik Sutton - AutoBooks: 00:41:42

It's okay.

Derik Sutton - AutoBooks: 00:41:42

To throw something up on YouTube, to talk to your customers.

Derik Sutton - AutoBooks: 00:41:45

So lean into that marketing, let 'em know you've got a solution for 'em and then let

Derik Sutton - AutoBooks: 00:41:49

your service and product solution shine.

Tedd Huff - Host: 00:41:54

What is the best way for the audience to reach out to you or

Tedd Huff - Host: 00:41:58

to the AutoBooks team to get started by learning more about what AutoBooks could,

Tedd Huff - Host: 00:42:03

offer them or, help them solve a problem?

Derik Sutton - AutoBooks: 00:42:05

Sure.

Derik Sutton - AutoBooks: 00:42:06

You can find me on Twitter @Deriksutton D E R I K S UT T O N.

Derik Sutton - AutoBooks: 00:42:11

same thing on LinkedIn, D E R I K S UTT O N a much more active on

Derik Sutton - AutoBooks: 00:42:15

LinkedIn, but most importantly, just go to www.AutoBooks.co it's.

Derik Sutton - AutoBooks: 00:42:20

Dot CO not dot com.

Derik Sutton - AutoBooks: 00:42:22

and you can, engage with us there.

Derik Sutton - AutoBooks: 00:42:24

you can also send us an email to letstalk@autobook.co as well.

Tedd Huff - Host: 00:42:30

Derek.

Tedd Huff - Host: 00:42:30

I really appreciate your time today.

Tedd Huff - Host: 00:42:32

I'm gonna put all these in the show notes and the description.

Tedd Huff - Host: 00:42:35

So everybody will have access to all these different links.

Tedd Huff - Host: 00:42:38

If you wanna get ahold of Derek, you wanna get ahold of somebody

Tedd Huff - Host: 00:42:40

at AutoBooks to really figure out what's gonna work for you.

Tedd Huff - Host: 00:42:43

We'll go ahead and have those links so you can go straight over there.

Tedd Huff - Host: 00:42:46

And again, Derek.

Tedd Huff - Host: 00:42:47

Thank you for being on man.

Tedd Huff - Host: 00:42:48

This is, this has been a fabulous conversation.

Tedd Huff - Host: 00:42:51

I have a feeling you and I probably could have done this for another couple hours.

Derik Sutton - AutoBooks: 00:42:55

Thanks, Tedd.

Derik Sutton - AutoBooks: 00:42:56

Great to great to be on and thanks for having me