Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Chana Schoenberger (00:01):
Hi, I'm Chana Schoenberger. I'm the Editor-in-Chief of American Banker, and I have with me here Dave Rogstad from Starion Bank in Bismarck, North Dakota, which is one of our Innovation of the Year winners. Welcome, by the way.
David Rogstad (00:15):
Thank you.
Chana Schoenberger (00:16):
Your team won in the category of embedded finance. So tell us a little bit about your project.
David Rogstad (00:22):
Well, thank you for the award and thank you for having us here and I appreciate that. Absolutely. So our award is banking as a services. We took a underserved underbanked community and we found a way to make banking work for them. We worked with a couple different corporate partners and they're able to, as gig workers, they're able to not only do their work through that app, they're also able to do their banking through the same app that they can get their jobs, their gig jobs from. So we were able to take that, give them full use of any banking service. So debit cards, ATM, they can do everything within their app right there. So
Chana Schoenberger (01:06):
Are they getting a checking account and does it bear interest?
David Rogstad (01:11):
It doesn't bear interest. There is rewards with it though. So there's debit rewards and that kind of thing with it.
Chana Schoenberger (01:18):
What is a debit reward?
David Rogstad (01:20):
When you swipe your card with the interchange, you get so much for different activities, much like a credit card rewards.
Chana Schoenberger (01:28):
I didn't realize you could do that with a debit card. That's brilliant. And can they also apply to get the more regular products with you, a savings account?
David Rogstad (01:39):
Not through that. So it is set up essentially as a separate bank within our bank. So they can't directly apply for us through us outside of the normal channel. So now that they are part of Starion, they can go to Starion and they can apply online for a savings account or a checking account or a loan or anything like that. But as it's right now, our initial steps, they cannot do any additional besides the debit account.
Chana Schoenberger (02:06):
What happens if they leave the company? You said it was DoorDash, right? So if they no longer work there, do they get to keep their account or it just goes away?
David Rogstad (02:15):
No, their account will remain with them. So they still have access to their account and they can still hold their funds there and do all that. So they have to be a part of it to sign up for the account initially, but they can always come back or they're not really, they're contract workers so they can work on and off. So they don't necessarily leave them. They may work once and then they may not work again for another seven months or six months or something.
Chana Schoenberger (02:44):
But the money's not stuck. It belongs to those people,
David Rogstad (02:46):
But it belongs to those people. Yep.
Chana Schoenberger (02:48):
Gotcha.
David Rogstad (02:48):
Okay.
Chana Schoenberger (02:49):
So that's a really interesting application of Baas. There's been a lot of sort of noise around Baas. And then with the new administration, it looks like some of the regulations may easing up a little bit. How did you get comfortable with the FinTech partners that you chose?
David Rogstad (03:05):
It was really just trying to determine the right partners, those that understood. We have a third party that helps with a lot of the compliance issues and making sure we have a full team on staff to take care of that on their side of things. So we have program managers that take care of that. We have a corporate sponsor that does the accounting side of everything, and we use some really big experts in that field. And that's really where we wanted to make sure that we had it. You talk about banking as a service and everybody's compliance regulation and all of that, and really trying to figure out that we're doing the right thing, we maintain doing the right thing. Nobody wants to face the regulators and them saying this isn't right. And nobody knows what the regulators want from day to day wholly, so, right.
Chana Schoenberger (03:57):
And they're not going to tell you.
David Rogstad (03:58):
They're not going to tell us until you do it wrong.
Chana Schoenberger (03:59):
Yeah. Yeah. It's like the game Operation. Remember that game? Yeah. If you hit the rail it goes, but otherwise you don't know that you're going wrong, otherwise you
David Rogstad (04:07):
Keep going until you hit that rail.
Chana Schoenberger (04:08):
Right. So we covered extensively the Synapse bankruptcy last year, and it was sort of a depth charge for the Baas industry. A lot of banks decided that they were going to get out of Baas after that, that it was just too scary for them. They couldn't get comfortable with it. How did you guys figure that your ledgering is good, your risk management is good on all this?
David Rogstad (04:32):
Well, when you talk about Synapse and that there decline in the dollars and everything like that, we manage our balance sheet a little bit differently so that we're not putting all of it.
Chana Schoenberger (04:43):
You actually know where the money is.
David Rogstad (04:43):
We know where the money is. Well, for one thing, we know what money is. That helps.
Chana Schoenberger (04:47):
That's good.
David Rogstad (04:47):
And we sell off some of it. So we're not all just deploying it. So we're managing, especially in the first couple years here, so we know what is that steady dollar amount that we have within and what's it going to look like going forward.
Chana Schoenberger (05:03):
Great, great. So what's next for you?
David Rogstad (05:07):
It's really looking at the product that we have, really looking at what we have, how can we make this better? There's additional opportunities when you work with FinTech companies such as this one here, they're always thinking about the next thing. They move like this and banks are move slow,
(05:25):
So we want to make sure that we're doing it right. They want to be onto the next thing already and they want to be onto the next thing and they're thinking. So it's really trying to be okay. What is the right way to do it and how can we do it when we're not going to get in trouble? And we can still make them happy because they want to be ahead of the game. And I think as a small community bank, we have that opportunity to work with them, to be able to be mobile. We can move things, we're swifter to action and larger banks are and do it the right way.
Chana Schoenberger (06:01):
Great. Great. Well thank you so much for coming in. I really appreciate it.
David Rogstad (06:04):
Well, thank you and I appreciate you, the American Banker and this award.
Chana Schoenberger (06:08):
And enjoy the conference this week.
David Rogstad (06:10):
Well, Florida's nice. So
Chana Schoenberger (06:12):
Florida is beautiful.
