Bank fintech partnerships: The fintech revolution will lift all boats

How to participate in the construction of a global, digital financial ecosystem.

Transcript:

Charles Potts (00:05):

All right, well, good afternoon everybody. How's everybody doing? No post lunch food comas. Everybody's got caffeine in them. Good. Well, thank you for being here. My name is Charles Potts. I'm the Executive Vice President and Chief Innovation Officer with Independent Community Bankers of America, and I have the pleasure of moderating this panel today, bank FinTech partnership track. Thank you for coming here. We're talking about the FinTech revolution. We'll lift off all boats. Joining me today. We're going to go from left to right real quickly. Warren Pattison, who is our Senior Leader, digital banking and strategy and innovation. He's got the longest title. All the things, Give it to Warren, he'll figure it out Alliant Credit Union. In the middle, Aly Yarris with Plaid, who's over their financial access area. And Jack Ingram, the CIO from WECU. Thank you all for joining me today. We're going to jump right in because I think one of the questions that we talked about and I think would be important for the audience is really kind of each of your perspectives on what you think the FinTech revolution is all about. And I'm going to start with you, Warren.

Warren Pattison (01:20):

What is the FinTech revolution all about? So I think for me in Alliant, and even in past lives for FinTech Revolution, it started off with competing and now it is working together. So where we've had a lot of success in looking at partners and FinTech partners is working together with them. So rises all boats for us. So what's good for Alliant and the partners that we choose, we make sure that it's a solid partnership and that's key.

Charles Potts (01:57):

And Jack, I'm going to jump over to you. When we talk about Wecu and we talk about the work that you guys have been doing, where did you start with this FinTech revolution? What were you trying to achieve and then how do you measure lifting all boats?

Jack Ingram (02:15):

Yeah, no, that's a great question. So for us, we had gone through a large core conversion online banking conversion, and the credit union had really taken it on the chin. The NPS dove down to 27. And so I sort of got hired to come in and help strategize and then clean things up. So we started on this journey around how we can sort of hit the reset button and really build a member friendly, frictionless, fast member experience. And when we think about FinTech partnership, at least in my mind and how it raises all boats or all boats rise, is it's really about ensuring members or customers have ease of access to funds and can engage with us as a trusted partner. I think the one challenge though, especially in the community banking space, is that investment can be difficult. And so choosing the appropriate FinTech partner is really, really critical.

Charles Potts (03:20):

Teeing it up for the FinTech partner

Jack Ingram (03:22):

That wasn't planned.

Charles Potts (03:24):

So obviously Plaid sits at a very important intersection in this revolution. From your seat, what does this look like and what should the audience be thinking about when we talk about this revolution?

Aly Yarris (03:45):

Yeah, I think to your point, it's really about being focused on what your customers, what your members are up to and what has become essential to how they think about their financial lives and likely how we all think about our financial lives as people in this room. I think the pandemic and the experience with Covid really accelerated digital adoption. And we're certainly not going back. It's just going to continue to increase over time. We've done data that shows that about 80% of consumers are engaged in digital finance and about 50% on a daily basis are engaging with some sort of financial tool. Plaid is really lucky to be kind of at the center of that. We support hundreds of millions of consumers access to the financial tools that they want and love. And of course those are the members and customers that all of your really important credit unions and community banks. I love the title of the session Lifting All Boats. I spend a lot of my time working with folks like yourself at regional community banks, credit unions, particularly on the connectivity side. So ensuring your members have access to utilize Venmo to pay a friend for dinner last night, or to download budgeting tools, et cetera. But there's lots of different ways you are able to partner with Plaid, but I think you all are really specifically positioned to have the best of both worlds to maintain that local in-person relationship, specialized relationship with your customers, while also utilizing digital tools to further your technical roadmap.

Charles Potts (05:26):

So Jack, Allie touched on a couple of very important themes there that I know are important to you guys and one of which is this notion of engagement and how do you really address this with your customers? And a key to that is trust. So how do you build trust into this digital evolution, this FinTech revolution?

Jack Ingram (05:55):

So for us, we're sort of at the heart of the conversation around trust. All of us in this room, realistically, that's just the nature of our business. So when we choose FinTech partners, that's always a central tenet of the conversation and the discovery process around how we're going to partner in the space and on our journey. I think we're going to be at 19 partners by the end of the year. So we've done a lot of this, but each of those partnerships has been really purposeful and really well vetted to ensure that we don't sort of broach or breach that trust with our members.

Charles Potts (06:32):

And Warren, from a kind of overall strategy, when you think about again, engagement, adoption, usage, trust, what are some of the things that are important to you to make sure you guys address that resonates with your customers that in trying to make sure this is a successful journey?

Warren Pattison (06:54):

Yeah, good question. So I think one on the engagement side and on the trust side as well is when we, and to take from Jack a little bit, but we're looking at the same thing and that's when we do vet a partner to make sure that all of the checks and balances are in place so that we know that in trusting that partner, that it's a partner that our members will be able to trust. And if that comes down to their information or mitigating security risk and ensuring that from a compliance standpoint or regulatory standpoint that are good friends at the CFPB and NCUA, like that partner as well.

Charles Potts (07:37):

All those other acronyms, which again brings up a very important part of this conversation that is partnerships. So when you start looking at your strategy and what you're trying to do, what are some of the things you look for in your partnerships?

Warren Pattison (07:57):

So one is scale. So we have grown rapidly since the pandemic. We are a, I believe right now top seven credit union as ranked by assets. And so what comes with that is the ability to scale rapidly. So in saying that when we're looking for a partner, we're not looking for a partner that can just give us a little bit for a year or two. We're looking for the long game. And so ensuring that we have partners that share their roadmap and make us a part of their roadmap and that we share that vision together, that's been very successful for us.

Charles Potts (08:36):

So from the other side of the equation, Allie, how do y'all look at partnerships? What are two or the three things, two or three things that you think people should be looking for when talking about partnerships on this journey?

Aly Yarris (08:48):

Yeah, I mean for me, where I sit because I have the pleasure to work with folks all through the ecosystem, really large financial institutions to folks like digital banking providers to credit unions, to fintechs on the plaid. And it's really about meeting our partners where they're at. So being really specialized and targeted with providing the services to adapt and make your experience as positive and efficient as possible. I think a thing I've learned from being in this space the last couple of years is that a really great way that you build trust with partners is actually delivering and really making the pace and the efficiency and the ease to the outcomes as straightforward and positive as possible. And I think that's something we really invest in and pride ourselves at Plaid at least, that we can hopefully be the easiest partner in your long list of challenging technical and complex relationships that we can make things as straightforward, have the best developer tooling, have really straightforward technical documents when you partnering with Plaid. And on the data access side, if you were interested in moving your data connectivity to an API paste data connection. So allowing your members to make that connection to Robinhood or Venmo via OAuth or an API connectivity on our team, you're getting the backing of over 200 world-class professionals who are thinking day in, day out about how they can make that one specific thing the best it can be and make your experience the best it can be. And I think also thinking one to 2, 3, 4 steps forward, so you don't to can partner with us and we'll do that legwork and we'll make sure you're brought along for the journey.

Charles Potts (10:26):

And Jack, you've got a number of partners including Plaid that you work with. When somebody new comes to approach you about potential partnership solution, what's kind of the first thing that you want to hear from?

Jack Ingram (10:44):

Well, that's a loaded question. It depends on if you're talking to my InfoSec team, if you're talking to the Ops teams, the development teams, I think part of it is vision and strategy of the FinTech partner and is there an alignment? Where are they at in their journey around funding to sort of Warren's point? Are they going to be there for the long-term? Can they scale? Have they built solutions that are intelligent and able to support us along our life cycle with our members? So that's a really, really big deal. And sometimes we choose best of breed solutions like plaid, but other times we have partners who are really, really new to the space. But for us it's been a sort of a natural fit because of what they're doing and how it aligns with our mission, our vision, and our strategy.

Charles Potts (11:36):

Allie, digital finance, the digital transformation, the FinTech revolution that's taking place. As we dig a little bit deeper, let's talk a little bit about best practices when financial institutions are thinking about the partnerships and building their own solutions. What are a couple of the lessons learned and best practices you've seen from your side of the equation that you think would be good to share with the audience?

Aly Yarris (12:06):

Yeah, I think I would encourage everyone in this room to have an open finance strategy in general that would have two components to it. Basically two sides that interconnect in this equation. One side, as I've mentioned a few times is the data connectivity side. So ensuring your customers have access to the FinTech apps they're using every day. The next step there is, there's basically two offerings on the table. One is we can utilize some of our amazing partnerships with digital banking providers like a Q2 a Jack Henry, many of the other major players are in our roadmap. And that's a way that you would have API access you maybe already have API access that doesn't necessarily require any development work on your end, which is a win-win I think for everyone involved. I know you all have busy technical roadmaps. The other option would be if you wanted to build API directly with Plaid, we have an FDX line spec, it's free. You literally can just reach out directly to me and I can tell you what you need to do to move forward there. You can find me on LinkedIn or that's my email auris@plaid.com. So that's one really essential part of the puzzle that I would really encourage folks if that's not on your roadmap this year to make sure it makes it on the roadmap for next year. And then the other really I think, exciting piece is plaid is continuing to partner more and more with financial institutions like these folks on the table to utilize plaid as a customer to think about how we can best accelerate your digital roadmap to do things like account funding, fraud mitigation, build out your own PFM tools, really any of that kind of great toolkit is accessible to you and our commercial team would love to partner with you to figure out what that could look like.

Charles Potts (13:51):

Or along the same lines, what are some of the pitfalls to avoid in this journey?

Warren Pattison (14:01):

So I think probably the biggest pitfall that I've learned in my experience is ensuring that the team that you'll be working with on a day-to-day basis is vetted along in the process of becoming a partner. In my experience, you typically get the A team when you're talking to the sales folks, certainly that wasn't the case with plaid, but in some partnerships there's been instances where you're talking with the A team and then when it comes to implementation time, it's a little bit of a different story and then you find a lot of pitfalls that weren't necessarily vetted through requirements, documentation, et cetera, which causes delays. Or even when you go to market, you then have performance issues.

Charles Potts (14:44):

And Jack, how do you work to mitigate those kinds of challenges when you're looking at these types of projects?

Jack Ingram (14:53):

Well, you start off with a really, really clear roadmap on where you're trying to go. I think we've faced similar challenges to Warren, but one of the things that we've done to mitigate it is really having strong partnerships and ensuring upfront that we're vetting appropriately. Because to everybody's point here, there's a lot of smoke and mirrors, especially for the financial institutions in the room. The sales process is what the sales process is, and then you get into the nitty gritty and it can be incredibly challenging and difficult, and what you may have seen in that Figma deck is nowhere close to reality. So really vetting what that looks like upfront and not being afraid to push back and ask from the vendors to sort of get that peak behind the scenes if they say they have an open API, okay, well is it documented? Right? Is it available? Is it at rest? What does that mean? And really working through the details because there's no vendor, I don't care who they are, that's going to solve all your pain points. There's no silver bullet out there. This kind of work takes passion, dedication, grit, and investment. And without that, you're never really going to achieve the outcome that you sort of want to achieve upfront.

Charles Potts (16:11):

Alright. Aly, we just a few days ago have seen the new third party guidance come out. Obviously a lot of financial institutions are seeing what's going on out of the agencies and the regulatory bodies. How would you counsel the financial institutions that you're working with to think about this space and this evolving digital evolution?

Aly Yarris (16:46):

Yeah, that's a great question. I mean, I think it's super top of mind for a majority of credit unions, community banks that I talk to every day, at least on the plaid end, we are doing everything in our power to set the highest bar we can personally to maintain that trust, to make it as easy as possible for everyone here in this room to meet your obligations in the ecosystem. As I mentioned before, I think my call to action for folks in the room is really to figure out your open finance path forward and have a perspective or an understanding of how you'll be able to move your data connectivity to an API based connection. That's a really tactical thing I think you can get ahead of in an environment where we anticipate regulatory landscape and ruling to come forward. And we're certainly happy to help you do that. In general, our FDX aligns spec. So FDX is a financial data exchange, it's consortium of banks, credit unions, plaid's been on the board for the last handful of years, as I'm sure some of you might be participants. A lot of the big players are having standardization in the ecosystem has made this all really straightforward. It's a lot easier to do than I think people even understand. We've seen people go from commitment to live in two weeks, that's a record. So that's a pretty high bar to meet. But in general, we're seeing maybe a handful of sprints for folks to execute this project. And then it's out of sight, out of mind. You're serving your consumers, you're increasing security, and you're preparing for a world where a lot might be changing and you've already checked the box and have it behind you.

Charles Potts (18:22):

Warren, how are you and your teams preparing for this kind of shifting regulatory landscape as you think about this?

Warren Pattison (18:33):

Yeah, so similar to what Aly said in that we have a pretty solid API framework we're looking at outside of plaid, and that's utilizing an API integration platform. Sounds like Salesforce or MuleSoft. And not to give anything away, but in looking at those and making sure that the partners that we choose in the API platform that we choose helps us from a standardization standpoint.

Charles Potts (19:07):

And how about at WECU?

Jack Ingram (19:09):

So we're sort of a similar point in our journey. We have an API gateway product, different vendor. We didn't go MuleSoft, it was a little too rich for our blood, but realistically, everybody should be sort of thinking about this. And to Allie's point, open banking I think is, it's an inevitability, right? Obviously it's going to depend on what the political sort of climate is and who's in office, but this stuff is coming and so you're better off preparing for it now in a way that allows you to be nimble and flexible as opposed to waiting until the last minute.

Charles Potts (19:46):

Alright, we got a few minutes for questions from the audience. Anybody got any questions for our panelists about this digital revolution? Anybody come on? I know you've got some questions. Do you have any horror stories? Well, I didn't want to get there yet.

Aly Yarris (20:03):

On the record.

Charles Potts (20:11):

Back to the kind of pitfall, what's something to avoid?

Jack Ingram (20:15):

So I think going from my lens, I sort of explained, I got Brian in the credit union sort of went through this cleanup effort. We took NPS from 27 to 73 in about an 18 month sprint. And we've been on that journey now for about three and a half years. And part of that is culture. Having been in both the commercial banking space and the credit union space, I think there's cultural differences between both kinds of institutions. But I think there's this natural tendency, regardless of which side of the aisle you sit on, to really trust in your core providers to do what's right and think that they're going to take care of you. And then we all sort of sign the big check and we grumble. But realistically, there is a lot of challenge I think in industry right now around delivery regardless of which provider you use. And so it's really imperative that you choose again, the partnerships where you are embedded in that process with them so that you actually achieve the outcomes that you've set for yourself upfront.

Charles Potts (21:22):

Warren, we've talked a lot about partnerships, we've talked about some external resources. How do you prepare your teams internally to follow along on this journey?

Warren Pattison (21:36):

It's a good question. So first and foremost, and that's to ensure you have buy-in, not only from your stakeholders, but from your internal teams as well. They're the ones that are going to have to build this stuff. So I do manage the product teams as part of our agile environment and ensuring that they believe in what we're trying to accomplish. That goes a long way.

Charles Potts (22:00):

And Allie, when you look at the ideal partnerships that you've formed, what are some of the resource alignment things that you all look for when you look at these partnerships?

Aly Yarris (22:18):

Yeah, I mean, in the position and where I sit, we work with anyone who wants to work with plaid because we're really committed to supporting all types of institutions moving to an API based framework. I think the key thing too for that from a resourcing perspective is it's completely free. It's not a commercial relationship. We are really just here to do what is best for consumers, what is best for you all as financial institutions and what's right in the ecosystem. We have a team of engineers and support professionals who will facilitate your experience throughout that. So we really adapt and build to you to make sure that we're constantly focused on that piece around delivery. I'm obsessed with delivery. Nothing matters unless you're actually bringing people live. We're an environment now where we have over I think 2000 financial institutions who have access to API on plaid. I think that was probably unthinkable a year or two ago. The industry has evolved so much and we're continuing to invest in things like updated data, partner dashboards, updated tooling, increased privacy toolkits, ecosystem management toolkits that really can take your vision maybe to layer a level that you hadn't even expected yet.

Charles Potts (23:32):

So we've talked a little bit about the changing regulatory landscape, the kind of open banking, open finance evolution that's taking place. Jack, what's one prediction or maybe even kind of a snapshot view of some roadmap items that you think are important for the next three to five years?

Jack Ingram (23:58):

Sure. So prediction. I think there's going to be a continual push towards hyper-personalization. I think it's inevitable. You saw some great demos from person attics and some other vendors here, but that's where our members are going. I mean, we have all this data, but how do we action that data? And this has been a hot topic at every conference I've been to in probably the last decade, but I think we're getting closer to reality there and our members or our customers demand it more near term. For us, our big focus is filling out gaps in our portfolio. One of the things we're actually looking at partnering with Plaid with and are excited about is there are sort of new wallet product around crypto. We built an internal sort of PFM embedded natively in our online and mobile banking products, leveraging plaid. So really trying to maintain primacy as opposed to SSO out to a third party like MX or something like that. So we've done a lot of work around those things. We have assets, liabilities, we do auth, of course, we use plaid for funding. We have investments. So we're leveraging their a p I stack all over the place. And our next sort of short-term journey with them is the wallet product for crypto. Most likely it's still in beta, but we're getting close. So that's an exciting one for us.

Charles Potts (25:21):

Warren, what's the digital finance future look like for Alliant and your members?

Warren Pattison (25:27):

For the next three to five years. We're putting in a lot of infrastructure. You already heard me mention one vendor previously, but it is to get to hyper-personalization. We think that's where it's at. And for us it's paramount since we are a digital only credit union without any branches. So we need to truly be a digital credit union since we don't have that branch personal experience or personal touch. So that's where we're going.

Charles Potts (25:58):

And as a key partner on this journey, Allie, what are some of the elements looking out into the future you want the audience to know or think about as they're pursuing this journey as well?

Aly Yarris (26:15):

Yeah, I mean, if the last five years has taught me anything, it's try to predict what might happen in the next five years. But even just specifically thinking about plaid and this ecosystem,

Charles Potts (26:26):

Wait, you mean there might be a change in the CFPB?

Aly Yarris (26:30):

Yeah, You just never know, right? And every day's new. And I don't think when I joined plaid four years ago, I could have ever dreamed of the type of adoption we would be seeing in the interesting ways in which all of you would be thinking about utilizing our products. And it's a little bit of a corny answer, but I think as a facilitator in the ecosystem, our job isn't to create the future. Our job is to create a foundation so that you all can create the future. And so that developers and innovators and leaders like yourself can keep pushing boundaries and doing that personalization and thinking about what are the next five ways, 10 ways that we can be moving the needle and creating that financial freedom in the ecosystem. And we're just really here to make the investment. So that's possible.

Charles Potts (27:15):

And Jack, when you take all of this together and all of this work that's happening in these partnerships, what do you want your members, your customers to think? What's the experience that you want them to know and understand?

Jack Ingram (27:36):

Well, I think the easy answer is surprised and delighted. We all want our customers, our members to be surprised and delighted and excited. But I thought one of the earlier conversations today was really on point, like our customers, our members don't wake up in the morning and go, Ooh, what's in the app? I'm going to go check it out. What's shiny and exciting? Frankly, we need to basically get out of the way and ensure that when they do engage with us, it's in a way that lets them live their lives easier and better. And if we can do that, then we've done our jobs. When they naturally think to us and don't shop the market, they just know that we're there along the journey with them, whether it's through personalization and insights, whether it's fast and frictionless experiences. I think that's where we're all sort of trying to get to, certainly us as an institution.

Charles Potts (28:29):

And Warren as a digital only experience there. What's the overarching strategy that you want to see manifested in this work that y'all are doing?

Warren Pattison (28:41):

I think primarily, so in my job description, the very first sentence in my job description is to make banking easier. And I think that's really the goal from providing insights, providing data as needed, that it's not a secret, right? I say this internally all the time on our PI planning sessions or sprint planning sessions and that the reality is banking is not sexy and it never will be, right? So sorry, reality check. But it can be a good experience and in having a good experience inuring the things that were just said, and that's to ensure that it's readily available, it's fast, and the information you are providing is easy to understand and is not confusing.

Charles Potts (29:34):

Aly, one big takeaway for the audience.

Aly Yarris (29:38):

That's hard to nail it down into one thing. I think it's sort of an inverse answer to this question, but would love to hear from people in the room about what's top of mind for all of you. There's other folks here from Plaid I think, who would similarly love to know about what's top of mind for you? What's in your list for this year? What's in your list for next year? I've had a great time, just the last 24 hours really getting in the weeds with folks, and I think that helps us better serve this segment and ensure that we're doing really everything we can to help you achieve what you want to achieve with your members, with your customers.

Charles Potts (30:14):

Awesome. Warren, Aly, Jack, Thank you so much. Our time is up today. Audience, I want to thank you for joining us and appreciate the words of wisdom.