Best-in-Class Bank-Fintech Partnership – KeyBank and Qolo

Learn about this successful partnership offering that was critical to the success and development of Key Virtual Account Management (KeyVAM). Qolo's next-generation infrastructure provides instant access to payments data, analytics, card and account generation, and money movement. What you'll learn: The work that went into bringing it to life, the collaboration of the partners, the technology, and the measurable success based on impact and scalability.


Transcription:

Chana Schoenberger (00:13):

Can everyone hear me? Oh, great. Okay, now you can. Awesome. If you just walked in. I'm Chana Schoenberger, I'm the Editor-in-Chief of American Banker. Thank you for being here with us at Digital Banking 2025. This panel is called Best in Class Bank FinTech Partnership, and we have KeyBank and Qolo. So in the middle here we have Patricia Montesi, who is the CEO of Qolo, which is a FinTech that we're going to hear about in a second. And then we have Diana Welch Howell, who's the SVP, head of Alternative and FinTech strategies for the commercial bank at KeyBank. And you just got this job, right? So congratulations.

Diana Welch Howell (00:51):

That's it. Thank you very much.

Chana Schoenberger (00:52):

Amazing. We'd love to see bankers getting promoted. Okay, so you two have some news to share with us breaking news.

Diana Welch Howell (01:00):

We do. It's fun to start this on a high note. Really, really excited to share that key and Qolo is deepening. We're deepening our relationship. Key is making a minority investment in Qolo, and we're really, really, really pumped about it because we have this shared passion around pushing banking and payments forward. Innovation in this space is really important to both organizations and this minority investment in Qolo really just cements that. And if I think about Key for the past 10 years, we've developed this muscle around these FinTech partnerships and one of the core components of that, after we've sort of co-developed a product that meets clients' needs after we've shared the best of both worlds culturally, being able to deepen that relationship with an equity investment is really just the cherry on top of making sure our destinies are aligned. So really, really energized about that.

Patricia Montesi (01:57):

Yeah, thanks Diana. We couldn't be prouder to have Key Bank do a minority investment in our company. We have remarkable relationships across the board, both wide and deep at KeyBank. Having an aligned vision and working with someone like KeyBank early on who has the chops to Diana's point of over a decade of embracing fintechs and figuring out how to partner with fintechs, punching well above their weight as it relates to the sophistication in the commercial market. For us, it was like Kismet meeting this team, understanding where we wanted to go with virtual account management, understanding how we together could take a FinTech who's small and fast and agile, and a bank who is not quite that. I'll just say,

Diana Welch Howell (02:47):

We're working on it

Patricia Montesi (02:49):

And works as well as we've worked together. Getting to market quickly with what we both believe is a game changing innovation and is all around something that's simple for a bank to digest, keep your core at Qolo. All of a sudden you have innovation that you never had before to go out and compete in the commercial markets in a way that is really solving a lot of pain points for multiple use cases in the commercial side of banking. So we are thrilled to level up our partnership in a way that is very meaningful. So I appreciate the support and the confidence and the future with KeyBank.

Diana Welch Howell (03:29):

Absolutely.

Chana Schoenberger (03:30):

So now why are you guys extending your partnership? Why is this better than what you were doing before?

Patricia Montesi (03:35):

I mean, I think if you as a startup, FinTech like Qolo become strategic for a bank the size of KeyBank, it matters that you don't just have a commercial relationship. It matters that they take an interest in making sure that you're healthy and that they can help you and guide you in any way at the right levels. So when you all of a sudden become a strategic investor, it just opens up and deepens the relationship so that we are aligned at every single level. So when you get up to the C levels of a bank, the size of key bank, all of a sudden it matters, right? People want to understand, oh, we invested here. How are they doing? How are we helping them grow? How are we helping them? So it just becomes this sort of symmetric relationship that is poised for future growth.

Diana Welch Howell (04:26):

Absolutely. I mean, you unlock a new level of value I think for both sides when your destinies are aligned, right? We can bring the best of what we know from how the inner guts of the bank that's sometimes slow, how it works, and we can kind of bring that to light. We can bring some of our industry expertise to light and Qolo can bring best in class technology, best in class technologists. They can push us to run faster. And I think when you have real skin in the game, it helps make sure that both sides are accountable to that, which is great.

Chana Schoenberger (04:58):

Got it. Okay, cool. So last year at American Bankers Payments Forum, you spoke, well, not you personally, but your institutions spoke about this partnership. So give us a quick update on what exactly you're offering together

Diana Welch Howell (05:15):

And me and key one and the same. So I will take that. So last year we announced a product that we worked on together called vm, and this year we're excited to announce that VM is up, it's running. We have clients on the platform,

Chana Schoenberger (05:31):

It's virtual account management,

Diana Welch Howell (05:32):

Virtual account management, which in its simplest terms, we have clients that have 10, 20, a hundred bank accounts. And not because they need that many bank accounts, but because they're looking for a simple way to logically organize their funds, whether it's for business needs, regulatory needs, whatever it is. And what VM allows them to do is to do that in 60 seconds or less. They can report on it, they can reconcile what they need to reconcile and they can do it without the additional expense, the additional KYC, all of that. And so it solves a real client need. And so we were able to build that together and to date, we've had over 8 billion, almost $9 billion of volume run through that platform. So very excited to see what's grown from when we announced last October to now.

Chana Schoenberger (06:25):

Okay, great. Awesome. Tell us about how the partnership progressed. Did anything go wrong and what did you learn?

Diana Welch Howell (06:36):

Everything was perfect, right Patricia?

Patricia Montesi (06:38):

I'm looking out in the audience and I see a couple folks who know the real, real here, so I'll be gentle here. Honestly, I couldn't ask for a more aligned partner at multiple levels. Did we have challenges? Absolutely. One of the things about Qolo is it's founded by payments and banking veterans that we've worked in this industry for 20 years. So we have the utmost respect for compliance and regulatory and risks and what it means to work with banks as partners. So we went in with that view, but we also went in with the view of if you want to make change and you want to move at the speed that you need to move at, when you see an opportunity and you need to capitalize on it, you have to embrace some of our approaches. So it really is, we shared the vision for the outcome.

(07:26):

We knew where we were going to get the how was not defined, the how was here's my team and here's your team. How are we going to develop software together? We have a process. You have a process, you have risk and committees and all these other committees that you have to surround yourself with. And we really took the approach of, look, let us guide you. Let us show you what we're good at. Let us help educate your risk compliance, et cetera, because it's change in a bank where they're used to a 30-year-old legacy core and all of a sudden you're going to upend that and all the processes for risk and compliance and everything else that's been built around that people are afraid it's going to change. What does that mean? Are we going to be out of compliance? And so what we did was take the educational approach really to talk about API oriented versus batch or file or whatever scares people.

(08:14):

And so we just had to walk people through and really take the time to say, just because it's an API doesn't mean that it's making your process different. We actually work within the process. We're integrated into the core. We're integrated into key bank's, payment rails. We're not a side ledger, we're not a side core. So I think we found middle ground everywhere. And I think that goes back to the leadership at KeyBank, the way they've helped manage that. They want to move fast. They know their own internal challenges to do that. And we work very, very collaboratively and very, very closely together. We go back to what you just said is a side core, like a side hustle.

(08:53):

There's a lot of confusion around side sidecar, core core ledger. Ask anyone. They'll have eight different answers if you ask eight different people. I think it's important, and the reason I noted it is that there's a lot of stuff in the industry that can give you a ledger or can give you a sidecar core. The difference is, and what KeyBank saw in partnering with Qolo is that we are an integrated quantum core, IE, we're integrated into the existing core, we're integrated into the payment rails, we're payment ready at the very beginning. There is no side ledger that you then have to go and reconcile. So immediately you can understand where your money is, where the funds are, are you reconciled to the penny at any given second? And that's the difference.

Diana Welch Howell (09:35):

And I think listening to Patricia walk through that, right? This is why it's so important, and I think she undersold it a little bit of how important it is that the Qolo team knew how to talk to banks. Because getting our risk teams, our compliance teams to understand that is I think one of the key things that makes this partnership or really any FinTech partnership works. The technology can be beautiful, but if you can't get the risk and compliance teams to understand it and have a team that can speak that language, you can't make it happen. And as simple and as complex as some of the various things are, having a team that can talk through that and explain it, I think is best in class.

Chana Schoenberger (10:14):

Yes, speaking banker is one of the most difficult skills that fintechs have to learn. I mean, there's a difference between fintechs that are run by 22-year-old Stanford dropouts and ones that are run by former banker regulatory people, right?

Diana Welch Howell (10:30):

Different learning curves.

Patricia Montesi (10:32):

Are you saying Chana, I don't like 22. You know what? I think it really was? It is down to not just the technology, the founding team at Qolo myself, 20 years in payments in banking, pouring every mistake we ever made into a new platform, and then also being able to speak to it in a way that provides value. Helping KeyBank understand that a business is a business is a business. What are the key use cases? Well, it initially was one or two and then it became 10 because, well, guess what? At the end of the day, if you know enough about the fundamentals of how to move money and payments, every business is the same, right? Every business has complexity. Some of them, they put it on themselves and some of them it's just natural for the organic for their business. But being able to have that type of conversation because we have the experience, I think made all the difference in the world. And by the way, right back at them because they had all of the FinTech experience and they really respected the differences between our organizations.

Diana Welch Howell (11:34):

And there's a trust that has to underlie that because you're going to whiteboard the use cases in the beginning, and by the time a product is live, by the time you're well down the path and you're learning from your client, you're going to add use cases, they will change. And so being able to trust each other as partners that we're going to evolve together and we both want the same outcome is the only way that this works. And I think we have some great examples of that, like Patricia mentioned.

Chana Schoenberger (12:03):

So how do your teams collaborate? How do they work together? Weekly meetings, constant Slack channels,

Diana Welch Howell (12:11):

All of the above. I think one of the great things about this partnership, and it gets back to the pillar that we have around our FinTech partnerships, which is this idea of cultural alignment. There's executive alignment. So myself, the team that's at the table, Ken Gaherty, who runs our commercial and payments organization is talking to Patricia constantly. Patricia and I went to dinner last night, and I think one of the things actually that we talked about at dinner was around this idea of relationships and how it's not just business and you get to know each other. And we're not only talking about what's next for VM, what's next for the partnership, but we're talking about how are your kids doing? And I think that level of relationship happens at this level, but it also happens across our product teams. It happens across our risk teams and our teams. Having weekly touch bases, our teams checking on each other I think is really important to the core of how this has worked.

Patricia Montesi (13:09):

I'll say the greatest compliment I ever heard personally and for Qolo was sitting in Cleveland with a group of KeyBank, everyone, product development, lots of 20 people in the room, and they looked at around at our team and they said, you're not our partner. You're actually an extension of our team. We think of you as our team. And that's the commitment that both organizations have had to build that trust, build that trust, have the dialogue. I always say bad news early, it's always been my mantra. If something's not going, let's all talk about it very openly and very transparently, and then build trust at, again, deep and broad. So me having dinner with Diana, she's new to the role. She's fabulous by the way. And I think that is culturally built into KeyBank, and we were fortunate to find someone that shares those values that we have as well

Chana Schoenberger (14:08):

Over communicate is always a good idea.

Diana Welch Howell (14:11):

Yes.

Chana Schoenberger (14:12):

Okay, so what is different about this partnership from the way that banks and fintechs usually work together? So this whole conference is filled with bankers and FinTech executives, and there are a lot of collaborations going on. How's this one different?

Diana Welch Howell (14:27):

I mean, I think we hit on a lot of it, but it's this idea of having FinTech partnerships that aren't vendor relationships that are true partnerships, where you are aligned on what the vision state is. You trust each other that no matter how windy the road gets, you're going to get there. You're sharing values and you're building those broad and deep relationships. And I think when these partnerships maybe don't work as well, or how we've seen maybe other folks run the playbook is they run it the same way they would run a vendor partnership or a vendor relationship. And I think those can be fine, but what makes this different is that deeper connectivity towards shared outcomes.

Patricia Montesi (15:06):

Yeah, and I would add to that. I think one of the things that's at the heart of our culture at Qolo is getting straight to the point, focusing on outcomes and really understanding what problem are we solving? What problem is the bank trying to solve? Do those two things marry up and can we actually make one plus one equal 10? Because if that doesn't exist and you can't actually get to the heart of that right in the beginning about why the two of you're coming together, then it's really just sort of moving shells around and playing office as we like to say. So what problem are we solving together? And to me that is just absolutely critical to the beginning, middle, and end of a relationship, is to make sure that you come back to that and you say, are we still adding value to each other? Are we still solving real problems for our clients?

Chana Schoenberger (16:01):

Absolutely. Okay, So what's next for you guys?

Diana Welch Howell (16:06):

I can jump in with that. So what's next for us at Key is just more, right? So I mentioned we've been on this FinTech journey for the last decade, and I will immodestly say on behalf of Key, I think we feel like we've built some differentiated muscle around it, but if we rest on our laurels, we can quickly fall behind. And so the bank has decided to invest in that area, and one of those ways is my role and my team. And so you'll see us doing more with our strategic partners like Qolo, more to come. Hint, hint, wink, wink. You'll see us building more partnerships with other FinTech companies that we could work together to solve client needs. You'll see us out in the VC ecosystem perhaps making more investments in that space. You'll see us making potentially follow on investments and companies where we are already invested in and partnered with. And so it's an exciting time. And so taking that muscle, taking that playbook, learning more about these new technologies that are trending, things like ai, like stable points, staying on the forefront of that. So more.

Chana Schoenberger (17:15):

More is the new more.

(17:15):

Okay. How many FinTech partnerships do you fair you have right now?

Diana Welch Howell (17:21):

So across companies that we are invested in, we have 10 active currently across other commercial partnerships. We have dozens of those.

Chana Schoenberger (17:33):

And how long does it take to go from meeting a FinTech to launching it?

Diana Welch Howell (17:39):

So this is not a skirting the answer answer, I promise, but the answer really is, it depends. I think in cases where you have companies like Qolo who know how to talk to banks, who there is a clear client need that we're working together to solve that process can be a little bit faster. There are other times where you're courting and you're dating for a little bit when you're trying to figure out the FinTech company is trying to figure out how to talk to a bank, and we're trying to make a use case real. So it truly does depend.

Chana Schoenberger (18:08):

Okay, cool. Alright, we're going to take questions from the audience in just a second and when that happens, someone's going to walk around with a microphone. So if you have a question for these fine executives, please raise your hand and the microphone will come to you. What is the coolest thing you guys have seen recently, not at your own organization in the bank FinTech world?

Diana Welch Howell (18:34):

I can start. I don't know if he's still in here, I can't really see, but I do think it's really interesting the branding that Fit Third has done around new line and embedded payments in that space. I think it's nice to see regional peers who are similarly investing in this space and branding pretty uniquely around it.

Chana Schoenberger (18:56):

Very cool. Patricia, what have you seen?

Patricia Montesi (19:00):

Across banking, across FinTech, across payments? I'm thrilled to sort of see us coming out of some of the struggles and challenges that we've had from the capital markets world over the last couple of years. And I think there was some course corrections that were necessary and needed and brought a spotlight to just how important it is to get it right when you do partner IE, where's my money? Is it reconciled? Do I know this? Do I have the right ledger? I think that movement has been a wake up call for all of us. And so finding the right partner and making sure that those things are never a question that you have in your mind is the most exciting thing for me.

Chana Schoenberger (19:42):

So we covered the synapse bankruptcy pretty closely. It's one of those can't look away situations in FinTech where you're just like, what happened and what is going on? How do banks and fintechs get comfortable about this issue of risk? And where is the ledger and who knows where the money is and how do you educate consumers who don't really understand FDIC insurance and the difference between an account at a FinTech and an account at an actual bank?

Diana Welch Howell (20:10):

I might let Patricia get that one first.

Patricia Montesi (20:12):

I mean, I think again, 20 years in payments, if you walk around shows, trade shows, whatever it is, everybody does everything 24 7, 365. You have to do your diligence, you have to dig deeper, you have to peel back the onion. You have to be skeptical of middleware when the closer you are to actually doing things at the infrastructure level. You're reducing your vulnerability, you're reducing the risks associated with systems, performance, compliance, everything. So it is not an easy industry to dig into and actually really feel that you know how things work. But new technology, being able to have a modern stack, cloud-based API oriented, we welcome people to do that, right? Do you know what a ledger is when someone says they have a ledger? Is it basic? Is it sophisticated? Is it bank grade? Is it dual entry? Those things really, really matter as well as who's in the supply chain. For these folks that are saying they can do it all, you just have to go deeper. It's not easy and it's not intended to be, but it's something that's necessary, I think.

Diana Welch Howell (21:27):

No, I think that's great. That's great.

Chana Schoenberger (21:29):

Yeah. We did a number of stories. One story I'm thinking of in particular, which was an article about the customers who had written into the bankruptcy corps, just their own tales of woe, folks who had had FinTech accounts where Synapse had been involved. And in many cases, these customers had no idea. They'd never heard the word synapse before, and they were under the impression that they had their accounts at a bank that was FDIC insured, and they did, but because of the whole vast situation, they didn't have accounts in their own names and they could not get that money back. And it was kind of a scary thing. And I sort of wonder where that's all going with the changing regulatory landscape around consumer protection these days.

Diana Welch Howell (22:16):

I think it's hard to tell exactly. When I think about the macro environment around that, obviously I think we're in a space right now where it wouldn't surprise me if we're moving towards deregulation at this moment, but I think especially for banks like Key, we feel strongly about our position is having a moderate risk appetite. So we'll always make sure in terms of making sure our customers are informed around where their money is, when we're doing partnerships, making sure that we have the appropriate compliance, regulatory reviews, all of that. And we really want to stay centered even as when sort of change around that. Because at the end of the day, customers, the safety of their funds is the most important thing.

Chana Schoenberger (22:57):

I feel like you should put that on a baseball cap, moderate risk appetite.

Diana Welch Howell (23:02):

I wouldn't be surprised if there probably is one that exists right now that has a key logo, and so it's moderate risk. But I mean, honestly, it is, as I think about where we are positioned, it enables us to take risk in places that matter, and it also enables us to keep our clients safe and secure. We're not always chasing the new shiny things. So I think it's a good balance.

Patricia Montesi (23:25):

I would just add that there's always a balance between sales, marketing, moving fast and compliance and regulatory. There's always that it is related to an appetite, right? And that you make trade offs based on that. I think what's become clear is that a third party risk management is not going anywhere anytime soon, no matter what administration is in charge because of the fallout of this. And I think that makes us all stronger, frankly. We welcome it. We're being asked every day by all of our other bank partners, how are you managing this? How are you managing that? Show me, show me. Show me. It makes us better. You have to embrace it. Great.

Chana Schoenberger (24:04):

Great. Okay. Taking questions. Raise your hand please if you have one. Yes. Right here we have a, hang on one second please. Here comes the microphone.

Diana Welch Howell (24:17):

It'll be a fun one, I'm sure.

Audience Member 1 (24:19):

Hello, Patricia. You spoke a little bit about a sidecar side core. What are some of the benefits of having that side core without having to replace the whole full core that the bank already has?

Patricia Montesi (24:34):

Yeah, so think of it this way, Benny, right? You've got Key Bank has a 30-year-old core. Many of the cores that are out there today are not dissimilar in terms of where they came from and the technology base and how old they are. Ripping and replacing that is something that can be done. It's not cheap, it's not easy, and it's certainly disruptive to an organization to actually be able to do that. And I think in a technology like Qolos where you can keep your core and then overlay it with the technology that Qolo brings, and think of it as an innovation layer that all of a sudden allows you to compete against tech forward banks, allows you to increase deposits in a way that you couldn't when they were leaving your organization through somebody else's TE card. I won't say a name, I won't pick it on anyone, but I do want to make sure that the, I was trying to distinguish from Qolo is actually in the overlay, but it's not technically a sidecar core because we are integrated into your core and your payment rails from the start. So there's no ledger over here. There's no double books, right? You don't have to look at two different books. It's all real time and it's all auto reconciled. And that is the difference. There are side cores out there that can help people. So don't get me wrong, a sidecar core can help. It just isn't what we did together. We did something beyond that.

Diana Welch Howell (26:01):

And I think when you start talking about ripping and replacing cores, folks break out in hives and projects, it's a really hard time to get those conversations off the ground. So solutions like that make it palatable and enables teams to move quickly.

Chana Schoenberger (26:18):

Great. Wonderful. Well, thank you all for joining us. Thank you so much for coming up here. Of course. Enjoy your next sessions.

Diana Welch Howell (26:25):

Thank you, Chana.