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A Match Made in Digital: The Evolving Partnership of Fintech & Community Banks
November 10,2021 Below is the transcribed live discussion from November 10, 2021, hosted by Travillian on the future of banking with Narmi Co-Founder Nikhil Lakhanpal, joined by Choice Financial President and CEO Brian Johnson. They covered what makes a successful fintech/BaaS bank relationship, the importance of customer experience, and how community banks can break into digital – including the new roles a digital future will need. |
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Keith Daly: [00:00:00] Hello, hello. Welcome everybody to a special Travillian Next Live from our headquarters here in King of Prussia, Pennsylvania. No retakes, no edits, we're live, anything goes here. My name is Keith Daly, Director of Banking and FinTech here at Travillian. Travillian partners with community banks, BaaS banks, Neo banks, fintechs across the country for executive search and town advisory. Please visit our website at www.travilliangroup.com to learn more about our firm, recent placements and check out our content channel, which is growing every day. You can also follow myself and Travillian on Twitter, Spotify and LinkedIn, as for today's event, [00:01:00] Travillian takes immense pride in providing relevant and insightful content.
And today we have two innovative executive leaders in the world of community banking and fintech. First, I'd like to introduce Nikhil Lakhanpal, Co-Founder of Narmi. Over a decade ago, Nikhil and Co-Founder Chris Griffin, ran the Georgetown University alumni, and student federal credit union. They didn't expect everything to be top of the line, but as they sat as CEO and CTO of their own financial institution, they pondered a simple, but very powerful question.
Why is delivering industry leading digital experiences so difficult for financial institutions? After graduating and pursuing careers in banking they reunited in NYC and they still wondered why do digital tools available for financial institutions, why are they lacking today? So they got to work. Nikhil and Chris founded Narmi with one simple mission. [00:02:00] Offer financial institutions the best digital banking platform in the industry. Today, financial institutions with billions of dollars in deposits use Narmi to increase deposits, profitability, and accounts with tools that make it very easy. Since 2016 Narmi has grown substantially and closed their Series A funding of $20.4 million late last year.So thank you, Nikhil for joining us. Appreciate you being here.
Next I'd like to introduce Brian Johnson, President and CEO at Choice Financial Group. Choice Financial Group is headquartered in Fargo, North Dakota, and began in 2001 with the merger of four local banks with collective assets, totaling $170 million.
Brian Johnson has been with Choice since 1999 and has served as President and CEO since 2011. Brian has helped grow the bank to over $3 trillion in assets, nurturing consistent growth and innovation across [00:03:00] the Midwest while never losing sight of the people or the communities they do serve. Moreover, Choice BaaS division has expanded into the fintech industry. First partnering with Lively in 2018 and since then, Choice has gone on to partner with other fintechs, including Current, Doough, Lili, Mercury, Qube, and Unit. We've known Brian for years, and he is one of the most genuine, down to earth leaders in the industry and he is a wonderful leader for a community bank in this digital age. So thank you very much, Brian, Nikhil for joining us and our audience today. So I wanted to start on the topic of talent, which is very dear to us here at Travillian. I wanted to start with you, Brian. You've mentioned that there's a glamour that digital and fintechs bring to community banking. But we also know you've got a strong opinion about the risk they inherently create. From a [00:04:00] talent perspective, how can a bank best protect itself when diving into digital banking or in your case, BaaS banking?
Brian Johnson: Yeah, thank you, Keith. Good afternoon. This is an area for us that's been at it a while and there's a reason it's been out a while because you have to get the team on board and your perspectives and your objective set. Very clearly. As Keith mentioned there is an appeal to it, maybe like crypto or Bitcoin in this space for community banks and there should be. It is an interesting array of possibilities for us, like I said, we've been at it five years.
We've had strong legal counsel and consulting partners through it. Always not the biggest advocate for, for doing that, but in this space, given its freshness and, and very, very, very fluid in terms of the directions, it can go like I do strongly advocate for, for outside help too, in that, when it comes to employees [00:05:00] in and of itself, I think just the, the bank and the fintech folks are on the same page. If not, you're going to have issues not only within your own walls, but I would certainly say from a regulatory standpoint too, as well that presents a lot of challenges. And so I think the team needs to understand the differences and amongst the products and services that are out there.
And that just takes time to form that team, formulate that strategy. But there is a lot of interest in, and even for banking in general, which is probably not a sexy business to attract young talent, there's certainly appeal from the fintech space in order to draw in that talent. And, and for us, that's, that's been exciting.
It is fresh and we, we look forward to the path ahead.
Keith Daly: Thanks Brian. And yes, I can concur on the talent war out there right now for innovative digital [00:06:00] banking, talent. So Nikhil, Narmi is a highly trusted vendor for community banks in their digital transformation roadmaps. What are some best practices on a talent organizational or management front that you've seen at your clients that really have helped them make this process a success for all?
Nikhil Lakhanpal: No. Yeah, definitely. Keith. Just want to say thank you for having me and Brian. It's great to be on this panel with you. Yeah. You know, we have I feel really humbled that Narmi is able to work with a diversity of financial institutions, both in terms of size, but most core priorities, you know, it goes on and on, but I will say culture is one of those items and it, it often, it's funny.
I think it really does matter more than what core banking system you're on or, you know, one of our very early customers is still on a core [00:07:00] that is definitely at the bottom of the list in terms of innovation and priority at that core banking vendor. And they were, they're still able to do a tremendous amount of amazing innovation on the front end because of their culture.
So I think your question around the culture at these banks matters more than most people. I would say a couple of themes. It starts top-down. I firmly believe that more than anything else, if the CEO and C-suite are not aligned or not thinking a certain way and are not going to work in order to make a digital initiative or whatever initiatives happen, it all falls apart.
And, you know, as a leader of an Narmi, I also kind of operate the same way. There is always a hundred priority ones. So what are the actual one or two that will get across the finish line? And if it is digital, it will happen. You can find every reason in the world that not to do [00:08:00] something, right? Not to open accounts online, not to collect a driver's license during account opening, not to offer wires to consumers.
There are a hundred reasons why you should not do that. But at the end of the day, that's where the world's going. And those institutions that truly have a top down approach figure out a way to make it a reality. So that's really what I personally look for when I get to meet, you know, prospect management teams.
Cause we do truly believe, you know, it's a partnership when we work with our banks. And we want that buy in from everyone. So I'll leave you with that. Cause I think it's so important. But I'm happy to dive in further.
Keith Daly: Now I'd love to get Brian's response there cause Brian we've spoken a lot about culture and your culture at, at Choice Financial.
And sometimes you have a new technology, new employees coming in and you know, you might have some legacy or how, from your perspective, Brian, the culture [00:09:00] change at Choice. How has that been? Is it been a struggle at times as you've moved more into BaaS and fintech, how does that work on your end?
Brian Johnson: Yeah, we we've had plenty activity or choice just on the traditional bank side with our growth.
We brought in some acquisition merger partners in the traditional sense. And so that, that is taxing on a team. And then you bring in a, a new line with a new line of thought process. And you know, for instance, one example I would say is the word change, management decisions as vastly different meetings between the legacy team and a fintech team in terms of the pace that, that change management has to go back to the core areas like Nikhil was saying you're on the traditional bank side, you're subject to that core and their pace and their response.
The fintech community doesn't operate that way. It's either more [00:10:00] like a drive-through at McDonald's. Here's what I want. Can you deliver it? And is it going to be right? And is it going to taste good? And so I think to try to totally align those type of visions, it can be done, but back to the talent side, what you're asking you have to have the folks of the mindset and that's what Nikhil is going. You want from my role as a CEO for the legacy people to understand what they brought to the table, why we're here, who's paid the bills up up until this point. But also I have them on board to say where the consumer is going is where we need to be. And, and at Choice we try to do it under a people first tent and have a people first experience.
And so in the fintech world, that might be an FBO relationship of what we would describe as a non-direct customer. Can we still be a people first bank to those non-direct customers through servicing who is our [00:11:00] customer, the fintech, and we have our direct customers on the legacy side. And so back to Nikhil's point on the culture, if you truly add people who believe in for us, we define it as that people first experience and who that customer is at least everybody in shop then is aware of what the objectives are, why we have them laid out that way and how we are going to get there. But definitely pace is a topic that comes up quite frequently at Choice. Pace of change and embracing that change. And you just try to manage through that.
Keith Daly: Yeah, speed. Speed at fintechs. It's a, it's interesting. And, and Nikhil you build Narmi from the ground up, I think you just had your five year anniversary a few months ago. So congratulations on that. What type of culture did you want to infuse at Narmi and has that culture kind of changed over the past five [00:12:00] years, especially in regards to your relationships with community banks? Fintechs move at a faster pace sometimes than community banks. So I just wanted to kind of learn how the Narmi culture handles this?
Nikhil Lakhanpal: No, for sure. It's, it's a broad question, which I could probably spend an hour on and it's from employee culture to company culture, to the culture we want to create with our customers.
So I'll, I'll just keep it a little bit broad at the risk of boring anyone. I will say when my Co-Founder and I, you know, decided to start Narmi, and we, we always wanted to like, keep the problem at the forefront of what we'd go to work for every day. And in that respect apply a product based culture to it.
And honestly, that is what we also felt was one of the main things missing from what now are Narmi's largest competitors. Where their culture is [00:13:00] more, some of them are more of a sales organization. Some of them are geared to solely be a public company and operate that way. But what we didn't find is a product based culture in this space in digital banking.
And it's very ironic, right? Because digital banking is a product. And then you couple that with all the innovation happening in, in SaaS, which stands for software as a service right now you think about companies like Slack and Salesforce and, you know, the list goes on and on that are doing so well.
Adobe has completely pivoted their business model and all of those successes have been on product based culture. And we just didn't see that in digital banking. So I will say that that drives us, that motivates us every time we see an uptick and engagement or a transactional activity, or we take a feature that.
Quite frankly, we weren't receiving negative feedback on, but we 10 X it, cause that's what we do like that, like that is what motivates us [00:14:00] every single day. And in turn, like leads to more business, leads to more credit unions buying our product, doubling down on us. And it is sometimes at odds.
And I know this is on the agenda. Talk about a little later on. Most banks don't have a product based culture. They have a compliance driven culture or they have a operational driven culture or they have just a let's sit there and chill culture. So it's, it has been somewhat a challenge to bring that product based culture to our customer base, but we knew that going into this, like we, we knew it and that's why we do a ton of content marketing, a ton of product marketing.
I mean, just check out our website. Our resources section is, is full of exciting. What's Narmi working on and why. So again, like I said, I could go on and on and talk about our people that is so incredibly important to me. But I think for this audience, that product based culture is one part of Narmi where I, I am fighting my hardest not to lose as we scale. Like that is last thing [00:15:00] I want to do is be a 15 year old company with hundreds, if not thousands of customers and then turn into what we set out to not be. So that is what I'm fighting every single day, year for. And I'm really proud to say six years in, we've kept it. So hopefully that's helpful.
Keith Daly: No, that's great. And that's great. And that kind of segues into the next question for both of you. A lot of banks you know, they look to their CEO, CTO or CIO to be the catalyst for digital change. However, finding visionaries may be easier than finding executor's. What advice would you give banks on how to best implement their digital game plan?
And is there a skill set lacking, just as you said, Nikhil, on the community bank side, such as product managers, digital engineers, software engineers, roles like that, that community banks should be looking at [00:16:00] now and in the future? I'll let you go first, Brian, since Nikhil was just on.
Brian Johnson: I'll build off Nikhil's answer. We always say here, a risk doesn't lead the process, but they're definitely at the table and we need to be very attentive to that in where their role is and how they can assist and partner here at Choice. I agree with Nikhil the vision part, right? That's always the fun part. And there's always dreamers and that's how we define it.
We have we believe we have the dreamers and then we have folks that can kind of come along and compliment, compliment that and try to execute that. And for me, I think it's a path of understanding. To your point on the build and the software talent build. And we do build software here at Choice. So for banks out there, and, and I hear this often, you know, I want to be part of fintech.
And so how do I, and to me, there's a couple paths of that. [00:17:00] You see what we've built at Choice over a five-year process in terms of trying to bring in that talent, that diversity of roles and alignment operationally, and spend that money and build that way. And hopefully you develop product and relationships over time that that meets the market's expectations.
And then there are a lot of funds that have gotten started or are in process of getting started where the banks can stroke equity checks and make those investments. And I think that's how this audience should look at that to say, well, if I don't want to go through this process of the talent and, and the risk and the requirements that are out there and spend that money.
If that spend would be $3 million over a three-year period or five-year period, should my bank be looking at doing 3 million worth of 10 equity investments at 300,000 a piece in fintech companies like Narmi and others. And participate in the [00:18:00] process. That way of getting an ROI back, I get, it might not be where the customer growth is, but it is such a long-term investment of aligning those visionaries and executions specialists in the field from a CEO or a CIO, or we, we were interviewing last week for a CTO and we're hopefully going to bring that position on.
It's continual it's daily on that end of it. Then it's a dedicated process because it can go in a number of different directions, especially given a lot of our staffs are remote, not on site, not in the same facility every day. And so you know, some Mondays it's maybe herding cats, but by the end of the week, I think you know, we keep them on the same page and rowing the boat in the same direction. Hopefully.
Keith Daly: No, thanks, Brian. And Nikhil, I know you have a lot of thoughts working with so many different community banks maybe skillsets that are lacking such as product managers that you don't really see on the community bank side. You know, I work with fintechs, I've placed [00:19:00] product managers on. the fintech side and every time I look at a website or see something on Slack it's product managers, product managers, engineers. Do you have any thoughts on maybe community banks moving into that space?
Nikhil Lakhanpal: Yeah. Look, I think building off my last answer around the culture Narmi's created, I certainly do not expect nor encourage banks to turn into product companies. You are blessed with the government backing of a business model, which can be incredibly lucrative. You play a irreplaceable role in communities. You make dreams come true, quite frankly, for both consumers and businesses. That is why like, I love this company and I love what we do.
Like all of those things are really special, especially in the United States because any part and the rest of the world doesn't have the regional and community financial institution presence the United States does, which makes it even cooler [00:20:00] here. But I'm asking you to meet me maybe 25% of the way there.
And maybe, you know, I think the most helpful hires are more product oriented people. I'm not saying hire five or 10 of them, but someone we can truly work with on the other side to convey release notes, to manage roadmaps, to you know, get product feedback, but also like in a respectful way to iterate, to pitch new products, to, to justify ROI.
I mean, it's, you know, to me, to us at Narmi, what we do is we, we believe we are the most important partner slash vendor to a bank. Like that is, that is what our team genuinely believes because at the mobile online banking and the account opening sides, like that is what is driving banks forward in terms of organic growth.
But that's a full-time. Imagine not having a person or a team dedicated to that most important channel, it's kind of at odds with each other. Right? So I'm [00:21:00] trying to, you know, especially our customers and our prospects, I'm trying to bring out a more product based culture where they're not, they don't think of it as like buying a vendor.
They think of it as buying a product and they do understand it's not the end of the world to have one or two FTEs support that product from a product standard. And you'll even realize higher ROI on your investment in buying a Narmi or like-minded solution, if you have those hires. Because I don't expect Brian to be sitting there as a CEO to be a product Wiz, right?
That's not, that's not what Brian should be doing, but on his team. And I'm sure he's done this. I know he's done this more product minded people typically do help banks cause, and I'm more than happy. You know, to provide guidance on what that person looks like. Sample job descriptions. A lot of also, sorry, I'm going on.
And on a lot of banks already have this person in house, by the way. They might just not be properly staffed or properly used them. And [00:22:00] I, I know for a fact it's a very high high growth type of role that banks are hiring for right now. In fact, we've also helped, you know, help some folks, you know, get involved here.
So that would be like my general approach to how to create and it doesn't replace the top-down approach I opened with, I think if the CEO and C-suites not bought in, last thing you want to do is bring in this digital product or product owner and not let them do anything or let them actually like get stuff done.
I mean, then you're just really, then you're almost faking it, which is worse. So yeah, that, that would, those would be my thoughts.
Brian Johnson: You know one thing Keith, I'd jump in, this is where it's, your partners are crucial on all ends to the delivery to the client, but then the tracking on the back side and the reconciling.
You know, we've all looked at CRM models and you know, if you try to find out optimal efficiency there, but if you don't, you're just out that upside. If you are [00:23:00] not aligned with the right partners and systems here, You're going to put yourself in a, in a tough position in relation to risk and reconciling accounts and KYC type stuff.
So this is where the partner choices to Nikhil's point, you know, to be out there, you're not going to create these systems entirely. You need to partner and have your people in house that understands how they need to connect and how they need to come together. Because the downside is if you don't execute, you are going to find yourself rightfully so subject to regulate or scrutiny in terms of delivery, you know, to that same level of the customer walking through your door.
Versus that customer never make it an ever in five to 10 years, their way into a branch. And you have to validate those same things on the BSA and AML side of, of the equation on that end. So your partner choices [00:24:00] here. Our vital and, and the people that have the talent to understand truly what their role is.
And it's a little bit different than a marketing program or other things in the bank that okay, if it didn't hit the hit the marks oh, well these, you, you have to really work hard to get the marks.
Keith Daly: Yeah. And Nikhil it really is a true partnership. I think the communication, understanding, you know, the issues from both the community bank side, credit unions and Narmi side. It's so critical to have that, not look at it as a vendor, but Hey, this is a complete partnership. Let's work on this together you know, to, to achieve those goals. But no, thank you very much. Great conversation on definitely the, the roles, the talent is changing so quickly and that kind of brings me to the next section: trends in the industry. So I recently got back [00:25:00] from Las Vegas Money 2020. It was my first Money 2020. And I was like a kid in Disney world when I was eight years old. Just kind of like looking around in awe at all these different vendors, all these different types of technology from blockchain, crypto, biogenetic risk management.
And it's just incredible. And I think we're moving at such a fast pace. I'd love to hear. And I'll start with you and Nikhil, kind of what trends are you seeing in the industry? What's coming down the road over the next few years that are going to be crucial skillsets for community banks and also fintechs to kind of keep up with the changing culture and the change of consumer behavior out there?
Nikhil Lakhanpal: Yeah. Obviously I'm biased. You know, my, you know, our entire company is built around the shift towards digital. The fact that we believe [00:26:00] the next decade banks will, will do the majority of their business digitally. We'll drive the majority of their bottom line digitally. Like that is again, you asked any Narmi employee that is another belief they will have.
I think just your question itself kind of answers it. Everything you, you mentioned crypto or biometric AI, which I don't even know as a thing, but some of you see where I came up with it is probably like multiple billion dollar companies in itself. So there's not one, there's not one thing it's really hard to like zero down on one thing.
And I would definitely recommend an element of focus at your bank. I don't think you should. You know, try to do all of it because I see I've seen some try and then maybe you get 10% of all of them. And in reality, you have really little to show for it. I think what Brian's done on the BaaS side, and he's purposely chosen to go all in [00:27:00] on that type of business model and it's working clearly.
So I got to give a lot of credit to him and his team for that. But you know, to answer your questions, what is Narmi excited by the next five, 10 years? Besides like the general shift to digital, I'd say definitely on the business and commercial side there's severe, even all the things you mentioned, crypto and by metrics and PFM and an account, you know, financial health all of that historically the last five, 10 years.
And I would say even looking forward the next two, five years has been consumer retail driven, which is nothing wrong with, but I think there's a reason for that. That's because. It's been the FinTech striving, most of the innovation and the, the raw market size from a customer base. It's just far larger.
I mean, there's what 350- 400 million people here. So that's why they focused on consumer, but the innovation on the business side has been lacking. And when you think about regional community banks, I mean, the majority of them are commercial banks. Of course, many of them [00:28:00] have retail presence. And we all know how, how important our business clients are to us as banks.
So we need to that innovation on the business side, making payments easier, making the user experience easier, seamless business account opening, seamless KYC on the businesses. Can you actually digitize a business's banking experience where they don't ever have to come into a branch? I mean Narmi there's, we've already done it.
It's not even though we believe that we've already done. And we're continuing to double down on that. So that is very important. I would say number two is hot, deeper level engagement. A lot of non-financial apps do this really, really well. Dining apps, food delivery apps, you know, Postmates or, or door dash, you know, the push notification that says.
Hey, millennial will get 20%. We noticed you haven't come back in two weeks. Here's 20% option your next new order that works. Banks don't do that. So, you know, I would say a very tailored [00:29:00] approach to personalization and engagement through digital is a huge trend. And you really need your mobile online banking provider to know what's going on there.
Otherwise, you know, I think you'll be caught in the dark. So those are, those are some themes that we're super excited about. I've spent a lot of time on. And obviously I've dedicated R and D efforts to and we'll continue to do so.
Keith Daly: Yeah, no, thanks Nikhil. Yeah. Personalization seems to be a buzz word. Cause everything we do now is personalized. Amazon updates.
Like you were just talking about, food apps. I just got a update from Slice. They're like, oh, you haven't ordered from this pizza place in the last two weeks or it knows when I usually order pizza on Friday or something. So those types of things, but Brian, from your standpoint Yeah, without giving away the secret sauce or anything, what's kind of your, your focus over the next few years, in terms of new trends, technology, as Nikhil was mentioning a small business, digital [00:30:00] transformation.
Do you have any kind of thoughts on the trends in the industry right now?
Brian Johnson: I think where, so to speak the battle, play out and you see this right from the traditional commercial bank setting, or even the corporate big banks dipping down in our space right now. Everybody's chasing yield. And so drives down pricing on loans and covenants on loans and, and things are loosened up to chase that yield.
This is a new space. We are trying to establish, I don't know if we quite would be say we're a Starbucks model where we gain that much premium on a cup of coffee, but we want to get value for the service that we're providing. But it's challenging, right? Because the customer wants everything for free.
But we say there's, there's a lot of toll takers in between and moving money around and a lot of hands in the cookie jar, how can we eliminate as many toll takers as possible and, [00:31:00] and execute on that, but still do it from a risk proportion reward standpoint on that end of it. You know, sometimes loans on our traditional portfolio or we're in the insurance and the wealth business on that end of it.
You know, they have set margins in the business. Can we achieve margins in the fintech space to compensate for the risk associated with ACH risk and fraud and, and things of that nature. From that standpoint, that is the model of service we're trying to deliver and execute on, but it's going to be challenging because as more banks chase into the space just like chasing yields on the loans, loan rates continue to go lower to chase that business.
And so I would just challenge the bank CEOs there again, to really look at a complete business model, because maybe you do just have a deposit gathering because you do need liquidity, not a lot of us do given the government influx of money, but I know going in pre COVID, [00:32:00] that was one of our initiatives and our drivers beyond going where the customer is, we need to gain deposits because we have great loan demand.
So if that's your strategy great, or if you're a transactional-based bank, that's delivering an in fintech. Understand the model and the fully loaded costs and risk associated with delivering that model. And so I think the banks that look to that resources and where the industry and the customer is going.
And sometimes you learn, you know, tuition is always expensive. As we always say in this business, there will be some tuition lessons on that end of it. Plan for it, budget for it, because you don't want to set yourself up when a board of directors that you're working with and you're trying to convince them that this is the path either to invest in fintech from an equity or be a player in the space. You should over prep on those areas of budget, [00:33:00] investment in things. And because if, as I told my board five years ago, if the first three flop, please don't quit on me. Because you get scared. Cause we might lost a million, 2 million, $3 million.
You know, this is a long-term play and we need to prep for it on that end of it. But board members, you know, what have you done for me lately. Monday morning quarterbacking. Those, those are big challenges for a CEO. So I would just really advise to look at a long gated picture. This is a rapidly moving space, but you need to have a long-term perspective game plan and investment plan and stick with it.
I think, to be successful.
Keith Daly: Great ideas, Brian, those ups and downs, you know, you can get from month to month, can leave, you know, especially board members, like what are we doing here? But stick with that plan and, you know, go forward and, you know, partner with the right partners like Narmi. So come to the, the [00:34:00] last section here and I want to thank the audience.
And this is something, you know, we love to talk about with all our, our guests. And I'll start with you Nikhil. What are some firms or leaders that you really admire and also firms you're trying to kind of emulate out there in the industry right now? Do you have, you know, firms you look to and say, wow, they're just doing a great job in so many different areas or from a leadership perspective, since you're a, you know, CEO and Co-Founder, are there leaders that you look to?
Nikhil Lakhanpal: Yeah. I mean, I think inspiration is critical. There is, you're not gonna figure it out on your own. You're, it's so important to learn from others. One that consistently comes up at Narmi all the time is Stripe. So for those of you that don't know, Stripe is a payments company and they've really made e-commerce possible, you know, anytime, you go to an e-commerce site and click checkout and enter your card information.
I mean, there's, [00:35:00] at this point, it's a, probably a pretty good chance that Stripe's powering the backend of it. So it's not a household name, but everything they do in our opinion, not everything, but so many of the things they do is just done with a really high degree of excellence. Everything from their blog, to their developer documentation, to even how their API is constructed, to how they do marketing, to how they market their products, to what their products are, to how they do pricing is really, really well done.
And we have a lot of respect for that company. They're obviously I think they're probably like a top a hundred, you know, in terms of value or they've done quite well. We actually had their former CEO, a COO speak at our five-year anniversary and really, you know, gave the team a great sense of how they scaled so quickly. Talked a lot about culture and hiring as I'm sure you know, you, you, you know why, so I would say that that's a company we admire a lot and try to try to take from so.
Keith Daly: That's great. And Brian, on your end do you have [00:36:00] any banks you look to as kind of, we'd like to emulate them or leaders in the industry, whether it's community banking or fintech that kind of inspire you to move forward with choice and you know, change and grow?
Brian Johnson: Yeah, I think what we've noticed the trend of the fintechs and, and the software behind to deliver from, you know, pay a couple of days ahead knowing what's coming. That clause I is at lending to extent, but it's not longer term risk lending. There's been other banks that we've worked with you know, across the country in terms of collaborating, talking.
I mean, some of them like Cross River are heavy end in a lending platform. And then there's folks like Cash App, you know, spent a significant amount of money. I think it was like upwards of 29 billion. Knowing, you know, I don't know if they know exactly where they're going, but they wanted it into the, in their platform and portfolio to [00:37:00] continue to try to drive that growth.
And so. For us, you have to pay attention to the product delivery on that end. So for instance, some way or somebody like our partner, Current that deals in the, in the prepaid debits, that is a different delivery and expectation versus somebody who's moving money P2P and you need to understand as a bank what goes on in into that, and that probably will carry over to the crypto space and certainly the blockchain space as well. And so how active the fed gets into that to determine that, or what I see in the trends right now, where chair McWilliams were an FDIC regulated bank. Her personal story of coming into the country has played into her being very pro fintech in terms of accessibility, which was one of the missions to the underbanked. That is, she is a huge player to driving the willingness to try to collaborate with regulators, to get this figured out because it's [00:38:00] new to them versus where the OCC maybe is undertaking more discussion and maybe a different take or a different version of how to execute and regulate with fintech space. And so those are the trends that we're really paying attention to because they are so fluid and we try to collaborate with our regulators. So we're on the same page with them as best possible and listening to them and having them be a partner at the table as well.
And so that's really where we're paying attention to what are these companies doing on the fintech side for the next wave of delivery and we need to be there with them to be able to execute on their behalf. So we are being accountable cause where Nikhil opened up, you know, our charter, the FDIC insurance behind that is a core foundation of this whole equation at this point.
And so that's where early on for [00:39:00] Choice, it was an easy choice on for the pawn on there. Are we going to try to buck and buck this? Are we going to get on board and try to collaborate with what we bring to the table? Because the other thing about those fintechs and you'll notice this continually. Is there they are innovators and they don't want to deal with everything. They want to deliver for the customer and, you know, at a bank we have a big broad infrastructure. And so hopefully that is what we bring to the table for them, that stability, that execution, the accessibility of a bank of our size at 3 billion, the, you know, for Nikhil to call up the CEO of that bank and get me a Choice anytime he wants.
That's important to fintech partners because they want execution and they want results and they want to grow customers because that's where their market cap goes up and their valuation goes up. And so that's where we continue to try to assess where they're at and where they're going. [00:40:00] And can we be there with them in having, you know, reasonable moderated, well-managed growth ourselves on that end.
Keith Daly: No, that's great, Brian. And you brought up to a line of McWilliams. She was at Money 2020. I've heard her speak a few times now over the past couple of years, and she's great looking for a new innovation and ways to work with fintechs and build out these regulations and, you know, here at Travillian, we're getting a lot of searches and placements from the compliance risk end but people that understand this new market of fintech relationships, BaaS banking, crypto, it's not kind of the old school, just risk. There's so many different layers now you know, partnering with fintechs that you need somebody who's innovative at the compliance and risk level too. Well, thank you both.
I can't thank you enough. I know we're in November right now and it's budget season and you know, people are planning for [00:41:00] 2022 on the bank side on the fintech side. So I think this was a very crucial discussion as banks and credit unions are thinking about their plan for next year. Nikhil, best way to reach you or somebody at Narmi if a bank or credit union wants to discuss kind of next steps or just have a talk with them.
Nikhil Lakhanpal: It was again, no hidden agenda here really, of course,all in this together. So feel free to reach out. nikhil@narmi.com. We'll keep it, keep it simple. That's the cool part about being the first employee. Six years ago, you get to kind of pick your own email address. So again, that's, nikhil@narmi.com. So if I'm not the right person to speak to you about what you're looking for, I'm more than happy to loop in one of our, our wonderful team members. So thanks again.
Keith Daly: And Brian, I know I don't want to, you know, have the CEO getting both of you getting inundated with emails, but is there a, a way to reach you if they have a question about BaaS banking or you know, fintech partnerships, maybe a little looking [00:42:00] to move into that industry. Is there a good way to contact you?
Brian Johnson: Yeah. We you know, look to grow our fintech partnerships on that end of it. And we do get a lot outreaches, small community. That reputation is, is built a non so yeah, for me, it's just a head out there to bankwithchoice.com and my email address posted my number's posted on that end of it. And we have a whole team taken in those calls and like to have that at times we collaborate with other banks too, as well across the country. And yeah, so.
Keith Daly: That's great. And I just want to finish with a, you know, something you said before, Nikhil, we're all in this together.
Here at Travillian, you know, we love community banks. We want them to thrive and grow in this digital era and there's firms like Narmi, Brian's bank is doing it, or you can, you can compete and it can be a little overwhelming sometimes maybe with all the new technology out there, partnerships. But to have, you know, resources and [00:43:00] collaboration and contacts out there giving you information on how to succeed.
It's fantastic. And it's a, it's a community and we want to see the the community banks thrive. But thank you everybody for joining us today. Really appreciate. Nikhil, Brian. Always great. I know you're both very busy, so I'll let you get back to whatever is going on in your prospective lives. And thank you very much.
And today we have two innovative executive leaders in the world of community banking and fintech. First, I'd like to introduce Nikhil Lakhanpal, Co-Founder of Narmi. Over a decade ago, Nikhil and Co-Founder Chris Griffin, ran the Georgetown University alumni, and student federal credit union. They didn't expect everything to be top of the line, but as they sat as CEO and CTO of their own financial institution, they pondered a simple, but very powerful question.
Why is delivering industry leading digital experiences so difficult for financial institutions? After graduating and pursuing careers in banking they reunited in NYC and they still wondered why do digital tools available for financial institutions, why are they lacking today? So they got to work. Nikhil and Chris founded Narmi with one simple mission. [00:02:00] Offer financial institutions the best digital banking platform in the industry. Today, financial institutions with billions of dollars in deposits use Narmi to increase deposits, profitability, and accounts with tools that make it very easy. Since 2016 Narmi has grown substantially and closed their Series A funding of $20.4 million late last year.So thank you, Nikhil for joining us. Appreciate you being here.
Next I'd like to introduce Brian Johnson, President and CEO at Choice Financial Group. Choice Financial Group is headquartered in Fargo, North Dakota, and began in 2001 with the merger of four local banks with collective assets, totaling $170 million.
Brian Johnson has been with Choice since 1999 and has served as President and CEO since 2011. Brian has helped grow the bank to over $3 trillion in assets, nurturing consistent growth and innovation across [00:03:00] the Midwest while never losing sight of the people or the communities they do serve. Moreover, Choice BaaS division has expanded into the fintech industry. First partnering with Lively in 2018 and since then, Choice has gone on to partner with other fintechs, including Current, Doough, Lili, Mercury, Qube, and Unit. We've known Brian for years, and he is one of the most genuine, down to earth leaders in the industry and he is a wonderful leader for a community bank in this digital age. So thank you very much, Brian, Nikhil for joining us and our audience today. So I wanted to start on the topic of talent, which is very dear to us here at Travillian. I wanted to start with you, Brian. You've mentioned that there's a glamour that digital and fintechs bring to community banking. But we also know you've got a strong opinion about the risk they inherently create. From a [00:04:00] talent perspective, how can a bank best protect itself when diving into digital banking or in your case, BaaS banking?
Brian Johnson: Yeah, thank you, Keith. Good afternoon. This is an area for us that's been at it a while and there's a reason it's been out a while because you have to get the team on board and your perspectives and your objective set. Very clearly. As Keith mentioned there is an appeal to it, maybe like crypto or Bitcoin in this space for community banks and there should be. It is an interesting array of possibilities for us, like I said, we've been at it five years.
We've had strong legal counsel and consulting partners through it. Always not the biggest advocate for, for doing that, but in this space, given its freshness and, and very, very, very fluid in terms of the directions, it can go like I do strongly advocate for, for outside help too, in that, when it comes to employees [00:05:00] in and of itself, I think just the, the bank and the fintech folks are on the same page. If not, you're going to have issues not only within your own walls, but I would certainly say from a regulatory standpoint too, as well that presents a lot of challenges. And so I think the team needs to understand the differences and amongst the products and services that are out there.
And that just takes time to form that team, formulate that strategy. But there is a lot of interest in, and even for banking in general, which is probably not a sexy business to attract young talent, there's certainly appeal from the fintech space in order to draw in that talent. And, and for us, that's, that's been exciting.
It is fresh and we, we look forward to the path ahead.
Keith Daly: Thanks Brian. And yes, I can concur on the talent war out there right now for innovative digital [00:06:00] banking, talent. So Nikhil, Narmi is a highly trusted vendor for community banks in their digital transformation roadmaps. What are some best practices on a talent organizational or management front that you've seen at your clients that really have helped them make this process a success for all?
Nikhil Lakhanpal: No. Yeah, definitely. Keith. Just want to say thank you for having me and Brian. It's great to be on this panel with you. Yeah. You know, we have I feel really humbled that Narmi is able to work with a diversity of financial institutions, both in terms of size, but most core priorities, you know, it goes on and on, but I will say culture is one of those items and it, it often, it's funny.
I think it really does matter more than what core banking system you're on or, you know, one of our very early customers is still on a core [00:07:00] that is definitely at the bottom of the list in terms of innovation and priority at that core banking vendor. And they were, they're still able to do a tremendous amount of amazing innovation on the front end because of their culture.
So I think your question around the culture at these banks matters more than most people. I would say a couple of themes. It starts top-down. I firmly believe that more than anything else, if the CEO and C-suite are not aligned or not thinking a certain way and are not going to work in order to make a digital initiative or whatever initiatives happen, it all falls apart.
And, you know, as a leader of an Narmi, I also kind of operate the same way. There is always a hundred priority ones. So what are the actual one or two that will get across the finish line? And if it is digital, it will happen. You can find every reason in the world that not to do [00:08:00] something, right? Not to open accounts online, not to collect a driver's license during account opening, not to offer wires to consumers.
There are a hundred reasons why you should not do that. But at the end of the day, that's where the world's going. And those institutions that truly have a top down approach figure out a way to make it a reality. So that's really what I personally look for when I get to meet, you know, prospect management teams.
Cause we do truly believe, you know, it's a partnership when we work with our banks. And we want that buy in from everyone. So I'll leave you with that. Cause I think it's so important. But I'm happy to dive in further.
Keith Daly: Now I'd love to get Brian's response there cause Brian we've spoken a lot about culture and your culture at, at Choice Financial.
And sometimes you have a new technology, new employees coming in and you know, you might have some legacy or how, from your perspective, Brian, the culture [00:09:00] change at Choice. How has that been? Is it been a struggle at times as you've moved more into BaaS and fintech, how does that work on your end?
Brian Johnson: Yeah, we we've had plenty activity or choice just on the traditional bank side with our growth.
We brought in some acquisition merger partners in the traditional sense. And so that, that is taxing on a team. And then you bring in a, a new line with a new line of thought process. And you know, for instance, one example I would say is the word change, management decisions as vastly different meetings between the legacy team and a fintech team in terms of the pace that, that change management has to go back to the core areas like Nikhil was saying you're on the traditional bank side, you're subject to that core and their pace and their response.
The fintech community doesn't operate that way. It's either more [00:10:00] like a drive-through at McDonald's. Here's what I want. Can you deliver it? And is it going to be right? And is it going to taste good? And so I think to try to totally align those type of visions, it can be done, but back to the talent side, what you're asking you have to have the folks of the mindset and that's what Nikhil is going. You want from my role as a CEO for the legacy people to understand what they brought to the table, why we're here, who's paid the bills up up until this point. But also I have them on board to say where the consumer is going is where we need to be. And, and at Choice we try to do it under a people first tent and have a people first experience.
And so in the fintech world, that might be an FBO relationship of what we would describe as a non-direct customer. Can we still be a people first bank to those non-direct customers through servicing who is our [00:11:00] customer, the fintech, and we have our direct customers on the legacy side. And so back to Nikhil's point on the culture, if you truly add people who believe in for us, we define it as that people first experience and who that customer is at least everybody in shop then is aware of what the objectives are, why we have them laid out that way and how we are going to get there. But definitely pace is a topic that comes up quite frequently at Choice. Pace of change and embracing that change. And you just try to manage through that.
Keith Daly: Yeah, speed. Speed at fintechs. It's a, it's interesting. And, and Nikhil you build Narmi from the ground up, I think you just had your five year anniversary a few months ago. So congratulations on that. What type of culture did you want to infuse at Narmi and has that culture kind of changed over the past five [00:12:00] years, especially in regards to your relationships with community banks? Fintechs move at a faster pace sometimes than community banks. So I just wanted to kind of learn how the Narmi culture handles this?
Nikhil Lakhanpal: No, for sure. It's, it's a broad question, which I could probably spend an hour on and it's from employee culture to company culture, to the culture we want to create with our customers.
So I'll, I'll just keep it a little bit broad at the risk of boring anyone. I will say when my Co-Founder and I, you know, decided to start Narmi, and we, we always wanted to like, keep the problem at the forefront of what we'd go to work for every day. And in that respect apply a product based culture to it.
And honestly, that is what we also felt was one of the main things missing from what now are Narmi's largest competitors. Where their culture is [00:13:00] more, some of them are more of a sales organization. Some of them are geared to solely be a public company and operate that way. But what we didn't find is a product based culture in this space in digital banking.
And it's very ironic, right? Because digital banking is a product. And then you couple that with all the innovation happening in, in SaaS, which stands for software as a service right now you think about companies like Slack and Salesforce and, you know, the list goes on and on that are doing so well.
Adobe has completely pivoted their business model and all of those successes have been on product based culture. And we just didn't see that in digital banking. So I will say that that drives us, that motivates us every time we see an uptick and engagement or a transactional activity, or we take a feature that.
Quite frankly, we weren't receiving negative feedback on, but we 10 X it, cause that's what we do like that, like that is what motivates us [00:14:00] every single day. And in turn, like leads to more business, leads to more credit unions buying our product, doubling down on us. And it is sometimes at odds.
And I know this is on the agenda. Talk about a little later on. Most banks don't have a product based culture. They have a compliance driven culture or they have a operational driven culture or they have just a let's sit there and chill culture. So it's, it has been somewhat a challenge to bring that product based culture to our customer base, but we knew that going into this, like we, we knew it and that's why we do a ton of content marketing, a ton of product marketing.
I mean, just check out our website. Our resources section is, is full of exciting. What's Narmi working on and why. So again, like I said, I could go on and on and talk about our people that is so incredibly important to me. But I think for this audience, that product based culture is one part of Narmi where I, I am fighting my hardest not to lose as we scale. Like that is last thing [00:15:00] I want to do is be a 15 year old company with hundreds, if not thousands of customers and then turn into what we set out to not be. So that is what I'm fighting every single day, year for. And I'm really proud to say six years in, we've kept it. So hopefully that's helpful.
Keith Daly: No, that's great. And that's great. And that kind of segues into the next question for both of you. A lot of banks you know, they look to their CEO, CTO or CIO to be the catalyst for digital change. However, finding visionaries may be easier than finding executor's. What advice would you give banks on how to best implement their digital game plan?
And is there a skill set lacking, just as you said, Nikhil, on the community bank side, such as product managers, digital engineers, software engineers, roles like that, that community banks should be looking at [00:16:00] now and in the future? I'll let you go first, Brian, since Nikhil was just on.
Brian Johnson: I'll build off Nikhil's answer. We always say here, a risk doesn't lead the process, but they're definitely at the table and we need to be very attentive to that in where their role is and how they can assist and partner here at Choice. I agree with Nikhil the vision part, right? That's always the fun part. And there's always dreamers and that's how we define it.
We have we believe we have the dreamers and then we have folks that can kind of come along and compliment, compliment that and try to execute that. And for me, I think it's a path of understanding. To your point on the build and the software talent build. And we do build software here at Choice. So for banks out there, and, and I hear this often, you know, I want to be part of fintech.
And so how do I, and to me, there's a couple paths of that. [00:17:00] You see what we've built at Choice over a five-year process in terms of trying to bring in that talent, that diversity of roles and alignment operationally, and spend that money and build that way. And hopefully you develop product and relationships over time that that meets the market's expectations.
And then there are a lot of funds that have gotten started or are in process of getting started where the banks can stroke equity checks and make those investments. And I think that's how this audience should look at that to say, well, if I don't want to go through this process of the talent and, and the risk and the requirements that are out there and spend that money.
If that spend would be $3 million over a three-year period or five-year period, should my bank be looking at doing 3 million worth of 10 equity investments at 300,000 a piece in fintech companies like Narmi and others. And participate in the [00:18:00] process. That way of getting an ROI back, I get, it might not be where the customer growth is, but it is such a long-term investment of aligning those visionaries and executions specialists in the field from a CEO or a CIO, or we, we were interviewing last week for a CTO and we're hopefully going to bring that position on.
It's continual it's daily on that end of it. Then it's a dedicated process because it can go in a number of different directions, especially given a lot of our staffs are remote, not on site, not in the same facility every day. And so you know, some Mondays it's maybe herding cats, but by the end of the week, I think you know, we keep them on the same page and rowing the boat in the same direction. Hopefully.
Keith Daly: No, thanks, Brian. And Nikhil, I know you have a lot of thoughts working with so many different community banks maybe skillsets that are lacking such as product managers that you don't really see on the community bank side. You know, I work with fintechs, I've placed [00:19:00] product managers on. the fintech side and every time I look at a website or see something on Slack it's product managers, product managers, engineers. Do you have any thoughts on maybe community banks moving into that space?
Nikhil Lakhanpal: Yeah. Look, I think building off my last answer around the culture Narmi's created, I certainly do not expect nor encourage banks to turn into product companies. You are blessed with the government backing of a business model, which can be incredibly lucrative. You play a irreplaceable role in communities. You make dreams come true, quite frankly, for both consumers and businesses. That is why like, I love this company and I love what we do.
Like all of those things are really special, especially in the United States because any part and the rest of the world doesn't have the regional and community financial institution presence the United States does, which makes it even cooler [00:20:00] here. But I'm asking you to meet me maybe 25% of the way there.
And maybe, you know, I think the most helpful hires are more product oriented people. I'm not saying hire five or 10 of them, but someone we can truly work with on the other side to convey release notes, to manage roadmaps, to you know, get product feedback, but also like in a respectful way to iterate, to pitch new products, to, to justify ROI.
I mean, it's, you know, to me, to us at Narmi, what we do is we, we believe we are the most important partner slash vendor to a bank. Like that is, that is what our team genuinely believes because at the mobile online banking and the account opening sides, like that is what is driving banks forward in terms of organic growth.
But that's a full-time. Imagine not having a person or a team dedicated to that most important channel, it's kind of at odds with each other. Right? So I'm [00:21:00] trying to, you know, especially our customers and our prospects, I'm trying to bring out a more product based culture where they're not, they don't think of it as like buying a vendor.
They think of it as buying a product and they do understand it's not the end of the world to have one or two FTEs support that product from a product standard. And you'll even realize higher ROI on your investment in buying a Narmi or like-minded solution, if you have those hires. Because I don't expect Brian to be sitting there as a CEO to be a product Wiz, right?
That's not, that's not what Brian should be doing, but on his team. And I'm sure he's done this. I know he's done this more product minded people typically do help banks cause, and I'm more than happy. You know, to provide guidance on what that person looks like. Sample job descriptions. A lot of also, sorry, I'm going on.
And on a lot of banks already have this person in house, by the way. They might just not be properly staffed or properly used them. And [00:22:00] I, I know for a fact it's a very high high growth type of role that banks are hiring for right now. In fact, we've also helped, you know, help some folks, you know, get involved here.
So that would be like my general approach to how to create and it doesn't replace the top-down approach I opened with, I think if the CEO and C-suites not bought in, last thing you want to do is bring in this digital product or product owner and not let them do anything or let them actually like get stuff done.
I mean, then you're just really, then you're almost faking it, which is worse. So yeah, that, that would, those would be my thoughts.
Brian Johnson: You know one thing Keith, I'd jump in, this is where it's, your partners are crucial on all ends to the delivery to the client, but then the tracking on the back side and the reconciling.
You know, we've all looked at CRM models and you know, if you try to find out optimal efficiency there, but if you don't, you're just out that upside. If you are [00:23:00] not aligned with the right partners and systems here, You're going to put yourself in a, in a tough position in relation to risk and reconciling accounts and KYC type stuff.
So this is where the partner choices to Nikhil's point, you know, to be out there, you're not going to create these systems entirely. You need to partner and have your people in house that understands how they need to connect and how they need to come together. Because the downside is if you don't execute, you are going to find yourself rightfully so subject to regulate or scrutiny in terms of delivery, you know, to that same level of the customer walking through your door.
Versus that customer never make it an ever in five to 10 years, their way into a branch. And you have to validate those same things on the BSA and AML side of, of the equation on that end. So your partner choices [00:24:00] here. Our vital and, and the people that have the talent to understand truly what their role is.
And it's a little bit different than a marketing program or other things in the bank that okay, if it didn't hit the hit the marks oh, well these, you, you have to really work hard to get the marks.
Keith Daly: Yeah. And Nikhil it really is a true partnership. I think the communication, understanding, you know, the issues from both the community bank side, credit unions and Narmi side. It's so critical to have that, not look at it as a vendor, but Hey, this is a complete partnership. Let's work on this together you know, to, to achieve those goals. But no, thank you very much. Great conversation on definitely the, the roles, the talent is changing so quickly and that kind of brings me to the next section: trends in the industry. So I recently got back [00:25:00] from Las Vegas Money 2020. It was my first Money 2020. And I was like a kid in Disney world when I was eight years old. Just kind of like looking around in awe at all these different vendors, all these different types of technology from blockchain, crypto, biogenetic risk management.
And it's just incredible. And I think we're moving at such a fast pace. I'd love to hear. And I'll start with you and Nikhil, kind of what trends are you seeing in the industry? What's coming down the road over the next few years that are going to be crucial skillsets for community banks and also fintechs to kind of keep up with the changing culture and the change of consumer behavior out there?
Nikhil Lakhanpal: Yeah. Obviously I'm biased. You know, my, you know, our entire company is built around the shift towards digital. The fact that we believe [00:26:00] the next decade banks will, will do the majority of their business digitally. We'll drive the majority of their bottom line digitally. Like that is again, you asked any Narmi employee that is another belief they will have.
I think just your question itself kind of answers it. Everything you, you mentioned crypto or biometric AI, which I don't even know as a thing, but some of you see where I came up with it is probably like multiple billion dollar companies in itself. So there's not one, there's not one thing it's really hard to like zero down on one thing.
And I would definitely recommend an element of focus at your bank. I don't think you should. You know, try to do all of it because I see I've seen some try and then maybe you get 10% of all of them. And in reality, you have really little to show for it. I think what Brian's done on the BaaS side, and he's purposely chosen to go all in [00:27:00] on that type of business model and it's working clearly.
So I got to give a lot of credit to him and his team for that. But you know, to answer your questions, what is Narmi excited by the next five, 10 years? Besides like the general shift to digital, I'd say definitely on the business and commercial side there's severe, even all the things you mentioned, crypto and by metrics and PFM and an account, you know, financial health all of that historically the last five, 10 years.
And I would say even looking forward the next two, five years has been consumer retail driven, which is nothing wrong with, but I think there's a reason for that. That's because. It's been the FinTech striving, most of the innovation and the, the raw market size from a customer base. It's just far larger.
I mean, there's what 350- 400 million people here. So that's why they focused on consumer, but the innovation on the business side has been lacking. And when you think about regional community banks, I mean, the majority of them are commercial banks. Of course, many of them [00:28:00] have retail presence. And we all know how, how important our business clients are to us as banks.
So we need to that innovation on the business side, making payments easier, making the user experience easier, seamless business account opening, seamless KYC on the businesses. Can you actually digitize a business's banking experience where they don't ever have to come into a branch? I mean Narmi there's, we've already done it.
It's not even though we believe that we've already done. And we're continuing to double down on that. So that is very important. I would say number two is hot, deeper level engagement. A lot of non-financial apps do this really, really well. Dining apps, food delivery apps, you know, Postmates or, or door dash, you know, the push notification that says.
Hey, millennial will get 20%. We noticed you haven't come back in two weeks. Here's 20% option your next new order that works. Banks don't do that. So, you know, I would say a very tailored [00:29:00] approach to personalization and engagement through digital is a huge trend. And you really need your mobile online banking provider to know what's going on there.
Otherwise, you know, I think you'll be caught in the dark. So those are, those are some themes that we're super excited about. I've spent a lot of time on. And obviously I've dedicated R and D efforts to and we'll continue to do so.
Keith Daly: Yeah, no, thanks Nikhil. Yeah. Personalization seems to be a buzz word. Cause everything we do now is personalized. Amazon updates.
Like you were just talking about, food apps. I just got a update from Slice. They're like, oh, you haven't ordered from this pizza place in the last two weeks or it knows when I usually order pizza on Friday or something. So those types of things, but Brian, from your standpoint Yeah, without giving away the secret sauce or anything, what's kind of your, your focus over the next few years, in terms of new trends, technology, as Nikhil was mentioning a small business, digital [00:30:00] transformation.
Do you have any kind of thoughts on the trends in the industry right now?
Brian Johnson: I think where, so to speak the battle, play out and you see this right from the traditional commercial bank setting, or even the corporate big banks dipping down in our space right now. Everybody's chasing yield. And so drives down pricing on loans and covenants on loans and, and things are loosened up to chase that yield.
This is a new space. We are trying to establish, I don't know if we quite would be say we're a Starbucks model where we gain that much premium on a cup of coffee, but we want to get value for the service that we're providing. But it's challenging, right? Because the customer wants everything for free.
But we say there's, there's a lot of toll takers in between and moving money around and a lot of hands in the cookie jar, how can we eliminate as many toll takers as possible and, [00:31:00] and execute on that, but still do it from a risk proportion reward standpoint on that end of it. You know, sometimes loans on our traditional portfolio or we're in the insurance and the wealth business on that end of it.
You know, they have set margins in the business. Can we achieve margins in the fintech space to compensate for the risk associated with ACH risk and fraud and, and things of that nature. From that standpoint, that is the model of service we're trying to deliver and execute on, but it's going to be challenging because as more banks chase into the space just like chasing yields on the loans, loan rates continue to go lower to chase that business.
And so I would just challenge the bank CEOs there again, to really look at a complete business model, because maybe you do just have a deposit gathering because you do need liquidity, not a lot of us do given the government influx of money, but I know going in pre COVID, [00:32:00] that was one of our initiatives and our drivers beyond going where the customer is, we need to gain deposits because we have great loan demand.
So if that's your strategy great, or if you're a transactional-based bank, that's delivering an in fintech. Understand the model and the fully loaded costs and risk associated with delivering that model. And so I think the banks that look to that resources and where the industry and the customer is going.
And sometimes you learn, you know, tuition is always expensive. As we always say in this business, there will be some tuition lessons on that end of it. Plan for it, budget for it, because you don't want to set yourself up when a board of directors that you're working with and you're trying to convince them that this is the path either to invest in fintech from an equity or be a player in the space. You should over prep on those areas of budget, [00:33:00] investment in things. And because if, as I told my board five years ago, if the first three flop, please don't quit on me. Because you get scared. Cause we might lost a million, 2 million, $3 million.
You know, this is a long-term play and we need to prep for it on that end of it. But board members, you know, what have you done for me lately. Monday morning quarterbacking. Those, those are big challenges for a CEO. So I would just really advise to look at a long gated picture. This is a rapidly moving space, but you need to have a long-term perspective game plan and investment plan and stick with it.
I think, to be successful.
Keith Daly: Great ideas, Brian, those ups and downs, you know, you can get from month to month, can leave, you know, especially board members, like what are we doing here? But stick with that plan and, you know, go forward and, you know, partner with the right partners like Narmi. So come to the, the [00:34:00] last section here and I want to thank the audience.
And this is something, you know, we love to talk about with all our, our guests. And I'll start with you Nikhil. What are some firms or leaders that you really admire and also firms you're trying to kind of emulate out there in the industry right now? Do you have, you know, firms you look to and say, wow, they're just doing a great job in so many different areas or from a leadership perspective, since you're a, you know, CEO and Co-Founder, are there leaders that you look to?
Nikhil Lakhanpal: Yeah. I mean, I think inspiration is critical. There is, you're not gonna figure it out on your own. You're, it's so important to learn from others. One that consistently comes up at Narmi all the time is Stripe. So for those of you that don't know, Stripe is a payments company and they've really made e-commerce possible, you know, anytime, you go to an e-commerce site and click checkout and enter your card information.
I mean, there's, [00:35:00] at this point, it's a, probably a pretty good chance that Stripe's powering the backend of it. So it's not a household name, but everything they do in our opinion, not everything, but so many of the things they do is just done with a really high degree of excellence. Everything from their blog, to their developer documentation, to even how their API is constructed, to how they do marketing, to how they market their products, to what their products are, to how they do pricing is really, really well done.
And we have a lot of respect for that company. They're obviously I think they're probably like a top a hundred, you know, in terms of value or they've done quite well. We actually had their former CEO, a COO speak at our five-year anniversary and really, you know, gave the team a great sense of how they scaled so quickly. Talked a lot about culture and hiring as I'm sure you know, you, you, you know why, so I would say that that's a company we admire a lot and try to try to take from so.
Keith Daly: That's great. And Brian, on your end do you have [00:36:00] any banks you look to as kind of, we'd like to emulate them or leaders in the industry, whether it's community banking or fintech that kind of inspire you to move forward with choice and you know, change and grow?
Brian Johnson: Yeah, I think what we've noticed the trend of the fintechs and, and the software behind to deliver from, you know, pay a couple of days ahead knowing what's coming. That clause I is at lending to extent, but it's not longer term risk lending. There's been other banks that we've worked with you know, across the country in terms of collaborating, talking.
I mean, some of them like Cross River are heavy end in a lending platform. And then there's folks like Cash App, you know, spent a significant amount of money. I think it was like upwards of 29 billion. Knowing, you know, I don't know if they know exactly where they're going, but they wanted it into the, in their platform and portfolio to [00:37:00] continue to try to drive that growth.
And so. For us, you have to pay attention to the product delivery on that end. So for instance, some way or somebody like our partner, Current that deals in the, in the prepaid debits, that is a different delivery and expectation versus somebody who's moving money P2P and you need to understand as a bank what goes on in into that, and that probably will carry over to the crypto space and certainly the blockchain space as well. And so how active the fed gets into that to determine that, or what I see in the trends right now, where chair McWilliams were an FDIC regulated bank. Her personal story of coming into the country has played into her being very pro fintech in terms of accessibility, which was one of the missions to the underbanked. That is, she is a huge player to driving the willingness to try to collaborate with regulators, to get this figured out because it's [00:38:00] new to them versus where the OCC maybe is undertaking more discussion and maybe a different take or a different version of how to execute and regulate with fintech space. And so those are the trends that we're really paying attention to because they are so fluid and we try to collaborate with our regulators. So we're on the same page with them as best possible and listening to them and having them be a partner at the table as well.
And so that's really where we're paying attention to what are these companies doing on the fintech side for the next wave of delivery and we need to be there with them to be able to execute on their behalf. So we are being accountable cause where Nikhil opened up, you know, our charter, the FDIC insurance behind that is a core foundation of this whole equation at this point.
And so that's where early on for [00:39:00] Choice, it was an easy choice on for the pawn on there. Are we going to try to buck and buck this? Are we going to get on board and try to collaborate with what we bring to the table? Because the other thing about those fintechs and you'll notice this continually. Is there they are innovators and they don't want to deal with everything. They want to deliver for the customer and, you know, at a bank we have a big broad infrastructure. And so hopefully that is what we bring to the table for them, that stability, that execution, the accessibility of a bank of our size at 3 billion, the, you know, for Nikhil to call up the CEO of that bank and get me a Choice anytime he wants.
That's important to fintech partners because they want execution and they want results and they want to grow customers because that's where their market cap goes up and their valuation goes up. And so that's where we continue to try to assess where they're at and where they're going. [00:40:00] And can we be there with them in having, you know, reasonable moderated, well-managed growth ourselves on that end.
Keith Daly: No, that's great, Brian. And you brought up to a line of McWilliams. She was at Money 2020. I've heard her speak a few times now over the past couple of years, and she's great looking for a new innovation and ways to work with fintechs and build out these regulations and, you know, here at Travillian, we're getting a lot of searches and placements from the compliance risk end but people that understand this new market of fintech relationships, BaaS banking, crypto, it's not kind of the old school, just risk. There's so many different layers now you know, partnering with fintechs that you need somebody who's innovative at the compliance and risk level too. Well, thank you both.
I can't thank you enough. I know we're in November right now and it's budget season and you know, people are planning for [00:41:00] 2022 on the bank side on the fintech side. So I think this was a very crucial discussion as banks and credit unions are thinking about their plan for next year. Nikhil, best way to reach you or somebody at Narmi if a bank or credit union wants to discuss kind of next steps or just have a talk with them.
Nikhil Lakhanpal: It was again, no hidden agenda here really, of course,all in this together. So feel free to reach out. nikhil@narmi.com. We'll keep it, keep it simple. That's the cool part about being the first employee. Six years ago, you get to kind of pick your own email address. So again, that's, nikhil@narmi.com. So if I'm not the right person to speak to you about what you're looking for, I'm more than happy to loop in one of our, our wonderful team members. So thanks again.
Keith Daly: And Brian, I know I don't want to, you know, have the CEO getting both of you getting inundated with emails, but is there a, a way to reach you if they have a question about BaaS banking or you know, fintech partnerships, maybe a little looking [00:42:00] to move into that industry. Is there a good way to contact you?
Brian Johnson: Yeah. We you know, look to grow our fintech partnerships on that end of it. And we do get a lot outreaches, small community. That reputation is, is built a non so yeah, for me, it's just a head out there to bankwithchoice.com and my email address posted my number's posted on that end of it. And we have a whole team taken in those calls and like to have that at times we collaborate with other banks too, as well across the country. And yeah, so.
Keith Daly: That's great. And I just want to finish with a, you know, something you said before, Nikhil, we're all in this together.
Here at Travillian, you know, we love community banks. We want them to thrive and grow in this digital era and there's firms like Narmi, Brian's bank is doing it, or you can, you can compete and it can be a little overwhelming sometimes maybe with all the new technology out there, partnerships. But to have, you know, resources and [00:43:00] collaboration and contacts out there giving you information on how to succeed.
It's fantastic. And it's a, it's a community and we want to see the the community banks thrive. But thank you everybody for joining us today. Really appreciate. Nikhil, Brian. Always great. I know you're both very busy, so I'll let you get back to whatever is going on in your prospective lives. And thank you very much.
