“Wow, That Was an Exciting Conference!”

Leave a comment

Now tell the truth, have you ever said that after a Banking/FinTech conference? But I heard a banker say it at the 2022 FedFis Roundup.

The Roundup is a different event–limited to 200 or so, and completely focused on intimate, round table conversations, rather than vendor booths and canned speeches to mass audiences.

What made it so exciting? The focus on BaaS banks. Fully 50% of the BaaS banks in the country were in attendance, along with the vendors that support them. And passions ran high.

Dave Mayo kicked us off with a clarion call to save community banking. How? By moving into the future as a FinTech driven BaaS Bank. And by learning from other bankers through the Bankers Helping Bankers platform.

Dave did a great job firing up the audience, but the real fireworks were on Day 2, when Josh Rowland, founder and Chairman of Lead Bank, made an impassioned speech that carved out a bold role for community banks in the FinTech landscape.

Josh made a number of unique and sometimes controversial points:

  1. Community bankers know banking and customers. FinTechs know technology and fundraising, not customers. Some FinTechers in the audience, including yours truly, flinched at the strong delivery, but he has a point.
  2. Don’t be intimidated by FinTech technical knowledge–they can’t do it without YOUR charter
  3. Your core probably doesn’t get it. You may a new tech partner if they don’t.
  4. Treat working with a FinTech as free customer acquisition–their venture capital money can bring you new customers and detailed data about their activity.

That last point got my attention. FinTechs bring bankers new customers at zero cost. Across the US. That’s good for efficiency as well as risk management. Good customers? Time will tell, but the price is right.

Josh drew an equally impassioned response from Tanna Faulkner of DCI, who drove home the point that they are already helping BaaS banks, but need their bankers to give them more feedback. Her comments were grounded by Tanna’s deep banking and FinTech heritage–her father, a banker, was one of the founders of DCI. How many second generation FinTechers do you know?

I’ve never seen so many bankers passionately arguing of the future of the industry. There were strenuous arguments as to how best move forward, but no debate about the value of BaaS banks.

We also managed to have a little fun, seeing the Bellamy Brothers live in Luckenbach. And a few adult beverages may have been consumed by some attendees.

The 2022 Roundup was without a doubt the most exciting, interesting conference I’ve ever attended. Unfortunately, 2023 is already sold out. You might want to get on the waiting list.

Getting an ROI on Your Digital Assets

Leave a comment

Bankers have a huge asset on their balance sheet that they are not managing: the traffic that flows daily to desktop and mobile Digital banking platforms.  Non-bank Digital marketers spend fortunes to generate “organic traffic”—meaning people who come to their platforms because they are interested in the content, rather than arriving after clicking on an ad.  Bankers have that built-in traffic due to their trusted position in the community.  Why don’t we manage it as intensely as any other asset?

Many will tell me “we are managing it—we present ads, and some of them convert.”  Great.  That is a wonderful start.  But my experience with Wells Fargo, Fidelity, and Morgan Stanley, tells me that most of the ads I see are annoyingly off-target.  If your conversion rates are low, that’s why.

I had the good fortune to speak to Alyson Clarke of Forrester Research last week, who is a real authority in the field.  Alyson aggressively made the point that our messaging has to be relevant or we’ll simply turn people off.  And more powerful ad technologies create the opportunity to irritate people more efficiently.  And she’s right.

Too often, banks and credit unions push offers for products that the FI wants to sell.  What about offering something your consumer wants to buy?

So how can we become more relevant?  AI or other Big Data tools can surely help tune the message.  The Financial Brand often covers AI-based marketing in depth.  Companies like Sensibill can help you find clues in the vast sea of debit and credit card transactions.  Tech surely has a role in improving our ability to present an offer that is actually useful.

The only issue with these technologies is that they take time and effort to implement.  And you should implement them to make your offers more relevant. But what can you do today to become more relevant to your customers immediately?

One answer lies in a sense of community.  Facebook, Instagram, and WeChat went viral because they create a sense of community.  People connect through family ties, shared interests, or following a celebrity.

Your bank or credit union is doubtless a hub for your community.  Why not show that through providing ad space for a worthy charity, perhaps one that you already support?  Start slowly.  Put up an ad for a local blood drive or community fundraiser.  Progress to offering a coupon for a local business customer.  You demonstrate involvement in your community in many ways—why not in your Digital channels?

Experiment. Learn what produces a a response in your community. Be prepared (and prepare your management team) for the inevitable stumbles and gaffes. Digital commerce companies religiously test and compare what works and what doesn’t. We can learn from them.

Is there an immediate ROI?  No.  But you’ll train people to expect something interesting in their bank “feed” and learn how to better engage them.  Get started and give them a reason to be more involved.  It worked for Facebook.

The Digital Banking Wars Will Not Be Won With Technology

Leave a comment


After 20+ years of selling Digital Banking tech, I’ve reached the conclusion that no vendor will give your bank or credit union a decisive edge.  But your connection to your community will.

Last week, I had a long conversation with two analysts at a leading tech research firm.  They kept wanting to steer the conversation to which vendor had killer functionality today.  I told them that it didn’t matter, because all the other vendors would have the same thing in a quarter or three.  The shiny object is really important in the sales cycle, but there is no sustainable advantage to be had.

Your real advantage comes from touching your customers frequently in the Digital channel.  At Malauzai, we learned that the typical consumer uses their mobile banking app 3-5 times per week and their desktop app another 3-5 times per month.  Each of those is a chance to connect with that consumer.  Tom Litwinowicz, CRO of DeepTarget said it best: “We have to start thinking of these impressions as currency”.  

Almost all Digital vendors have some marketing capability, usually the ability to show a banner or other ad at specific locations.  That’s the vehicle.  The real question what are you going to say to them?

I’ve seen two tactics that work: 1) presenting a relevant offer, and 2) delivering meaningful community information.

Presenting a relevant offer requires marketing data analysis to make sure the right customer sees the right offer.  The offer has to be focused on the needs of the customer.   For example, offering a college loan to a retiree sends the message that you haven’t really taken the needs of the consumer into consideration.  Several Digital Banking vendors have an offering in this area, but companies like DeepTarget and Terafina are leading the way.  And don’t think this has to be an expensive or long-term analytic effort.  It doesn’t.

The second option, delivering meaningful community information, may be even more important in nurturing a long-term relationship with your customer or account holder.   DeepTarget proved this point by assisting their FIs in rolling out Covid-19 information to their customers and members.  At the time, I thought it was a nice gesture, but couldn’t imagine that consumers hadn’t already been saturated with information on that topic.  I was flat wrong.  Best in class institutions were getting a 10% click through rate on the public service ads. (A good clickthrough rate on a Google ad is 0.5%).  Important information from trusted FIs was valued by consumers.

That tells me consumers would value other, community oriented information.  Your FI probably supports a charity—why not give them some visibility on your apps?  You undoubtedly bank businesses in your community that would love to offer a discount to your customer.  Why aren’t we doing this today?

You might be thinking “what’s  the ROI on promoting community events?”.  How much effort did you put into customer retention last quarter?  How often do we brag about being community or member oriented?

Each customer interaction in Digital channels is a chance to promote our products and connect with our communities.  We need to spend Tom’s “currency” much more thoughtfully.

Disclosures and Thanks:

DeepTarget is a consulting customer

Several friends have helped develop my thinking in this arena:

Jill Homan and Tom Litwinowicz of DeepTarget
Amber Buker of Bank Director

Not Everyone Loves Startups

Leave a comment

This week, I met a prospective customer who was interested in our Apps, but had a real problem.  “What happens to me when you get acquired?” he demanded angrily.

It was a fair question. There are many cases where a young tech company gets acquired, the founders ride off into the sunset, and service goes to hell as the company is absorbed by a large acquiror.  Customers buy innovation from young companies, but worry that that innovation may evaporate post exit.  It has happened more than once in Fin Tech.

There is a real clash of interests here: entrepreneurs don’t reap many financial benefits until a company is sold, but customers may suffer in the aftermath.  And it doesn’t help that your customer visualizes you sailing away on your yacht while they are still in the trenches. (You are all reading this on your yachts, aren’t you?)

I told the prospect that while we definitely want an exit, we are hoping for an IPO that will let us manage the company indefinitely, and in any case, an exit is some years away.  I also reminded him that it’s a two way street–we have had customers get acquired as well.

That prospect taught me a two good lessons: 1) entrepreneurs need to be sensitive to the fact that their customers don’t always have good experiences post exit, and 2) a person in a long term career with a larger business might view an exit very differently than you do.  I’m going to try to show a little sensitivity and remember to look after my customers when I’m fortunate enough to get to an exit.


Counting Angels

Leave a comment


How many Angels do you want in your cap table?  Mark Suster wrote a great piece in July giving his answer: “If all else fails, angel-load away! If you can’t raise from a few strong angels, from seed funds or from a VC then raising from a ton (let’s say 20+) angels is a perfectly acceptable strategy. There. I said it. It’s not terrible, it’s just not ideal if you can avoid it. ”

Well said, Mark.  I often hear founders fretting about “too many Angels on the cap table.”  Everyone has a vision that one or two “Super Angels” will write million dollar checks and all will be well.  It’s good work if you can get it!

The reality is that many successful companies have more than 20 angels in the cap table.  MindBody (MB on Nasdaq), just went public with a $500mm market cap, and they had a significant number of Pasadena Angel as investors.  It hasn’t seemed to hurt them.

The key to managing your Angels?  A strong lead and experienced Angels help, as Mr. Suster noted.  Most reputable Angel groups can supply both.  I can’t imagine dealing with inexperienced investors–it’s hard enough with veterans.

One thing you can do is to communicate early and often.  You will create havoc if you fail to keep your Angels (or any other investor) informed.  Put yourself in their shoes–they are busy and have multiple investments.  They don’t live in your world.  In other words, they have no idea whether you are succeeding wildly or about to crater.  And yet they’ve committed their hard-earned cash and periodically wonder what is going on.  Take the time to shoot them a “what’s up” email monthly, and serious financial reports quarterly.  You will rarely hear from them.

One CEO I know did just that, and then got an irate call from one of his larger Angels.  It turned out that reality didn’t quite match the forecast, and the Angel wanted to know what the heck was going on.  Needless to say, he was initially annoyed and didn’t particularly want to deal with the issue, given that he has a complex business to run.  I reminded him that once you cash their check they have a right to call.

As we talked it over, he realized that he’d been working so hard that he hadn’t communicated for months and things had changed.  There actually was a tremendous amount of good news, but unless you heard it in context it could be easily misconstrued.  It will all get sorted out in a brief phone call, but the lesson was clear: no surprises.  Send that email.

And if you’re still thinking it would be easier with just a few larger investors, let me share a story.  The company I work for, Malauzai Software, was initially funded by a small group of industry insiders, and later rounds were all done with strategic investors.  No VCs, no flocks of Angels.  Sounds great, right?  It is great to have a small, knowledgeable pool of experienced industry veterans as investors.  The bad news?  They ask hard questions. REALLY HARD questions.  They know all the details and all the metrics because they are industry experts.  It’s a different kind of challenge, but it’s still a challenge to communicate business complexities to investors, regardless of their sophistication.

The answer is the same regardless of who funds you: keep your investors informed and close to you.  You took their money and you may need them again.

True Believers and Hired Guns

Leave a comment
Entrepreneurs / Sales

The Professionals

There is a conflict in many startups that no one seems to write about–the clash that can occur between the founder and the professionals they bring in to help build their companies.  It was highlighted for me by a conversation with a friend this week who had just joined a young company in the Bay Area as as a CFO.  He remarked that with just a few tweaks in the business model, he thought the team could get to an exit in 18-24 months.   If it didn’t work out in that time frame, he would be off to find the next opportunity.  It sounded pretty mercenary, but it was an honest reflection of his world.

It’s a real culture clash-the founder who believes in his vision heart and soul, versus CFOs, Salesmen, and Operations pros who are there for adventure and profit.  The ultimate goal is shared–building a successful company.  The motivations, though, can be very different.

For the founder, the company is a reflection of them.  Successes or failures are very personal, and they have a deep conviction that they will succeed no mater what the odds.  For the teams they hire, it’s professional, not personal.  Many of those professionals love to build companies as much as founders, but at the end of the day, there’s always another opportunity waiting.   They see every flaw in a company along with the big dream. By definition, they are not “all in” like a founder, even if they get seduced by the dream once they join.

The attitude of the professional members of the team can be downright offensive to founders and their close associates.  Their views tend to be more analytical and less optimistic than the founding team.  I should know, as I’ve offended my fair share of founders with candid comments (and maybe a little arrogance).

So what’s a founder to do as they build out their team?

  • Accept that you will need to hire professionals as your company grows, and know that they see the world differently.
  • Be ready for the fact that they will tell you things that you don’t want to hear and point out uncomfortable realities.  Listen.  They might even be right.
  • Hire only the best–those with proven success.  Forget friends and family hires.  You are betting your company on their talent.
  • Take heart.  The good ones, over time, will start to become true believers.  They will never match your commitment, but they’ll give you long hours, high performance, and loyalty.

Oh, and the picture above–that’s Lee Marvin in “The Professionals”, 1966.