Fintech Hustle
Join host Sam Kilmer, fintech advisor, in unscripted conversations with top fintech industry leaders. No planned corporate talking points, no scripts, no pitches. Just useful advice and insights. To keep it lively, Sam often brings co-hosts like author/researcher Ron Shevlin, former American Banker editor Mary Wisniewski, and former Bank Director President Al Dominick.
Fintech Hustle
Samantha Paxson and Nathan Baumeister
Samantha Paxson from Co-op Solutions and Nathan Baumeister of Z-Suite join Sam and Mary to discuss aligning growth strategies with consumer needs. You'll also get a peek into Samantha's philanthropic journey with Shades Up for Kids, blending personal passion with the credit union ethos. Samantha and Nathan share stories from the trenches on fostering collaboration within financial organizations, breaking down operational silos for more secure, customer-focused solutions.
Well, hello out there. Welcome to another episode of Fintech Hustle. I am your host, Sam Kilmer, managing director of Cornerstone Advisors. Contributor to Gonzo Banker.
Nathan Baumeister:And.
Sam Kilmer:I am really, really jazzed to be here with the two industry rock stars today to talk shop about what's going on in the street. I'm joined by my co-host today, guest co-host Miss Mary Wisniewski, Cornerstone Advisors, and we are joined by two industry rock stars straight off the road, I suspect although we've just come out of the holiday so maybe we had a little bit of downtime but Samantha, sam Paxson of Co-op Solutions. Hi, sam, hi.
Mary Wisniewski:Good to be here.
Sam Kilmer:Glad to have you and CEO and co-founder of Z-Suite, Nathan Baumeister. Nathan, hello.
Nathan Baumeister:Hey, how's it going? It's going great, going great I should have mentioned.
Sam Kilmer:Sam Paxson is the chief experience officer of Co-op Solutions and I guess you know one thing is to get things kind of kicked off. I just always like to talk about on FinTechCustle is talk about the lives of people in the industry and, sam, I know you've been beyond the work that you've done at Co-op Solutions. You've done a lot of work in establishing shades up for kids. You know mad respect and tip of my hat to what you've done there. But what I'd love to just hear about the day in the life of Sam the other Sam on podcast, and both in what you've been doing with Co-op Solutions and the rest of your I know you're on boards and all kinds of great stuff as well as what you do with Shades Up. So take away Sam. Tell us about a day in the life of Sam Paxson.
Samantha Paxson:We're Sam squared on this podcast today, so I like the Sam power here. I meet with a lot of credit unions. I do a lot of speaking engagements on our proprietary research that we've done at Co-op and now Co-op and FSCU. You know that there's been a merger in our industry so we've been out talking to so many credit unions about where they should be placing their strategic bets and so many leaders right now are just really almost paralyzed. They're what they have done. Their set of assumptions have changed and so they're really leaning on industry thought leaders, q-sos advisories, so many organizations like Cornerstone, like everybody here today, to say where should I be investing? And so my day is really advising credit unions on their growth strategy and really helping them design their organizations as closely to the consumer as possible so that they can have greater precision around their P&L. So I do that. I go to Pilates, I hang out with my son and travel around the country and meet up with so many friends. So it's just so fun to be here virtually with each of you.
Sam Kilmer:That's great. That's great. And tell me a little bit about Shades Up. I just think that's an interesting story in and of itself. That's a personal story too. It is a personal story.
Samantha Paxson:It is a personal story. So I have to fly a lot, I go out and the credit union industry we like to meet up, so I get to be on airplanes a lot. And what many people don't know is I'm a very fearful flyer and so I have all these things that I do to help myself not be afraid when the plane starts going like this. And I'm in this little metal tube 30,000 feet in the sky. And about five years ago it's been five and a half years since this started five years ago, I was on a flight that was really bumpy and I was sitting on the aisle seat and I put out a tweet saying I don't understand why people buy the window seat and they shut the shade, why A girl needs context, and so my friends in the industry started doing this thing, where they were saying Shades Up for Sam and they would take a selfie with themselves in front of this window shade, and so I just thought well, this is an opportunity. We're a mission-driven industry. We should focus on how to be local and support the National Credit Union Foundation, credit Unions for Kids. And I said what if we raised? For every shade raised and selfie taken, that we donate $10 to Children's Miracle Network Hospitals and to the National Credit Union Foundation and it took off. So since the time that it started we've raised about $100,000, with people raising their shade and showing their support for these two critically important platforms. That really demonstrate our mission.
Samantha Paxson:I know at Cornerstone Advisors you all talk about financial performance. Health and wellness really go together in terms of people's financial performance and people get into medical debt. They have so many financial pressures. That demonstrate your mission through the ways that you help the average consumer with their day-to-day challenges in maintaining their financial performance. These things that the National Credit Union Foundation are doing and Credit Unions for Kids are doing is really aligned with Credit Unions mission of helping their members in their daily financial lives. So it was based on my fear and then it's turned into something good which helps me when I'm on a plane and not feeling so secure that I'm really raising my shade to help kids in their financial lives and help families.
Sam Kilmer:Well, I love how it came from something personal and then it sort of built out from there. It's sort of like we always hear people talk about authenticity, but it's almost like you don't have to aim for that. Did come from that place and so mad respect for that and love to hear about that.
Samantha Paxson:Well, I'm a big believer in turning something negative into a positive always, and why not do that in something that is really aligned with who we are as an industry? And so I just and I'm what you get. What you see is what you get, so I'll show you all the time.
Sam Kilmer:Go ahead, mary.
Mary Wisniewski:Like all my awful moments, I like to always write about them five to ten years later, because I'm like all right, yeah, exactly.
Sam Kilmer:And if and if I, let's see. So, if I, if I came to meet you, sam Pax, and through Shades Up for Kids and traveling similar to you, you know that steel tube Up in the sky, I think, I think Nathan, I think probably you and I bet, probably at an AFT meeting, I although it might be possible that it was somewhere else, but now it all sort of runs together because of that world that we came from it. I've even got my, I've even got my AFT coffee mug here, yeah, yeah. So, but tell us, tell us a little bit about the day in the life of of Nathan bowmeister, at z sweet and and with some, many of the other things You're doing.
Nathan Baumeister:Yeah Well, I think that crazy pretty much sums up a day in the life Over over here at the bowmeister household. So we have I mean first I'll start with the actual craziness for kids from 12 year old to two year old, and the 12 year olds are twins, so you know, pack in some extra extra fun there Got a wonderful standard poodle that we get to play with. So we have a. We have a full household. I bet you could imagine they keep me on my toes all the time.
Nathan Baumeister:And then I have this wonderful privilege of Getting to be the CEO of z sweet tech, where we work with so many Financial institutions across the United States, and so I'm constantly talking to my leadership team and trying to figure out what's going on there and our different team members and figuring out how their lives are going, and Then talking to a prospect and then jumping on a plane to going to an industry conference. And then, you know, within there, you know we always have to make sure that we make enough time for delicious food, right. So you know that's a. I always make sure that that's a big part of my life, because if you're gonna have to eat, you might as well make it enjoyable, right.
Nathan Baumeister:And then I, I have a problem. I have too many hobbies. Sam, you know you can see my guitars in the background. I can see I'm not the only one with some guitars in the background is Obviously we share some common interests there. But I love rock climbing, I love trail running, I love Crossfit. I mean, you know I it's crazy, that's. I think that's the way I started, that's well and is the day in the life. Definitely is crazy, but it's just so much fun and so engaging.
Sam Kilmer:Hashtag crazy Mary, were you gonna. I think I heard pop in there for the question what's what's your favorite delicious meal?
Nathan Baumeister:So you know it's interesting because I just love food so much that there's really no style of food I don't like. I will say that for a long time I perhaps had an addiction with bacon cheeseburgers. I may or may not had eat. I ate them Maybe every day. So I had to. I had to set a rule for myself. Like I'm a big, I'm a big believer in living by principles, but I also realized that I'm not disciplined enough to always live by principle, so I need to set some rules. So for about a three-year period I had a very hard and fast rule that I could only eat one hamburger a week Because it got out of control. Now it's back in control. So I'm I'm good now. I've gotten past the addiction. But you know, I love all types of food but I you know, if I get right down to it, it's probably that bacon cheeseburger that I end up with.
Samantha Paxson:Nathan, it sounds like this is why you have trail running and Rock claiming and those other things, and equally as a hobby and a passion.
Nathan Baumeister:Yeah, some people ask me why I work out so hard. Like do you enjoy? It's like no, I love to eat.
Sam Kilmer:Yeah, I used to call that. My wife and I go to vacations. I have a tendency I'm one of these flawed individuals that I get up in morning. I have something to feel like. I'm kind of like it's my feeling alive. I've oftentimes referred to as earning my beer, Um and um. My wife's always like why can't we just relax?
Nathan Baumeister:But anyway, uh it is my relaxing, that is my relaxing. I do the same thing.
Samantha Paxson:I'm a morning walker and hiker. I just spent a week in Sedona hiking, doing meditation and yoga, so I'm with you.
Sam Kilmer:Good stuff, good stuff. Well, I'm really curious. You know, given all of your travels, you guys are both on that proverbial steel steel tube, constantly going from industry event to industry event, meeting audience prospects. I just would, I've loved your sense, for you know, now, here we are. 2024, um Kind of had a really interesting couple of years in fintech.
Sam Kilmer:You know, we kind of went through. If you look back, like, what is it sort of? If you were to take 2019 and then take out 20 through 23, which was kind of an interesting little bubble thing, it would almost look smooth. You know what I mean. Like, if you just looked at it Before and after, it would be. This would probably be a great point where I'm using graphic tools instead of my hands. But you did what I mean that there's this, that that there was this really weird bubble that happened over the last couple years of rapid, sometimes even vacuous, interest in a lot of things and then a falling off at it. But it seems like it's kind of Maybe more normal, I don't know.
Sam Kilmer:I I was just really curious for your take on, you know, on the industry right now. What do you see right now that Appeals to your think is working really well in the industry right now, when you're in your conversations with other banks and credit unions than tech companies, what are you really jazzed by right now? What seems to be working well? And, as you might imagine, we'll come back around to the dark side and ask you what you think may not be working. Great, love your tech. I'm sure it's working well. I don't know, sam, since we started with you before Nathan, you wanna give it a shot?
Nathan Baumeister:Yeah, I'll tell you, the thing that I have seen over the last couple of years, more so than ever before, is the willingness to collaborate, I think really has increased quite a bit, sam, you and I. You mentioned AFT. It's an association for financial technology companies. It's been around for over 50 years, but we get together twice a year to figure out how can we help the industry be better, even though many of us are competitors. But and so that's been there for a while, and I know the credit union movement obviously has a lot of that in there as well, and you know banking associations have that as well but so the big difference, or the big change that I think I've seen over the last couple of years, is that all of the communities are collapsing to figure out how to work together, cause for the longest time, the technology providers within the banking industry are the FinTechs we're seeing as something scary bad, perhaps competitive. You know some folks that you have to stay away from, and I'm just really seeing this tangible collapse of the communities for all of us to realize that we actually all coexist and have to work together to be able to do it. So it's not just reaching out to competitors between, you know, bankers to bankers, credit unions to credit unioners or FinTechers to FinTechers. But actually, how can the whole ecosystem come together? And I think one of the most tangible places that I've seen that come to action is all the different VC funds that have been put together, where financial institutions are actually the ones that are putting the money in place to invest in and drive growth for FinTech companies and technology providers who are working on solutions that are helpful for the greater ecosystem, and then, rather, you know, putting it back into the marketplace to make it all better, to make sure that they're doing stuff to help the industry move forward.
Nathan Baumeister:You know I've been the beneficiary of it at Z-Suite Tech. You know we went through the ICBA accelerator at the Venture Center early on. That absolutely helped us. I mean we were able to get in front of like 120 financial institutions in a three month period at the time that we were developing our product. I mean you can't get that level of feedback in any scenario I've ever been a part of and that fundamentally changed what we could do as a company. And then it ends up that, you know, from our cap table perspective or our investors two of our VC firms are Jamf and Topp and BankTech Ventures. Two of these bank led VC funds. So that's just one tangible example, but there's so many more. But that's what I think is really. We've made some awesome progress and I think is helping a lot of companies out there be more successful.
Sam Kilmer:Really interesting, sam. What about what are some things that you see going on right now that you're jazz buyer and think are working?
Samantha Paxson:with. Well, I'm excited to see exactly what Nathan just talked about is that idea of collaboration, and I think it comes down to why. Why are we collaborating so much? Why is this important right now? And I think in the timeframe that you just talked about 2019 to 2024, we have these set of assumptions in 2019, like we can lean on the products that we've had and we have these competitors out there and the business as usual is still working and we know this change is on the horizon. But we can kind of wait and in the last four years, we have had such an abrupt smack in the face about what we need to do differently as an industry, and I think Nathan is completely spot on that.
Samantha Paxson:Instead of seeing each other as competitors, where FinTechs are looking for scale and traditional financial institutions are looking to take these members, these consumers, out of dormancy and help to engage them to improve deposits and liquidity and growth, what we're seeing is that, instead of moving, instead of having such a focus on product centricity, the why is how do we engage the consumer?
Samantha Paxson:Every company in the world today is battling for consumer attention and the consumer has no patience, no patience at all to be able to, and they're incredibly empowered, so they have this ability to switch and move and get the use cases that they need to get their daily lives, their daily financial lives and their daily financial performance needs in place over here and then have to worry about long game what that means for their long-term financial performance.
Samantha Paxson:So what I'm excited about is I'm seeing bank CEOs, community bank CEOs, credit union CEOs say, okay, we need to design ourselves around the consumer and when we do that, we'll improve utilization of our FI and pick and prioritize the use cases that will engage them in the day to day, help their short-term financial performance and engage them long-term with those big ticket items that improve our overall credit unions financial performance or the banks financial performance and the member or the consumers financial performance. And that's really where most brands are going, the most successful brands that are out there today, brands like Starbucks, tesla, apple, amazon. This is their strategy, and so that's what the consumer expects. And what a beautiful thing to collaborate for FinTechs to continue to build scale and for financial institutions to realize active members that improve deposits and liquidity and long-term financial performance.
Sam Kilmer:Stuff Mary, we need to get you in here. Any thoughts on some of Nathan or Sam's thoughts, or I guess the other thing would be is there anything that's really jazzy and you going 2024 here?
Mary Wisniewski:Well, I'll take you back. I'll take you back off of this growth theme. Sam, I definitely want to ask you a little bit more about this, but first I'll give an example. Right before the holiday, I interviewed CEO of StellarFi who's trying to. It's a credit building product and that tracks billpapers.
Mary Wisniewski:But that startup, very early stage, bought a bunch of debt, like from debt collectors and then forgave it as part of its customer acquisition strategy. And I have never heard of anything like I mean, imagine you've been dodging a debt for a long time and then you're like oh, what's the startup that just forgave me? Like for them to even connect those dots where the consumer is interesting, but like, to me that's like novel example of how to try to grow your customers. I think that's what it's trying to do with this corruption based product that. Sam, I wanted to ask you more. You mentioned at the top of this podcast about helping credit unions grow, and I don't talk with credit unions all the time, but enough to know. One of the issues that seems to be on the top of their minds is like how do we get younger members? And I'm curious if you've seen any interesting strategies there.
Samantha Paxson:I think they're well I come back to they're finally understanding their existing consumer base. How do we take our existing membership base and get them to be active? Not just, but this comes back to not being product centric and you know most financial institutions bread and butter is on the lending side. That is every five to seven years. Well, who needs a loan? My 12 year old son, who's out transacting every day on his green light card, does not need a loan, but he's building loyalty and usage of an FI actually a fintech at age 12. Nathan and I both have 12 year olds.
Samantha Paxson:So it's those kinds of strategies that I think are creating more creativity and deeply understanding the user journey or the consumer journey and saying how can we help them, almost like jobs to be done, how can we help them with their needs today? That then makes them sticky and want to use us for more. That then helps us to gain their trust and their loyalty for their needs in the future. And I'm seeing this play out. I serve on the board of a university credit union and they're realizing that when students, their main acquisition strategy has been new student orientation, you know, for those 18 and 19 year olds that are coming in as new students and saying, hey, join the credit union, and they're finding that most of them are already banked or are already using fintechs and don't need a traditional FI. They don't know why they need a traditional FI. So I love this new thinking about how can we introduce the simplest things like P to P payments, like contactless payments.
Samantha Paxson:There's so many merchants that don't accept cash anymore. Young people get birthday money and allowance money, but they need to be able to use it digitally because merchants aren't necessarily accepting cash these days and it's not easy to carry. So it's those kinds of things about. We kind of get in our own operational heads as financial leaders in the banking and FI space and we need to really lead with empathy and think through the mind of the consumer that we're seeking to serve, and once we deeply understand that, know their behavior, we can serve up value bundles that create value innovation that you were just talking about, that help grow these FIs, and I think we're starting to see that. We're starting to see the mindset shift toward a growth strategy mindset rather than a fear-based mindset. They were realizing we need to change and I'm loving that. I'm loving that leaning into being bold and to trying new things.
Mary Wisniewski:Yeah, I mean it came out of the dark side. I don't know if you all saw that Monzo, I think with Monzo did a financial rap of people spending trends and so it sort of backfired on social media of the people being haunted by their oh, I spent a lot on fast food, oh, here's my alimony.
Samantha Paxson:There's like there are there are wrong ways to do this, but yeah, it's interesting to Test and learn as they say that's such an opportunity, though I think what you just described is a huge opportunity because the consumer is so empowered. They're able to pull down any financial apps, sign up for any subscription, have their, their credit card or their debit card Embedded into these apps and they don't know their financial position. Ron Shedlin, your colleague, says the average consumer has 40 different financial relationships 40. So first the consumer needs to understand their financial position and any use case that a bank or credit union can offer that would say like hey, here's how you're spending.
Samantha Paxson:You have this many subscriptions on Apple. You have Hulu and Disney and Netflix, apple TV and all of these things that are so easy to buy. Your kids have subscriptions to Nintendo and and PlayStation and they're buying things for fortnight like there's all these things coming through. That adds up and then the consumer can get scared and then they don't. They need to re-aggregate their understanding of their financial position and then be served up solution sets and can help them take the best next action that is seamless and that helps them understand and give guidance for what they should be doing next. So I'm liking that FIs are kind of Realizing this and saying there's some simple things that we could do. That would create stickiness and engagement and attention. That would build trust for that younger consumer to use us and I'm liking seeing that kind of thinking happening in our industry.
Sam Kilmer:Yeah it's interesting to me too that I I can follow that from the consumer side of the business side to. One of the things that's really jazzed me in the last several months is Nathan. You mentioned the Jam Fenton and or Jam Fenton and Bank and bank adventures. Nice what they're doing. I I've been thinking back on some of those events and thinking how prevalent some of the treasury or inscriptions a lot like you know In the area that you're into Nathan meeting.
Sam Kilmer:I think to your point Sam earlier about. You know everybody was chasing loan volume and all of a sudden didn't take the positives for granted and for credit unions and and even the banks in many cases. You know it's certainly get the short of stuff and say what are we doing relevant for consumers and, flip side of that, also business clients? You know we don't just want to be commercial state loans Funded by hot consumer money but we have some industry needs that were Verticals, that were particularly good at as a bank.
Sam Kilmer:If we don't have some good, solid treasury type tools or things around payments blows that bring value for the businesses, it's seeming like, whether it's square or whoever sit here and pick a disruptor or pick a competitor, it's sort of the same thread. It's just that the pain point is, in addition to being a consumer, the pain point is Is a business, and I know that, nathan. I think that's probably where you're spending so much, so much of your time Helping think people think through, because, at least from my understanding of what Z-suite is focused on. But it seems like the whole point of cash management, whether it's for an individual or for a, a business, we just cannot take that, we cannot yield that. A community bank or credit union shall not yield that To them to the outside, you know.
Nathan Baumeister:So that's a threat Nathan.
Sam Kilmer:Yeah, it's the the, the principles exact same, whether you're on the retail side or the commercial side.
Nathan Baumeister:It's all about who's your customer. What are their pain points, what are they struggling with? How can I help? What are natural and normal ways that I can offer services to them? And you know, one of a joke I have made many times, which I'm not sure if it's a joke because it might cut a little bit too close to the truth. But I always tell things. I have an audience and I have, you know, fintechers and bankers sitting there. I say I'll tell you how both of you do innovation. Here's how a banker does innovation.
Nathan Baumeister:You go to finnavate. You get excited about something. You then talk to a customer. You get excited about something. You then talk to a whole bunch of FinTech companies and you say, hey, look at me, I'm innovative because I was exposed to a bunch of innovative companies and I decided to move forward with some of them. Right, some people have referred to that as the FinTech petting zoo.
Nathan Baumeister:I had one financial institution that they were so excited because we met with over a thousand FinTechs this year. That's like and this is a good thing. It's like, yeah, that's how the innovation team is working. And then you move over and it's like okay, I'm done making you know, poking fun a little bit at Our financial institution colleagues. Now I'm gonna poke fun of my own colleagues on the FinTech side. Here's how we do innovation. I have sat in a room for the last three days Not eating anything, thinking about the world and I have seen, and here is how the future is gonna be, and I am the one that will make it happen. And as soon as I make it happen, I'll build the whole product. I'll go out to the marketplace and all of you will tell me how amazing I am and buy my products Right and that's just the way.
Sam Kilmer:They would also get you a bacon cheese.
Nathan Baumeister:Oh well, they better.
Sam Kilmer:Yeah, as you say, if you're sitting in a room for three days.
Nathan Baumeister:But the the fundamental flaw in both of those? There's neither of them work, because, in the end, well, who's actually gonna do the things? Like, who are you actually building the thing for? Who's gonna use it? Like? What Problem are you trying to solve? Like, innovation is super simple. Who am I trying to serve? Get to know him super well. What is hard? How can I help you? What are you wanting to pull your hair out? And, man, if I can just help that person just a little bit more, or don't pull any hair out, sam.
Sam Kilmer:So you know.
Nathan Baumeister:Don't worry, I won't be too far behind you in a couple years. But but find out what those are and then fill the need, solve the pain, help them Right, like that's innovation, that's success. But it's so funny and this isn't just in our industry, by the way. This is true for pretty much any startup company. This is true for any new product feature or any new product line that a new company is providing. Most of them failed because they just do it within the my own viewpoint instead of pushing out.
Nathan Baumeister:So yeah, exact everything that Sam was saying is is true for the commercial side as it is for the consumer side. I actually think we're in an amazing Renaissance, if you will, on the commercial side, because most of the digital transformation that's happened over the last decade has been on the consumer side, and the reason is is because the consumer problems are easier to solve and they're more uniform. The commercial side the problems are a lot more complicated and there's way more niches, but the ease of technology builds have gotten Easier and easier and easier with all of the. You know I don't not going to name all the tools why it's made it so much less expensive to create more complicated software, but there's a whole bunch of stuff that's fed into it that now we're able to take a lot of these digital Transformations that consumers have been benefiting from and applying them on the commercial side.
Samantha Paxson:I love it's. It's all about the, the user, the consumer, that the end outcome that we're trying to create. I mean, nathan, you were just talking, I love this heading zoom idea, but it's like the activity for activity sake makes you innovative and it's really what outcomes are you driving for the consumer? I've said this externally and some people are kind of like what does that mean? But the member or the consumer is the P&L like.
Samantha Paxson:If you design yourself as close to the human that you're seeking to serve, you understand their behaviors and you're able to serve up value bundles. I call it value innovation. If you're able to do value innovation, you're able to grow instead of having your revenue engine under attack. You're able to really understand gosh, I can create this flywheel effect of Designing or bringing together even existing solution sets that I have that solve for needs that the consumer has, and then I'm able to grow. This is a new idea. This is this is actually an old idea that we're finally Realizing works and we're seeing other brands. Just like Nathan said, this is the strategy of most, most companies today and those that really are good at it and really deeply understanding their consumer Are able to thrive really fast.
Sam Kilmer:Was busy Speaking of us. Good evening.
Nathan Baumeister:I was just saying, isn't it more fulfilling too? Yes, I mean, as a human, what are the things that actually bring you true joy? Is it creating more profit or more revenue for a corporation of some sort? No, it's helping people. It's tangibly seeing that you're making someone's life better and that you had a part in that. Like that's awesome and that makes me want to work even harder and do even more, and stuff like that. So when you do that, it's just I mean, life is just more fulfilling if you focus on stuff like that.
Samantha Paxson:Absolutely.
Samantha Paxson:And organizations are becoming more anticipatory. When an organization understands what I'm needing to get done in my life I travel all the time I need to understand okay, where are all these accounts and how can I re-aggregate them? And how do I understand how I'm doing? And, gosh, I need to be able to get internet access on a plane and be able to buy my Starbucks and send donuts to my 12-year-old back at home, Like I want to be able to do that super easily and so not only meet the need to just make my financial transaction happen, but then help me attain an outcome that I'm trying to a savings goal, a short-term goal that I'm trying to accomplish and that makes me really happy. I just want to live my life, and so companies that make that, that understand me and demonstrate that they're anticipating my needs, bring me joy and then that creates good financial outcomes for them. So I love that thought, Nathan. We should talk about that more.
Sam Kilmer:Well, okay, so if that's the positive side of things that we're getting joy from and seeing working well, I mean, other than the petting zoo, which I love that, other than the petting zoo negative, is there anything else that you, when you guys, look at in the industry, right? Now either you're just bombed by or you said, man, that could work a lot. Speaking of pain and what's making people pull their hair out, what makes you guys pull your hair out in the industry right now? What do you think could be done a lot better?
Samantha Paxson:Well, I have some immediate thoughts. I mean the CEOs that I talked to yesterday. They say, sam, I'm bought in, like I know I need to do this, but I'm afraid. And I'm afraid because not only is our revenue engine under attack from us getting in our way and us leaning on old paradigms, but our revenue engine is under attack because of security, because of the CFPB and fee you know coming at our fee income, because of technology barriers that I need to understand my tech environment to know if I can actually connect in to all of Nathan's FinTecher friends to say is that going to work in my core environment and my digital banking environment, my payments platform? How do those things all fit together? For me to add these use cases really easily, because I don't have a developer on staff and they just get. What frustrates me is we've created a lot of barriers and in our business to be able to grow them and meet the needs of the consumer, and that's created inertia that is making people kind of paralyzed.
Samantha Paxson:And then there are things that are making it harder, like the threat, the security threats and fraudsters have just really amped up their pursuit of all of this engagement where other companies are winning. So there's a thought around sustainability If we build it and they come, how do we sustain that business and keep that income safe and keep members safe in the meantime? So I feel like we have opportunity and we have fear, and how do we bring those things together in a really healthy way?
Sam Kilmer:What about you, Nathan? What bugs you when you're looking out there? You think that we can do a better job in the industry.
Nathan Baumeister:You know I have a lot of thoughts and a lot of it is self-reflection a little bit as well, I do think. On the FinTech side, on the technology side, I still think there is too much of an obsession with the consumer and they need to focus on commercial and they're very, very underserved the commercial use cases, and you're starting to see more and more FinTech companies coming up in that regard. But we have a long way to go. There needs to be a lot more technologists and the problem is that technologists usually the way founders usually come up with the problem is they have their own problem and then they try and fix it. And so what is a common experience that pretty much everybody has? Well, we're all consumers, so it's easier to identify what problems exist. It's harder to find out that property managers in Massachusetts are pulling their hair out because the security deposit laws there are crazy. That's harder to find out than your average Joe. So pushing towards that and figuring out how to build ecosystems that drive that, and again, jamfintop, banktech Ventures some other folks like that are helping to drive that to make sure that funding is going into those places and I think the industry is taking note there. But on the financial institution side, a lot of my thoughts revolve around what Sam is sharing, and part of it is any organization is only going to be able to be good at a few things. That's just been proven time and time again across all industries, across all the years that we've been studying.
Nathan Baumeister:Business and financial institutions are in a hard spot because they have two different businesses that they're actually running. One is compliance, security management, information, being good stewards of money, making sure that they're not taking too much risk and managing those risks, and that, in of itself, is a discipline that's extremely important, and, in fact, that is what is causing the resiliency of the charter and the value of a charter in the US economy. However, they also need to be good at identifying consumer pain, being very proactive in innovation, and the thing is is these two things are actually many times opposed, and so how is it that you can create an organization or, I might state this in a different way how can you surround yourself with the appropriate team members? So, when you look at your organization, as well as all the other organizations you depend on to do, what you're going to do can actually fill the whole picture of what you need to be successful, and this has especially become true, or became super pronounced in this last rising rate environment, because, if you actually look back, the large majority of the CEOs and CFOs of financial institutions right now have never operated in a rising rate environment and now they are, but they don't have any muscle memory or experience to go back from. You know, a lot of them are probably in their entry level positions, maybe starting getting up into middle management, and so there was a huge focus. I mean, quite honestly, there were several financial institutions that we were talking to that just disappeared the last year. They had really important initiatives that they were working to be very, very focused on growing and trying to do all these innovative things, et cetera, and they just disappeared because that the management of this rising rate environment took all of their attention.
Nathan Baumeister:And now you throw on the additional regulatory scrutiny that's coming up Some of what Sam was talking about in regards to fraudsters, in regards to cybersecurity and how they're getting smarter and better and harder to stop. But then you also put in that you know, with banking as a service and embedded banking and a lot of scrutiny that's coming around there, now all fintech companies are being painted as the same as well. Every fintech is as dangerous as a bass technology provider. And you know they're sitting there like what am I supposed to do? And I think that's very, very difficult and you know, I wish I could say I have a solution or anything like that. But it's a. It this is, this is where we're at. This is we need to figure out how to do this, and I don't think there's a. There's a very straightforward path that just says well, if we all do this, it'll, it'll happen.
Samantha Paxson:I like describing that healthy tension between those things, though I mean, I feel like, nathan, you just gave a little mini roadmap to a C-suite of an FI to say, like, how do I make sure that I have it, that I'm not too all in on the compliance side or too all in on the growth side? You kind of have to have that balanced approach to make sure that there's there's maybe a healthy that we don't know over and that's on fear and and and compliance, so that we you know, I've I've heard somebody say, like I know how to stop fraud, we'll just stop all transactions.
Mary Wisniewski:Yeah, well then you shut down your business.
Samantha Paxson:You know, like, like, we need to make sure that we're, that we have a really healthy balance between those things, and those can be positive. I mean that that's a this, this idea of just seeing this as an opportunity and not this place of paralysis, is a good thing. So I'm, and I'm seeing so many.
Samantha Paxson:You know we've done research for the last five years or so looking at who's winning in the space and, you know, at the beginning of the research that we did with EY and Mastercard and Feline is that PayPal was the most trusted brand in the in the financial services space because they just demonstrated that they had the capability to serve the consumer. This has slowly changed over the last few years in that JPMorgan Chase and the Lashers research that we did was the most trusted because, they're demonstrating they have the capability to serve.
Samantha Paxson:How did they do that? They started buying up FinTechs or ingesting FinTechs into their environment so that they could both anticipate the consumer needs and meet those needs, so that they're not slowly being disintermediated use case by use case through the empowered consumer, but they're also have the compliance engine and the safety side of the business in play. So it's really interesting to see this trend over time and really see it as an opportunity to kind of lean into both in a healthy way.
Sam Kilmer:Yeah, I think you used the term collaboration earlier and then Nathan used the term collapsing. It's an interesting thing. Talk about JPMorgan. They essentially invested in it In some ways you can say became the FinTech, not really kind of a material way on their balance sheet, but in a more material way, took most of us and took to the impact of that survey finding and I'm with you on that, nathan, I think one of the I've sometimes used the term at course, in the trifecta of someone who is a banker or credit union or a FinTech or investor all three I mean that one person, meaning it's not that they're all working better together.
Sam Kilmer:It's the same gang of people and they're not hanging out together at the cocktail party. They are the cocktail party, they're the same people, and so to me that's a really interesting development that I've seen where you do want people to collaborate more. But it's a lot easier to collaborate inside your own home when it's right there, so whether it's your 12 year olds or my 15 year old, but I think it's very effective. And anyway, good stuff and, mary, anything, anything pop out of you there or that you'd like to add to that.
Mary Wisniewski:I think that's just with fraud. I mean, Czech fraud is still wild and out of control, and I think I saw today's American banker about regions maybe doing early, early pay and that inviting in more frauds. So that I think and this has been true I've covered FinTech and digital banking since 2007. And this has long been one of the greatest truths of this industry. The most profound tension is how to create something new and not get overwhelmed with fraud, and there's no obvious answer.
Samantha Paxson:That regions bank example was brought up to me yesterday, mary, and that that that was this whole idea of sustainability that this CEO was saying gosh, I want to invite all of these use cases and bring them in so that I get engagement and I capture the attention of the consumer. But you know, I know a big trend is what chime started was the two days early access to your deposit and that's inviting fraud. So he says I just don't know what to do, I don't know which, which to do, and it's. It's a that's kind of this idea of this challenge. And I think we have an opportunity within FIs to not be, you know, to collapse verticals and to cooperate and collaborate inside our own FIs.
Samantha Paxson:There's so many operational verticals that are barriers to living this strategy, to having this healthy tension between the compliance side and the growth side, because everybody is operating in their silo and that's comfortable. We've always done that, but the end consumer doesn't need to feel that and the fraudster kind of sees that as the opportunity that they can sneak in. Well, these internal teams aren't really pressure testing, as I like to say, all of these things that that we're introducing in our go to market strategy and finding the ways to deliver those solutions in the most seamless customer centric way or consumer centric way, while making them as secure as possible. So it just it creates a need for different kinds of leadership. This growth mindset and our leadership, this idea of integrating functions to this radical collaboration inside FIs to make sure that we're being really smart in the ways that we're making these choices. Yeah, yeah.
Mary Wisniewski:Yeah.
Sam Kilmer:Go ahead.
Mary Wisniewski:Yeah, I'd love to see creativity for gig gig workers and for, like, aging parents, and those are two areas I think.
Samantha Paxson:I live in LA. How?
Mary Wisniewski:do. People are catching together all these gigs and just even having to supply the you know the forms every single time. It's just really a promise.
Sam Kilmer:Well, what I love about the gig worker example too, is that back to Nathan's point around, you know, there's a tendency to go after the consumer side. Think of the gig workers, that classic example of bridge between consumer and business where and you can, almost, we can, almost they could more tackle the merchant problem. Is the merchant also a consumer? Are we tackling it from the merchant through to the consumer so we're able to? You know, sort of like two birds with one stone analogy going after it all once I. That's why I love gig workers so much, because you're tackling a business problem and really a consumer problem all on the same Backdoor collapsing point. And you know, I don't even know that you really have to try to do that, it's just because of the nature of the pain that they have Is much more in the middle of all that you know.
Nathan Baumeister:So Interesting, yeah, and the one of the the thoughts that came to mind, sam, is you were sharing a little bit about, you know, how they can do innovation and move forward and get past fear and stuff like that, as well as the region's example and I have no special insider knowledge about that, so any of my comments aren't directed towards that specifically, but I was. I was talking to one of my good industry friends, sam. I know you know very well Zach Dukes, ceo and co-founder of FinnoSack, who, by the way, I do have to give him credit. I believe he was the one that introduced me to this concept of the fintech petting zoo, so want to make sure that I can I can give him credit there. But we were having a fabulous discussion yesterday and one of the things we were talking about was failure, and so both of us have fully adopted this idea of vulnerability and failure as being a part of our everyday lives. But then when we asked, well, give me an example of a really big failure. And both of us struggled to find a really big failure, and the reason is Is because we we make small incremental steps and do small experiments and we fail at those and fix it or don't do it Right.
Nathan Baumeister:So I think this, this other concept where a lot of people have this in their mind, is If I'm going to do something, it has to be big. If I'm going to do something, it's something I'm going to have to roll out to all of my customers, or all of my members, or all of my businesses, or it's going to have to be a, you know, a bank wide initiative. I think that type of thinking and that type of ideas is one of the things that one of the things that produces Larger failures of big scale, produces more Rightness for big parts of fraud or types of attacks. It's more let's just do experiments and and and let those fail and let them succeed and build on top of those, so that you don't have to do this big thing. Start with the small thing. What's the smallest thing I could do next to test this hypothesis? If it worked out well, then I'll go to the next step. If it didn't work out well, I'll go back, read, just see if it's something I want to do or not.
Samantha Paxson:That also treats like such an agile culture too. I mean, I think we've not had this thirst for change because the pain wasn't big enough in our industry to make change. I mean, I've heard this thinking, you know, among psychologists, that people won't change until they have enough pain, and so I think our industry is finally feeling enough pain to say like, oh, I need to do something different. But that difference seems super scary, and so what Nathan's suggesting is Do it in small amounts, you know, eat the elephant one bite at a time. Like just try little steps that are going to get you closer to um creating, creating either the business um the small business or the business or commercial um solution set that is going to create more value or the consumer focused solution set that is going to create more value. This is how those organizations are overcoming or shifting their culture.
Samantha Paxson:We actually did it at co-op. I started something called the momentum program with my team on the cx side. We were able to do things that were Didn't cost us any money. It was just people's time. We brought different groups together. We said how can we improve our service times? How can we reduce call volume, how can we improve our implementation process and we were able to reduce Tickets and call time by 50 percent in three months Just by bringing teams together and problem solving around this. This doesn't this just create. This just requires good brains, bringing, bringing different groups together and Helping to to deeply understand our clients and saying if we just did this small thing, what kind of change could we see? And that feels good, and let's take it to the next level. So I love this idea, nathan, and I think it helps us to be less Fearful about change and really lean into the pain, to create goodness out of it and to create really positive change in our industry.
Sam Kilmer:Well, speaking of leaning into pain, um, but you know, I want to be mindful of all of your schedules. I don't want you guys to say, hey, that Kilmer guy invited me on to his podcast and kept me on there for three freaking hours.
Sam Kilmer:This has been a real blast catching up with you and uh, looking forward to seeing both of you. I think I'll say I'm. I'll probably see you with the shades up out In our next steel tube travels and, nathan, I'll I'll be seeing you in boston at the afk conference, if not sooner. Um and mary, I think we're gonna probably see each other in a week or so here. Yeah, um and uh. But, guys, it was so much fun spending time with you and uh. Thanks to all the rest of you out there that have joined us on this episode of fintech castle. We'll see you out there on the road. Thanks for joining us.
