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Winning the Battle for Primacy in Banking · Leaders in Lending

• 0:04
  Speaker 1: Hey everyone, Matt Snow from Upstart with another episode of
• 0:06
  Speaker 1: Leaders in Lending live from CBA twenty twenty five here
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  Speaker 1: in Orlando. Today, I'm joining with Dennis and Way from
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  Speaker 1: Oliver Wyman and Kurt from Pinwell. Thank you guys for joining. Yeah, absolutely,
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  Speaker 1: maybe we can go down the line with quick introductions.
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  Speaker 1: Tell me a little bit about what you're doing today.
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  Speaker 2: Yeah. My name is Dennis Tchura.
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  Speaker 3: I'm a principal in our retail business making practice at
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  Speaker 3: Oliver Wyman. I focus primarily on consumer financial needs as
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  Speaker 3: well as deposits.
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  Speaker 4: And my name is Wake I'm a partner with Oliver
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  Speaker 4: Wyman retovininess banking practice. I do a lot of work
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  Speaker 4: on product proposition, innovation, pricing, sales marketing.
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  Speaker 2: And I'm Kurtlin. I'm copeender and CEO of a company
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  Speaker 2: called Pinweel. We help built soffward to make it easy
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  Speaker 2: for bings to win and establish primacy. So things like
• 0:48
  Speaker 2: making it easy to switch your drive deposit, help manage
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  Speaker 2: your bills, eventually switch your bills, et cetera, et cetera.
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  Speaker 1: Great, and so I sat in on the session earlier
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  Speaker 1: the three of you were a part of. In terms
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  Speaker 1: of primacy and defining that in how it's important and
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  Speaker 1: how to help banks establish that. So I was thinking,
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  Speaker 1: you know, maybe I'll start a little bit more provocative
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  Speaker 1: and like, is primacy even important today if you think
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  Speaker 1: about open banking and the choice consumers have, Like, is
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  Speaker 1: that still a goal worth pursuing for a financial institution.
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  Speaker 3: I mean, I'm happy to start on that one. I
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  Speaker 3: think that's a really fair and important question, and I
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  Speaker 3: think the answer generally is yes. But then also depends, right.
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  Speaker 3: I think there's an option where you don't need that
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  Speaker 3: relationship right, where instead you just focus on as cost
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  Speaker 3: effectively as possible selling a particular product. But then you
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  Speaker 3: become a pure commodity. And I think that the real
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  Speaker 3: question when it comes to primacy is how much of
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  Speaker 3: the value do you want to actually create that is
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  Speaker 3: not simply about a commodity. How much of it's actually
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  Speaker 3: about serving the needs of a consumer more holistically, how
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  Speaker 3: much of it's about your brand about basically your value
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  Speaker 3: is about other things that you provide to the customer,
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  Speaker 3: wherein you know, the decision of whether or not to
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  Speaker 3: choose to work with you isn't just about the price,
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  Speaker 3: it's about something else.
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  Speaker 4: Yeah, yeah, fair, Yeah, I think there's a there's a
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  Speaker 4: math question here because at Dennis in the earlier session
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  Speaker 4: was mentioning that maybe like ninety seven percent of the
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  Speaker 4: Americans are actually banked. So at the end of the day,
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  Speaker 4: you know, the banks are out there and the fintech's
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  Speaker 4: out there essentially stealing each other's clients, and primacy is
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  Speaker 4: a way of deepening that relationship, and really, you know,
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  Speaker 4: that's that's what's probably going to food of growth going forward.
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  Speaker 2: Yeah, I think it's hugely important. And the way I
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  Speaker 2: think about it is you're trying to build a relationship
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  Speaker 2: with that customer and ultimately get them into deeper and
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  Speaker 2: deeper into your ecosystem. Right, So the example I always give,
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  Speaker 2: I think actually Dentnis had mentioned earlier, is you look
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  Speaker 2: at Apple, right, like maybe you start with an iPod
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  Speaker 2: or an iPhone and then eventually, you know, you get
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  Speaker 2: a MacBook, then you get some air pods, and all
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  Speaker 2: of a sudden, like you're in this ecosystem where everything
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  Speaker 2: works fluidly because you really like bought into the brand
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  Speaker 2: ethos and the product suite, and as a bank, like
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  Speaker 2: it's a lot easier what should be a lot easier,
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  Speaker 2: I should say, if you have a credit card, a
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  Speaker 2: checking account, a savings account, hopefully even with a broken
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  Speaker 2: or something, all with the same FI instead of having
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  Speaker 2: one of those at four different places, because then they
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  Speaker 2: can really understand your holistic financial life and serve you better. Sure.
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  Speaker 1: Yeah, and that really resonated with me, along with many
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  Speaker 1: stats and the presentation. But thinking about the reduction and
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  Speaker 1: the number of banks, So if there are so so
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  Speaker 1: much fewer banks today and the consumers have choice, like
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  Speaker 1: what do they differentiate on besides yield? Like that's what
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  Speaker 1: consumers tend to shop, or like what are the other
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  Speaker 1: tangible things? Could a bank set itself apart to establish
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  Speaker 1: that progacy with a customer?
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  Speaker 2: Yeah, I can go first. I think it's largely what
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  Speaker 2: we talked about at the end of the session, which
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  Speaker 2: was when you think about, you know, how you really differentiate,
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  Speaker 2: You really have to think about how do I create
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  Speaker 2: a two x five x ten x better banking experience
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  Speaker 2: for that consumer. The reality is banking looks very commoditize
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  Speaker 2: these days, right, like per your point, unless you're like really,
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  Speaker 2: price sends it into I want to maximize my savings
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  Speaker 2: yield or I want to get you know, the most
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  Speaker 2: amount of points for a certain spend category. The reality
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  Speaker 2: is like when you can have a fundamentally different product,
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  Speaker 2: people get really excited. Right, So why thing that you
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  Speaker 2: know we focus a lot on is this idea of
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  Speaker 2: building subscription management? Right? Can I build a whole experience
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  Speaker 2: that you know, helps the customer understand what all my
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  Speaker 2: bills are, like find ones I didn't realize I was
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  Speaker 2: paying for, help me consolidate or find a better rate
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  Speaker 2: for something that I already you know, buy, and then
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  Speaker 2: kind of curate something that like nobody else is really
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  Speaker 2: able to do effectively. If you can do that and
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  Speaker 2: find those moments to make that happen, then I think
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  Speaker 2: you can really win.
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  Speaker 1: Yeah, and you mentioned the like mobile check deposit, like
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  Speaker 1: that was the last major thing I even remember as
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  Speaker 1: a consumer. Like this changes how I think about banking.
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  Speaker 1: But so would you say technology like what pinwheels developing
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  Speaker 1: or the things you talked about switching deposits, does that
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  Speaker 1: make up a bank stickier or does that just make
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  Speaker 1: it easier for people to switch and maybe you know,
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  Speaker 1: decrease again the need for privacy.
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  Speaker 2: Yeah, so I think of it as two classes of products.
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  Speaker 2: I think one is around customer activation and portability. That's
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  Speaker 2: things like a direct depositive switch or you know, switching
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  Speaker 2: your card on file, right, those things are inherently in
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  Speaker 2: service of making it easy to to switch and make
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  Speaker 2: your account more portable. Those I think will and hopefully
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  Speaker 2: it's a good thing that you're increasing competition, right so
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  Speaker 2: that people aren't stuck at the same place, because there's
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  Speaker 2: just like inertia, not wanting to switch, right even though
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  Speaker 2: they know there's a better product out there. And the
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  Speaker 2: other part is what I would call like more value creation,
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  Speaker 2: so like a subscription or bill manager that really helps
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  Speaker 2: you get a hold of your financial life, check all
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  Speaker 2: your bills, be able to pay them appropriately so you
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  Speaker 2: avoid late ps and what have you. That I think
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  Speaker 2: is like something that everybody should have. And it doesn't
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  Speaker 2: really make it, you know, make you want to necessarily
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  Speaker 2: hop from one place for another place. It's just something
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  Speaker 2: that every single FI should have in their making experience.
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  Speaker 1: Yeah, and you guys mentioned some stats around you know,
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  Speaker 1: why would people switch primary financial institution and seem to
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  Speaker 1: be between major life events or just being so disgruntled
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  Speaker 1: You're like, I never want to do business with this company.
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  Speaker 1: Again maybe like double click into that a little bit.
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  Speaker 1: What are some of those underlying causes of switching.
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  Speaker 3: I mean, I think the reality is when it comes
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  Speaker 3: to kind of the quote unquote primary checking account, the
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  Speaker 3: one where you're in come comes into and where you spend,
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  Speaker 3: there is a high level of stickiness there because it's
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  Speaker 3: sort of like electricity.
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  Speaker 2: You need it.
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  Speaker 3: You can't turn it off, right, you need to have
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  Speaker 3: it on. So there's a hesitancy to move that because
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  Speaker 3: you know there's friction. But you know, as Kurt mentioned,
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  Speaker 3: a lot of the technology that we see today is
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  Speaker 3: actually reducing that friction, making it easier to move, so
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  Speaker 3: that people, you know, have more choice. But at the
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  Speaker 3: same time, it isn't that important for most people. They're
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  Speaker 3: not thinking about it regularly. And I think the real
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  Speaker 3: challenge that the industry is facing in a sense is
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  Speaker 3: this idea where well, historically we always focus on acquisition,
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  Speaker 3: let's get the next account, let's grow right. But then
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  Speaker 3: I think there's a shift right now from you know,
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  Speaker 3: focusing on quantity to quality because quantity is churned mostly now.
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  Speaker 3: As why I mentioned ninety seven percent of Americans are banked, right,
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  Speaker 3: and so if you want to win the next customer
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  Speaker 3: to take it from someone else. And the the challenging
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  Speaker 3: part right now is to date because of the way,
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  Speaker 3: like a lot of large banks or banks in general
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  Speaker 3: are structured, like everything all the business kind of product
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  Speaker 3: lines are pretty independent, and so you as a consumer
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  Speaker 3: there there's limited actual value in terms of consolidating, right
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  Speaker 3: Why go to the same place when you see over there,
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  Speaker 3: there's an offer over there, an offer over there, And
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  Speaker 3: so people tend to go in that direction. But I
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  Speaker 3: think that's actually to the detriment in both the individual
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  Speaker 3: consumer and also to the provider, because there's a lot
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  Speaker 3: of waste, is the short of it.
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  Speaker 1: Yeah, yeah, And the other thing that that struck me
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  Speaker 1: you talked about you know, the goal should be again
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  Speaker 1: focused back on the consumer. So how do you become
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  Speaker 1: top of mind or that person they go to for advice?
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  Speaker 1: And it got me thinking again, like tend to reach
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  Speaker 1: for my phone, So like is the phone the new branch?
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  Speaker 1: So I have a question and I go to perplexity,
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  Speaker 1: Like I want to move money, like I open a
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  Speaker 1: certain app. I want to transfer money or pay someone
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  Speaker 1: back for a Broadway show ticket, like I use a
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  Speaker 1: different app, but like the phone, is like where I
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  Speaker 1: go first, and you know, is that what people expect
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  Speaker 1: to interact with their How do you think about, you know,
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  Speaker 1: who who is the consumer asking questions when it comes
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  Speaker 1: to their finances and is that still a traditional bank
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  Speaker 1: or who has that right for the consumer.
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  Speaker 4: So, you know, if we unpacked a little bit your question,
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  Speaker 4: there are a few things. One one is we know
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  Speaker 4: we've actually as a firm, we published some research on
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  Speaker 4: the gen Z population. Interestingly, we found in that research
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  Speaker 4: that the gen Z they don't respect you know, sort
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  Speaker 4: of authoritative figures and experts and such like I said,
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  Speaker 4: the don't want to listen to like the person that
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  Speaker 4: supposedly has the correct knowledge, right, so instead they listen
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  Speaker 4: to their peers, right, so they can go on TikTok
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  Speaker 4: And if you know, there's an influencer, so I think
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  Speaker 4: we should, you know, as financial institutions like kind of
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  Speaker 4: marketing to the next generation of customers. That is important
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  Speaker 4: whether you're a bank or a fintech. And just recognizing
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  Speaker 4: you know that they actually you know sort of almost
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  Speaker 4: like a peer pressure and stuff like, you know, there's
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  Speaker 4: the peer influence right for for how they actually make
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  Speaker 4: their financial decisions and that's important. The other thing I
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  Speaker 4: want to call out is the sort of the digital
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  Speaker 4: experience side of things, like because you were mentioned in
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  Speaker 4: the phone and if you pull up your mobile banking app,
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  Speaker 4: you know, ninety nine percent of the time it shows
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  Speaker 4: you a laundry list of accounts, and so from a
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  Speaker 4: behavioral science angle, if you see the accounts, you basically
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  Speaker 4: are checking balances and that's sort of the most sort
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  Speaker 4: of engaging thing that you could do with anybody's banking
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  Speaker 4: app today. But Kurt Worth mentioning that there's other ways
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  Speaker 4: of engaging with the customers that might actually get to
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  Speaker 4: a better definition privacy, because just checking your accounts is
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  Speaker 4: not really primacy. It's a very passive sort of activity
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  Speaker 4: to do, right, So I think a lot of the
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  Speaker 4: banks actually overlook, you know, how they actually serve their
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  Speaker 4: customers in the digital world.
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  Speaker 1: Yeah, that's a great point, and you guys also hit
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  Speaker 1: on maybe an appropriate balance of that in the industry
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  Speaker 1: is risk management. So, you know, how do you think
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  Speaker 1: about the view there in terms of, yes, be innovative,
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  Speaker 1: find ways to connect with your customers, but knowing that
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  Speaker 1: the health of the American economies like underpinned by this industry.
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  Speaker 3: That's certainly the foundation of banking.
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  Speaker 4: Right.
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  Speaker 3: This is a gathered deposits of privilege. Right, you need
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  Speaker 3: a charter to do it. It's considered to be basically
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  Speaker 3: a public good in anyways, and so I think on
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  Speaker 3: that end that that needs to stay right and this
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  Speaker 3: this industry is unique relative to all industries because of that.
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  Speaker 3: But that is not to say that there is not
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  Speaker 3: a better way to serve consumers. And I think that
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  Speaker 3: the challenge has a little bit been that it is
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  Speaker 3: expensive to basically take that next step.
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  Speaker 2: Right.
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  Speaker 3: I think there's a focus on, you know, how do
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  Speaker 3: I drive incremental like kind of progress in the near term.
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  Speaker 3: And there are some of these things that we're talking
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  Speaker 3: about here that are more forward looking in terms of like,
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  Speaker 3: you know, what are the needs that are unmet right
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  Speaker 3: now that I think that a lot of consumers actually want, right,
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  Speaker 3: because I think that if you ask consumers, are they
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  Speaker 3: satisfied with what they have? Yeah? Actually they are generally satisfied.
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  Speaker 3: That's why they're not moving too much. But do they
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  Speaker 3: actually do a bunch of things in order to just
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  Speaker 3: kind of curate their needs, Like you know, pick a
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  Speaker 3: little bit account here, an account there, and mix it
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  Speaker 3: together and you know, serve their needs maybe as a
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  Speaker 3: household of you know, a couples for instance, Like yeah,
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  Speaker 3: plenty of people do that. And what that really reflects
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  Speaker 3: is that actually there's stuff that people are doing that
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  Speaker 3: they would love to have streamline for them if possible, Right,
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  Speaker 3: why not do one stop, Like if you're able to
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  Speaker 3: actually do that in a way that creates more value
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  Speaker 3: for the customer, I actually think that there would be
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  Speaker 3: demand for that.
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  Speaker 2: Right, Building off of that, like to your earlier question
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  Speaker 2: around like you know, is there your phone the new branch? Right,
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  Speaker 2: there's this thesis that existed for a long time in
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  Speaker 2: the industry around like building super apps, right, Like in China,
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  Speaker 2: there's all these examples of like there's one app that
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  Speaker 2: does everything for you, right, and the fundamental like crux
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  Speaker 2: of it actually makes a ton of sense, right, Like
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  Speaker 2: whether it was Mint or all these like first wave pfms.
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  Speaker 2: Everybody would love to see a view of like my
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  Speaker 2: holistic financial life in one app, right, like my savings accounts,
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  Speaker 2: my brokerage accounts, all my investment accounts, my crypto accounts,
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  Speaker 2: Like I want to see everything in one place, and
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  Speaker 2: ideally it's like constantly helping me make more money, makes
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  Speaker 2: more decisions, et cetera. Right, So, like, I don't think
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  Speaker 2: anybody disagrees with that dream. But I think the problem is,
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  Speaker 2: going back to your question, a lot of the large
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  Speaker 2: fis are structured to be risk management apparatus, right and
• 12:00
  Speaker 2: right fully so, right, like you, when you are relied
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  Speaker 2: upon for society to operate, you really can't screw things up, right,
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  Speaker 2: Like the cost of that extremely high. So they're doing
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  Speaker 2: what they're supposed to be doing. But the downside of
• 12:11
  Speaker 2: that is you don't have a culture of people are
• 12:12
  Speaker 2: willing to take risks because like, if you just don't
• 12:15
  Speaker 2: mess anything up, you keep your job. Everybody wins. You
• 12:18
  Speaker 2: take risks, they don't work out, You create like undue exposure,
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  Speaker 2: Things fall apart, people get in trouble. And so I
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  Speaker 2: think what you see is like that's why fintech exists.
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  Speaker 2: That's why companies like us exist, because we can be
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  Speaker 2: that extended arm that helps you innovate, prove things out,
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  Speaker 2: and if it really works well, you can always bring
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  Speaker 2: it inside.
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  Speaker 1: Right.
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  Speaker 2: So, Like the example that always like to share is
• 12:36
  Speaker 2: like when you look at P to P payments, right,
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  Speaker 2: there's menmo there's cash app, and they crushed for a
• 12:41
  Speaker 2: long time, and then the banks are like, wait a second,
• 12:43
  Speaker 2: like we should just create our own system, right, And
• 12:45
  Speaker 2: thus Zel was born, and like Zell does a ton
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  Speaker 2: of volume. People don't even realize how how much it proliferates,
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  Speaker 2: and it's it's in every bank's app for the most part, right,
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  Speaker 2: And so I think like, if you can really prove
• 12:57
  Speaker 2: something that works well, it will eventually get adopted device.
• 13:00
  Speaker 2: And then like if you keep doing that thing over
• 13:01
  Speaker 2: and over and over again, if you get another version
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  Speaker 2: of Azel or a tenex better bill pay thing or
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  Speaker 2: have you eventually do you think these large fis will
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  Speaker 2: start to be super apps? But it's just going to
• 13:12
  Speaker 2: take a very long time because no one, no one
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  Speaker 2: internally is innovating in the speed they need to.
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  Speaker 1: Yeah, well, and you guys did a good job also
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  Speaker 1: managing like the you know, the economic side of the
• 13:21
  Speaker 1: city equation, right, because the cost of deposits is what
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  Speaker 1: fuels a lot of the ability to lend, right, So
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  Speaker 1: in a lot of other technology companies maybe the expense
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  Speaker 1: is different. Do you see that always being a part
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  Speaker 1: of the equation here or again we've kind of gone
• 13:34
  Speaker 1: back and forth, and separating what should a bank do,
• 13:36
  Speaker 1: what kind of businesses should it be in, and separating
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  Speaker 1: those things, and regulation playing apart, Like is deposits always
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  Speaker 1: going to be the best way to fund you know,
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  Speaker 1: lending or do you see banks separating? And as you
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  Speaker 1: were saying earlier, like maybe there's some commoditization necessary and
• 13:51
  Speaker 1: someone just really good at doing a certain lending product
• 13:54
  Speaker 1: or someone's great at savings, and you know that the
• 13:57
  Speaker 1: market starts to break apart, our banks stay as the
• 14:01
  Speaker 1: super app that you're talking about.
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  Speaker 3: I mean, on the I guess I don't know if
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  Speaker 3: I fully understand the question, but I mean, certainly there's
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  Speaker 3: I think one of the main challenges in banking, right
• 14:12
  Speaker 3: it's like kind of like the ironies, if you will,
• 14:14
  Speaker 3: is that a lot of the value that's created is
• 14:18
  Speaker 3: through inertia, right, Like when we think about deposits, for instance,
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  Speaker 3: like why is there so much so much value is
• 14:24
  Speaker 3: created from deposits. Why Because it's a lower cost of
• 14:27
  Speaker 3: funds for the rest of the bank. Right it funds
• 14:28
  Speaker 3: the balance sheet that otherwise if they had to get
• 14:31
  Speaker 3: through wholesale palk pro funding would be really expensive. But
• 14:33
  Speaker 3: there's this question also fundamentally is like is that actually
• 14:35
  Speaker 3: the right thing to do?
• 14:36
  Speaker 2: Right?
• 14:37
  Speaker 3: And so, I mean you look at some of the
• 14:38
  Speaker 3: lawsuits in the last year right on this topic. I
• 14:41
  Speaker 3: want to name names, but right like the idea where hey,
• 14:44
  Speaker 3: consumer was misled in terms of the rate that they
• 14:46
  Speaker 3: were going to get in their deposits, they should have
• 14:47
  Speaker 3: gotten more look at that big gap. Well you can
• 14:49
  Speaker 3: make that argument for a lot of institutions where you know,
• 14:52
  Speaker 3: like people are being paid like low interest rates on
• 14:55
  Speaker 3: their savings. But there's like that that moves, right and
• 14:59
  Speaker 3: what drives that inner And then one of the things
• 15:01
  Speaker 3: technology has done, of course, is create this kind of
• 15:03
  Speaker 3: more less information asymmetry. More people are aware of and
• 15:08
  Speaker 3: easily aware what that information is, and so like should
• 15:11
  Speaker 3: that happen right on the flip side, like from a
• 15:13
  Speaker 3: regulatory standpoint, right, like that that's not great for consumers,
• 15:15
  Speaker 3: But from a regulatory standpoint, you want kind of those
• 15:18
  Speaker 3: balances to be kind of lower cost and stable at least, right,
• 15:21
  Speaker 3: And so it's a it's a tricky thing in terms
• 15:25
  Speaker 3: of what the right balance is, but I definitely see
• 15:27
  Speaker 3: a shift inevitably where you know that inertia in a sense,
• 15:32
  Speaker 3: it's like kind of similar to that anchoring analogy that
• 15:34
  Speaker 3: I brought up during the session, where I think that
• 15:36
  Speaker 3: that anchor is getting later and later, right, Like, there's
• 15:39
  Speaker 3: just more that do more than that. You can't just
• 15:41
  Speaker 3: rely on inertia in the future.
• 15:42
  Speaker 1: Yeah, no, And I think you hit to the heart
• 15:43
  Speaker 1: of the question because the other part of that is,
• 15:45
  Speaker 1: you know, the focus on fees, right, So if banks
• 15:47
  Speaker 1: fundamentally have to earn less money on fees, like the
• 15:50
  Speaker 1: only other way you know to do that is through deposits.
• 15:53
  Speaker 3: Or it can be through other things. I think, because
• 15:55
  Speaker 3: there is a question is are people willing to pay
• 15:57
  Speaker 3: fees for other kind of sources of value? Like that's
• 16:01
  Speaker 3: the real question, you know. And we can say what
• 16:03
  Speaker 3: we want about the last kind of administration in terms
• 16:06
  Speaker 3: of you know, questions around fees, but like I mean,
• 16:08
  Speaker 3: there was a considered push for you know, in a
• 16:12
  Speaker 3: pushing for innovation in a sense where it's like you
• 16:14
  Speaker 3: cannot in a sense still generate as much value from
• 16:18
  Speaker 3: kind of history. You need to create new value, right
• 16:20
  Speaker 3: to continue to do that. And that's a real tough
• 16:22
  Speaker 3: part where it's like are people going to be willing
• 16:24
  Speaker 3: to pay what are the people willing to pay for right,
• 16:26
  Speaker 3: because once something's free, it's very hard to you know,
• 16:28
  Speaker 3: pay charge them for it.
• 16:29
  Speaker 4: But just on that note, what's interesting is if you
• 16:31
  Speaker 4: look at the difference between neo banks and FinTechs versus
• 16:35
  Speaker 4: traditional banks. In Chime, which is an example that's being
• 16:39
  Speaker 4: brought up, I mean, they were one of the first
• 16:41
  Speaker 4: to charge a monthly fee and people are willing to
• 16:44
  Speaker 4: pay for it. And at the time, they didn't really
• 16:46
  Speaker 4: offer you know, high interests or whatnot, like it was
• 16:48
  Speaker 4: like the whole whole value proposition was, you know, basically
• 16:52
  Speaker 4: to advance a paycheck and and that's something that people
• 16:54
  Speaker 4: needed and then they're actually willing to pay a fee
• 16:56
  Speaker 4: for whereas if you look at a big bank, it's
• 16:58
  Speaker 4: a different sort of starting point where the majority of
• 17:01
  Speaker 4: the fees are not the monthly fees but rather you know,
• 17:03
  Speaker 4: overdraft than some of the other you know, kind of
• 17:06
  Speaker 4: the fees that are you know, in the previous administration
• 17:10
  Speaker 4: that termed as more nuisance fees and and so so
• 17:13
  Speaker 4: I would say like this, the starting points are different,
• 17:15
  Speaker 4: and the economics model was actually different between the bank
• 17:18
  Speaker 4: side and the fintech side, and it's actually pretty exciting
• 17:21
  Speaker 4: to see what kind of solutions they come up with.
• 17:23
  Speaker 4: And in the in the session earlier, we we said
• 17:26
  Speaker 4: there was no there was no unified It's not like
• 17:29
  Speaker 4: the whole industry is converging to one model of you know,
• 17:32
  Speaker 4: like there's here's one proposition to draw primacy. That the
• 17:36
  Speaker 4: FinTechs are actually coming up with different soclutions from the banks.
• 17:38
  Speaker 4: Even within the banks, they're coming up with different solutions. Yeah,
• 17:42
  Speaker 4: this is a really key point.
• 17:42
  Speaker 2: I just want to make sure that we make hit,
• 17:44
  Speaker 2: which is like, yeah, uh, the banks are like the
• 17:47
  Speaker 2: og subscription products. People don't realize la they always charge
• 17:50
  Speaker 2: you monthly fees. It was used the didn't know it
• 17:53
  Speaker 2: because it just like plopped into your like your transaction
• 17:56
  Speaker 2: like flow. One day You're like, oh, it was ten
• 17:58
  Speaker 2: bucks this month, right, but like you didn't nobody really
• 18:00
  Speaker 2: thought about it because you when when you write the
• 18:01
  Speaker 2: brandch by the way, we're going to charge your ten
• 18:03
  Speaker 2: bucks to service the account. Right, you just like got charged.
• 18:05
  Speaker 2: But like they've had subscriptions for a very very long time.
• 18:08
  Speaker 2: And the difference that ways language is really important is
• 18:11
  Speaker 2: like there's two kinds of fees, right, there's uh pees
• 18:15
  Speaker 2: that fees that penalize you. And then there are fees
• 18:18
  Speaker 2: that like are value supported, you know you're paying for right,
• 18:23
  Speaker 2: And like.
• 18:24
  Speaker 3: The tallens though, is that like because of free checking
• 18:26
  Speaker 3: historically in the United States? Right, the expectation today from
• 18:30
  Speaker 3: a lot of consumers that like, oh, there's a fee,
• 18:32
  Speaker 3: but I'm gonna you know, that's gonna get waived. And
• 18:35
  Speaker 3: that is true for the majority of large banks, right.
• 18:37
  Speaker 3: It's like a small percentage at least in the US
• 18:38
  Speaker 3: actually get charged that fee. And so like that's the
• 18:41
  Speaker 3: part that's triggy where I think that there are very
• 18:43
  Speaker 3: few people in America today that are willing to pay
• 18:46
  Speaker 3: for those very basic kind of services anymore because they
• 18:48
  Speaker 3: believe that that should be free, just as free training
• 18:51
  Speaker 3: is free now. So the only way to be able
• 18:52
  Speaker 3: to charge fees where it's like more like a subscription model,
• 18:55
  Speaker 3: right or remembers models like you've got to give them
• 18:57
  Speaker 3: something else, right, And the real question is what could
• 18:59
  Speaker 3: that be?
• 19:00
  Speaker 4: Right?
• 19:00
  Speaker 3: And I think that in the credit card will you
• 19:02
  Speaker 3: see some of what that might look like? Right, Some
• 19:04
  Speaker 3: of the large credit card issuers, like they have certain
• 19:06
  Speaker 3: models where hey, fees are part of the thing, and
• 19:09
  Speaker 3: many of them have really tried to branch out where
• 19:12
  Speaker 3: they're not just doing credit card anymore. They have savings accounts,
• 19:15
  Speaker 3: they have checking accounts, and they're also doing the same
• 19:18
  Speaker 3: thing as everyone else is doing, which is trying to know,
• 19:20
  Speaker 3: build that holistic relationship, right, because there's a lot of
• 19:24
  Speaker 3: value there.
• 19:25
  Speaker 2: But there is this concept that has been around for decades,
• 19:28
  Speaker 2: like value added checking accounts or like premium checking accounts
• 19:31
  Speaker 2: where you pay for a higher tier or you pay
• 19:34
  Speaker 2: a higher monthly fee or to get more products, right,
• 19:36
  Speaker 2: and so those perform extremely well, right, whether it's getting
• 19:39
  Speaker 2: access to like better interest rates, or like you bundle
• 19:42
  Speaker 2: in like ID theft protection, phone insurance, pet insurance, like
• 19:47
  Speaker 2: triple A, et cetera. Like when you bundle it into
• 19:49
  Speaker 2: the checking account and you start to charge them, you know,
• 19:52
  Speaker 2: ten bucks a month instead of three bucks a month.
• 19:54
  Speaker 2: The consumers like, actually the math makes sense if I
• 19:56
  Speaker 2: don't have to pay a triple a somewhere else, it's
• 19:58
  Speaker 2: actually is like still a good deal for for me, Yes,
• 20:00
  Speaker 2: I'll do this, right, And so there's actually plenty of
• 20:02
  Speaker 2: ways that are good for the consumer, good for the FI,
• 20:05
  Speaker 2: good for the ecosystem where you can still charge the
• 20:07
  Speaker 2: consumer fees, and I think we have to get away
• 20:09
  Speaker 2: from this idea of like like like fees are bad.
• 20:12
  Speaker 2: It's just like the fees have to be worth it
• 20:15
  Speaker 2: to pay, right, Like you pay for Amazon Prime, Nobody
• 20:17
  Speaker 2: bats an eye at them. It's like forty bucks a month.
• 20:19
  Speaker 2: You're like, yeah, because I get my packaged tomorrow. Right,
• 20:22
  Speaker 2: It's like I'm totally worth it. Yeah, totally.
• 20:25
  Speaker 1: Well, I think we're running out of times, so maybe
• 20:27
  Speaker 1: we can end with you know, a bold prediction or
• 20:29
  Speaker 1: like if we were to meet again in five to
• 20:31
  Speaker 1: ten years, like who will be the winner in the
• 20:34
  Speaker 1: primary financial institution race, or a characteristic of that institution,
• 20:37
  Speaker 1: like what will have they gotten? Right?
• 20:41
  Speaker 3: I mean I think that I think scale does matter
• 20:44
  Speaker 3: in this space, right, So I think the scale players
• 20:46
  Speaker 3: have a big advantage here, and that scale may be
• 20:49
  Speaker 3: in terms of traditional banks, but also scale in terms
• 20:51
  Speaker 3: of you know, non banks as well. That that's there.
• 20:56
  Speaker 3: The country is over banks at the end of the
• 20:58
  Speaker 3: day in many ways, and so that's going to make
• 21:00
  Speaker 3: a big difference.
• 21:01
  Speaker 1: I think. So whoever can make the most of the
• 21:03
  Speaker 1: customer base they have and sustain.
• 21:04
  Speaker 3: And I think the number of banks will continue to
• 21:06
  Speaker 3: decline and credit unisill the kind that's sort of inevitable,
• 21:09
  Speaker 3: and so I think we'll see basically scale players really
• 21:11
  Speaker 3: trying to you know, win basically a bigger share of
• 21:14
  Speaker 3: their customer's wallet.
• 21:17
  Speaker 4: Well, I agree with that point. I am actually pretty
• 21:21
  Speaker 4: excited with the way open banking has had it in
• 21:23
  Speaker 4: this country because unlike other jurisdictions like Europe and Canada, UK,
• 21:28
  Speaker 4: where open banking was sort of pushed by regulators as
• 21:33
  Speaker 4: more of a transparence like you know, kind of data sharing,
• 21:35
  Speaker 4: kind of a mandate, there's a lot of innovation happening
• 21:39
  Speaker 4: in the US, you know, for for better or was,
• 21:42
  Speaker 4: there was a lack of a mandate from the government
• 21:45
  Speaker 4: to do things. And what that actually creates is as
• 21:48
  Speaker 4: a traditional financial services player continue to commoditize their products,
• 21:52
  Speaker 4: the technology players can come in to create that customer experience.
• 21:56
  Speaker 4: And that's where the primacy you know question will be
• 21:59
  Speaker 4: answered than I think, you know, maybe five to ten
• 22:02
  Speaker 4: years down the road, we'll start to see true disintermediation
• 22:05
  Speaker 4: where the traditional players are still there to do the
• 22:08
  Speaker 4: risk management stuff, but the customer experience and you know,
• 22:12
  Speaker 4: where the mind share is, where customers actually turned to
• 22:15
  Speaker 4: is where the technology innovators are.
• 22:18
  Speaker 2: My het take, and it's definitely a hot take, is
• 22:21
  Speaker 2: that I think the big brands that have a lot
• 22:25
  Speaker 2: of brand equity with their customers will become increasingly more
• 22:29
  Speaker 2: like perceived as a financial service provider. So I'll give
• 22:33
  Speaker 2: you a couple examples, right, Like, the the amount of
• 22:37
  Speaker 2: spend on Delta's American Express card is like equal to
• 22:41
  Speaker 2: one percent of the country's GDP. It's crazy, right, And
• 22:43
  Speaker 2: that's a co branded card. And so you see this
• 22:46
  Speaker 2: massive movement now of like if as a brand, I
• 22:49
  Speaker 2: can monetize on my customer because of my relationship, but
• 22:51
  Speaker 2: then and they trust me, I can get some of
• 22:53
  Speaker 2: the entertained, it's a big revenue stream for me. Right, Like,
• 22:56
  Speaker 2: you start to see a lot of other brands trying
• 22:58
  Speaker 2: to replicate that model because the're like, well, if Delta
• 22:59
  Speaker 2: can do it, why can't I do that?
• 23:01
  Speaker 1: Right?
• 23:02
  Speaker 2: And the other one is like, we just announced a
• 23:03
  Speaker 2: partnership with DoorDash where they're basically trying to take all
• 23:06
  Speaker 2: of their dashers and like create a bank and a
• 23:08
  Speaker 2: whole set of like financial services dedicated to what they need,
• 23:11
  Speaker 2: which is not the same thing as what a chase
• 23:13
  Speaker 2: can provide for example, right, And so I think whether
• 23:16
  Speaker 2: it's because you have a special like set of data
• 23:20
  Speaker 2: and ways to like understand your customer, or you're just
• 23:22
  Speaker 2: a brand that has like, like I don't understand why
• 23:25
  Speaker 2: Airbnb or Nike or some of these brands have a
• 23:27
  Speaker 2: lot of like affinity like aren't moving faster or to
• 23:29
  Speaker 2: create more like financial products for their customers because they
• 23:33
  Speaker 2: would crush it, right, And I think that that is
• 23:35
  Speaker 2: starting to happen and trying to see a lot of
• 23:36
  Speaker 2: these companies really start to like create their own like
• 23:38
  Speaker 2: financial product suites and that will only continue to grow.
• 23:42
  Speaker 1: Yeah, very interesting.
• 23:43
  Speaker 3: I like that.
• 23:43
  Speaker 1: It's almost like, you know, what's old is new again.
• 23:45
  Speaker 1: A lot of credit unions start that way, right, like
• 23:47
  Speaker 1: a common membership goal and create financial services geared towards them.
• 23:50
  Speaker 1: So that could be an interesting take.
• 23:53
  Speaker 2: Cool.
• 23:53
  Speaker 1: Well, thank you all for the time. Really enjoyed the
• 23:55
  Speaker 1: session and the chat today, so hope you enjoy the
• 23:57
  Speaker 1: rest of the show.
• 23:58
  Speaker 3: The huge thanks for having us since
• 24:02
  Speaker 4: At