Latest / Leaders In Payments / Brian Bailey, President of Clip | Episode 391
Transcript
- 0:01Speaker 1: Welcome to the Leaders in Payments podcast, where we talk to C-level leaders from across the payments landscape.
- 0:06Speaker 1: We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments.
- 0:14Speaker 1: We will also hear stories from our guests about their journeys to the top.
- 0:18Greg Myers: Hello everyone and welcome to the Leaders in Payments podcast.
- 0:20Greg Myers: I'm your host, greg Myers, and today's special guest is Brian Bailey, the president and COO of Clip Money.
- 0:27Greg Myers: So, brian, thank you so much for being on the show today.
- 0:29Greg Myers: Thanks for having me, greg.
- 0:30Greg Myers: So let's start out by having you tell our audience a little bit about yourself, maybe where you're from, where you grew up, where you currently live, a few things like that.
- 0:39Brian Bailey: Yeah, sounds good.
- 0:40Brian Bailey: Born and bred in Cleveland, Ohio, Midwestern guy at heart.
- 0:43Brian Bailey: From there I went to the University of Dayton to do my undergraduate work in business and there was a small tech company across the road from UD by the name of NCR, National Cash Register.
- 0:54Brian Bailey: So I had a chance to do a number of internships and co-ops with them and that's where I had my first job.
- 0:59Brian Bailey: So I had my first job with NCR, working in their financial services division as a salesperson, and from there I moved around the world with the company and had a chance to be in a few different countries and markets and learn about global financial services technology from different perspectives.
- 1:16Brian Bailey: And now I reside in Atlanta, Georgia.
- 1:19Greg Myers: Okay, awesome.
- 1:19Greg Myers: Well, let's dive in and talk about Clip Money.
- 1:23Greg Myers: So tell the audience what Clip does.
- 1:26Brian Bailey: Yeah, great.
- 1:26Brian Bailey: So Clip Money is the world's first North America's first shared network for business cash deposits.
- 1:32Brian Bailey: We allow any business who tenders in cash to make cash deposits into their bank account of choice.
- 1:38Brian Bailey: And this is a very novel idea, greg, because today, if you're a business, you're really tethered to your local bank branch in terms of where you're able to deposit cash.
- 1:47Brian Bailey: There are no shared networks for cash deposit like you have with ATMs or credit cards, and it's been a real big inconvenience for businesses to have to work within this business model for literally the last 50 years.
- 2:00Brian Bailey: There's been very little innovation here.
- 2:02Brian Bailey: Our business is made up of a network of endpoint devices that allow businesses to deposit their cash In shopping malls.
- 2:09Brian Bailey: We have about 500 shopping malls with smart safes where businesses share that common device to make their cash deposits.
- 2:16Brian Bailey: We also have a network of ATMs in partnership with NCR Atleos 3,000 locations in pharmacies and convenience stores, again to make cash deposits into their bank account of choice.
- 2:27Brian Bailey: And recently we announced a partnership with Green Dot to leverage their over-the-counter network in retailer locations, again for the purpose of depositing cash.
- 2:36Brian Bailey: So take that network of 7,000 locations across North America.
- 2:41Brian Bailey: We now create an exceptional convenience value proposition which is very close to the business.
- 2:46Brian Bailey: We also can typically save a business between 40% and 60% versus their standard way of depositing cash today, which we think is super important in today's retail world.
- 2:57Brian Bailey: So those are some of the elements, and then, finally, one thing we're very proud of is we digitize a paper-based transaction.
- 3:04Brian Bailey: So if you think about how businesses deposit money today, they literally use a paper deposit slip, believe it or not, when they go to the bank branch, and so we're digitizing that process, using our technology and our platform to allow a business to have greater transparency of where that deposit is in its lifecycle.
- 3:21Greg Myers: Okay, okay, and how big is the company?
- 3:23Brian Bailey: Yeah, so the company is made up of about 16 people globally across our base.
- 3:28Brian Bailey: We have developers in Europe, but we have over thousands of customers who deposit daily into our account.
- 3:34Brian Bailey: One of the things people don't realize about business transactions is that businesses like to deposit cash every day to get that liquidity into their bank account of choice.
- 3:43Brian Bailey: So we've been very fortunate.
- 3:44Brian Bailey: We're growing very quickly and off to a great start, okay.
- 3:48Greg Myers: So how do you get those new customers?
- 3:50Greg Myers: What's the go-to-market strategy?
- 3:52Brian Bailey: So our go-to-market is direct to customers in shopping malls.
- 3:56Brian Bailey: It's obviously a very contained base of customers.
- 3:59Brian Bailey: We work with many of the top 250 largest retailers and shopping malls across the US and they're using our service on a regular and daily basis.
- 4:08Brian Bailey: As we look outside of the shopping mall, we believe financial institutions will be a wonderful path to market for us.
- 4:15Brian Bailey: If you think about this transaction banks are not super excited about becoming the best at processing cash within their bank branch.
- 4:22Brian Bailey: In fact, they're trying to move that transaction outside of the branch because of its inconvenience and cost to the bank.
- 4:28Brian Bailey: So we're now working with financial institutions who are looking to leverage the Clip network to more conveniently offer cash services, cash deposit services, to their customers as opposed to walking into the bank branch.
- 4:39Brian Bailey: So that's our go-to-market strategy, both direct and indirect, and we're very excited to be working with FIs today to bring that network to their customers.
- 4:48Greg Myers: Okay, so you mentioned more the kind of the shopping mall that makes sense that all the businesses are kind of aggregated in one place.
- 4:55Greg Myers: But I mean, is there any reason more of a standalone restaurant wouldn't be able to use the service?
- 5:01Brian Bailey: Yeah.
- 5:01Brian Bailey: So one thing that we think is important is convenience and access to deposit services and if you're a quick serve restaurant or a restaurant outside of the bank branch, going to send a manager or an employee to that bank branch during business hours is very inconvenient.
- 5:17Brian Bailey: So we do believe the clip proposition, in particular with our new over-the-counter relationship with Green Dot, is going to become very effective.
- 5:24Brian Bailey: You could literally go into a leading market or big box retailer through the over-the-counter network and make that deposit at your time of choosing during the day.
- 5:34Brian Bailey: So we think our network is not just fit for shopping malls now but also Main Street to bring that convenience and cost-effectiveness to businesses outside of shopping malls as well to bring that convenience and cost-effectiveness to businesses outside of shopping malls as well.
- 5:50Brian Bailey: Okay, okay, and I assume you're mainly in the US or North America.
- 5:52Brian Bailey: Yeah, we are.
- 5:55Brian Bailey: We actually were founded in Canada.
- 5:56Brian Bailey: Our network is up and running in Canada as well, across that marketplace and the US, and we've been very fortunate to work with a range of different businesses.
- 6:01Brian Bailey: We have customers today who are quick serve restaurants, who are specialty apparel.
- 6:05Brian Bailey: We work with large convenience store operators to facilitate their deposit services.
- 6:10Brian Bailey: So this problem today is very ubiquitous across all types of businesses.
- 6:15Brian Bailey: Any business that is walking to the bank branch which, believe it or not, is 90% of all businesses out there can utilize our service, and while cash is a declining cash instrument, as that cash transaction volume slowly declines, the cost of it goes up for the entire marketplace, and so we believe it's a solution that is required and needed for the market and really we're here at the right time to bring that cost down for all businesses.
- 6:41Greg Myers: Okay, and it doesn't sound like you have a whole lot of competition, but there are current ways people are doing it and you've talked a little bit about that.
- 6:48Greg Myers: But what would you say differentiates you the most in the market?
- 7:06Brian Bailey: cash deposits.
- 7:07Brian Bailey: I talked a lot about the sort of inconvenience of that.
- 7:08Brian Bailey: One large US regional bank executive told us recently that they believe it costs them about $30 per deposit to process a single deposit inside the bank branch.
- 7:16Brian Bailey: When you talk about the cost of emptying a bag, counting the cash, counting it again, handing it off to an armored carrier.
- 7:22Brian Bailey: So that is a very acute problem they're trying to solve.
- 7:25Brian Bailey: For, however, clip's business model is very unique in that it's the first utility or shared network model in the industry and what that means is we are leveraging a common infrastructure.
- 7:36Brian Bailey: That infrastructure could be an ATM or a night safe or an over-the-counter network to spread the cost of those transactions and so other solutions in the marketplace today, namely bespoke SmartSafe, so a business can put a SmartSafe inside of their business.
- 7:50Brian Bailey: It's a very costly proposition.
- 7:52Brian Bailey: They have to pay for the capital, they have to pay for the regular servicing, and what we're doing at Clip is spreading that cost amongst many businesses, which invariably just drives down the transaction cost for every cash deposit.
- 8:05Greg Myers: Okay, and one clarification question.
- 8:08Greg Myers: You mentioned there are two devices.
- 8:09Greg Myers: So there's a standalone that's deposit only, and then there's ATM.
- 8:14Greg Myers: So is the ATM like a standard ATM, where you get money, like consumers get money out, or is it a different thing?
- 8:20Brian Bailey: Yeah.
- 8:20Brian Bailey: So our clip drop box solution is a cashin only solution.
- 8:24Brian Bailey: We use drop bags to allow a business to declare a deposit.
- 8:28Brian Bailey: Put money in a bag, drop it in the box.
- 8:30Brian Bailey: Clip provides next business day credit to that business until we pick it up and service that cash inside the bag.
- 8:37Brian Bailey: The ATM network works similarly in that you don't need a bag, you just put money directly into the ATM.
- 8:43Brian Bailey: It's a cash-accepting ATM, so what it's now able to do is we're able to have businesses in a community deposit cash into that device.
- 8:50Brian Bailey: We validate the funds.
- 8:52Brian Bailey: Once the money's deposited, we pay next business day, but the ATM operator NCR in this instance can then dispense that cash back out to the consumer.
- 9:01Brian Bailey: We're actually creating more of a closed cash community within these locations and NCR is able to obviously dispense as well as accept cash from businesses at that point in time.
- 9:10Brian Bailey: One important note on the ATM solution is that we're no longer using the debit card rails for that transaction, so we offer a cardless transaction.
- 9:19Brian Bailey: So if you think about how businesses deposit, it's typically not the owner of the business who owns the bank cards.
- 9:25Brian Bailey: It's very hard to manage bank cards giving it to an employee and sharing pins, so Clip provides a one-time use passcode that that employee can use to make a deposit on behalf of their business.
- 9:36Greg Myers: Okay, okay.
- 9:37Greg Myers: And is there software on the back end?
- 9:39Greg Myers: Does the business have software that helps manage this?
- 9:43Brian Bailey: Yes, I talked earlier about transparency and, for the first time, being able to understand where cash is all the way through its deposit lifecycle.
- 9:51Brian Bailey: So the clip cashboard, as we like to call it pun on the word dashboard allows our users to see all of their stores, all of their users and employees who are signed up to use the system.
- 10:02Brian Bailey: So we have a very robust user management system.
- 10:04Brian Bailey: If you think about regulation, it's very important that we as a technology provider provide clarity of who's making deposits.
- 10:11Brian Bailey: So we have a registration system where employees can be added to our platform, but then we allow the business owner to track individual deposits for every store the minute they enter our devices and make their way through the crediting process until that money appears in their bank account next business day.
- 10:29Brian Bailey: We also offer robust tools like loss prevention.
- 10:32Brian Bailey: So if there's an issue where a store is not making a regular deposit every day per instructions of the corporate entity, we allow them the ability to go out and talk to that store manager and understand things.
- 10:42Brian Bailey: So this is part of that elevation of the digital experience that paper unfortunately just can't provide in bank branches today.
- 10:50Greg Myers: Right, right, okay.
- 10:51Greg Myers: Well, when you step back and look at the payments industry as a whole and you can certainly answer this question and kind of the view of what you guys do but where do you see the industry headed, say, in the next three to five years?
- 11:03Brian Bailey: Yeah.
- 11:03Brian Bailey: So first of all, I come from a cash background.
- 11:05Brian Bailey: I've worked in the ATM industry and cash businesses basically my whole career, and do believe that cash is going to be here well past my retirement date, and so we're here solving really important problems for cash.
- 11:18Brian Bailey: Cash still makes up nearly 30% of all in-store payments, slightly behind debit and credit, so we do believe there's a great long future in cash.
- 11:29Brian Bailey: However, some things we see in our business that really affects the small business element of US businesses today is liquidity, and so one thing we've got our eye on is real-time payments.
- 11:40Brian Bailey: How can real-time payments and the ability to help businesses with their daily cash flow through the clip network?
- 11:48Brian Bailey: We think that's a really important thing we're watching.
- 11:50Brian Bailey: There's obviously some standardization going on in the RTP space that we're watching.
- 11:55Brian Bailey: The cost is coming down quite significantly, but we see an opportunity as a business makes a deposit.
- 12:01Brian Bailey: While next business day is important and an improvement, we think there's possibly even a better way to get cash back into the hands of business owners even quicker.
- 12:10Brian Bailey: So RTP is something that's really exciting for us and we're tracking that as we look at sort of the horizon past that, greg.
- 12:18Brian Bailey: One thing that CLIP is really focused on is how do we leverage this concept of shared networks right?
- 12:25Brian Bailey: So shared networks, which we enjoy today across many things we do.
- 12:28Brian Bailey: We enjoy shared networks when we use our credit and debit cards, whether it's domestically or overseas.
- 12:34Brian Bailey: We enjoy shared networks when it comes to P2P payments through common tools like Zelle and Venmo, where multiple institutions are leveraging a common platform to connect P2P payments.
- 12:47Brian Bailey: We think that same concept is going to be coming to this world of business deposits and we're leading the charge here because nothing's been done in that and I think the same will hold true for emerging technologies like crypto and other payment technologies.
- 13:01Brian Bailey: So, if history proves the future, I think that's something we should all be focused on at a payments industry level.
- 13:07Brian Bailey: Okay.
- 13:08Greg Myers: We rarely have a payments conversation without talking about AI.
- 13:12Greg Myers: Are you guys using AI in your business in any way?
- 13:16Brian Bailey: So we are using AI to an extent to help businesses in their reconciliation process.
- 13:21Brian Bailey: If you think about how a point of sale or a cash transaction credit transaction, debit transaction happens, one of the bigger burdens for our customers in the back office is how do I reconcile a store or a cash register or a specific payment type in a clean, simple, easy way, and so one thing we do at Clip is we provide direct integrations from our daily reporting system to an individual store and we allow a business to upload that real-time, also calling into question some of the insights around cash usage.
- 13:54Brian Bailey: One of the beauties of having a real-time platform, greg, is that we can see what's happening in a region, in a store, in a specific type of business, who serves different demographic areas, and so we're demographic types of consumers, and so it's a data rich.
- 14:11Brian Bailey: It's a data rich field which we're now starting to use to help our customers to better understand their business, because cash makes up such a huge part of their payment type.
- 14:21Greg Myers: Yeah, that makes a lot of sense If 30% of their business is cash, knowing exactly where it is and the whole liquidity thing and just the knowledge and the data.
- 14:31Greg Myers: So that makes a lot of sense.
- 14:32Brian Bailey: As people do a little shopping, do a little commerce before their vacation, we see back to school.
- 14:35Brian Bailey: It's a real thing in retail August September timeframe.
- 14:49Brian Bailey: Different regions enter school at different times.
- 14:52Brian Bailey: So some of these national trends around cash usage is really important and of course, the holidays is a huge season for us as well as our retail partners.
- 15:01Brian Bailey: So it's trends that we think are important going forward and we've got a bird's eye view to it here at Clip Sure makes a lot of sense.
- 15:08Greg Myers: Well, let's switch gears a little bit and talk about you.
- 15:10Greg Myers: You mentioned a little bit about your early career, but maybe walk us through the rest of your career and how you ended up getting to Clip Money Sure.
- 15:18Brian Bailey: Sure.
- 15:18Brian Bailey: So NCR was an amazing training ground for me.
- 15:22Brian Bailey: I had a chance to work in a number of fields sales, product management, marketing strategy and I also had a chance to live in a number of different regions I mentioned.
- 15:31Brian Bailey: I lived in Asia and Singapore back in the early 2000s and spent some time in Europe and Scotland throughout the mid-2000s.
- 15:39Brian Bailey: What that did was really create awareness for me about how different markets mature at different pace and speed.
- 15:46Brian Bailey: Asia back in the early 2000s was way ahead of the US and to the extent they still are in digital banking, mobile-based banking.
- 15:53Brian Bailey: At the time they were using SMS and some of those technologies to allow basic banking services.
- 15:59Brian Bailey: But what it opened up my eyes to was the way markets can leapfrog others by moving to new technologies quicker.
- 16:06Brian Bailey: So that was a huge foundational element, as well as the concept of P2P payments which was going on in Asia from the late 90s forward that we've just adopted here in the last decade.
- 16:17Brian Bailey: So those were all really foundational for me.
- 16:20Brian Bailey: As we moved back to the US, I had a chance to get an experience outside of NCR at Cardtronics, and Cardtronics was the world's leader in independent deployment of ATMs, and so that was a huge learning experience relative to utility business models.
- 16:34Brian Bailey: How do we use common infrastructure to service multiple stakeholders banks, consumers as well as networks to lower the cost of ATM transactions and I'm pretty sure everybody listening to this podcast hopefully has not paid a surcharge in many years because we now use these shared networks in a way to advantage consumers with lower costs for each transaction.
- 16:57Brian Bailey: So Cartronics was a huge learning experience, but one thing that kept coming up in my travels as I talked to financial institutions around the world was how do we solve for this business customer walking into my bank branch?
- 17:11Brian Bailey: We solved consumers' ability to deposit checks through mobile RDC.
- 17:16Brian Bailey: We solved the ability for consumers to get cash virtually anywhere on the planet through our debit cards.
- 17:21Brian Bailey: We've digitized branches for most transactions, but there's still this customer walking in every day and dropping a bag of cash on my teller line, and so that's what led myself and Joe Arraj and a few of the Clip members to found Clip and really build this unique business model around business cash deposits.
- 17:38Brian Bailey: So that was the full circle of big company to medium-sized company to now startup, and we're having a ton of big company to medium-sized company to now startup and we're having a ton of fun in the marketplace, leveraging everything we've learned over the years.
- 17:48Brian Bailey: Okay, awesome.
- 17:50Greg Myers: So what are some things you're passionate about?
- 17:51Greg Myers: Maybe one work-related passion, one personal passion.
- 17:55Brian Bailey: So I don't know if this is the right thing to be passionate about, but I am passionate about really solving or helping solve this challenge of regulation for new technologies.
- 18:05Brian Bailey: And so, while Clip is solving a cash-based problem that has been around for years, the hurdles and walls we've had to scale to get this business up and running have been significant because of the rules and regulations of how cash has been perceived and managed through the regulatory system and through this archaic way of tracking.
- 18:24Brian Bailey: Cash has been perceived and managed through the regulatory system and through sort of this archaic way of tracking cash within branches.
- 18:28Brian Bailey: So the example I always like to give is that we had a hard time just working through in our initial days making sure that we're compliant with all basic rules and regs around CTRs and unusual activity.
- 18:41Brian Bailey: When you look at how banks today take cash over the counter, they're doing it through a paper deposit slip, which couldn't be the most archaic way of tracking a transaction in the world.
- 18:51Brian Bailey: However, we've digitized all that.
- 18:54Brian Bailey: We know who the conductor is, we know what the business is, we've done all the requisite KYB checks through modern KYB tools, and so we've actually elevated the whole aspect of compliance that we think should be embraced in the industry and not sort of criticized, and so I think this is something that we're really excited about over the next few years about how we can work with regulators, how we can move quicker to market with these new solutions without sort of all the hurdles we've been straddled with in terms of it's new and so it must be wrong, and so that's an area that I'm super passionate about within the workplace that we work on every day here at Cliff.
- 19:34Brian Bailey: From a personal perspective, I'm a huge sports fan, so I've grown up big Cleveland sports fan go Cavs.
- 19:42Brian Bailey: But one thing I also love is coaching youth sports.
- 19:46Brian Bailey: In today's world of travel, aau sports, where everybody's going to be in the NBA or Major League Baseball, I think there's some beauty in recreational sports as well.
- 19:56Brian Bailey: So I coach a rec basketball league with my two sons every winter and just love seeing where a team starts and where it ends throughout the year and how we can take kids having fun playing basketball outside of their Xbox and really develop them as a unit.
- 20:11Brian Bailey: So that's something I enjoy doing and for the next few years we'll enjoy that time with my kids.
- 20:17Greg Myers: Nice, Nice.
- 20:17Greg Myers: So Cleveland, like all sports, in Cleveland I mean the Indian, like the whole thing.
- 20:23Brian Bailey: Fortunately yes, I'm a beleaguered Cleveland sports fan We'll keep the Browns on the side for a minute, but the Cavs will give us a good playoff run, and maybe the Guardians will as well.
- 20:33Brian Bailey: Okay.
- 20:34Greg Myers: Yeah, so I grew up in Pittsburgh so kind of the same thing, right.
- 20:37Greg Myers: We had all the major sports there and so was a big fan of all those.
- 20:42Greg Myers: Now, of course, being in Dallas, there's the whole cowboy influence, so we won't get into all that.
- 20:47Brian Bailey: I saw the smile on your face when I mentioned Cleveland.
- 20:51Greg Myers: Yeah, definitely was that kind of one city in all the sports and definitely a huge sports fan as well.
- 20:57Greg Myers: So, Brian, if someone came to you maybe they just graduated from college and you've been in this industry for a while they said, hey, I want to build my career in payments or fintech.
- 21:07Greg Myers: What kind of advice would you give them to be successful?
- 21:10Brian Bailey: One thing I learned sort of later on in my career, and both at Cartronics and now at ClipMoney, is the importance of understanding unit economics of how a payment transaction works.
- 21:20Brian Bailey: I grew up sort of in the solution space, right Marketing and selling technology to end users like banks, and one thing I didn't appreciate is sort of the complexity and beauty of the unit economics of a payment transaction and I'll just use a debit or credit transaction You've got acquirers and issuers and the network and the consumer and how value is created for all those constituents is really important, and I think that holds true not just for sort of legacy payment methods and instruments but also future.
- 21:54Brian Bailey: So in the world of crypto, as we start to really understand how crypto can become a vibrant payment method or even business deposits, now really understanding the unit economics of how a transaction and the funds and the fee flows behind it, I think it's a really important thing early in a career to become confident and comfortable with Okay, well, brian, we've talked about, obviously, you and your background and the company and the industry as a whole.
- 22:22Greg Myers: Is there anything else you'd like to add before we wrap up the show?
- 22:25Brian Bailey: No, I just want to thank you for having me.
- 22:26Brian Bailey: Hopefully we've brought cash to the forefront and the importance of what it is for businesses, and we're just happy in this sort of economic uncertain times to be helping businesses to lower their cost through a disruptive way of making cash deposits.
- 22:41Brian Bailey: So, Greg, thanks for having me.
- 22:42Brian Bailey: Really really enjoyed the time, yeah absolutely so, Brian.
- 22:46Greg Myers: Thank you again for being on the show.
- 22:47Greg Myers: I know your time is very valuable, so again thanks for being here.
- 22:50Brian Bailey: Thank you.
- 22:51Greg Myers: And to all your listeners out there.
- 22:52Greg Myers: I thank you for your time as well, and until the next story.
- 22:56Speaker 1: Thank you for joining us this week on the Leaders in Payments podcast.
- 22:59Speaker 1: Make sure you visit our website at leadersinpaymentscom, where you can subscribe to the show and where you'll find our show notes.
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