How Community Banks Can Win the Business Banking Battle

Jim Marous (00:00):

Welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous. Today, we're diving deep into the world of business banking, exploring the latest trends, challenges, and opportunities facing community banks and credit unions.

Jim Marous (00:24):

As the landscape of commercial banking continues to evolve, it's critical for financial institutions to stay ahead of the curve and adapt to the changing needs and expectations of their business clients.

Jim Marous (00:36):

Joining me for this insightful discussion, are two industry experts who bring a wealth of knowledge and expertise to the table. First, we have Jacob Leick, director of product management at Alkami Technology. We're also, thrilled to have Mandy Lopez lead product manager at Alkami.

Jim Marous (00:52):

We explore the importance of building strong relationships with business clients, adapting to the consumerization of commercial banking, maximizing the revenue impact while reducing back-office expenses and leveraging technology to a level that's never been seen before for the community banks and credit unions.

Jim Marous (01:14):

More than ever, banking executives must understand the future of business banking and the potential innovations and technological advancements that will shape the industry for years to come.

Jim Marous (01:25):

Executives must also, understand the challenges and risks associated with the area of business banking.

Jim Marous (01:32):

So, Jacob, before we start, can we provide a little bit of a background of your experience and how Alkami is working to provide clients with the best business banking tools for the future?

Jacob Leick (01:43):

Yeah. So, happy to be here. My name is Jacob Leick. I'm on Alkami's product team. I'm a director and responsible for our commercial banking team.

Jacob Leick (01:53):

My background, I've been at Alkami for seven years, and have been fortunate enough to watch us grow in our commercial space.

Jacob Leick (02:02):

I came from Capital One, where for previous seven years, I spent time in the commercial bank in treasury management managing liquidity products.

Jacob Leick (02:13):

And yeah, so, in terms of differentiation, we feel that our kind of unique area is really in providing much better user experiences.

Jacob Leick (02:28):

And we focus on a kind of deep understanding of the user experience and really try to go the extra mile to solve some of the toughest challenges that ultimately end in a competitive advantage for our clients.

Jim Marous (02:48):

So, Mandy, you also, have an extensive background in banking and in business banking. Can you share a little bit about what your role is at Alkami and your background?

Mandy Lopez (02:58):

Sure, Jim. My name is Mandy Lopez, and I joined Alkami about three years ago. And I'm currently a product manager lead on Jacob's team.

Mandy Lopez (03:07):

And I have to be honest with you, Jim, after spending about 27 years in traditional banking, coming to a FinTech company was an adjustment. It was a change, but I welcomed it because I wanted to learn something new.

Mandy Lopez (03:20):

I've spent the majority of my career in cash and treasury management services from senior management positions building banks, setting up operations, running sales. I've really kind of done the gamut.

Mandy Lopez (03:34):

So, I was really looking forward to joining Alkami and have never looked back. But I tell you what, I have learned something new every single day that I've been here. It's been a lot of fun.

Jim Marous (03:45):

Well, it's interesting because I'm familiar with Alkami, obviously, and I'm also, familiar with the banking industry and the speed of change is much faster at a company like Alkami.

Jim Marous (03:54):

Because you have to actually be faster than the clients you serve. You have to be on the cutting edge of what they're doing and then bring solutions to the table that enable financial institutions to do more than they've ever done before.

Jim Marous (04:08):

I mean, the world of composable banking solutions is so exciting because organizations can buy components of what they used to buy without completely changing their entire core. And it allows them the opportunity to be the best at certain things through the capabilities of a company like Alkami.

Jim Marous (04:27):

So, before we get into the specific question, let's go on a real broad base and say for both of you, what market trends and challenges are you seeing in the commercial and business banking landscape for community institutions? Mandy, why don't we start with you.

Mandy Lopez (04:45):

So, I'm going to really start with kind of the history, the background of when I was a community banker in the early 2000s. We started a bank that was built on technology to serve our business customers and those people behind the businesses that we're going to talk about in just a few minutes.

Mandy Lopez (05:00):

We had to get crafty with what we were going to do. We partnered with a couple of mega banks to offer some services to our customers. And it wasn't just only treasury management services, but their branch network as well for cash depositors that we had, like C-stores, parking garages.

Mandy Lopez (05:15):

It worked well for us as we were a single office bank that was located in downtown Portland. And we were able to offer a branch network across multiple states at not only a reduced cost to the customer making those cash deposits, but also, much cheaper than asking them to pay for cash vault services.

Mandy Lopez (05:34):

Those funds would be swept over to us for investing, paying down debt, offsetting fees via earnings credits, whatever the case may be.

Mandy Lopez (05:41):

Eventually, we opened a handful of branches, but we still remained a mostly digital bank in the early 2000s, which is kind of unheard of at that time.

Mandy Lopez (05:49):

These correspondent banking relationships allowed us to continue to do so, and it served our customers, the correspondent banks, and us very, very well.

Mandy Lopez (05:58):

But to keep us digital, offering online banking services to support our customer's treasury management needs was paramount.

Mandy Lopez (06:05):

We are a very successful bank that was built on innovation. And even though the landscape of innovation has shifted today, customers still want the same things.

Mandy Lopez (06:14):

They want access to their funds, to see what's happening in their accounts, investment opportunities, and the ability to get their banking done in the fastest way possible.

Mandy Lopez (06:23):

I don't think that's really ever going to change, no matter how many iterations of the banking system it goes through. I mean, look at Fed now, real-time payments, and consumerization as examples example.

Jim Marous (06:34):

So, Jacob, from your perspective, what market trends and challenges do you see in the commercial and business banking space right now, for the community banks?

Jacob Leick (06:44):

I think I kind of agree with Mandy's last points and really believe in consumerization and the impact that that's having on the financial services. I believe that's going to be a major kind of changing force in the next few years.

Jacob Leick (07:04):

And really, I think that that consumerization, what it's going to do ultimately is it's going to put on the main stage a major differentiator for regional and community financial institutions.

Jacob Leick (07:19):

Which basically it's like the number one thing that they hold sacred is that their differentiator is providing much better service. Their businesses and commercial entities are not just a number at these institutions, and they really pride themselves in the service that they provide.

Jacob Leick (07:38):

And I think the consumerization in financial services is ultimately going to bring that to the forefront. And I know that term is not very commonly used, it's more like technical terms. So, I can take a minute and kind of explain what I mean by that.

Jacob Leick (07:56):

Consumerization is basically a consumer technology that has ultimately shifted and moved into the enterprise sector. And there's some good examples of that changing an entire industry.

Jacob Leick (08:16):

One is iPhones for example. If you remember when iPhones first came out, everyone loved them. It was great. You could take pictures, like listen to music. All the cool things that you want to do in your personal life.

Jacob Leick (08:30):

But meanwhile, firms, businesses, and banks and whatever are still issuing blackberries. But it was really the need and the consumers, the actual users of the iPhones were really the driving force.

Jacob Leick (08:46):

And I remember it was like probably four years after the iPhone was launched. It was like 2011 for Capital One when I got my first like bank issued iPhone. I had to jump through all these hoops to actually use it, but I loved it. And I'm like showing my friends that also work at other banks, like, "Haha, I got an iPhone."

Jacob Leick (09:04):

But now, we use our personal phone for work purposes. And it's almost like you can't even imagine life without it.

Jacob Leick (09:13):

I think the Google Workplace is another great example of that. When I first came to Alkami, we use Google Docs, Google Sheets, Gmail and those things. And I felt like, "Hey, I work for a startup. We can't even afford Microsoft Word."

Jacob Leick (09:32):

But when I realized the powerful collaboration associated with it, it really changed the way that I interact with my team.

Jacob Leick (09:40):

That same thing is happening, I believe in banking right now, specifically in the commercial space. These regional community financial institutions need to understand that who they're dealing with is not a extraordinarily sophisticated commercial entity. It's a person on the other end [crosstalk 00:10:04].

Jim Marous (10:04):

It's a person, exactly right.

Jacob Leick (10:06):

And their needs and their expectations are really driven by their personal lives. We all use Uber or order groceries online, and these experiences are frankly, and sometimes like magical. The first time you ever used Uber, you're probably like, "Wow, did I just pay them? Like what just happened?"

Jacob Leick (10:26):

And so, that's really the expectations. But the reality of commercial banking right now, is very different.

Jacob Leick (10:35):

And so, I think the only option these regional community financial institutions really have is to fully embrace this change, focus on personalized experiences, focus on ease of use.

Jacob Leick (10:54):

And I think what's going to happen is technology providers like Alkami are really focused on adding leading treasury capabilities that will ultimately level the playing field between them and the mega banks.

Jacob Leick (11:10):

And when that happens, I think when regional community financial institutions are operating in the commercial space on a level playing field with mega banks, something really special happens, and that's when their major differentiator comes to the forefront, which is exceptional service.

Jacob Leick (11:28):

And I think technology can also, help out with that to kind of bring that to life.

Jacob Leick (11:34):

And so, I think in my perspective, that's an exciting thing and that's what energizes me and the people that I work with.

Jim Marous (11:44):

It's interesting, Jacob, before digital, if we remember that at all, the reality is business banking accounts were relatively convoluted.

Jim Marous (11:53):

You have different experiences for different layers of the organization. The difference between a senior executive and let's say the payroll area or other areas that interacted with the bank.

Jim Marous (12:03):

And the challenge was, as you said, it wasn't always easy for everybody. It may have been easy for the senior executive or for a specific area, but now, more than ever, speed and simplicity are the driving influences, which is what the driving influences for the consumer are.

Jim Marous (12:19):

So, Mandy, both on the consumer side and the business side, the key is how can I get more primary accounts? How can I generate more business? What challenges and opportunities do you see for banks and credit unions in trying to acquire the operating account for a business?

Mandy Lopez (12:40):

Yeah, that's a great question, Jim. And traditionally, community financial institutions have had an uphill battle winning those operating accounts away from the mega banks.

Mandy Lopez (12:49):

It's mostly due to more favorable lending terms. And while it's not always best practice to require the depository relationship, honestly, most of them are mentioned in any term sheet that's given out to a prospective client.

Mandy Lopez (13:01):

In fact, these mega banks own almost 90% of business deposit accounts according to a cornerstone advisor study that was done in 2023. So, where is the opportunity and how can community financial institutions win in this space?

Mandy Lopez (13:18):

Recent market data from DataInsights show that business clients are open to new financial provider relationships. Less than 25% of mid-size and large enterprises say their current FIs, treasury management, and payment capabilities fully meet their needs.

Mandy Lopez (13:33):

Further, 2/3 of small and medium sized businesses, also known as SMBs in the industry, are somewhat or very likely to look for new banking relationships within the next 12 months. Better used to mean more functionality with their digital banking platform, almost always at the cost of a friendly user experience.

Mandy Lopez (13:53):

And you know what, those days are changing. Much like the consumer retail side of digital banking, AKA, the consumerization that Jacob referenced, the demand for an easy intuitive user experience coupled with robust capabilities is what businesses are now asking for and they're not going to stop.

Jim Marous (14:11):

It's interesting, Jacob, from your perspective, when we look at the differentiation issues and we look at the challenges in acquiring accounts, especially by a community organization that's not as big as the big players, what challenges and opportunities do you see for banks and credit unions in the area of personalization for the perspective of generating revenue for businesses?

Jim Marous (14:36):

So, in other words, again, going back to your consumerization idea, how important is the ability to personalize the experience on the commercial side as well as finding revenue opportunities from the personalization perspective?

Jacob Leick (14:53):

Yeah, I think it's absolutely critical. And Mandy's talking about operating accounts and we all know that commercial operating accounts provided really rich source of funding for an institution.

Jacob Leick (15:08):

And that's, I don't know, I would almost say the holy grail of deposits for a bank. And I believe that personalization is the new battlefield for those deposits.

Jacob Leick (15:26):

Personalization enables rich payment capabilities that ultimately allow businesses to save time.

Jacob Leick (15:37):

And at the end of the day, time is money. And whether you are a growing small business, you're an entrepreneur, you're the founder of a growing small business, and you kind of naturally gravitate towards the path of least resistance.

Jacob Leick (15:52):

I can tell you, you're going to be more loyal to an institution that allows you to make payments faster, that can kind of suggest like new capabilities that maybe you're not leveraging that would add value to your operation. And you view annoying advertisements as something that kind of slows you down.

Jacob Leick (16:13):

So, I think specifically the value of data around personalization and understanding the needs of a business of a specific user within that business and being able to recommend the next best action for them or suggest something that deepens the relationship right when they kind of need it.

Jacob Leick (16:35):

I think overall, it's an exciting time because that technology exists and it's readily available now.

Jacob Leick (16:46):

So, I think in summary, personalization is really the key to deepening relationships and demonstrating that you really understand the business and you care about the business.

Jacob Leick (17:01):

All these things for regional community financial institutions that are really important prior to digital banking. But now, that we're in the kind of digital space, it's even more important.

Jim Marous (17:15):

So, Jacob, sticking with you for a second. Do you have any examples of how Alkami has helped a community bank personalize their solutions for their business clients?

Jacob Leick (17:25):

Yeah, yeah. So, there's simple examples, there's more complex ones. But on the very simple side, first of all is just tailoring the overall experience to the specific needs of the business.

Jacob Leick (17:44):

But being able to do that in more of an automated way so that you can set up rules, for example, when a business logs in, you understand that they meet certain criteria and you can kind of change their experience automatically.

Jacob Leick (17:59):

Another one is just truly through just I'll say design thinking and applying user research kind of as a science to how you ultimately build capabilities. I think look at RTP and Fed now, as an example. There's so much buzz, all institutions seem very interested.

Jacob Leick (18:29):

There's a lot of chatter and whatnot, but I think what we see is a little bit lackluster actual adoption from actual business originators. And why is that?

Jacob Leick (18:40):

I think because you see ACH and wire originations, those were kind of like the two standard things. And the typical way of kind of marketing those capabilities is here's where you send ACH, here's where you send wires.

Jacob Leick (18:56):

And so, now, that we have more and more payment channels, if you treat it like how you treated things in the past, people are going to become overwhelmed.

Jacob Leick (19:07):

So, I think for the future of personalization, I think understanding the specific payment use case that the business wants to ultimately accomplish, like sending payroll, paying taxes, whatever, creating an experience that kind of abstracts away the payment channel.

Jacob Leick (19:31):

So, it's less about ACH, it's less about wires, it's less about RTP. It's about I'm creating an experience allowing you to send payroll and you can either do it fast or you can do it in two days or whatever.

Jacob Leick (19:44):

And I think when you do that effectively, and you tailor the experience to the specific payment use case, you can create so much value with that actually you no longer have to worry about. For example, "Oh, hey, we're going to have some non-interest income attrition when we offer RTP because people are going to move away from wires or whatever."

Jacob Leick (20:10):

It's now, like, “We're creating so much value that we can actually charge more than we charged before for even some of these low cost payment channels.”

Jim Marous (20:20):

So, Mandy, you come from a long history of working on the business side of banking. One of the things that is more important now, than ever before is not being the loudest, but differentiating your organization from the others in the marketplace, especially when you're looking at a community bank versus a large bank.

Jim Marous (20:41):

This is just a perspective thing more than anything else, more than a specific answer. But how can community banks and credit unions today differentiate themselves in the business banking space beyond just offering the best lending terms, or as Jacob mentioned, the personalization aspects.

Jim Marous (21:02):

How can they do that and on an ongoing basis to win the business?

Mandy Lopez (21:08):

So, I think we have to look at everything holistically. I think that we can't just say, “Ignore the lending terms, ignore this personalization.” But I think it's really a culmination of bringing all of that together.

Mandy Lopez (21:19):

But I firmly believe in talent as well. So, I've managed a lot of teams in my past, and I have to say, I have had the best treasury management teams on the face of the earth. But it's really those experiences that they're creating, they're helping to win that business and not only win that business, but retain that business, keep that business.

Mandy Lopez (21:40):

At the end of the day, businesses want to do their banking, they want to get in, they want to get out, but you make friends along the way and it turns into more than just a banking relationship. It's how are your kids? Let's go golfing. Let's have dinner. Let's hang out.

Mandy Lopez (21:57):

So, you start to develop these really deep relationships with people where you want that business to succeed, and you want to be a part of that success. And a lot of that does come with honestly getting to know the people behind the business. To me, that is what really makes that winning combination.

Jim Marous (22:16):

Yeah. So, that's interesting because the talent side of everything kind of sounds soft, but when you think about relationships, especially in a digital world, once you get past the, oh, the transactions process effectively, it does get down to people.

Jim Marous (22:34):

It gets down to people if you make a call into a bank. It gets down to people if you visit a financial institution. And I think you're right, that sometimes that human aspect becomes a very important key to generating new business banking relationships.

Jim Marous (22:50):

So, Jacob, we look at the outside, we look at the customer experience, we look at the front of the glass aspects of business banking at times.

Jim Marous (23:00):

But one of the issues that really have become key and becomes even more key with AI and generative AI is the ability to simplify the back office, automate it, and reducing cost to serve the customers.

Jim Marous (23:14):

What challenges and opportunities do you see in that space as far as being able to simplify and digitalize the back office to reduce cost, but also importantly, to make it so the back office can digitally serve the front facing glass of a banking relationship?

Jacob Leick (23:36):

Yeah. I think this is very much related to some of the things that Mandy was touching on. We talked about there's a huge opportunity for financial institutions and with that opportunity comes rapid growth.

Jacob Leick (23:55):

And then the back office becomes a bit of an issue because it becomes a problem for institutions when you're growing very quickly. A good problem to have, but still a problem. And it's like you're forced with a few different choices.

Jacob Leick (24:10):

One is you can just scale your back office, scale your team as you grow. That's totally fine. The other option is you kind of look for ways to automate to be more efficient.

Jacob Leick (24:26):

And while everyone wants to achieve it, a lot of times that's often overlooked by regional community financial institutions because they feel like they're giving up the thing that makes them unique.

Jacob Leick (24:38):

And so, what we really challenge institutions on respectfully, is really trying to rethink the way that like what is exceptional service?

Jacob Leick (24:54):

And what is it? Focusing the manual effort around things that really build and deepen relationships, like what Mandy's saying, like using your talent for stuff like that, not for just clicking buttons and setting stuff up manually. Those things don't necessarily add value.

Jacob Leick (25:12):

So, we look at like things like billing whether it's through account analysis or hard charge billing. That's a very common task that either it's manual or institutions in many cases are not even doing it because it's just too costly to bill.

Jacob Leick (25:32):

But we know there's a lot of data suggesting or supporting this, businesses are willing to pay fees for things that add value. So, it's often overlooked as something that institutions can do.

Jacob Leick (25:48):

Other one this big is administering and managing users. To an extent, when you're onboarding a new business, it makes sense for the institution to do it. But I would argue that it's a much better experience empowering the actual business with the tools to set up and manage their own users.

Jacob Leick (26:11):

And to me, I think it's easy. If you think of almost like Blockbuster versus Netflix as it exists today, just as an example, where you could argue that Blockbuster provided much better service because you would go into a store and you'd be able to talk to someone.

Jacob Leick (26:31):

That person probably watched every single movie that's ever existed and they can suggest movies to you or whatever.

Jacob Leick (26:37):

But you can't deny the fact that you have to drive to the store. Sometimes probably the movie that you want to rent is already checked out and you remember, it was like, "Hey, here's my name. Can you like call me as soon as the movie's in?"

Jacob Leick (26:50):

But versus the kind of Netflix model as it exists today where data is kind of used based on your viewing patterns to suggest the exact movie that you want. I have little kids at home.

Jacob Leick (27:02):

And so, it's exciting for us and we finish dinner and on Friday nights we sometimes do like movie night. And I can just sit down and we find like the newest like kid movie that just came out and we can enjoy time together, connect and laugh without needing to waste any time going to a store or whatever.

Jacob Leick (27:25):

And so, I think to me, that's just a bit of an analogy around the value that some of the like empowering users with some digital experiences, like you can kind of shift the way that you think about it a little bit.

Jacob Leick (27:40):

And there is a way to do things like sub user management in a way that deepens the relationship between the institution and the business without giving up the thing that you hold sacred or the regional community financial institutions hold sacred.

Jim Marous (28:01):

So, Mandy, what challenges and opportunities do you see today for banks and credit unions in the business FinTech ecosystem?

Jim Marous (28:09):

One thing we've found that Alkami's a great example. The composable banking solutions. You can bring solutions to the table that are simple to implement, that can be done at speed and scale, or you can bring an overarching platform to the table that can help them convert their entire business banking relationships.

Jim Marous (28:28):

How do you see the FinTech marketplace and FinTech ecosystem, both from a traditional FinTech of solution provider or a larger organization like Alkami? What challenges and opportunities do you see as you look at that integration within the business banking world?

Mandy Lopez (28:47):

Yeah, it's a great question, Jim. And it's really an exciting time to be in finance and financial technology. I mean, I love to see how banking has evolved over the time I've been in it, which has been, I don't know, gosh, I think about 30 years and counting. Oh, okay.

Mandy Lopez (29:02):

Anyway, moving on. I watched remote deposit capture come into existence in the early 2000s with the passing of Check 21, huge opportunity.

Mandy Lopez (29:11):

Around that same time, the Promontory Network, which is now known I think as IntraFi started at CDARS program to allow a depositor to have fully insured funds across multiple FIs to stay under that $250,000 FDIC limit. Great opportunities there too.

Mandy Lopez (29:27):

I've experienced the financial crisis of 2007, 2008, where we had to navigate through it as a bank, increase our loan loss reserves, watch and protect our loan portfolios.

Mandy Lopez (29:38):

And at the time, I was working for a bank in Vancouver, Washington, and it was amazing to see the caring, the human connection that our executive management had with our business customers and working with those folks who were not able to repay their loans. And it was a very inspiring time to be part of that bank.

Mandy Lopez (30:00):

But around that same time, during the financial crisis, the Fed responded with new lending programs to support liquidity and FIs, and it began to pay banks' interest on their excess reserve, which encouraged banks to hold onto those reserves instead of lending them out. Which then reduced the need for the Fed to offset its expanded lending with reductions in other assets.

Mandy Lopez (30:20):

And I have to give credit to the Federal Reserve history page for citing that. It's actually a very, very interesting read.

Mandy Lopez (30:28):

But the list goes on and on. There's underlying themes to all of these. Major life events drive the need for creativity and innovation. And with that lies these challenges and these opportunities.

Mandy Lopez (30:40):

And I think as we continue to experience life events, like COVID-19 was a major catalyst change for the banking industry. I think Jacob touched on it earlier.

Mandy Lopez (30:53):

We are going to have to continue to be creative, to innovate, to rely on partners, to rely on ourselves, and to maintain that human connection to keep those relationships and keep those businesses at the bank that they're currently at.

Jim Marous (31:08):

Boy, that's so key. And you said it so well because it really is the challenge and the opportunity at the same time. We have solutions now. Alkami is a great example where solutions can be deployed in such a quick speed.

Jim Marous (31:21):

I mean, you look at your banking history, my banking history, Jacob's banking history, and the reality is, it used to take years to implement an idea. Now, you can do it in weeks, sometimes quarters.

Jim Marous (31:33):

And it's so exciting because you don't have to take apart the whole package to be able to implement solutions that can help the bank's customers, the client that they have.

Jim Marous (31:42):

And what's also, exciting is new ideas are being generated all the time. New technologies are being used to deploy more personalized solutions. And actually, it gives the smaller financial institutions the tools that used to be only at the biggest organizations.

Jim Marous (32:02):

And we talk about this in the FIsionary Podcast, that we talked to a number of small banks doing great things.

Jim Marous (32:08):

And a lot of that is because we now, can buy solutions in a compact easy way and deploy them with really, a lowest hanging fruit mentality that says we can generate revenue, we can reduce costs, we can improve customer experiences and engagement, and we can really build a platform that is the same level of expertise and dynamics and structure that is usually only available to biggest financial institutions.

Jim Marous (32:36):

So, I'm going to throw this out to both of you, and you can take whatever order you want. But looking at everything that's going on right now, looking at the business banking evolution has really kind of followed what's happened in the consumer space with regard to digital at least, and the ability to really divide up the business relationship in a way that's never been done before.

Jim Marous (33:00):

How do you foresee the landscape of business banking evolving in the next, I would usually say 5 or 10 years, but I'm going to say next 3 years because things are happening so fast. And what potential innovations and technology advancements do you anticipate shaping the future?

Jim Marous (33:17):

How do you see Gen AI play out? How do you see new technologies playing out, and how do you see the way banking is actually accepting some of the tools they have at their disposal as opposed to just doing business as usual?

Jim Marous (33:31):

I'll tell you what, let's start with Mandy. Mandy, why don't you give us your thoughts on this.

Mandy Lopez (33:35):

Absolutely. And I'm really excited to talk about this because I'm not an expert in this area, but if I were to take out my crystal ball and take a stab at one area in particular, a couple areas, to me, it's going to be, as you mentioned, Jim, the data and power of these partnerships to drive these AI insights that in turn control the experience for the end user in a hyper-personalized way.

Mandy Lopez (34:01):

I mean, we've seen a huge rush of a lot of industries using or wanting to use insights to drive this personalization, make recommendations on products and services.

Mandy Lopez (34:13):

Look at the food ordering apps like Uber Eats and DoorDash, they're asking if you want to reorder your favorites and are making suggestions of what you may want to eat based on what you've ordered in the past.

Mandy Lopez (34:23):

And as Jacob alluded to a little bit ago, same with those TV streaming services, you rate shows either good or bad. And those services fine tune the experience you see based on those ratings and make suggestions of shows you may want to watch.

Mandy Lopez (34:36):

Even as I was typing out notes for this podcast today, Google Docs was making suggestions on how I should finish my sentences, so it's everywhere, everywhere.

Mandy Lopez (34:45):

So, really, all of the companies want the same thing. And it's no different for banks. Banks need to have an intelligent, easy way of aggregating data, normalizing it, and being able to use it in a meaningful way. And if you guys will allow me, I'm going to give a couple of examples.

Mandy Lopez (35:03):

We have a product suite within our Alkami platform called Data and Marketing Solutions. And what it really does is it helps the community financial institution distill very large bits of information into a personalized hub for data insights and key lifestyle indicators.

Mandy Lopez (35:22):

And key lifestyle indicators, or KLIs, as we affectionately call them, is combining account holder transactions with their product line utilization and delivers those insights to the FI to show the account holder spending habits and activity at competing banks. I mean, that's huge.

Mandy Lopez (35:39):

Our data and marketing solutions platform also, provides the ability for the FI to market products and services to their consumers based on that data that they're receiving to retain that customer and hopefully expand the relationship.

Mandy Lopez (35:55):

Flipping to the business side of the house, we partner with a company called upSWOT, and it does something similar, but with a twist for our business customers.

Mandy Lopez (36:04):

upSWOT is a company that provides actionable insights, cashflow forecasting, key performance indicators, and many other features to a business user that's powered by the data within the applications that that business is connecting. Like Facebook, Amazon, CRM systems, QuickBooks, accounting reconciliation systems, all of that.

Mandy Lopez (36:26):

And much like our data and marketing solutions, upSWOT takes these bits of information from those connected apps, they normalize that data so the business user can understand the health of their business, their receivables or payables that are due, and it even will give them their carbon footprint with a whole lot more.

Mandy Lopez (36:42):

And what's really neat is the bank can also, see all of that data in their own separate admin portal. So, now, the bank has access to all of this data to help them make faster decisions on these businesses that they're banking.

Mandy Lopez (36:57):

And they can make offers of like a line of credit, a money market account, or anything else that they so choose to provide that white glove service, that personalization and keep the business relationships they have and cross sell to obtain accounts held at other institutions. It's really pretty cool stuff.

Jim Marous (37:17):

Well, it is interesting too because both you and Jacob have kept on reinforcing either subtly or directly the importance of data. And one of the keys that Alkami can provide is the open the door to the data aspect of what's going on to make the solutions better.

Jim Marous (37:35):

And you also referenced, Mandy, the partnerships you have with upSWOT and there's other partnerships you've had with other organizations.

Jim Marous (37:42):

You're a gateway to a solutions portal that a financial institution can say, “I want one from isle one, I want one from column B. On the check out, don't want to pick up something my way out. And I really need this solution.”

Jim Marous (37:56):

And the ability to pick up those kind of solutions and build a partnership with an organization that's like Alkami that you have trust in and can run down the field on your behalf knowing what you are trying to achieve, but also, what Alkami's trying to achieve.

Jim Marous (38:13):

Which is how can we build relationships that last and where there's not going to be silent attrition, which is beating up the banks and credit unions right now. And sometimes not so silent, unfortunately.

Jim Marous (38:24):

But I think that you open the door to potential and it really still rests with the financial institution and the executive management to pull the trigger and say, “We're actually going to implement these things.” It does nothing if you buy the capability and don't do anything with.

Jim Marous (38:43):

I referenced Salesforce quite a bit saying every finance institution has relationship with Salesforce. Less than half probably use it for anything, but they keep on paying the fee on an annual basis. That's not a disruption on Salesforce. It's not something that they're doing a bad job.

Jim Marous (39:01):

The problem is just because you build it doesn't mean they'll come. And I think when you look to the future, this becomes even more important.

Jim Marous (39:08):

Jacob, from your perspective, you're running an department that's trying to move a lot of things at once and trying to really build solutions that three years ago we weren't really looking at the business banking side of things as being as important as it is today.

Jim Marous (39:24):

What do you see in three years? What do you see changing? How do you see generative AI or any AI overall or anything really impacting financial institutions on a daily basis like a lot of things are today?

Jacob Leick (39:40):

Well, as you know, the possibilities are truly endless. I think for me, one thing is sure, is definitely certain, and that is uncertainty. And I mean, rates are going up down, we have maybe another global pandemic, presidential election coming up. All these different things have major impacts.

Jim Marous (40:10):

Those are different things. Not the global pandemic and the elections, but I do know what you mean, yes.

Jacob Leick (40:15):

Sometimes it seems the same. But it's like these things have big impacts and all of them could ... who knows. So, I think, like to me, where we focus is on really creating a platform that can respond very quickly.

Jacob Leick (40:33):

You talked about a lot of the partnerships that we have in place today. I think one of the things that is really important to us is it's not necessarily about the ones that you have today. It's being able to create new ones very quickly.

Jacob Leick (40:49):

Because on a moment's notice, we all like Alkami, our competitors, and even financial institutions may have to respond to something that we didn't even know about a week ago. And so, I think that's the thing that really energizes us, I think is just being able to react, stay very close to our clients.

Jacob Leick (41:17):

One of our values at Alkami is the customer is the North Star. We truly believe that. And so, we spend a lot of time sitting with our clients. And my team pre pandemic, we would spend at least 150 hours a year sitting with actual businesses and just watching them do things like payroll, for example.

Jacob Leick (41:43):

And you'd be surprised how many little ... when you sit and watch someone do payroll for three hours, like the little tiny things that you kind of see that you can change in the experience to make it a little bit better.

Jacob Leick (41:58):

So, to me, is just staying close to users in what they're doing and financial institutions and creating a platform that can scale at a moment's notice.

Jim Marous (42:16):

I thank you both for being on the show today. It's interesting because I think what we're really talking about is ongoing resilience. The one thing we, as you said, take very well, it's one thing we can be certain of is uncertainty or some version of that.

Jim Marous (42:30):

And I think this is where smaller finance institutions aren't in the position to build things once something changes in the marketplace. They do have the capability though of selecting vendors that they believe in that can take them down the path to success in a quick and easy way.

Jim Marous (42:49):

And in many cases, we find already that smaller institutions and large institutions tend to be more digitally astute and digitally advanced than those in the middle, mainly because you have a lot more open minds in the smaller organizations, a lot more money in the big ones. And that's really knocking it down into real easy parts.

Jim Marous (43:08):

But I think it's important, especially in the business banking area, that more and more smaller institutions are focusing on.

Jim Marous (43:17):

That they look at the solutions that you can bring to the table at Alkami through your partnerships and built within your organization, and realize that if you want the safety of resilience, if you want the safety and security of being prepared for changes that are unheard of.

Jim Marous (43:33):

I mean, I'm sorry, but one year ago, we weren't talking about interest rates as being a major issue or the amount of savings we're generating, but now, it's very major.

Jim Marous (43:41):

And then you look back at the beginning of COVID and the solutions we had for businesses and realizing that government gave us Thursday a new product that we had implement on a Monday, and most organizations did that.

Jim Marous (43:56):

So, if you're challenged by, I don't think we have time to do this, it means it's not a priority. You got to make it a priority.

Jim Marous (44:03):

Thank you both for being on the show. I know we're going to have you again at some point and appreciate your help with us.

Mandy Lopez (44:10):

Thank you so much, Jim.

[Music Playing]

Jim Marous (44:12):

Thanks for listening to Banking Transformed, the top podcast in retail banking, and the winner of three international awards for podcast excellence. We appreciate the support we have received to make this an endeavor success.

Jim Marous (44:23):

If you enjoy what we're doing, please take some time to show some love in the form of a review.

Jim Marous (44:29):

Finally, be sure to catch my recent articles on The Financial Brand and check out the research we're doing for the Digital Banking Report.

Jim Marous (44:36):

This has been the production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, and audio engineer and video producer, Sean Rule-Hoffman.

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