What Keeps Financial Executives Up at Night?

Jim Marous (00:09):

Welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, owner, and CEO of the Digital Banking Report and co-publisher of the Financial Brand.

Jim Marous (00:18):

In today's episode, we're excited to have Devesh Khare, chief product officer at MeridianLink on the show. In this episode, we'll be discussing the challenges financial institutions face today, and how organizations are working to solve these challenges.

Jim Marous (00:33):

Devesh also shares how partnerships with solution providers have changed over time and what organizations are looking for from a third-party provider. Finally, he shares the keys to the success for banks and credit unions in both the short and the long-term.

Jim Marous (00:47):

The banking industry continues to change more challenges, more opportunities, more ways to do business. What's interesting is a lot of things can keep bankers up at night. They aren't the same for every size organization. They're not the same for every type of organization.

Jim Marous (01:07):

However, at the end of the day, what we're trying to do is making banking better for both financial institutions and the consumer.

Jim Marous (01:18):

So, welcome to the show, Devesh. Before we start, can you share a little bit about your background and also provide a short introduction to MeridianLink?

Devesh Khare (01:27):

Yeah, absolutely. Nice to be on here and great to talk to you again, Jim. So, about myself. So, I've been with MeridianLink for four years. I'm the chief product officer here at MeridianLink. And prior to joining, I was at ADP as head of product for their payments business. And prior to that I was at a health tech company for four years where we were trying to solve problems for doctors and their practices.

Devesh Khare (01:51):

I've been in product management my entire career, and I focus on how do we take industry problems, understand what the customer's needs are, and really try to solution and evolve and innovate.

Devesh Khare (02:01):

And here at MeridianLink, we're doing the same thing. So, at MeridianLink, we focus on how do we help banks and credit unions really help serve the digital community, the evolution that our customers are going on to really help consumers get into better financial products and go on their personal financial journey.

Devesh Khare (02:19):

And so, MeridianLink, we provide automated account opening and lending solutions that we wrap into an end-to-end data-driven workflow to help credit unions and banks grow and thrive in the digital economy.

Jim Marous (02:34):

So, it's interesting, you just completed a huge industry client event called MeridianLink LIVE. I think there were 1700 attendees. I was one of them. And it was your largest number ever.

Jim Marous (02:47):

What is interesting is while you're the product manager, you usually get bits and pieces as customers say, we need this, we need to do this. But you just jump into the well, when you have a client event, because people are all around you, you get to hear what's going on in the street. You get to sit through different sessions to hear what people are really resonating, how many people are in each room.

Jim Marous (03:10):

What was the overarching theme that you felt happened this year? What were people talking about? What were they looking to do? What did you hear on the street?

Devesh Khare (03:22):

Yeah, I love MeridianLink LIVE. It's the one opportunity year where our team, our customers can get together and share, and share such a broad spectrum. You said over 1700 attendees. If you take a step back and this is really what I get to do in my role as chief product officer, I get pulled into the weeds, but I also get the opportunity to step back and think about what did I hear, what I learned, what are people saying?

Devesh Khare (03:49):

And really, as we all know, digital transformation's been a buzzword for years. I mean, you've been doing this for a long time, Jim, dealing with banks and credit unions and digital transformation's been going on for a very, very long time. What I'm starting to hear now is one, is there's a common theme around the end customer, the consumer, or the member, depending on who you're talking with.

Devesh Khare (04:09):

But ultimately, how do we do better for them? How do we think of their personal financial journey? And how does our institution help them meet their financial needs and goals over the course of time? And in doing so, how do we make sure that we keep innovating to meet their needs?

Devesh Khare (04:28):

There's a lot of opportunities for consumers to go other places. And these institutions have a unique ability to provide a personal level of service that they've done historically but do now in a digital domain. And so, for us, what we're hearing from customers is, we know digital transformation is needed, but digital transformation is not a destination. It's an ongoing journey.

Devesh Khare (04:50):

Is how do we continue to evolve our capabilities to better serve the needs of our consumer? How do we take that next step to provide a new product, a new capability, a new experience to make sure that we're meeting the needs of our customer base?

Devesh Khare (05:08):

And so, that's what we're hearing more and more now, is this realization that digital transformation is never done. It's an ongoing journey. And how do we keep progressing our roadmap, our blueprint to serve our customers better?

Jim Marous (05:22):

It's interesting, I was walking the floor quite a bit. I actually interviewed eight different people, eight different organizations on the floor and went to an executive session the night before and got to see some of the highest-level financial institution executives that you had at the event.

Jim Marous (05:37):

And what I sensed also was there was a higher sense of urgency to say, "I can't talk about anymore. I got to get it done." Not that they thought they were just talking about before, but there's an urgency about the fact that I can't afford to have the future get away from me. It's changing too quickly.

Jim Marous (05:58):

Another thing that I sensed also was that they are looking for partners that can get them there quicker and at scale. In other words, they know they can't do it themselves. Many of your clients are mid-size organizations. Some of them are not the smallest and there's not maybe all the largest, but they sense that I need to find partners that are going to get me there quickly.

Jim Marous (06:25):

And so, there are a lot of shoppers for lack of better term, they're knocking on doors, they're meeting with your partners, they're going to sessions, learning sessions, but there's really a sense of speed.

Jim Marous (06:37):

I think another thing I sense, I don't know if you saw this, but as opposed to looking at customer experiences, there's a lot more momentum discussion around customer engagement where they really need to find a way to recapture that relationship at a time when their competition can open an account in three minutes and start a loan process in five or less.

Jim Marous (07:03):

So, it's interesting, so many attendees go to, as I mentioned, these events with questions on their mind or services they would like to buy. What did you feel was the biggest need of the attendees? I'd almost say, which of your partners were they standing in line for?

Jim Marous (07:21):

But the reality is I think as a product manager, you're probably sensing this on an ongoing basis, but it really comes to bear in an event like yours. What sense did you get that more attendees than any others were looking for from a need standpoint?

Devesh Khare (07:38):

Yeah. And so, for me, you said it well, it's about a relationship. So, I want to just address that first before kind of answering your specific question. If you think about the relationship part, community financial institutions, that was their recipe for success.

Devesh Khare (07:52):

Jim, when you walked into a branch, they knew who you were, they knew everything about your family and they knew what you might need. And so, they provided recommendations that were really valuable in terms of keeping that relationship with you over the long-term.

Devesh Khare (08:06):

In today's world, that's hard because everything's digital, we're being thrown offers left, right, and center. And so, how as a community finance institution do we now keep and maintain that relationship over the long-term? That's a challenge. It's a struggle.

Devesh Khare (08:21):

So, the first thing that I think it always starts with for me is, and I see this time and time again with customers, with prospects that come through the door, is it got to be honest with themselves of where are they on their journey in terms of digital maturity. Where are they on the maturity curve?

Devesh Khare (08:38):

And then what kind of progress do they want to make? Where do they ultimately want to be and what kind of relationships do they want to establish with their customer base? And really there's sort of five areas that I think I find the most amount of curiosity and where we kind of talk about in terms of driving continuous improvement and this sort of helps these community financial institutions keep growing in terms of that ability to engage in deep relationships in the digital domain.

Devesh Khare (09:02):

It always starts with these consumer experiences. You already touched on that, but it's also thinking about share of wallet. How do we service a broader base of our customers’ needs across their entire debt portfolio, not just this current transaction. It's looking at it broadly.

Devesh Khare (09:19):

Things like instant decisioning. No one wants to wait around for a decision anymore. I have need, I want answer right now, right away. Then process automation is, I want to give my team, my staff, a better experience as well. I'm not just about the end customer, the member. And then data and data centricity.

Devesh Khare (09:36):

So, looking at all those together, and to answer your question, I mean the one area that creates a lot of buzz, and we probably heard it on the floor everywhere we went, was AI, AI, AI, AI. But if you take a step back and think about what AI does, it's really helped in support of those five areas I just talked about.

Devesh Khare (09:55):

Consumer experience, share of wallet, instant decisioning, process automation, data centricity, AI has a role in all of that. And so, that's really the area that we think customers are focusing on is how do we drive that progression towards a better kind of digital level of maturity that we want to offer in the industry and really compete head-to-head with some of the fintechs that are out there from a community financial institution standpoint.

Devesh Khare (10:22):

So, in doing those, I mean the ones that come to the forefront, I mean you were asking me obviously as you go digital, fraud, fraud is always front and center. How do you make sure you're dealing with the right actor on the other end? I mean, that's paramount. How do I know Jim is Jim?

Devesh Khare (10:39):

And so, that's always paramount in terms of everything that we go do, and especially you think with digital, I mean, I get that question every single time from community finance solutions that say are early in their journey on digital. How do I protect myself? That comes up a lot.

Devesh Khare (10:57):

The other one that comes up a lot is really around, just, again, I know you said consumer experiences are there, but really how do I provide better consumer experiences? How do I make them easier? How do I make them faster? How do I make them more intuitive? How do I make them more personalized?

Devesh Khare (11:11):

So, that's coupled with data. So, kind of those three things are things that we always hear a lot about when we go to these events, and we hold our own events.

Jim Marous (11:19):

It's interesting, the title of the podcast is What Keeps Financial Executives Up at

Night. And there's a whole host of things. You just brought up fraud and risk, that never goes away.

Jim Marous (11:31):

But on the other hand, you have executives, when I met with some of the senior executives, they're all talking about AI and gen AI and all that also. But the reality is they don't really know what that definition is. What does that mean?

Jim Marous (11:45):

And at the beginning of your conversation, you mentioned about digital maturity, and we've done some recent studies about digital maturity. And what I see is every year people have gotten better and better, but they rate themselves in certain ways lower and lower.

Jim Marous (12:00):

And it may be because of what's around them. The Netflix, the Hulus, the Ubers, the Amazons, all these different organizations that do things differently, put you on the hot seat to say, "How am I going to meet my customer's needs that are changing almost faster than I can?"

Jim Marous (12:20):

So, when you think about that, what do you believe is keeping banking executives up at night? Boy, there's a whole host of things, not the least of which is security and compliance. And not the least of which is, "Geez, how do I keep my customers?"

Jim Marous (12:33):

And one thing I've done at some of these events is I'll ask a whole room full of people, bankers, in all cases, how many of you have closed a primary financial relationship in the last five years? And virtually nobody raised their hand.

Jim Marous (12:49):

I then say, how many of you have opened a new financial relationship without being your primary organization in the last two years? And everybody raised their hand. And this is one of these things that scare the living bejeebies out of the bankers. Because I say, "Look around, this is the silent attrition that's happening in your organization that you don't even know is happening."

Jim Marous (13:10):

You think you still have these relationships, but you, just like your customers all of a sudden have 5, 6, 7 relationships at other organizations, thereby undermining the loyalty.

Jim Marous (13:23):

So, you have a lot of things going on right now. How does MeridianLink serve to help financial institutions address these challenges? There were a lot of partners at your event and there are partners of MeridianLink that helped solve the problems of the financial institutions at the event.

Jim Marous (13:41):

When you look at the different ways you solve the problems, how do you and your partners work to get things off of people's to-do list?

Devesh Khare (13:51):

Yeah. And I love that question because for me it started with what sort of goes through what you started with is consumer expectations keep changing. I think I said last year at MeridianLink LIVE, the consumer expectations have changed. And this year I said they just keep changing. If you look back at 2019 and Amazon, you get two-day shipping, and it was amazing. I loved it. I'd order everything. Now I get same day delivery,

Jim Marous (14:18):

Two hours. Yeah, exactly.

Devesh Khare (14:19):

Two-hour delivery. It's crazy. Same thing with do Uber Eats or DoorDash is now when you order, you could, before just get delivery from a restaurant, now they can pick up five orders on the same way and drop it off your house and everyone get their own food and own choices. It's crazy at how those expectations keep changing.

Devesh Khare (14:36):

And so, that mindset of our customers needs to be, that they need to think about continuous innovation, continuous investment in terms of that journey they're going on. And so, for us at MeridianLink, that's really ... if we look at what our platform does, ultimately, it's a unified data platform to help financial institutions acquire new customers, new relationships and extend them, deepen those over the course of time.

Devesh Khare (15:04):

How we do that is we have solutions and workflows for the entire retail and mortgage debt wallet minus student loans. And so, we look at that breadth of offerings that we have, meaning a financial solution can work with us and have solutions and products to go win the entire debt wallet from a consumer.

Devesh Khare (15:25):

That's a big deal. Now, how you weave that together is using data and automation to help a customer not only just sit and wait for these customers come in, but also reach out and market to them and say, here's our value proposition. And if you think about that reach out, it's reach out for new customers, but it's also reach out to your existing membership because you need to keep earning that next bit of business, that next relationship.

Devesh Khare (15:49):

How do you keep doing that over time? And the only way to do that is having connected solutions that look at that debt wallet entirety and go, "What next? What else should I be offering this customer? What does this customer have with me today? And how do I help them at that next step and deepen that relationship with my institution?"

Devesh Khare (16:05):

And so really that's what we offer is that with MeridianLink One is that connected and automated solution around the entire retail and mortgage debt wallet.

Devesh Khare (16:18):

But ultimately what we do with these FIs, like I said, they're starting off at a really kind of nascent digital maturity. They don't know where to get started. The first thing I always tell every FI is be honest, where are you today? Just really be honest.

Devesh Khare (16:33):

And then because we have our connected workflows and we have a very, very large partner in marketplace that now takes those workflows and pulls in all of these different things that are to originate a loan, to open a new account and streamlines it into end-to-end workflow in an automated fashion is what steps can you take to keep moving yourself forward into the digital domain? And think about start, move forward, invest more, and move forward, invest more, move forward.

Devesh Khare (17:02):

But the idea is that it can be iterative. It doesn't have to be one and done. I think that's the biggest fear that we see from customers.

Jim Marous (17:08):

No more rip and replace course. I mean the reality is you can do this in a composable way. Yeah.

Devesh Khare (17:14):

Exactly. And that's the key. Is that if you think about the breadth of our platform with MeridianLink One, the breadth of our partner marketplace, we offer a lot of flexibility and progression over time that a customer can use.

Devesh Khare (17:27):

The key is where to start and how to kind of build that roadmap, build that blueprint that you can then execute against. And really, that's really, I think what the power of MeridianLink is, is the coupling of our platform, our solution set with guidance on how to actually go on this step-by-step process.

Jim Marous (17:44):

So, speaking of that, how do organizations prioritize their deployment of solutions? I would imagine it's different for different organizations based on where they are along the digital maturity path. But when you go into a financial institution the first time, how do you help them set priorities? Because you can't do it all once. I mean, it's mentally impossible in many cases. But how do you help organizations determine their priority?

Devesh Khare (18:12):

Yeah, it starts by one, having an honest dialogue with them in terms of where are they today? And you said it too. Where are they today? And let's be real. What do you have in place today? What are you trying to accomplish? And understand that ultimate vision goal that they have.

Devesh Khare (18:29):

And then step back and go, okay, now what's the best next step? If let's just say, for example, they have no digital presence today in terms of capturing digital demand, well that's probably a good place to start because if your consumers are going digital, they want interact with you digitally, that's probably a good place to start it's probably not worth then going and ripping and replacing your entire processes and policies to enable that.

Devesh Khare (18:53):

But if you already have that digital presence, maybe the next step is to go look at how do we drive more instant decisioning? How do we drive more automation on the backend through to supplement that digital experience you already have.

Devesh Khare (19:06):

So, it really is on a case-by-case basis, but ultimately that's how we have that conversation is starting with, let's take a real assessment of where you are today. Let's define the goal of where you want to be from a vision standpoint, and then breaking down into a stepwise fashion so that you can actually make progress, measure results, and then invest into the next step.

Devesh Khare (19:27):

Because ultimately, like you said, the rip and replace is very dangerous because you rip replace everything and you don't know at the end, are you going to be better or are you going to be worse? Versus if you can do this in a stepwise progression, you can measure progress along the way and then think about is the next step the right next step or not? If not, hey, let's reassess and define where we should go now.

Jim Marous (19:48):

That's interesting. I would imagine that organizations today, more than ever, it's hard to focus. I mean, I look at what I do daily and my job's a whole lot easier than most of the people I work with. But the reality is there is so much noise, there's so much going on.

Jim Marous (20:03):

Do I get into blockchain? Do I get into composable solutions? Do I deal with a cloud computing, whatever it may be to prioritize is really difficult with all that noise.

Jim Marous (20:14):

And somebody brought this up a couple weeks ago on a podcast talking about that, and you mentioned it, you got to know your north star. You got to know what are you trying to solve for today to get you down that path to be able to do what you have to do tomorrow. And you can get really, really in the muck if you don't know what your north star, it's like setting a GPS system saying, "I'm going north."

Jim Marous (20:37):

And you go, "What? Okay, that doesn't give me much direction," if you tell me exactly where to go, I can help you get there. But I think the analogy's important because there is so much noise. There are so many solutions out there.

Jim Marous (20:52):

You won't even be able to pick partners. You may just get enamored with somebody's partnership, but you say, "Guys, I'm not there yet. How am I going to solve for X if my overall Y is completely off base?"

Jim Marous (21:06):

One thing I've seen and as I said, I've worked with MeridianLink for quite a few years in different ways, was that overall, over time, one thing that you really focus on as organization is saying, how can I get what the customer wants achieved faster, easier, and with less friction than ever before? And you've gone through a lot of iterations what that means, both on the lending side as well, is you do digital account opening.

Jim Marous (21:35):

The financial institutions know this is a problem. And when we do surveys, we ask, do you have digital account opening? In fact, the survey we did with you guys, do you have digital account opening? Do you have digital loan acquisition? And they all go, "Yes." 87%. I think it was.

Jim Marous (21:52):

The challenge is we then ask, do they have to use other channels to get there, and an uncomfortable percentage less than it was three years ago, but in a comfortable percentage say yes. Well, that's not digital.

Jim Marous (22:06):

If I'm going to make my order on DoorDash and then have to pick up my food, there's a little problem here. We're not doing everything we're supposed to be doing. Why is it so hard for finance institutions to actually go the complete way to get to where you can go as an organization in your best situation?

Devesh Khare (22:27):

Yeah. And you summarized it actually extremely well. If you think about the challenge that community finance institutions face today. It's the how, it's how do I provide a true end-to-end, what you said, end-to-end digital experience.

Devesh Khare (22:44):

It's not just, "I got an application now, come into the branch and let's finish it off. Let's get wet signatures on documents." It's how do I have a truly end to end digital experience? And if you think about the true measure, it should always be from the outside perspective, from the consumer's lens inwards.

Devesh Khare (23:01):

Not from the financial institutions needs outwards. And ultimately consumers, the way I would measure it is how fast can I apply for something digitally and have funds in my account. That speed of that time it takes. Now it used to be measured in days or maybe weeks in the past days, and then now it's hours or minutes to get that money, right?

Jim Marous (23:22):

Yep.

Devesh Khare (23:23):

Things have moved a lot faster in our industry and the complexity comes from that entire I'll call it supply chain of everything that has to happen along the way. If you're applying for a car loan, an auto loan, you need to pull a vehicle valuation. You need to do your KYC, know who the customer is, who the consumer is applying.

Devesh Khare (23:44):

You need to possibly get stipulations in place, you need to get your documents together. You need to get signatures on those, submit all this to the court. I mean, those are simple examples of everything that has to happen to make it end to end.

Devesh Khare (23:55):

And same thing happens on digital account opening. There's a lot of steps to orchestrate through that end-to-end chain. And ultimately, if you look at what a lot of financial institutions used do in the past, they'd bounce from one website to another website to something else to do all of this. And that takes time. It takes manual effort.

Devesh Khare (24:13):

To drive to a truly end-to-end digital process, you have to have this workflow, this orchestration that's pulling all this stuff in and streamlining it, reducing the work on the FI but ultimately meeting the needs of the consumer for that true digital experience that they desire and demand, today in the industry.

Devesh Khare (24:32):

And really from a MeridianLink lens, MeridianLink perspective, that's what we have with our MeridianLink One platform, is we have that end-to-end workflow for the breadth of the retail and mortgage lending as well as account opening.

Devesh Khare (24:45):

But we pull in all these partners, that's our partner marketplace. We pull in all these partners and we showcase a lot of our partners at MeridianLink LIVE this year. We had a whole session area for the people to walk through and understand and learn more. But we orchestrate all of that.

Devesh Khare (24:57):

And so, that way our customers can take our workflow, pull in what they need, and drive that end-to-end automation to ultimately meet that digital experience that's needed in the overall industry.

Jim Marous (25:12):

Yeah.

Devesh Khare (25:12):

And what you said at the very beginning sort of resonates with me is what advice or guidance do we like to give to, to our customers or prospects when they come in? And to me one, I said being honest in terms of where they are today, but two is actually find the right partner who they can go on a journey with.

Devesh Khare (25:27):

Because again, if you're going to do the stepwise investment function, you need to have someone that can go on that journey with you from beginning to there's never an end, but to expertise.

Jim Marous (25:39):

That that is so key. And we talk about that once in a while, that you don't need somebody that's going to hang onto the ball. I'm going to use a football analogy, which I tend to do quite often. But you don't want somebody that's going to hang on the ball the same time you're hanging onto it.

Jim Marous (25:53):

The bank needs a partner that they're going to let go of the ball and give it to the partner and let them run down the field on your behalf. Because you think about the whole activity of either soccer or regular football. You can't do these things together. You're not going to be any faster.

Jim Marous (26:08):

You're only going to be faster if you can pass it. If you can, laterally, if you can give it to somebody else who's better at it than you.

Jim Marous (26:15):

When you're looking at the digital process, I mean, you have the ability to get a loan applied for and adjudicated and deployed in a frightening speed. I mean, it's really quite amazing. What are one or two of the steps that create the most anxiety. We're going to go back to that. What keeps you up at night?

Jim Marous (26:39):

Let's say I'm sleeping, okay, but I get started in the middle of the night because there's one or two things that I'm not bought into. What are financial institutions having the hardest time to embrace when it talks about truly delivering a digital solution?

Devesh Khare (26:56):

Yeah. And we talked about one of them earlier, fraud. Things that digital we know it comes up every single time. Is I always step back and look at the — and the numbers aren't accurate, but let's say the 80/20 rule. Say things are real easy when it's happy path, everything works well.

Devesh Khare (27:14):

It’s when they don't work well or there's unknowns, is where it creates a lot of effort for both the financial solution and the consumer. And so, that's where you can either deliver a great experience or maybe lose potential business in the future.

Devesh Khare (27:28):

And so, for me, it always starts with when someone's applying is how do we know who they are and making that fraud verification process easy for the consumer, but thorough for the financial institution. And that's a balance. Because there's tradeoffs in delivering both of those.

Devesh Khare (27:44):

And so, that's one that I hear a lot from our customers in terms of just what do we do and how do we reduce friction, but also make it comprehensive for us. So, that's one area that keeps them up at night.

Devesh Khare (27:57):

The other one that surprisingly still comes up a lot is decisioning. If you look at historic community finance institutions, they might have just decisioned off of your credit score 720 and above. Fantastic. You're one of our customers.

Devesh Khare (28:10):

But that doesn't apply in today's economy. If you look at Gen Zs, you look at millennials, I think they're averaging in the 600s in terms of their average credit scores. And a traditional decisioning would be like, "Nope, sorry, you're not for us, but you are for us."

Devesh Khare (28:25):

And so, how do you look at new data points? How do you think about creating different decisioning criteria which forces these community financials to take an introspective look at themselves and like, are our policies up to date, are our procedures up to date that we then have the software support what we want?

Devesh Khare (28:44):

But it always starts by looking at what kind of risk are we willing to tolerate and redefining how they look at risk. And so, both for me, fraud on the front end, but the risk on the evaluation or decisioning side are the two big areas that we always hear a lot about. And we see the most challenges dealing with sort of the financial institutions that are less digitally mature is them really taking a hard look at what do we do differently here?

Jim Marous (29:12):

That is such a good point. It's interesting because you mentioned the fraud and risk. And I will say that in many cases, finance institutions use that as an excuse. And again, I have been to the fraud and risk department, but for a very short time during rotation when I was a banker.

Jim Marous (29:31):

But the reality is it is like somebody saying, I want to use a piece of plastic because it's better than cash. Well, that's true. But is using the digital process better than a card? And it's letting go of some of those old thoughts because a lot of people say, "Well, a card's better." No, it's not. There's just no way it is. Because you don't have to biometrics, you don't have all these interactions. It's letting go of some of those past thoughts.

Jim Marous (30:00):

You brought up another one where you talk about the whole know your customer and the whole know your customer. There are better ways to determine the know your customer in a digital way than there are in the ways they were before.

Jim Marous (30:13):

I mean, look, how long it took banking to let go of the signature card thinking that that was the best process for verifying somebody? Well, it wasn't. It's just that it was habit. It's what we had done.

Jim Marous (30:23):

And I think this is where a gentleman, the president of Lemonade a long time, back in the very beginning of our podcast said, "The biggest hindrance to digital transformation is legacy thought," that you have a hard time letting go of what you've already known.

Jim Marous (30:41):

And one thing that I saw when I visited China, four years ago now, around the way they looked at risk and looked at credit scores, they realized that they had to move from a risk avoidance to a risk management mindset. And risk management means I can afford to lose a little bit on those smaller lines of credit as opposed to in banking when I went through banking it's still the case in many cases. They just don't want to have a loss.

Jim Marous (31:10):

Well, that's not real anymore. It's going to happen. And the matter is how much can you accept? Where's the balance? Where's the equilibrium between risk and value? You can kill yourself. I mean, we see what happens with new account openings where because of the know your customer components, you end up not accepting a lot of new accounts that would've been easily opened online if you let it happen all in one channel.

Jim Marous (31:38):

Unfortunately, you make it go through multiple channels and 60% of your people empty their shopping cart. They don't fill it. They don't check it out. Well, those processes that stopped were because we did not make it acceptable to the consumer.

Jim Marous (31:56):

So, it's very interesting the role you have because in many cases I'm sure you have financial institution partners where you know exactly where their stumbling block is, but they won't let go of that stumbling block. How do organizations have to rethink that to get over that hurdle of legacy mindset?

Devesh Khare (32:18):

Yeah, and it's tough and you said it extremely well in terms of how that manifests itself. It holds these institutions back from really staying relevant and helping the broader population succeed and want to do business with that bank credit union.

Devesh Khare (32:37):

So, for me, it's a challenge. We see that day in, day out. And I think the best way to overcome it is talking to their peers. And that's part of MeridianLink LIVE. If you look at what we try to create here is it's not just about us sharing. It's about talking to each other and sharing stories about what they've done and how they've evolved and how they had to take a hard look.

Devesh Khare (33:00):

And having those stories be on stage or be in a side conversation at lunch or dinner, is invaluable because having institutions hear from each other and the struggles that they may have gone through and that decision making process and ultimately making the right decision for their institution is invaluable.

Devesh Khare (33:20):

And I think that's how a lot of these ones that are … stuck in terms of legacy mindset overcome it, is they just realize that if they don't change, they're going to be relevant years from now. I mean, I can't tell you how many times I've heard from institutions away saying that my consumers aren't digital yet, but I think by the time they realize that their consumers are digital, they no longer have any customers. So, it's-

Jim Marous (33:46):

Well, yeah, and that legacy mindset, it's built into our system saying older people don't use digital. Well, I can tell you they do. And you know what, they're learning around them all the time. I mean, FaceTime, it wasn't a big deal. Zoom was not a big deal until COVID hit. And then everybody is FaceTiming still and Zooming between family members.

Jim Marous (34:10):

You look at the way people pay. Well, restaurants are all converting to digital payments, they're tap and pay, leave, it's all done. They're bringing the old card reader to the table. And most people aren't using the card. They're tap and pay. They're learning everywhere. And I think those legacy thoughts have to change because as you said, they'll become irrelevant.

Jim Marous (34:35):

And it's so interesting because when you look at the potential, one thing that was a huge takeaway at your event as well as recent events I've been to, I was lucky enough to have a dinner with a lot of your senior executives’ clients, the client senior executives. And as you said, there were the interaction between the people who have done it and the people that hadn't quite done it.

Jim Marous (34:57):

And what was an amazing takeaway, and I've had this several times in the last two years, is that size doesn't matter. I am hearing some amazing stories from organizations, less than $1 billion that are doing things that organizations of 200 billion are still struggling with. I'm sure you're seeing that.

Jim Marous (35:17):

How do you build products at MeridianLink to serve all these different organizations, both from a size perspective, but also digital maturity perspective?

Devesh Khare (35:29):

Yeah, and it goes back to what I talked earlier on the digital progression mindset. If you look at where someone is around sort of those four kind of areas of focus where they need to invest, it's consumer experience, share of wallet, instant decisioning, process automation and data centricity.

Devesh Khare (35:49):

If you really look at those, MeridianLink One, our platform goes broad, as I mentioned, in terms of supporting the full retail, um, mortgage and account opening lines of business for a financial institution. But also, for each one of those, we go very, very deep, both from a end-to-end partner ecosystem standpoint, but also from a automated workflow standpoint.

Devesh Khare (36:12):

And so, for us to support these organizations, it's helping them go on that journey over time. And like you said, it doesn't matter how big they are, those needs might be just based off where they are from a current digital maturity perspective.

Devesh Khare (36:26):

And so, for us, we just think about how do we provide capabilities to keep advancing on those five areas no matter where they start. And so, for us, it's not necessarily size, it's really around defining that roadmap, that blueprint for a customer to progress forward in terms of their level of digital sophistication, digital maturity.

Devesh Khare (36:48):

So, really, it's not really about size. It's really about having breadth of capabilities across that entire retail mortgage and account opening line of business.

Jim Marous (36:57):

Okay. So, I'm no longer the banking executive that's being kept up at night. I'm either you or your boss saying, "Okay, from a product perspective, what are we working on to make sure that we stay on top and ahead of the financial institutions that are using us as a provider?" What's on your roadmap for what you're trying to fix out there that's going to keep you and MeridianLink ahead of the curve?

Devesh Khare (37:24):

Yeah. And so, MeridianLink LIVE as you saw Jim was, I mentioned before AI is hot for everybody right now, really big. But if you really think about what AI requires, it's a lot of data. It's knowing and understanding what's going around in an institution, what's going on with their customers, and how to harness that data. And that's what AI's really good at doing.

Devesh Khare (37:46):

And so, for us, it's really that data centricity is how do we take all this data that MeridianLink has across all of those community finance institutions that we support and help guide them on this path of digital maturity, digital progression. How do we help them do better and keep advancing?

Devesh Khare (38:02):

And so, really that's the area that we're investing in and focusing. And where we'll always continue to invest in focus is leveraging and taking that data that we have and making more digestible, making more relevant, and guiding our customers along their digital progression.

Jim Marous (38:18):

Well, it's nice too, because I saw it on the floor. Your partners are thinking the same way. They're thinking, "How can I serve MeridianLink better and the finance institutions better to make it so it all comes together?"

Jim Marous (38:31):

How do I make it so that the finance institution executives can sleep at night, even though there's a lot of noise out there, even though there's enough going on in a daily environmental basis outside of banking to keep us up at night. I don't want banking to be the stumbling block.

Jim Marous (38:47):

So, Devesh, it's interesting because we have a lot of things going on in the marketplace right now. We have a lot of things going on in our world right now. And to try to make it so that financial institutions, executives can sleep better at night, to know they're keeping ahead of the curve, or at least keeping up with what's going on in the marketplace is so important.

Jim Marous (39:07):

And as we said at the beginning, finding those partners that are going to make it their mission to keep you up to date is more important than ever because I can't do it. I'm not smart enough to do it. I'm not a financial institution executive, but if I was, I'd have to find a whole lot of people smarter than me. Especially when you're talking about AI and generative AI.

Jim Marous (39:27):

And it's really good to speak and have podcasts with these solution providers that their mission is to make it easier for financial institutions to do their business and to make banking better.

[Music Playing]

Jim Marous (39:40):

Thank you so much for being on the show today. I really appreciate the discussion. It was great to see you a couple weeks ago at MeridianLink LIVE and looking forward to next year already.

Devesh Khare (39:49):

Yeah, absolutely. Thank you again for having me on the show. Always enjoy our conversations and I look forward to doing more of these as time goes on.

Jim Marous (39:56):

Looking forward to that as well. This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, and our audio and video engineer Will Pritts.

Jim Marous (40:07):

I'm your host, Jim Marous. Until next time, remember, transformation is an ongoing journey, but you must embrace change, take risks, and be willing to disrupt yourself and your organization for all to work together.

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