WEBVTT
1
00:00:04.120 --> 00:00:06.559
Hey everyone, Matt Snow from Upstart with another episode of
2
00:00:06.639 --> 00:00:09.519
Leaders in Lending live from CBA twenty twenty five here
3
00:00:09.519 --> 00:00:11.880
in Orlando. Today, I'm joining with Dennis and Way from
4
00:00:11.919 --> 00:00:16.399
Oliver Wyman and Kurt from Pinwell. Thank you guys for joining. Yeah, absolutely,
5
00:00:16.480 --> 00:00:18.359
maybe we can go down the line with quick introductions.
6
00:00:18.399 --> 00:00:20.120
Tell me a little bit about what you're doing today.
7
00:00:20.519 --> 00:00:21.800
Yeah. My name is Dennis Tchura.
8
00:00:21.839 --> 00:00:24.039
I'm a principal in our retail business making practice at
9
00:00:24.039 --> 00:00:27.480
Oliver Wyman. I focus primarily on consumer financial needs as
10
00:00:27.480 --> 00:00:28.480
well as deposits.
11
00:00:29.399 --> 00:00:31.480
And my name is Wake I'm a partner with Oliver
12
00:00:31.480 --> 00:00:35.119
Wyman retovininess banking practice. I do a lot of work
13
00:00:35.119 --> 00:00:38.759
on product proposition, innovation, pricing, sales marketing.
14
00:00:39.679 --> 00:00:41.880
And I'm Kurtlin. I'm copeender and CEO of a company
15
00:00:41.960 --> 00:00:45.119
called Pinweel. We help built soffward to make it easy
16
00:00:45.119 --> 00:00:48.320
for bings to win and establish primacy. So things like
17
00:00:48.359 --> 00:00:51.359
making it easy to switch your drive deposit, help manage
18
00:00:51.359 --> 00:00:53.840
your bills, eventually switch your bills, et cetera, et cetera.
19
00:00:54.079 --> 00:00:56.039
Great, and so I sat in on the session earlier
20
00:00:56.079 --> 00:00:57.719
the three of you were a part of. In terms
21
00:00:57.719 --> 00:01:00.840
of primacy and defining that in how it's important and
22
00:01:00.840 --> 00:01:05.120
how to help banks establish that. So I was thinking,
23
00:01:05.200 --> 00:01:07.200
you know, maybe I'll start a little bit more provocative
24
00:01:07.239 --> 00:01:10.159
and like, is primacy even important today if you think
25
00:01:10.159 --> 00:01:13.480
about open banking and the choice consumers have, Like, is
26
00:01:13.519 --> 00:01:16.599
that still a goal worth pursuing for a financial institution.
27
00:01:18.480 --> 00:01:20.079
I mean, I'm happy to start on that one. I
28
00:01:20.079 --> 00:01:22.599
think that's a really fair and important question, and I
29
00:01:22.599 --> 00:01:25.840
think the answer generally is yes. But then also depends, right.
30
00:01:25.840 --> 00:01:27.879
I think there's an option where you don't need that
31
00:01:27.920 --> 00:01:30.879
relationship right, where instead you just focus on as cost
32
00:01:30.920 --> 00:01:34.200
effectively as possible selling a particular product. But then you
33
00:01:34.239 --> 00:01:36.640
become a pure commodity. And I think that the real
34
00:01:36.719 --> 00:01:39.120
question when it comes to primacy is how much of
35
00:01:39.159 --> 00:01:41.400
the value do you want to actually create that is
36
00:01:41.400 --> 00:01:43.840
not simply about a commodity. How much of it's actually
37
00:01:43.879 --> 00:01:46.719
about serving the needs of a consumer more holistically, how
38
00:01:46.799 --> 00:01:49.079
much of it's about your brand about basically your value
39
00:01:49.079 --> 00:01:50.959
is about other things that you provide to the customer,
40
00:01:51.319 --> 00:01:53.239
wherein you know, the decision of whether or not to
41
00:01:53.319 --> 00:01:55.519
choose to work with you isn't just about the price,
42
00:01:55.519 --> 00:01:56.400
it's about something else.
43
00:01:56.599 --> 00:02:00.719
Yeah, yeah, fair, Yeah, I think there's a there's a
44
00:02:00.719 --> 00:02:03.599
math question here because at Dennis in the earlier session
45
00:02:03.760 --> 00:02:06.719
was mentioning that maybe like ninety seven percent of the
46
00:02:06.719 --> 00:02:09.080
Americans are actually banked. So at the end of the day,
47
00:02:09.639 --> 00:02:11.919
you know, the banks are out there and the fintech's
48
00:02:11.919 --> 00:02:15.360
out there essentially stealing each other's clients, and primacy is
49
00:02:15.400 --> 00:02:18.439
a way of deepening that relationship, and really, you know,
50
00:02:18.520 --> 00:02:21.360
that's that's what's probably going to food of growth going forward.
51
00:02:21.520 --> 00:02:23.400
Yeah, I think it's hugely important. And the way I
52
00:02:23.439 --> 00:02:26.680
think about it is you're trying to build a relationship
53
00:02:26.680 --> 00:02:28.879
with that customer and ultimately get them into deeper and
54
00:02:28.879 --> 00:02:31.719
deeper into your ecosystem. Right, So the example I always give,
55
00:02:31.879 --> 00:02:34.240
I think actually Dentnis had mentioned earlier, is you look
56
00:02:34.280 --> 00:02:36.680
at Apple, right, like maybe you start with an iPod
57
00:02:36.840 --> 00:02:38.759
or an iPhone and then eventually, you know, you get
58
00:02:38.759 --> 00:02:41.120
a MacBook, then you get some air pods, and all
59
00:02:41.120 --> 00:02:43.240
of a sudden, like you're in this ecosystem where everything
60
00:02:43.319 --> 00:02:46.120
works fluidly because you really like bought into the brand
61
00:02:46.120 --> 00:02:48.960
ethos and the product suite, and as a bank, like
62
00:02:49.000 --> 00:02:50.879
it's a lot easier what should be a lot easier,
63
00:02:50.879 --> 00:02:53.039
I should say, if you have a credit card, a
64
00:02:53.120 --> 00:02:56.280
checking account, a savings account, hopefully even with a broken
65
00:02:56.400 --> 00:02:59.000
or something, all with the same FI instead of having
66
00:02:59.039 --> 00:03:01.560
one of those at four different places, because then they
67
00:03:01.560 --> 00:03:04.560
can really understand your holistic financial life and serve you better. Sure.
68
00:03:04.879 --> 00:03:08.719
Yeah, and that really resonated with me, along with many
69
00:03:08.759 --> 00:03:11.479
stats and the presentation. But thinking about the reduction and
70
00:03:11.479 --> 00:03:13.560
the number of banks, So if there are so so
71
00:03:13.639 --> 00:03:16.479
much fewer banks today and the consumers have choice, like
72
00:03:16.599 --> 00:03:19.199
what do they differentiate on besides yield? Like that's what
73
00:03:19.240 --> 00:03:20.960
consumers tend to shop, or like what are the other
74
00:03:21.039 --> 00:03:26.039
tangible things? Could a bank set itself apart to establish
75
00:03:26.120 --> 00:03:27.280
that progacy with a customer?
76
00:03:27.560 --> 00:03:30.599
Yeah, I can go first. I think it's largely what
77
00:03:30.639 --> 00:03:32.560
we talked about at the end of the session, which
78
00:03:32.599 --> 00:03:36.199
was when you think about, you know, how you really differentiate,
79
00:03:36.360 --> 00:03:38.240
You really have to think about how do I create
80
00:03:38.280 --> 00:03:41.120
a two x five x ten x better banking experience
81
00:03:41.400 --> 00:03:45.439
for that consumer. The reality is banking looks very commoditize
82
00:03:45.479 --> 00:03:48.439
these days, right, like per your point, unless you're like really,
83
00:03:48.479 --> 00:03:50.800
price sends it into I want to maximize my savings
84
00:03:50.879 --> 00:03:52.759
yield or I want to get you know, the most
85
00:03:52.800 --> 00:03:55.800
amount of points for a certain spend category. The reality
86
00:03:55.840 --> 00:03:57.840
is like when you can have a fundamentally different product,
87
00:03:57.960 --> 00:04:00.680
people get really excited. Right, So why thing that you
88
00:04:00.680 --> 00:04:02.680
know we focus a lot on is this idea of
89
00:04:02.960 --> 00:04:06.759
building subscription management? Right? Can I build a whole experience
90
00:04:06.800 --> 00:04:09.479
that you know, helps the customer understand what all my
91
00:04:09.520 --> 00:04:11.599
bills are, like find ones I didn't realize I was
92
00:04:11.639 --> 00:04:14.879
paying for, help me consolidate or find a better rate
93
00:04:14.919 --> 00:04:17.680
for something that I already you know, buy, and then
94
00:04:17.800 --> 00:04:20.079
kind of curate something that like nobody else is really
95
00:04:20.079 --> 00:04:22.519
able to do effectively. If you can do that and
96
00:04:22.560 --> 00:04:24.480
find those moments to make that happen, then I think
97
00:04:24.480 --> 00:04:25.160
you can really win.
98
00:04:25.480 --> 00:04:28.319
Yeah, and you mentioned the like mobile check deposit, like
99
00:04:28.319 --> 00:04:30.360
that was the last major thing I even remember as
100
00:04:30.360 --> 00:04:32.759
a consumer. Like this changes how I think about banking.
101
00:04:33.480 --> 00:04:36.839
But so would you say technology like what pinwheels developing
102
00:04:36.959 --> 00:04:39.920
or the things you talked about switching deposits, does that
103
00:04:40.240 --> 00:04:42.319
make up a bank stickier or does that just make
104
00:04:42.360 --> 00:04:44.360
it easier for people to switch and maybe you know,
105
00:04:44.439 --> 00:04:45.920
decrease again the need for privacy.
106
00:04:46.079 --> 00:04:48.600
Yeah, so I think of it as two classes of products.
107
00:04:48.600 --> 00:04:52.240
I think one is around customer activation and portability. That's
108
00:04:52.319 --> 00:04:55.600
things like a direct depositive switch or you know, switching
109
00:04:55.600 --> 00:04:58.399
your card on file, right, those things are inherently in
110
00:04:58.439 --> 00:05:01.240
service of making it easy to to switch and make
111
00:05:01.240 --> 00:05:04.439
your account more portable. Those I think will and hopefully
112
00:05:04.959 --> 00:05:07.439
it's a good thing that you're increasing competition, right so
113
00:05:07.480 --> 00:05:09.519
that people aren't stuck at the same place, because there's
114
00:05:09.560 --> 00:05:12.240
just like inertia, not wanting to switch, right even though
115
00:05:12.240 --> 00:05:14.240
they know there's a better product out there. And the
116
00:05:14.360 --> 00:05:16.800
other part is what I would call like more value creation,
117
00:05:17.000 --> 00:05:19.439
so like a subscription or bill manager that really helps
118
00:05:19.439 --> 00:05:21.680
you get a hold of your financial life, check all
119
00:05:21.680 --> 00:05:23.959
your bills, be able to pay them appropriately so you
120
00:05:24.000 --> 00:05:26.160
avoid late ps and what have you. That I think
121
00:05:26.240 --> 00:05:28.560
is like something that everybody should have. And it doesn't
122
00:05:28.600 --> 00:05:31.519
really make it, you know, make you want to necessarily
123
00:05:31.560 --> 00:05:33.199
hop from one place for another place. It's just something
124
00:05:33.199 --> 00:05:36.120
that every single FI should have in their making experience.
125
00:05:36.279 --> 00:05:38.680
Yeah, and you guys mentioned some stats around you know,
126
00:05:38.839 --> 00:05:42.199
why would people switch primary financial institution and seem to
127
00:05:42.240 --> 00:05:45.800
be between major life events or just being so disgruntled
128
00:05:45.839 --> 00:05:47.759
You're like, I never want to do business with this company.
129
00:05:47.800 --> 00:05:50.519
Again maybe like double click into that a little bit.
130
00:05:50.519 --> 00:05:53.600
What are some of those underlying causes of switching.
131
00:05:53.879 --> 00:05:55.920
I mean, I think the reality is when it comes
132
00:05:55.920 --> 00:05:59.000
to kind of the quote unquote primary checking account, the
133
00:05:59.000 --> 00:06:01.480
one where you're in come comes into and where you spend,
134
00:06:02.040 --> 00:06:04.279
there is a high level of stickiness there because it's
135
00:06:04.279 --> 00:06:05.319
sort of like electricity.
136
00:06:05.519 --> 00:06:06.000
You need it.
137
00:06:06.000 --> 00:06:07.639
You can't turn it off, right, you need to have
138
00:06:07.680 --> 00:06:10.240
it on. So there's a hesitancy to move that because
139
00:06:10.279 --> 00:06:13.000
you know there's friction. But you know, as Kurt mentioned,
140
00:06:13.040 --> 00:06:15.160
a lot of the technology that we see today is
141
00:06:15.199 --> 00:06:17.959
actually reducing that friction, making it easier to move, so
142
00:06:18.000 --> 00:06:20.279
that people, you know, have more choice. But at the
143
00:06:20.319 --> 00:06:22.319
same time, it isn't that important for most people. They're
144
00:06:22.319 --> 00:06:24.639
not thinking about it regularly. And I think the real
145
00:06:24.720 --> 00:06:27.600
challenge that the industry is facing in a sense is
146
00:06:27.600 --> 00:06:30.480
this idea where well, historically we always focus on acquisition,
147
00:06:30.560 --> 00:06:32.920
let's get the next account, let's grow right. But then
148
00:06:33.000 --> 00:06:35.240
I think there's a shift right now from you know,
149
00:06:35.279 --> 00:06:39.839
focusing on quantity to quality because quantity is churned mostly now.
150
00:06:39.839 --> 00:06:42.879
As why I mentioned ninety seven percent of Americans are banked, right,
151
00:06:42.920 --> 00:06:44.639
and so if you want to win the next customer
152
00:06:44.839 --> 00:06:47.639
to take it from someone else. And the the challenging
153
00:06:47.680 --> 00:06:49.360
part right now is to date because of the way,
154
00:06:49.439 --> 00:06:52.000
like a lot of large banks or banks in general
155
00:06:52.000 --> 00:06:55.759
are structured, like everything all the business kind of product
156
00:06:55.800 --> 00:06:59.600
lines are pretty independent, and so you as a consumer
157
00:06:59.680 --> 00:07:03.560
there there's limited actual value in terms of consolidating, right
158
00:07:03.560 --> 00:07:05.360
Why go to the same place when you see over there,
159
00:07:05.399 --> 00:07:07.279
there's an offer over there, an offer over there, And
160
00:07:07.399 --> 00:07:09.600
so people tend to go in that direction. But I
161
00:07:09.600 --> 00:07:12.199
think that's actually to the detriment in both the individual
162
00:07:12.199 --> 00:07:14.720
consumer and also to the provider, because there's a lot
163
00:07:14.759 --> 00:07:15.839
of waste, is the short of it.
164
00:07:16.079 --> 00:07:18.600
Yeah, yeah, And the other thing that that struck me
165
00:07:18.639 --> 00:07:20.600
you talked about you know, the goal should be again
166
00:07:20.639 --> 00:07:23.360
focused back on the consumer. So how do you become
167
00:07:23.399 --> 00:07:25.600
top of mind or that person they go to for advice?
168
00:07:25.720 --> 00:07:27.920
And it got me thinking again, like tend to reach
169
00:07:27.959 --> 00:07:30.279
for my phone, So like is the phone the new branch?
170
00:07:30.360 --> 00:07:32.439
So I have a question and I go to perplexity,
171
00:07:32.480 --> 00:07:33.800
Like I want to move money, like I open a
172
00:07:33.800 --> 00:07:35.959
certain app. I want to transfer money or pay someone
173
00:07:36.000 --> 00:07:38.120
back for a Broadway show ticket, like I use a
174
00:07:38.120 --> 00:07:40.439
different app, but like the phone, is like where I
175
00:07:40.480 --> 00:07:43.800
go first, and you know, is that what people expect
176
00:07:43.800 --> 00:07:45.959
to interact with their How do you think about, you know,
177
00:07:46.000 --> 00:07:48.319
who who is the consumer asking questions when it comes
178
00:07:48.360 --> 00:07:51.279
to their finances and is that still a traditional bank
179
00:07:51.439 --> 00:07:53.839
or who has that right for the consumer.
180
00:07:56.279 --> 00:07:59.800
So, you know, if we unpacked a little bit your question,
181
00:08:00.879 --> 00:08:02.680
there are a few things. One one is we know
182
00:08:03.199 --> 00:08:05.959
we've actually as a firm, we published some research on
183
00:08:06.000 --> 00:08:10.839
the gen Z population. Interestingly, we found in that research
184
00:08:11.040 --> 00:08:15.199
that the gen Z they don't respect you know, sort
185
00:08:15.199 --> 00:08:17.720
of authoritative figures and experts and such like I said,
186
00:08:17.879 --> 00:08:20.519
the don't want to listen to like the person that
187
00:08:20.600 --> 00:08:23.720
supposedly has the correct knowledge, right, so instead they listen
188
00:08:23.759 --> 00:08:25.839
to their peers, right, so they can go on TikTok
189
00:08:25.879 --> 00:08:28.040
And if you know, there's an influencer, so I think
190
00:08:28.079 --> 00:08:30.360
we should, you know, as financial institutions like kind of
191
00:08:30.480 --> 00:08:33.399
marketing to the next generation of customers. That is important
192
00:08:33.399 --> 00:08:35.960
whether you're a bank or a fintech. And just recognizing
193
00:08:36.399 --> 00:08:38.559
you know that they actually you know sort of almost
194
00:08:38.559 --> 00:08:40.559
like a peer pressure and stuff like, you know, there's
195
00:08:40.600 --> 00:08:43.360
the peer influence right for for how they actually make
196
00:08:43.360 --> 00:08:46.399
their financial decisions and that's important. The other thing I
197
00:08:46.399 --> 00:08:50.639
want to call out is the sort of the digital
198
00:08:51.000 --> 00:08:53.639
experience side of things, like because you were mentioned in
199
00:08:53.639 --> 00:08:56.360
the phone and if you pull up your mobile banking app,
200
00:08:56.919 --> 00:08:59.120
you know, ninety nine percent of the time it shows
201
00:08:59.159 --> 00:09:02.879
you a laundry list of accounts, and so from a
202
00:09:02.879 --> 00:09:06.720
behavioral science angle, if you see the accounts, you basically
203
00:09:06.759 --> 00:09:09.000
are checking balances and that's sort of the most sort
204
00:09:09.039 --> 00:09:12.279
of engaging thing that you could do with anybody's banking
205
00:09:12.279 --> 00:09:16.360
app today. But Kurt Worth mentioning that there's other ways
206
00:09:16.360 --> 00:09:19.399
of engaging with the customers that might actually get to
207
00:09:20.159 --> 00:09:22.679
a better definition privacy, because just checking your accounts is
208
00:09:22.720 --> 00:09:25.519
not really primacy. It's a very passive sort of activity
209
00:09:25.600 --> 00:09:27.159
to do, right, So I think a lot of the
210
00:09:27.200 --> 00:09:30.679
banks actually overlook, you know, how they actually serve their
211
00:09:30.759 --> 00:09:33.399
customers in the digital world.
212
00:09:33.600 --> 00:09:35.639
Yeah, that's a great point, and you guys also hit
213
00:09:35.679 --> 00:09:38.519
on maybe an appropriate balance of that in the industry
214
00:09:38.559 --> 00:09:41.759
is risk management. So, you know, how do you think
215
00:09:41.759 --> 00:09:45.200
about the view there in terms of, yes, be innovative,
216
00:09:45.200 --> 00:09:47.679
find ways to connect with your customers, but knowing that
217
00:09:48.279 --> 00:09:51.440
the health of the American economies like underpinned by this industry.
218
00:09:52.080 --> 00:09:53.799
That's certainly the foundation of banking.
219
00:09:53.879 --> 00:09:54.080
Right.
220
00:09:54.120 --> 00:09:57.320
This is a gathered deposits of privilege. Right, you need
221
00:09:57.360 --> 00:09:59.240
a charter to do it. It's considered to be basically
222
00:09:59.279 --> 00:10:01.480
a public good in anyways, and so I think on
223
00:10:01.480 --> 00:10:04.519
that end that that needs to stay right and this
224
00:10:04.519 --> 00:10:07.879
this industry is unique relative to all industries because of that.
225
00:10:08.519 --> 00:10:10.320
But that is not to say that there is not
226
00:10:10.399 --> 00:10:13.279
a better way to serve consumers. And I think that
227
00:10:13.320 --> 00:10:16.480
the challenge has a little bit been that it is
228
00:10:16.519 --> 00:10:18.559
expensive to basically take that next step.
229
00:10:18.679 --> 00:10:18.840
Right.
230
00:10:18.919 --> 00:10:20.840
I think there's a focus on, you know, how do
231
00:10:20.919 --> 00:10:23.840
I drive incremental like kind of progress in the near term.
232
00:10:24.080 --> 00:10:25.639
And there are some of these things that we're talking
233
00:10:25.639 --> 00:10:27.919
about here that are more forward looking in terms of like,
234
00:10:28.240 --> 00:10:29.879
you know, what are the needs that are unmet right
235
00:10:29.960 --> 00:10:32.720
now that I think that a lot of consumers actually want, right,
236
00:10:32.720 --> 00:10:34.440
because I think that if you ask consumers, are they
237
00:10:34.440 --> 00:10:37.399
satisfied with what they have? Yeah? Actually they are generally satisfied.
238
00:10:37.399 --> 00:10:39.120
That's why they're not moving too much. But do they
239
00:10:39.159 --> 00:10:41.840
actually do a bunch of things in order to just