Breaking Banks

The conversation dives deep into the integration challenges facing the fintech landscape, highlighting the costs and complexities involved. With a staggering $80 trillion processed through the ACH system, partnerships emerge as a vital solution. The guests discuss innovative payment interfaces and the evolution of real-time payment systems in the U.S. They also tackle the crowded fintech event scene, exploring best practices for maximizing the value of networking and content. The necessity for genuine connections in this dynamic industry is emphasized, blending humor and professionalism.

In This Episode Deposits are the aqua vitae of banking, the water of life. The very core of the traditional banking business model is gathering deposits at no to low-cost and lending the money back out at higher rates. Bankers used to reference the “3-6-3 Rule”: bring in deposits at 3%, make loans at 6%, and be out on the golf course by 3:00PM. Money is the primary raw material in the business of banking. The difference between what financial institutions pay for that raw material is subtracted from what they earn from lending it out right at the very top of their income statements. That difference is net interest income, and it is the largest component of earnings for virtually every bank. As much as 95% or more for some. Expressed as a ratio, the net interest margin or NIM is a key metric in measuring bank performance, and it’s been under considerable pressure lately. The traditional levers have been trying to lower deposit rates and raise loan rates, and hope you don’t lose too much volume. As the business has become more complex, so have the tools and strategies to reduce that pressure. Today we get into some of the hidden levers that banks are using to add non-rate value, one focus is SBA lending. How new approaches and new technology is expanding the market for banks large and small, and also for fintechs; and how the secondary market is helping to improve liquidity and improve NIM. Joining host JP Nicols in this episode are Steve Tanzer and Joel Updegraff, both Managing Directors at Brean Capital. Read the entire transcript here. Podcast Content: Chapter 1: 00:00 - Introduction: The Lifeblood of Banking The hosts introduce net interest margin (NIM) as a critical metric for bank performance and set the stage for a discussion on strategies to manage NIM pressures. Chapter 2: 05:20 - SBA Lending: A Hidden Lever for Profitability Steve Tanzer from Breen Capital explains the role of Small Business Administration (SBA) loans in enhancing bank liquidity, profitability, and risk management. Chapter 3: 15:45 - Expanding Beyond Local Markets The discussion shifts to how banks can diversify geographically and leverage national lending platforms while maintaining strong customer relationships. Chapter 4: 25:30 - The SBA Secondary Market: Transforming Loan Portfolios An overview of how the SBA’s secondary market enables banks to sell guaranteed portions of loans, generating fee income and freeing up capital for growth. Chapter 5: 35:10 - Fintech Partnerships and Efficiency Gains The panel explores how fintech and "Fintech Lite" solutions are streamlining SBA lending, boosting efficiency, and expanding credit access to underserved markets. Chapter 6: 45:25 - Innovations Born from the Pandemic Insights on how SBA modernized processes during COVID-19, including the shift from wet signatures to digital transactions, improving efficiency in loan settlement. Chapter 7: 55:15 - Lessons from Leaders: Specialization and Technology The hosts highlight examples like Live Oak Bank, showcasing how specialization in industry verticals and investment in technology yield competitive advantages. Chapter 8: 1:05:30 - Getting Started with SBA Lending Practical advice for banks new to SBA lending, including understanding the program’s economics, finding the right partners, and identifying growth opportunities. Chapter 9: 1:15:40 - Non-Traditional Players in the SBA Space The role of non-bank lenders and fintech innovations in reshaping the SBA landscape is examined, emphasizing their influence on efficiency and market dynamics. Chapter 10: 1:25:10 - Closing Thoughts: The Future of NIM and SBA Lending The episode wraps up with reflections on the evolving role of SBA programs and non-rate strategies in addressing NIM compression challenges. Related Content: Episode 340: Good Policy, Good Banking Episode 560: Killing It: Ohad Samet on Reimagining Debt Collecti...

In This Episode This Breaking Banks episode's Killing It guest went from software engineer to investment banker to founder of a community supporting the next generation of fintech founders to adviser then founder of the fintech team at Andreessen Horowitz (A16Z) and now solo venture fund founder in the fintech space investing at the angel, pre-seed and seed stage. Meet Rex Salisbury, founder Cambrian Ventures, backing early-stage companies, as he shares his journey and founder stories -- his path, motivation and the support that ultimately led him to being a solo fund founder after clearly being bitten by the fintech bug. He shares thoughts on putting talents and strengths to good use, creative destruction and how to think about failure to get you where you want and ought to be. In short, he's killing it! https://youtu.be/v8MC6xGc_lo

In This Episode Soft landings are a topic of hot conversation these days. The go-go days where you can always raise another round are gone. The ecosystem is littered with companies with little product market fit, less revenue and even less runway. Many of these are looking for a soft spot to land. Unfortunately M&A is hard in the best of times and many fintechs are now looking to banks as a potential exit. In the first half of today's show, Jason Zaler, partner at Oliver Wyman, joins Jason Henrichs to discuss Oliver Wyman's  new report on bank fintech M&A. In the second half,  Robert Antoniades, General Partner at Information Venture Partners, and Jason H talk about 3 decades of venture cycles and M&A more broadly including strategies for big banks, community banks, fintechs and even VCs. Read the entire transcript here. Podcast Content: Chapter 1: 00:00:00 - Insights into Bank and Fintech Partnerships Introductory thoughts on fintech struggles and the shifting landscape of bank-fintech partnerships. Chapter 2: 00:12:45 - Bank-Fintech M&A Challenges and Opportunities Exploring the difficulties banks face in acquiring fintechs and factors impacting M&A deals. Chapter 3: 00:24:10 - Case Study: SoFi's Acquisition Strategy A deep dive into SoFi's significant acquisitions, including Galileo and Technisys. Chapter 4: 00:37:00 - Key Steps to Successful Integration Post-Acquisition Outlining the playbook for integrating fintech acquisitions successfully. Chapter 5: 00:45:15 - Navigating Regulatory Hurdles in M&A Challenges fintechs and banks face in complying with emerging regulations. Chapter 6: 01:00:30 - Venture Capital Trends and Market Outlook Discussion on venture capital cycles, overfunded startups, and future fintech consolidation. Chapter 7: 01:15:00 - Closing Thoughts on Fintech Consolidation Predictions on soft landings, hard landings, and where fintechs are headed next. Related Content: Bank-Fintech Partnerships, Open Banking and AI...oh my! Episode 31: Where Does the Money Go? - Corporate Venture Capital - The Challenges of Strategic Investing Episode 553: The Secret of NIM Episode 558: Fintech Visionaries Reimagining the Future of Finance: Start Path Episode 561: Demystifying Fintech: Insights on Banking's Future https://youtu.be/1e5Vtj3fiEQ

Regulatory lawyer Jesse, Trustly's Matt, and editor Kiah discuss the aftermath of Synapse's bankruptcy, focusing on banks' compliance failures and AML/BSA issues. They delve into regulatory gaps, risk management, and the need for banks to adapt to digital risks. Insightful discussion on evolving banking landscape and industry challenges.

In This Episode It's a Breaking Banks and Finovate collab! Fresh off of FinovateSpring hosts JP Nicols, Greg Palmer and Brett King talk trends, takeaways and best of show; bringing the best to you in this episode. If you missed FinovateSpring, enjoy the recap and themes, and some of the best fintech innovations covering artificial intelligence, open banking, future payments, CX and more. With new market entrants and the loosening of capital, creativity is coming back into the ecosystem, and the bar is being raised, pushing everyone forward. We also introduce you to one of FinovateSpring's Best of Show winners, Maya Mikhailov, SAVVI AI, Founder & CEO. Meeting users where they are, SAVVI AI offers a powerful AI tool to unlock data and make finserv and fintech goal driven AI use cases easier, distilling data natively into excel, to offer insights for institutions on new product offerings to benefit customers and business. In the coming weeks, tune into sister podcast Finovate for profiles, a deep dive and one-on-ones with all FinovateSpring 'Best of Show' winners: Bloom Credit, Remynt, Kobalt Labs, QuickFi, SAVVI AI, Cascading AI Read the entire transcript here. Podcast Content: Chapter 1: 00:00:00 - Introduction: Welcoming Greg Palmer and Finnovate Insights The hosts introduce Greg Palmer from Finnovate, discussing his observations post-Finnovate Spring and setting the stage for the episode. Chapter 2: 00:05:30 - The State of Fintech: Fresh Ideas and New Players Exploring the influx of early-stage companies, Series A fintechs, and how creativity is driving a new wave of innovation in the ecosystem. Chapter 3: 00:15:00 - The Innovation Cycle: Incumbents vs. Insurgents Discussing the classic innovation cycle, venture capital trends, and how fintechs challenge incumbents to adapt or acquire. Chapter 4: 00:24:45 - AI in Fintech: Who Will Win the Next Wave? Highlighting AI’s role in shaping financial services, the incumbents’ challenges with legacy systems, and fintechs’ AI-friendly advantages. Chapter 5: 00:35:30 - Best of Show Winners: The Highlights of Finnovate Spring A brief overview of standout winners like Bloom Credit, Remit, and Savvy AI, and their innovative, customer-centric approaches. Chapter 6: 00:45:15 - Meet Savvy AI: Democratizing AI for Banks Maya Mikhailov shares Savvy AI’s mission to bring AI capabilities to banks through Excel, empowering them to use their existing data. Chapter 7: 00:55:00 - Practical AI Use Cases: Start with What You Have Discussing how banks can begin with deposit and transaction data to solve practical challenges like deposit growth, churn, and loan delinquency. Chapter 8: Reflections on the episode’s themes: AI as a tool for efficiency, solving everyday banking problems, and meeting customers where they are. Related Content: Life Before and After Social Distancing Special Episode: Navigating the Crisis AI is coming to help! A.I.- Ally Or Foe Bioplausible Artificial Intelligence https://www.youtube.com/watch?v=LZUWot-48E8

In This Episode Jake Gibson, former investment banker, entrepreneur / co-founder NerdWallet, angel investor, now VC founder Better Tomorrow Ventures, who crossed career paths with host Jason Henrichs 10+ years ago, have an honest discussion about the twists and turns of co-founding a boot-strapping start-up particularly when you are young, on to something and quickly have to figure everything out. After years of hard work and being all-in, tough decisions needed to be made as NerdWallet continued to grow quickly. Jake knew it was time to move on, but so hard to do. The arrival of twins and focus on strengths, honesty, lessons learned, and giving advice to others in similar situations, helped Jake figure his calling and path forward, and has enabled him to keep many 'cards in his wallet'.  Read the entire transcript here. Podcast Content: Chapter 1: 00:00:00 - Introduction: Reinvention and Identity Setting the stage for Jake Gibson's journey, from Wall Street to co-founding NerdWallet, angel investing, and ultimately venture capital. Chapter 2: 00:04:30 - From Wall Street to Silicon Valley: The First Reinvention Jake shares his transition from a successful trading desk role at J.P. Morgan to joining Tim Chen on the early journey of NerdWallet. Chapter 3: 00:12:00 - Bootstrapping NerdWallet: The Rocky Early Days Insights into the early challenges of building NerdWallet, the struggles of SEO, and how Google’s algorithm updates became a turning point. Chapter 4: 00:22:45 - Growth Pains: Scaling Beyond Founders’ Capabilities The tough lessons in scaling NerdWallet, managing people, and navigating layoffs, despite the company’s upward revenue trajectory. Chapter 5: 00:35:00 - Leaving NerdWallet: Letting Go of Identity Jake opens up about the emotional difficulty of leaving NerdWallet, redefining his sense of self, and taking time to decompress. Chapter 6: 00:45:30 - Angel Investing: Paying It Forward The next phase for Jake—mentoring and investing in startups, building a network, and finding fulfillment through helping others succeed. Chapter 7: 00:52:00 - Commitment Issues: From Angel to VC with Better Tomorrow Ventures How Jake partnered with Sheel Mohnot, overcame hesitations, and co-founded Better Tomorrow Ventures (BTV) to support fintech innovation. Chapter 8: 01:05:30 - Facing Failure and Luck: Lessons for Founders Candid advice on preparing for potential failure, embracing identity shifts, and recognizing that success often requires persistence and luck. Chapter 9: 01:15:00 - Closing Reflections: The Founder’s Mentality Jake’s thoughts on unreasonable optimism, self-awareness, and how founders should approach reinvention and uncertainty. Related Content: Episode 44: Where Does The Money Go? - Angel Investing Episode 451: AWS Bets Big on Black and Women Founders & Harmonizing Taxes Episode 550: Cease and Desist Identities Merging Episode 551: This Spot Looks Soft https://youtu.be/aQnekFgirVU

In This Episode There's more to episode 543 -- Killing It: The Story Behind the Synapse Story -- right here! The Synapse saga continues but we make it easy to stay current and benefit from expert analysis as host Jason Henrichs unpacks the latest news with Jason Mikula, publisher of Fintech Business Weekly. The two are watching the topic closely, offering insight into what it all means, from a Chapter 11 Trustee, to new account and financial resilience concerns, FDIC insurance disclosure, challenges and regulation not to mention potential risks and implications for banking and fintech. A takeaway from it all, the importance of regulation in promoting responsible innovation. Read the entire transcript here. Podcast Content: Chapter 1: 00:00:00 - Introduction: A Slow-Moving Disaster Hosts Jason Henrichs and Jason Mikula set the stage for the ongoing Synapse-Evolve-Lineage saga, describing the magnitude and impact. Chapter 2: 00:05:30 - The Missing Millions: Ledger Integrity Crisis Analyzing the $50 million shortfall between Synapse and Evolve, the flawed ledger issues, and how the situation spiraled over time. Chapter 3: 00:14:00 - How Did This Happen? The Role of Boards and Fintechs Exploring Synapse’s board oversight, fintech clients’ reactions, and questions about operational resilience and business continuity. Chapter 4: 00:22:00 - The Complexity of Banking Ledgers Discussing why ledgers are so complex, how ACH and settlement flows add layers of difficulty, and why banks failed to catch the discrepancies. Chapter 5: 00:30:45 - FDIC Insurance Clarification: A Regulatory Surprise Examining the FDIC’s stance on insurance limitations and the lack of clear communication to consumers regarding fintech-held deposits. Chapter 6: 00:40:00 - Regulatory Gaps and Fintech Accountability Comparing U.S. regulatory gaps to Europe’s EMI licenses, and how the lack of supervision exacerbated fintech risks. Chapter 7: 00:50:15 - Tourists on BaaS Island: Banks and Fintech Missteps Highlighting the dangers of underprepared banks and fintech players entering the complex world of Banking-as-a-Service (BaaS). Chapter 8: 00:58:30 - The Fallout: Long-Term Implications for BaaS and Fintech Assessing how this saga will impact future bank-fintech partnerships, regulatory oversight, and the fintech innovation landscape. Chapter 9: 01:08:00 - Lessons Learned: Regulation, Boards, and Responsible Innovation Reflecting on the importance of regulation, investor accountability, and building robust systems to prevent future crises. Related Content: Episode 562: Hot Takes: Regulatory Headwinds for BaaS Episode 70: Women's Economic Empowerment TechSprint & Conference Episode 464: Second Wave BaaS & “Deep Tech” Episode 550: Cease and Desist Episode 559: Hot Take: Brokered Deposits Join the Eras Tour https://youtu.be/JrbIignFP64

In This Episode In this episode Jason Henrichs and Kiah Haslett, Bank Director's Banking and Fintech Editor riff on FBO (For Benefit Of) accounts, implications for banks, banking as a service and the future of fintech. Then, Jason connects with Paul Davis, Founder, The Bank Slate about fintech partnerships, future landscape, consent orders and AI in banking. https://youtu.be/403ajB3n9mo

In This Episode In this episode Brett King catches up with Ali Paterson, Editor-in-Chief, FF News about ... fintech and banking! Having been part of the architecture, or rather furniture, of the industry for many years, these two leaders, writers and influencers look at fintech -- through rearview mirrors and what's on the road ahead -- in a lighthearted discussion from respective vantage points. There are standout moments (does anyone remember the literal payments race?), personalities, culture, and some favorite stories. Read the entire transcript here. Podcast Content: Chapter 1: 00:00:00 - Introduction: A Decade of Fintech Chronicles Brett King and Ali Patterson introduce the episode, sharing stories about their long-standing relationship and Ali's role in fintech journalism. Chapter 2: 00:05:30 - Founding FF News: From Future Banking to Buzzword Bingo Ali discusses his early days in fintech reporting, founding FF News at Finnovate London 2015, and covering industry-shaping events. Chapter 3: 00:14:00 - Capturing History: Starling, Revolut, and the Early Challenger Banks Memorable moments with fintech pioneers like Anne Boden and Nick Storonsky, highlighting how Starling and Revolut emerged from humble beginnings. Chapter 4: 00:22:15 - Stories of Success and Collapse: Loot and Wirecard A look back at the rise and fall of standout fintechs like Loot and Wirecard, and the lessons they provide for the industry. Chapter 5: 00:30:45 - Fintech Media: The Secret to Longevity and Client Trust Ali shares how FF News thrives through resilience, client relationships, and unconventional solutions to deliver value. Chapter 6: 00:40:30 - Buzzword Bingo and the Evolving Media Landscape How fintech media has shifted to focus on targeted engagement over vanity metrics, including strategies for TikTok and content delivery. Chapter 7: 00:48:15 - Emerging Markets: The Caribbean as Fintech’s Next Wave Discussion on the Caribbean as an untapped fintech hub, with opportunities for challenger banks and financial innovation. Chapter 8: 00:55:00 - The Payments Race: Innovation, Community, and Crazy Logistics Ali recounts the entertaining and logistically challenging Payments Race events that highlighted global payments evolution. Chapter 9: 01:05:00 - Best and Worst Interviews: From Will.I.Am to Frank Abagnale Jr. Ali shares stories of his most memorable interviews, including thought-provoking conversations with fintech leaders and unexpected challenges. Chapter 10: 01:12:00 - Advice for Fintech Founders: Be Unique and Recognizable Tips for fintech entrepreneurs on creating impactful stories, standing out in media, and building a strong, unique brand presence. Related Content: Episode 144: Metaverse Deep Dive - Decoding the Buzzword Episode 561: Demystifying Fintech: Insights on Banking's Future Episode 547: The BaaS Bombs Drop + Synapse Bankruptcy Fintech Visionaries and Revolutionaries & What's Up With Bitcoin? Huawei Does Gen-Fi https://youtu.be/MEpeF1Wp2uY