Operate Podcast

Chapter Markers

In this episode of the Operate Podcast, we dive deep into the world of banking investment strategy with Tom Brown, CEO and founder of Second Curve Capital. Tom brings an incredible 40-plus year perspective on the banking industry, starting as a top-rated Wall Street analyst before founding his equity investment firm exclusively focused on financial services about 25 years ago.

What makes Tom's approach truly unique is his commitment to understanding banks at the execution level, not just through financial statements and management presentations. We explore how early in his career he realized that bank executives often believed they were implementing cutting-edge strategies, but the reality on the front lines told a different story. This led him to develop his now-famous practice of visiting bank branches, applying for credit cards, and even showing up unannounced on a teller floor to test whether what management said matched what actually happened there.

Our conversation covers the evolving competitive landscape facing community and regional banks, particularly the threat from neobanks like Chime that are profitably serving market segments traditional banks have struggled with. Tom shares his perspective on why the relationship banking model still matters for banks under $10B in assets, but emphasizes that success requires increasingly sophisticated use of data, technology, and marketing. We discuss why many publicly-traded banks have become too risk-averse, how bringing executives from larger institutions to smaller banks can create tremendous value, and why JP Morgan Chase's Jamie Dimon religiously reads Tom's banking newsletter to understand what his bank cannot do.

Tom offers candid insights on where banks are over-investing and under-investing, from data lake projects that are becoming obsolete thanks to AI, to marketing budgets that remain stuck at 2% of expenses when they should be climbing higher. We explore the talent challenge facing community banks and how they can better attract digital-native young professionals by emphasizing the unique opportunity to work with diverse data and businesses. Throughout the conversation, Tom's philosophy remains clear: as an investor, he is ultimately making bets on people, and the ability to evaluate execution separates winning investments from losing ones.

00:00 Preview

00:37 Intro

00:53 Sponsor

01:28 Tom Brown's Journey from Analyst to Fund Manager

06:19 The Turning Point: Going to the Branch Floor

07:43 The Customer Profitability Story

09:16 The Challenge of Executive Branch Visits

11:43 Investment Framework: Screening with Metrics, Deciding on People

13:14 The Power of Turnaround Executives

13:57 Bringing Big Bank Experience to Smaller Banks

16:45 50 Years of Change, Same Solutions

18:38 The Relationship Game and Geographic Focus

18:50 Jamie Dimon's Perspective on Community Banks

21:09 Finding Your Customer Segment Focus

22:37 The Line of Business vs. Relationship Approach

25:36 Technology Decision-Making Challenges

27:36 The Biggest Blind Spot: Risk Aversion

30:56 CEO as Chief Technology Officer

32:26 The Marketing Investment Gap

33:05 Capital One's Marketing Budget: 20%

36:27 Branch Strategy Done Right: Fifth Third's Approach

39:03 The Data Management Evolution

40:52 Attracting Digital Native Talent

44:52 The Death of New Bank Charters

46:09 The Neobank Threat: Chime as the Nucor of Banking

48:40 Outro

Resources:

Second Curve Capital (https://www.secondcurve.com)

Tom Brown's Banking Weekly Newsletter (https://www.secondcurve.com/Tom-Brown-Banking-Weekly)

Sponsor: Bank Tech Ventures (https://www.banktechventures.com/)

I'm so grateful that Georgina joined me for a conversation to explore the future of financial data infrastructure. As the founder and CEO of SOLO, she brings a unique outsider perspective to financial services, having started her career as a data scientist in cybersecurity before founding Egypt's first cross-border payments app, Ziv Me, which she later sold to the National Bank of Egypt.

We dove deep into the fundamental problems with today's financial data systems, where customers must constantly reintroduce themselves to every institution despite having established trust records elsewhere. Georgina explained how the current infrastructure was built to scale transactions rather than relationships, creating $30 billion in annual data collection costs for banks and frustrating reset experiences for consumers.

Georgina revealed the shocking reality behind credit bureaus, describing them as "the biggest Ponzi scheme of all time" where banks pay for data they already had and provided. She contrasted this with SOLO's vision of a customer data clearing house that would make trust portable across financial institutions while maintaining proper regulatory compliance as an FCRA-regulated entity.

We explored the concept of data as representing relationships rather than just transactions, and how SOLO's network model could transform the $50 billion annual spend on data collection and aggregation into a collaborative system where banks are incentivized to help customers rather than hoard their information. Georgina also shared candid insights about entrepreneurship, including the importance of founder-market fit and learning when to listen to "no" as market feedback rather than obstacle to overcome.

I hope this conversation offers a compelling vision for how financial services could work better for everyone - banks, fintechs, and consumers alike - through smarter data architecture and aligned incentives.

RESOURCES:

Learn more about Solo: https://solo.one

Connect with Georgina Merhom on LinkedIn: https://www.linkedin.com/in/georginamerhom

00:00 Preview

00:37 Intro

00:53 Sponsor

01:26 Introducing Georgina Merhom and SOLO

04:45 Challenges in Traditional Banking Data Systems

08:38 SOLO's Innovative Approach to Data Collection

09:49 Use Cases and Benefits of SOLO

13:45 Regulatory Challenges and Responsibilities

17:56 The Future of Open Banking and Data Sharing

26:45 The SOLO Network Model

35:57 Georgina's Entrepreneurial Journey

43:19 Advice for Aspiring Entrepreneurs

47:47 Final Thoughts

48:12 Outro

In this episode of the Operate Podcast, we took a deep dive into the world of community banking with John Maxfield, the mind behind Maxfield on Banks. We explored the critical role community banks play in local economies and the unique challenges and opportunities they face. John discussed his journey from studying various subjects like high-altitude mountaineering and maritime disasters to his in-depth 20-year exploration of the banking sector, driven by a long family history of community bank investments and the 2008 financial crisis. His investigative approach, including a recent cross-country road trip to visit banks, reveals the profound differences these institutions can make in their communities.

John also shared his insights on innovation within the banking industry, emphasizing the importance of steady, incremental improvements rather than disruptive, high-risk changes. He highlighted the need for banks to know their customers deeply, adapting to modern challenges like AI without losing the personal touch that defines community banking. We also discussed the characteristics of great bankers, focusing on their ability to make independent decisions, often shaped by overcoming personal hardships. John named Ross McKnight of InterBank as a prime example of such leadership.

We dug into the dynamics of bank leadership, the essential nature of understanding and serving one's community, and the importance of strong, independent boards. John provided a historical lens on banking cycles, emphasizing the necessity of maintaining discipline and avoiding dramatic changes during volatile times. This episode offered a rich perspective on how community banks can navigate current challenges and continue to serve their vital role in American society.

RESOURCES:

Subscribe to Maxfield on Banks: https://www.maxfieldonbanks.com

Connect with John J. Maxfield on LinkedIn: https://www.linkedin.com/in/johnmaxfield

00:00 Preview

00:14 Intro

00:30 Sponsor

02:38 John's Journey and Passion for Banking

04:09 The Road Trip and Insights on Community Banks

04:58 Deep Dive into Banking History and Theory

11:37 Challenges and Innovations in Banking

20:35 Spotlight on Ross McKnight: America's Best Banker

23:42 The Challenge of Standing Alone

23:59 Analyzing Top Bankers

24:33 Subjective Data and Personal Stories

25:27 The Impact of Hardship on Leadership

26:55 Leadership and Board Dynamics

27:53 Rallying Cry for Independence

29:48 The Role of Community Banks

34:28 Navigating Economic Challenges

40:25 The Value of Banking in Society

41:26 Conclusion and Call to Action

41:43 Outro

In this episode of the Operate Podcast, we explored leadership through volatility with Dan Holt, co-founder and CEO of BillGO. Rather than looking back at his entire career, we focused on the major transformation he's currently navigating both personally and professionally as his company pivots its business model.

Dan shared candidly about reducing his team from 340 to 150 employees while discovering that a somewhat neglected part of their business was actually growing and thriving with 90% profit margins. He discussed how his leadership approach had to evolve, realizing that the fighter mentality and feeling of invincibility that previously served him well had become limitations to where he needed to go.

Our conversation explored Dan's perspective that "the hardest battles aren't outside, they're inside," and his development of practices to maintain calm during crisis – including intentional morning routines, daily exercise, and slowing down to ask better questions. He emphasized how a leader's presence can either diminish or create space for trust and innovation.

We also discussed Dan's evolving view on "wartime" versus "peacetime" leadership, suggesting that effective leaders need both capacities simultaneously. Throughout the episode, Dan offered valuable insights on maintaining transparency during difficult transitions and how treating people with compassion through challenges builds lasting resilience and trust.

Thanks to show sponsor, BankTech Ventures.

Chapter Markers:

00:40 Intro 

00:58 Sponsor 

01:30 Introduction and Background 

03:20 Current Leadership Transformation 

06:45 Leading Through Volatility 

13:32 Self-Leadership and Growth 

17:14 Daily Practices for Leadership 

19:52 Building Company Culture 

24:10 Building Trust Through Change 

28:50 The Pivot Decision 

35:10  Wartime vs. Peacetime Leadership 

42:59 Moving Forward: BillGO's Future 

44:39 Outro

Brooke Ybarra and I dive into the intricacies of innovation and transformation within the banking industry in this episode. She is currently SVP of Innovation and Strategy at the American Bankers Association (ABA). Brooke shares her unique career journey, starting with the CIA, strategy consulting, a significant corporate role during the pandemic, and finally her impactful position at the ABA. We discuss how she has infused creativity and a forward-thinking mindset into the association, particularly focusing on how partnerships between banks and fintechs are evolving and the current state of innovation in banking.

Brooke emphasizes the importance of aligning technological advancements with customer needs and how banks can leverage external solutions to meet these needs effectively. We also touch on the challenges of infrastructure upgrades, the relevance of middleware, and the shift towards a more digitized banking environment. Furthermore, we explore the role of AI in banking, how banks can stay competitive with non-bank financial services, and ways to attract new talent into the banking industry. Brooke provides valuable insights on maintaining integrity, continuous learning, and embracing change. This episode is packed with productive thoughts and expert perspectives on how banks can navigate and thrive in the rapidly changing financial landscape.

Thanks to show sponsor, BankTech Ventures.

00:00 Preview

00:57 Intro

01:13 Sponsor

01:47 Guest Introduction: Brooke Ybarra

02:59 The Intersection of Banking and Technology

04:24 Current State of Innovation in Banking

05:50 Challenges and Opportunities for Banks

08:01 The Role of ABA in Banking Innovation

17:29 Diversifying Revenue Streams for Banks

22:10 Infrastructure Challenges in Banking

26:04 The Digital Transformation Imperative

28:38 Fraud Concerns in Digital Banking

29:49 The Importance of Online Presence

30:58 AI in Banking: Current State and Future Prospects

34:55 Customer Expectations and Personalization

37:26 Challenges in Data Infrastructure and Literacy

39:30 Finding the Right Technology Partners

41:11 Attracting Talent to the Banking Industry

44:10 Non-Bank Competition and Regulation

46:31 Brooke's Journey to the ABA

49:41 Brooke's Core Values

51:13 Brooke's Habits/Rituals

52:37 Advice for Early Professionals

54:48 Outro

In this episode of the Operate Podcast, we explore the complex and crucial topic of technology transformation within the banking sector, with Kristiane Koontz, EVP and Director of Treasury Services and Payments at Zions Bancorporation. We dive into the significance of replacing legacy banking systems, a daunting project that Kristiane and her team successfully completed over a decade-long journey. Kristiane sheds light on the challenges of a complete business transformation and how much bigger it is than a "core conversion." She explains how Zions maintained operational continuity while integrating new technologies, and restructured organizational processes and data governance systems. Zions' commitment to this massive overhaul shows their goal of staying competitive and efficient in a rapidly evolving banking industry.

We also discuss the broader implications for U.S. community banks and the role of technology partners in driving innovation. Kristiane elaborates on how Zions' transformation efforts have positioned them uniquely and competitively within the market, enabling faster product development cycles, enhanced customer experiences, and improved data utilization for fraud prevention and personalization.

Additionally, Kristiane shares her perspective on the future of banking, particularly the importance of easier technology access for community banks and strategic vendor partnerships. She emphasizes that continued innovation and adaptability are vital for community banks to thrive amidst industry consolidation and change. Kristiane generously shares her insights on leading a transformative project and also offers advice to those entering the profession today, highlighting the significance of continuous learning and understanding the core business of banking.

Thank you to show sponsor, BankTech Ventures.

00:00 Preview

01:15 Intro

01:32 Sponsor

02:08 Guest Introduction: Kristiane Koontz

03:26 Challenges of Legacy Banking Technology

05:31 The Complexity of Core Transformation

08:26 Global Perspectives and U.S. Core Providers

12:26 Zions Bank's Core Transformation Journey

22:53  Real-Time System Benefits and ROI

25:59 Team Morale and Future Innovations

29:02 Leveraging Broader Banking Transformation

29:54 Investing in Treasury and Payments

30:36 Customer-Centric Transformation

33:35 Strategic Partnerships and Vendor Management

39:52 Unified Customer Experiences

42:17 Digital Transformation Challenges

47:32 Leadership Insights

51:56 Personal Rituals

54:30 Advice for Future Bankers

56:20 Outro

In this episode of the Operate Podcast, we explored the transformation of the banking sector through technology, leadership, and community engagement. Our guest, Marc Rehberger, delves into his journey from technology companies to leading tech-enabled banking at Customers Bank. We discussed cutting-edge advancements in real-time payments, the strategic adoption of technologies like RTP and FedNow, and their long-term impacts on financial institutions. The discussion highlighted how banks have adapted to unprecedented times, emphasizing agility, decision-making, and the integration of modern FinTech solutions with traditional banking practices. We also touched on the invaluable role of community banks in the U.S. financial system, their unique understanding of local markets, and the collaborative ecosystem they foster. Throughout the episode, we emphasized the balance between technological adoption, regulatory compliance, and maintaining personal customer relationships, which we both believe will persist in banking. Marc shared his insights on leadership, the power of mentorship, and the importance of investing in people, concluding with practical advice for professionals eager to innovate in their banking careers. Tune in to discover how combining traditional banking strengths with modern technology creates a dynamic and exciting environment for both customers and employees.

Thanks to show sponsor, BankTech Ventures!

CHAPTER MARKERS:

00:00 Preview

00:37 Intro

00:54 Sponsor

01:28 Guest Introduction: Marc Rehberger

02:40 Marc's Career Journey

05:17 Transition to Customers Bank

07:56 Role and Responsibilities at Customers Bank

15:14 Challenges and Successes in Banking

24:37 The Importance of Community Banks

27:28 Challenges Facing Community Banks

29:04 The Importance of Technology Partnerships

31:31 Advice for Bankers on Tech Integration

36:43 The Role of Core Technology in Banking

38:47 The Future of Banking: Open Banking and Portability

47:55 Core Values and Personal Reflections

50:53 Advice for Early Career Professionals

52:59 Conclusion and Final Thoughts

In this episode of the Operate Podcast, we take a behind-the-scenes look at the birth of fintech P2P and marketplace lending with Peter Renton, one of its pioneers. Peter shared his extensive background, starting from his early days as a self-directed investor to founding key fintech companies like Lend Academy and LendIt, which later became Fintech Nexus. We discussed his journey into peer-to-peer lending and its evolution as institutional investors entered the space. The conversation spans the rise of fintech innovation, the challenges of scaling peer-to-peer platforms, and the role of community banks in the future of financial services. Peter recounted the bubble in the fintech lending space around 2015 and how the industry adapted following the Lending Club debacle in 2016. He also shared his advice for fintech founders, emphasizing the importance of diversification in funding sources and customer acquisition strategies. 

We delved into notable companies like Upstart and their pivots in the fintech landscape. Additionally, Peter reflected on the transition from LendIt to FinTech Nexus to encompass a broader range of fintech innovations for their content and events. We touched on the increasing interest of banks in fintech events from 2016 onwards and the changing landscape post-pandemic. Peter discussed emerging trends in fintech, such as embedded lending, mobile wallets, and new payment rails. He highlighted the necessity for community banks to adopt technology and attract younger customers. Lastly, Peter introduced his new consulting venture, Renton & Co, aimed at guiding fintech companies through content strategy, marketing, and market analysis. Enjoy this comprehensive look at the past, present, and future of fintech.

CHAPTER MARKERS:

00:00 Preview 

00:34 Intro

00:47 Sponsor

01:19 Meet Peter Renton: A Fintech Pioneer

02:50 Peter's Early Fascination with Finance

04:04 Discovering Peer-to-Peer Lending

05:36 Building Lend Academy and LendIt

09:21 The Evolution of Marketplace Lending

18:39 Reflections on the Fintech Lending Boom

27:19 Kudos to Dave Girard (UpStart) and Team

28:04 The Shift to FinTech Nexus

29:04 Expanding Beyond Lending

32:16 Challenges and Stress of the Events Business

32:48 The Impact of the Pandemic

33:54 Future of FinTech and Embedded Lending

37:47 The Role of Community Banks

42:38 Advice for Community Bank CEOs

49:18 Peter's New Venture: Renton & Co

In this episode, we get an insider look into the financial technology landscape with Jason Mikula. Jason shares his journey, from his unexpected entry into financial services and digital marketing to launching the publication Fintech Business Weekly. He emphasizes the importance of understanding customer acquisition metrics and analyzes the evolution of fintech innovations like online lending, BNPL, Banking as a Service, etc.

We delve into the mechanics of Banking as a Service (BaaS) and the complex relationships between fintechs, middleware platforms, and banks. Jason is currently in the middle of reporting on news as it breaks around Synapse, Evolve and several fintechs, as well as the thousands of customers caught in the middle of it. He highlights the regulatory challenges and the balancing act between risk and growth. Our discussion also addresses the current regulatory landscape and the future of partner banking, stressing the need for sustainable and economically sound practices. Tune in for a comprehensive conversation that explores the intricacies of fintech and digital banking services.

CHAPTER MARKERS:

00:00 Preview

00:45 Intro

00:58 Sponsor

01:31 Meet Jason Mikula, Analyst and Writer of FinTech Business Weekly

03:23 Jason's Background in Financial Services

04:27 Joining Enova and Learning Subprime Lending

05:22 Marketing Metrics and Customer Acquisition

07:05 Challenges in Digital Financial Services

09:09 The Importance of Digital Marketing in FinTech

14:29 Starting FinTech Business Weekly

17:38 Analyzing the FinTech Landscape

20:10 Insights on BNPL and Market Valuations

23:32 Banking as a Service and Middleware Companies

31:49 Regulatory Challenges and Partner Banking

40:23 Regulatory Priorities and Market Impact

44:46 Systemic Risks and Community Banks

48:53 Conclusion and Final Thoughts