This week we are taking a look back at 5 of our favorite episodes we recorded in 2022. We hope you enjoy!

The views, information, or opinions expressed during this show are solely those of the participants involved and do not necessarily represent those of SouthState Bank and its employees.

SouthState Bank, N.A. – Member FDIC

Eric Bagwell: Welcome to the Community Bank podcast. I’m Eric Bagwell, Director of Sales and Marketing for the correspondent Division of SouthState Bank. Joining me as always is Caleb Stevens. Caleb heads up our marketing here at the correspondent division. Caleb, how are you?
Caleb Stevens: I’m good. The day that this show is coming out is December 26th, so none of us are actually in the office. This is all pre-recorded, but we wanted to take some time to just reflect on this past year of episodes and play everyone a few snippets of some of our favorite shows from the year.
Eric Bagwell: All right, let’s get to our first one. It’s Glen Jackson. Glen was on the show. He’s the CEO of Jackson Spalding, and he talked with you about four types of relationship builders. Expound on that a little bit.
Caleb Stevens: Yeah, Glen is the CEO of Jackson Spalding. They’re a PR firm based here in Atlanta, but they have offices all over the country. And Glen is a master of relationship building, and he makes the case that there’s really four types of relationship builders, and ideally, you want to be all four. So here is Glen Jackson on the four types of relationship builders.
You make the case that there’s actually not one sort of one size fits all kind of personality. And we’ve got a lot of commercial lenders who are listening that are always thinking about “who can I get to know? What are the small businesses I can serve through our bank?” Talk about those different types of relationship builders.
Glen Jackson: Yeah, let me make an overarching point before I do that, Caleb and Eric. Whether you’re an extrovert or introvert as it relates to creating relational wealth in your life, and we’re all living in a relational economy, period, that’s never changed in my 30-plus years of being in my industry, the point is be more interested than interesting when you’re with other people. Be more interested than interesting. So talk less, ask more questions, listen really well, that is so, so important. And that leads to what I’ve identified in the book is four types of relationship builders. So they’re four, and each has a mindset. So the four are investors, connectors, personalizers, and observers. Those are the four. The observer is an introvert. I’ll get back to that in a minute. Typically, your investor, connector or personalizer is an extrovert.
So the mindset for the investor is long-term low pressure. She builds the relationship over time. She sees the relationship as a commitment, not a task. And her mindset is, “I’m going to give this relationship time. I’m not going to sell. It’s not going to be high-pressure.” And that mindset eventually leads to results. The connector mindset is genuine; always wins. He is great at connecting people that he thinks will really enjoy getting to know each other. So he makes that connection and those connections actually come back to him for making those connections. It bears fruit over time because they realize their friendship or relationship would not be the case without that connection point you made. The personalizer, it’s very interesting. The mindset there is “personalize to maximize.” She personalizes these relationships beautifully by handwritten notes and sending articles to their customer, a link that they need to see, a podcast they need to hear, a book they need to read, constantly personalizing the relationship.
And everybody wants to feel noteworthy in their life. All of us listening have received handwritten notes from someone and they keep them and they cherish them. And the personalizer is really good at making people feel noteworthy. And the observer typically is the introvert. He’s quiet, he listens well. The mindset there is “trust your intuition to spark action.” So he’s observing. He’s looking at the situation with that wide-angle lens and has very high emotional intelligence. And that is a strength that the observer has, and they’re able to see things, for example, the connector typically doesn’t see, or the investor. So ideally, you want to be all four. You want to really be good at all four as a relationship builder.
Eric Bagwell: All right. Our next clip from our “Best of” show from 2022 is Mike Cagney. Mike is the CEO of Figure Technologies. Caleb, talk about this one.
Caleb Stevens: Yeah. So this was actually a panel of five people that Chris Nichols interviewed, but Mike really stood out from this interview. He is a blockchain expert. He has a company called Figure Technologies that’s using blockchain technology to help banks. And as usual with Chris Nichols’s shows, half of it goes over my head, but I know a lot of people listen to this show. I think this was our most downloaded episode of the year. And so here’s a quick snippet from Mike Cagney and Chris Nichols talking about the importance of blockchain and banking.
Chris Nichols: I saw the announcement earlier last year on New York Community Bank, and that kind of really opened up my eyes about the efficiency of what happened there. Tell us more about what Figure is all about and what you’re doing with banks these days.
Mike Cagney: Sure. So the fundamental premise behind Figure is we believe blockchain is going to have a massive transformational effect on financial services. And when we talk about that, we really distill blockchain down to two things that are of value, which is it allows you to displace trust with truth. So creating native digital assets, whether that’s native digital fiat or loans or what have you. And it allows you to transact bilaterally without counterparty risk. So you and I can face off on a blockchain without any intermediation and transact, let’s say I’m selling you a pool of loans, you would move stablecoin to my wallet. I would move the loans to your wallet real-time and simultaneous, and therefore not incurring any counterparty risk and settling instantly. And when you intersect these two things, you create marketplaces where you’re agnostic to your counterparty.
And if you think about financial services, it’s a set of marketplaces where you can’t be agnostic to the counterparty. So you think about how exchanges work, how the NASDAQ or NYSE works, you’ve got DTC sitting in the middle, and then a five-party brokerage settlement process. Think about how Interchange works. You’ve got Visa or MasterCard sitting in the middle and a five-party settlement process. And so bring this ability to do bilateral transactions and effectively build these agnostic marketplaces is going to be hugely transformational for the banks. And USDF was a clear example of that.
Chris Nichols: So let’s keep going down that. Give us another example of how this might work. One, what blockchain are you on?
Mike Cagney: Sure. So we built a blockchain called Provenance, and it’s a public decentralized open source blockchain, so anyone can use it. There’s no permission required, there’s no centralization or central actor controlling it. It’s a what we call distributed stakeholder blockchain. So it’s very fast and very cheap. It will handle over 10,000 transactions a second. The gas fees to move things on Provenance are very, very small. So, for example, when I put a loan on Provenance, I might incur a couple dollars of gas fees and that’s it. But what Provenance does is effectively, and especially as it relates to USDF, it’s open loop. And this is a huge difference between how people have been approaching payment networks, have been really approaching this in the context of either an on-the-go structure like Zelle or a closed-loop system like Passit.
What we’re trying to do with Provenance and what we’ve done with USDS is we’ve created an open loop framework where any bank can attach into that consortium and any bank can KYC a wallet, and you have a stablecoin USDF that can move from wallet to wallet 24/7, 365 without friction. So if you think about the original use case, the NYCB use case you talked about, that was one where we were running a marketplace for Figure Equity and we needed the buyers to be able to have fiat in their wallets to be able to transact bilaterally to the sellers. And so New York Community Bank sold USDF to those buyers, got the fungible liability on their side so they had the cash deposit, and then supported that marketplace. That’s obviously one use case related to USDF, but the larger use cases are really underpinning around the 24/7, 365 payment rail.
So USDF allows any USDF customers. So let’s say I’m a retail customer at NYCB and I’m transacting with a small business or a small-medium business that banks with NBH, I can do that transaction through a USDF rail real-time versus Interchange or ACH or wire where the merchant is getting the benefit of real-time settlement, no chargeback, no Interchange fees. And the consumer ideally is getting the benefit of the merchant pushing rewards back to them to leverage that transaction framework. So the paradigm here that I think is pretty interesting is what USDF does, aside from being this 24/7, 365 payment rail, it opens up some interesting use cases for the banks where it changes their economic model somewhat. So rather than earning the economics as the issuing bank in a card framework, they can actually earn the economics as a merchant acquirer to go to their small bank customers and say, “I will set you up on this USDF rail to take payment.” And so they’re basically competing with the Stripes and the Squares of the world who are the big merchant acquirers today and stepping in and saying, “No, we, the bank can do that on the USDF rail.”
Eric Bagwell: All right, our next clip is from Jeremy Lucas. We didn’t have to go far to get this one, he’s right down the hall from us. But Jeremy is the head of balance sheet strategies and investor relations here at SouthState. And Jeremy came on to talk about funding. Caleb, talk about what he said.
Caleb Stevens: Well, we had Jeremy on the show back in 2020 when rates were going to zero and everyone had too much liquidity. We decided, hey, let’s have him back on when rates are going up and liquidity is going out the door. And so it was good to hear Jeremy talk about the past two years, the rollercoaster that it’s been, and some strategies that we’ve been thinking through at SouthState in terms of managing our balance sheet. So here’s a quick snippet with Jeremy Lucas.
Tom Fitzgerald: It was funny, I was talking to our AL manager, Billy Fielding, and we do AL processing for about 70-plus banks. And he was saying the second quarter was really too early to see any dramatic movement in deposit costs or liquidity changes but he suspects third quarters we’re going to start to see some movements upward in those deposit costs. Is that kind of your experience as we worked our way through the quarter?
Jeremy Lucas: It is. If you think about it, I guess what people probably haven’t paid attention to is how fast things have moved. If you look at the last cycle, our deposit made at SouthState was around 24%. It took about three years to get up to 2.25 on the Fed funds rate. Took fourth quarter of ’15 through fourth quarter of ’18. We’ve moved that same amount in four and a half months, since the end of March. And so, March was a 25 basis point increase. May, you had 50. Mid-June, you had 75. And so really until June, it really wasn’t on most people’s radar. I think most people are used to a 25-basis point increase, just from the past. So really, mid-June was 75 and it’s kind of too late in the quarter to see any really impact. And now July and September you’ve had two more 75 basis point increases and that’s really starting to get people’s attention. I think deposit costs, what we’re hearing, have increased across the industry. Deposit betas are going to be higher than some people think.
But no, at SouthState, we increased rates at the beginning of August. We have a couple CD specials out there. We have a money market special. So I think it’s just the magnitude and how fast things have increased really just in the last six months. Like I said, the first couple of increases I don’t think really had much attention, but once you start talking about it, once you’re seeing it, whether it’s mortgage rates on the news every day, that gets people’s attention and then people start asking. I think you’re dealing with online banks as well who are paying two and a half percent or so. So that’s another challenge that customers are going to. Here at South State, they put some deposits to our wealth group, some wealth strategies. So we’ve seen a little bit of that as well. But I think just the magnitude and the pace of increases so far compared to the last cycle.
Tom Fitzgerald: And I think too when you sit here with a three, three and a quarter funds rate, but we know it’s going up to four next month and then probably 4.50 by year-end, I would imagine you’re trying to grab as much deposits at the levels we are today as you can at this point in knowing that the rate is going to go higher for the next several months.
Jeremy Lucas: Yeah. There’s core relationships we’re trying to protect. I think one thing, and you’ve seen it a little bit with stated rates going up at banks, but just talking to the field, a lot of banks haven’t increased them through the quarter, but they’re using one-off price and exception pricing, so you might not get a chance to kind of match that rate for a customer. So they’re coming to us and we’re adjusting as necessary, but there’s a lot of the kind of off-the-grid pricing that banks are using where it’s not exactly stated or captured in some of the competitive data.
Tom Fitzgerald: Now, let’s shift gears a little bit and talk about wholesale funding from the traditional retail deposit. Home loan bank advances are a big source of that funding. Also broker deposits. I know our desk kind of looks at, at least recently that they found broker deposits were a little bit cheaper, kind of on the shorter part of the curve, and advances kind of took over as you got further out on the maturity. Are you using kind of a mix of that as well? Or are you kind of leaning towards one versus the other right now?
Jeremy Lucas: Yeah. Right now, we have significant liquidity just, you do to the MOE, the merger with CenterState and SouthState a couple years ago. We still have liquidity from that, but we are hearing that advances in the second quarter were very strong, even going to the third quarter. Brokered CDs as well. It’s been very strong for both of those kind of the wholesale funding markets. But I think we’ve looked at our plan, whether it’s advances, the Fed, Fed funds loans. Things can turn and are turning quickly, so where do you get the liquidity if you need it? But I think both of those brokered and federal home loan bank advances had a very strong second and third quarters. And most of that has been on the short end – one year and less. I think it’s probably four to four and a half percent for both of those. But one year and less is kind of where we’ve seen most of it. And I think advances, I think they hit a 20-year low at the end of ’21, and they came back very strong. And it’s not just insurance companies and other, it’s commercial banks that are borrowing the last couple quarters. So we’re definitely seeing that across the industry.
Eric Bagwell: All right. Our fourth “Best of” clip is from Russ Hill. Russ is a leadership expert. He’s the founder of Lone Rock Consulting, was on the show earlier this year. Caleb, talk about Russ.
Caleb Stevens: Russ is one of those guys that you follow him on LinkedIn, and he has really good content and you think, wow, this guy ought to be on the podcast. Russ and I talk all about the qualities that make up effective leaders in their organizations, how to create buy-in to your vision. So here’s a quick snippet of my discussion with Russ Hill.
Russ Hill: When it comes to culture, what great leaders do is they focus in three areas, and we call it the third leader. And in fact, let me walk you through this just real quickly. It will take me a minute or two. So the first leader, so I’m just going to define different leadership profiles. This is really helpful in our experience because often we aren’t putting the mirror to ourselves and thinking about, “Okay, well what kind of leader am I?” I might think about what kind of leader I am, but I’m defining it by 50 million things. Let’s narrow it down. So the first leader is somebody who’s got no vision. They haven’t defined anything. It’s not that their team is not doing anything. In fact, their team feels super busy. There’s tons going on, but they feel like they’re on a treadmill – sweaty, exhausted, they’re busy all day long, but we’re not really going anywhere. We can’t point to any progress we’ve made as an organization or a team over the last six, 12, 36 months, whatever it might be. So there’s no vision.
The first leader, they love discussion. They hesitate to make decisions so they love meetings. There’s just endless discussion. You log into their meetings, you walk into their meetings, just tons of dialogue. And it’s because the first leader leans into consensus. It’s what they care about more than anything else is, “I don’t want to create conflict, I don’t want to make decisions because I just want consensus.” And that’s extreme. There are all kinds of costs that an organization pays because of that. The second leader views himself as an upgrade. They’re actually an evolution of the first leader. They used to be the first leader, now they’re not. And the second leader, they’ve got a vision. The problem is, it reads like a Broadway Playbill. There are 150 priorities, 20 pages long. And so everything is a priority. So they think they’ve created a vision, but in fact, it’s way too complicated. Nobody knows what to do with it. The second leader micromanages. They’ve had your job and they can’t wait to tell you how to do it more effectively. And so they pride themselves on making decisions. Unlike the first leader, the second leader is making decisions on a moment’s notice. But they don’t have anybody coming along with them or taking ownership of it because they had no involvement in that decision. So the second leader doesn’t seek to create conflict, but by nature of the way they lead, they create tons of conflict. They create silos. Okay?
The third leader is what we advocate going into. And the third leader does these three things. These are the three categories I was talking about. The third leader creates clarity. It’s three to four key results. These are the most important things for our financial institution to deliver this year. And it might be a revenue number, it might be a profit number, it might be number of new clients, it might be employee engagement, whatever it is, these are the three things. It’s not more than three or four because people can’t remember more than three or four and we want them top of mind. And so the third leader creates clarity. The second thing that they do is they build alignment. They understand that there’s a fundamental difference between my team being aware of things and that that’s what most leaders do, they make their team aware of it. “Here’s the new policy. Here’s the plan for the next year. Here’s the new project.” They create awareness and then wonder why they don’t have alignment. And alignment happens out loud. It’s messy.
And so the third leader not only creates clarity, but they build alignment around their vision. The team is not just aware of it, they are aligned to it. And alignment is different than agreement, by the way. And then the third thing that the third leader does is they generate movement. And this is where culture management comes in. They define the mindset of the team. So whether you look at a Chick-fil-A, you look at an Amazon, you look at Apple, just go down the list of companies that you think of as culture, as a competitive advantage, they have defined the culture they’re looking for. Well, how do you define the culture? It’s not a bunch of old, static, stale values that are sitting on a frame somewhere gathering dust. It’s a living, breathing, timely set of statements. Can be three or four, it shouldn’t be more than that, that define how we need to be thinking and acting. So for instance, Amazon, and I’ll hesitate just so I can give you a chance to recount, Caleb, but you can tell I’m passionate about this, can’t you?
Caleb Stevens: Yeah, let’s keep going.
Russ Hill: So like Amazon, one of their, what they call them leadership principles is “Biased for Action.” We are hiring people who are this way, they are biased to take action. They’re not biased for discussion, they’re not biased for analysis, they’re biased for action. You can Google “Amazon Biased for Action,” you’ll see it’s one of their leadership principles. There’s a large defense contractor we worked with, we’ve consulted their senior team for a lot of years. They just rewrote their set of culture principles, whatever you want to call them, leadership principles, and one of them is “accelerate change.” They’re way too stuck in the status quo. They need more people innovating, speaking up, challenging the way we’ve always done it if they’re going to compete for talent and clients. And so “accelerate change” defines the narrative that they’re looking for. At other organizations, it’s “customer first” or “patient first,” or it’s “one team.” So you look at, if I’m the leader of a financial institution, whether it’s just one location or a bunch of them, I’m looking at what’s the narrative? How do I want people to describe how we think and act here? Do we accelerate change? Are we one team, customer first, biased for action? What are those few statements that define the way we need people to think and act? And you define the culture and you start managing it.
Caleb Stevens: So clarity, alignment, and movement. So let’s say you’re working with a large company and let’s say the executive team says, “Yeah, Russ, I get it. We’re all about that. There’s clarity on the executive team. There’s alignment, they’re committed to making change happen.” But my gosh, when you get five, six, seven layers down into the organization, how do you cast vision and create clarity in such a way that it actually spreads and scales to the whole organization? I mean, I heard you say one thing, “bias for action,” that’s a short, frequently repeated, sticky, portable phrase that can probably be disseminated throughout the whole company. But how do leaders who are trying to create movement and clarity and alignment with five, 6,000 folks, how do they do that effectively?
Russ Hill: Okay, so it’s a great question and there’s a lot to that, but I’ll give you the 30,000-foot kind of thumbnail version of this. So the first thing is, if I were to call all of your direct reports, whatever financial institution, whatever team you’re leading, so I’m going to call your direct reports, we’re going to do a quick Zoom meeting and I’m going to ask them, “What are the three things that define success?” Would they all answer the same way? And in our experience of asking that question for over 15 years in all kinds of industries and all kinds of locations around the world, over 95% of the teams we interviewed do not answer the same. They don’t have clarity. You think they do. “Oh yeah, we’re clear.” But yeah, I mean you’ve shown them the plan for the year; it’s got 50 million things in it. And or they’re aware of it, but they’re not aligned to it. So they know you’re saying this is important, but they’re over working on that.
And so how do you get it throughout the organization? You start with, you have to really drill in on the leadership team with this, do we have clarity? So what are the three most important things? And we would tell you, and again, we teach all this in this thing called Lead In 30. People can find out about it at Think about it like a 30-day fitness challenge, but it’s a 30-day leadership challenge. Anybody can sign up for it. We actually offer it for free. We just require that people bring two leaders, other leaders from their company with them because then it actually gets traction and impact and that helps our organization. So And we start, week one is all about clarity. We call them RPM key results. Repeatable, purposeful, measurable. Are they repeatable? Like a large pharmaceutical company we consult, it’s five, one, 85. Five, one, 85. Those are their key results. Everybody in the whole organization, tens of thousands of people know five, one, 85. And those numbers five, one, 85 represent three different metrics that are incredibly important.
General Motors is a client of ours, three zeros. If you look up, Google GM. We could talk about this. I can mention their name because it’s public. But General Motors, six years ago we were in the room when they wrote the three zeros. That is the vision for General Motors. How do you get tens of thousands of people aligned? You start with clarity at the top. So we’re going to have a discussion about what is clarity. What are the RPM, repeatable, purposeful, measurable, key results? We’re going to discuss that and then we’re going to look for alignment. How aligned are we as a team? And alignment means I feel heard, I feel involved. Doesn’t mean I have to agree with you, but I feel like I had a chance to weigh in before you made the decision on anything. Okay? And teams don’t make decisions. Leaders make decisions, but teams inform leaders to make the best decision. So many organizations have that backwards. They think teams make decisions. No, no, no. Your job as the leader of that leadership team is not to get them to help you make a decision. They help you make the decision, but you make the decision or you delegate one of the decisions to them and they’re the decision maker. So you create alignment there and then you start to define at the executive level, Caleb, what do we need? How do we need people thinking and acting?
Then, we just did this with a large manufacturing company, 425 directors, VPs along with the ELT. They have 35,000 people underneath them. They’re at multiple warehouses around the US and around the world, actually. And so we have them in Lead In 30, virtual set of meetings, 30 days long, one meeting a week. And so 425 top leaders going in to create clarity, alignment, and movement at that level. Because we’ve spent months doing up the leadership team, the ELT level, now they’re rolling it out and they’re recruiting into the conversation these 425 directors and VPs. And by the way, we just wrapped up that session with them last Friday at the time we’re recording this and they came out of it going, “Oh my gosh.” The directors are going, “I’ve never had access to the ELT like that. Never been able to interact.” They didn’t say it this way, but you could tell. I don’t feel like my voice was heard the way it has been the last four weeks. So now you’re moving down the org chart. Guess what the next step is? The next layer. So that’s an extreme example of a very large organization, but you take a company of 300 or a company of 3000 and it’s the same principle.
Eric Bagwell: All right, last but not least, our last clip from our “Best of” show is Lee Wetherington. And I think, Caleb, tell me if I’m wrong, wasn’t Lee the most popular show that we’ve had?
Caleb Stevens: 2021, he was our most downloaded show of last year. And so if you ever attend banking conferences, there is a good chance that you have heard of this guy before. He’s hilarious. He’s a great speaker. But even more than that, he is a wealth of knowledge when it comes to fintech, open banking, embedded finance. He works with Jack Henry. And so we are going to close out this series of best shows with Lee Wetherington.
Maybe this is more of an ALCO question, but all of these online digital banks paying 3% rates right now, how do you see that putting pressure in terms of younger generations maybe moving away from their primary financial institution to using their online savings account, sort of saying that is their primary bank, even though they may do day-to-day checking with another bank, or maybe they’re going to a Personal Capital or a Mint or one of these aggregate sort of fintechs that aggregate all your accounts together? I’ll kind of give you the floor to go wherever you want to go on that.
Lee Wetherington: Yeah, it’s a big problem. And it didn’t begin just when rates started to rise. The allure of these neobanks, digital-only banks, direct-to-consumer fintechs has always been convenience and simplicity. Basically immediacy and simplicity. And now they have an additional lure, which is higher, higher rates, as we see rates begin to bump up. And we already know that just over the last 12 months, the growth rate of deposits at the average bank has basically been cut in half and that’s going to continue to come down. And I would hazard that when we see these official third-quarter numbers, we will see that coming down really precipitously. So there’s a big difference between the first half of 2022 and the second half of 2022 with basically it’s a pivot. It’s a turning point. We’ll see that in deposits and I would tell you that probably within the six to eight-month frame, you’re going to have banks who are suddenly realizing, wait a minute, we’ve got to actively attract deposits now? We’ve been awash in them for the last two and a half, three years, and now we’ve actually got to chase deposits or we’ve got to make sure that we are being strategic about how to keep deposits that we have on hand from leaving the bank.
And I want to talk to that a little bit because this gets back to this issue of financial fragmentation. The average consumer in the United States has somewhere between 15 and 20 different relationships with different financial service providers. Think about all the different apps you have on your phone today. Think about your P2P apps. Think about maybe you have a Coinbase app. Where is your 529? Where is your 401(k)? How many different credit cards do you have? Do you use the Starbucks app? Do you use other merchant apps where you’ve got to load them with value before you can actually use them to buy stuff? When you start thinking about all of those things, you realize that your money is scattered all over the place and you’ve gotten there. I’m an English major, so this is a beautiful irony. I love to pause and just take in things like I’m about to describe. But the reason why we have all of those different apps and all of those different financial service provider relationships is because in a given moment, those apps or that particular provider was the easiest way to solve for a particular need in a particular moment, situation, or circumstance.
And so in that moment, it makes a lot of sense. It seems to make that particular thing we need to do with our money faster, easier, better, maybe cheaper, maybe all of the above. But in aggregate, over time, as you’re adding more apps and more financial service providers, what you’re actually doing is you’re complicating your financial life to an extent and to a degree that has never been in the history of banking in the United States. We’re suffering now from more financial fragmentation with the average consumer and the average business by the way, we can talk about that a little later as well, than has ever been the case in history. Now, here’s the good news, going back to open banking, we have the most mature open banking rails in the world. And by the way, what is the plumbing of open banking in the United States? It’s basically four companies. It’s Plaid, it’s MasterCard’s Finciity, it’s the big banks’ financial data platform called Akoya and it’s Envestnet Yodlee. Those four big financial data exchange platforms are the de facto open banking plumbing in the United States. They’re behind all the biggest fintechs that you know.
And by the way, the beautiful thing about them is that those financial data exchange platforms are now primarily using secure, standardized APIs to move financial data between one account and another, or to gather it from one place based on the permission of the account holder or the owner of that financial data. So here’s this beautiful situation in which everybody is suffering from financial fragmentation. By the way, if you look at the average Gen Z couple or Gen Y couple, their total number of financial service provider relationships is between 30 and 40. Just think about that. Thirty to 40 different financial service provider relationships. Now, what does that mean for the community bank? Well, it’s a big problem. To your point, yes, they continue to add and be lured by neobanks and digital banks and different direct-to-consumer fintech offerings for different reasons and different situations with different benefits. Sometimes, I’ll tell you, I’m in boardrooms and I lay this out. I’ll lay all the data out and I’ll have a board member say, “Well, how do we get them to quit all those 39 other financial service providers out there and bring it all home back to the community bank? How do we do that?” It’s like, okay, first of all, that’s never going to happen. You are delusional. Let’s just go ahead and just say that out loud. That’s a delusion. That will never happen.
The opportunity is how do you achieve first-app status in the context of all that financial fragmentation? Is there a way for the community bank’s app to make sense of what is otherwise hopelessly fragmented and scattered across 20, 30, 40 different financial service providers? And the good news is you can do that now. You can lever these open banking rails so that your customers at the bank can aggregate back to the bank and to their view through the bank’s digital apps, mobile apps, whatever the case may be. They can see where they are across all of those disparate relationships and therefore know where they are with their money. And if they know where they are with their money, now the community bank is in a prime position to say, “Okay, here we’ve aggregated your full picture. And by the way, we’ve done this securely through APIs, not screen scraping. We’ve eliminated all inbound screen scraping.” That’s the other big benefit there. “And now you have a full picture. Now we’re going to help you. We’re going to nudge you with the right message at the right time to tell you what to do next or how to do better. Next best product or service, et cetera.”
And you think about what that means. As soon as you do that, the community bank has achieved first-app status in this otherwise hopelessly fragmented ecosystem. In other words, it’s taken the biggest challenge– By the way, financial fragmentation according to Javelin, is the biggest challenge in 2022 and 2023. And you’ve inverted that challenge into the biggest blue ocean opportunity, which is to achieve first-app status. And you do that by not only bringing everything home but then making yourself your superpower, you bring that fully into the picture by saying, “We’re here to talk to you and help you make sense of everything that now we’ve made coherent to you in one view. We’re here to talk to you at the tap of a button inside your mobile app or inside your online banking. Whenever you want to talk or if something doesn’t make sense, we’re here for you to advise you what to do next, how to do better, solve problems, et cetera.” To me, this is why I’m more excited and bullish about what progressive community banks can get done this year, next year, and in the years to come.


Recent Episodes


The Keys to Asset-Liability Management in Today’s Rate Environment

Today Tom Fitzgerald sits down with Billy Fielding to discuss the ALM trends we are seeing with our community bank clients and strategies to navigate the current economic environment. The views, information, or opinions expressed during this show are solely those of the participants involved and do not necessarily represent those of SouthState Bank and…

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When Will the Fed Start Cutting Rates? Economic Outlook with Joe Keating

Today Tom Fitzgerald welcomes Joe Keating back to the podcast. Joe serves as Senior Portfolio Manager at SouthState Wealth and is a regular contributor to the podcast. They discuss Joe’s economic forecast and when the Fed might start cutting rates. Subscribe to Tom’s Friday Five Newsletter Here The views, information, or opinions expressed during this…

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The Art of Selling Your Bank with Kurt Knutson

Today we sit down with former bank CEO, Kurt Knutson. We discuss his book The Art of Selling Your Bank, where most M&A deals go wrong, how to merge 2 different cultures, and how to increase your bank’s value — whether you plan to sell or remain independent.  GET THE FIRST SECTION OF KURT’S BOOK FOR…

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The State of Bank M&A with Catherine Mealor from KBW

Today we sit down with Catherine Mealor, Managing Director of Equity Research at KBW. We discuss the current M&A environment and its implications for communtiy banks. The views, information, or opinions expressed during this show are solely those of the participants involved and do not necessarily represent those of SouthState Bank and its employees. SouthState…

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5 Fundamentals to Transform Your Leadership with Mark Miller from Chick-fil-A

Today we bring back a popular guest and friend of the show, Mark Miller.  Mark spent over 40 years with Chick-fil-A, most recently serving as Vice President of High Performance Leadership. Mark recently retired and has co-founded a new organization dedicated to serving leaders called Lead Every Day. In today’s episode, we talk with Mark…

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The Future Of Core Processing With Nymbus CEO Jeffery Kendall

Today Chris Nichols, our Director of Capital Markets, sits down with Nymbus CEO Jeffery Kendall. Chris and Jeffery talk about the future of core processing, payments, how banks should be thinking about their relationship with their core provider, and the new opportunities emerging for banks to offer more innovative products and solutions to their customers….

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