Sam Maule, Managing Partner at the fintech/digital banking consultancy 11:FS, joins the Purposeful Banker podcast to talk about the digital banking movement - the challenges banks face and how they can overcome them. It's a topic he'll be covering in-depth during his keynote speech at BankOnPurpose, which is titled, "Doing Digital: A Modern Bank's Guide to Thrive."
Helpful Links
Fintech Expert Chris Skinner Reveals Keys to Becoming a True Digital Bank (Financial Brand)
Doing Digital: Lessons From Leaders (Amazon)
Are You Really Doing Digital (The Finanser)
From CIO to COO to CEO (Fifth Third)
Transcript:
Maria Abbe:
Hi and welcome to The Purposeful Banker, the podcast brought to you by PrecisionLender, where we discuss the big topics on the minds of today's best bankers. I'm Maria Abbe, senior communications manager here at PrecisionLender. On today's show, Jim Young, our director of content, will be interviewing Sam Maule. Sam is a managing partner at 11:FS, and will also be speaking at BankOnPurpose this year. The title of his talk is "Doing Digital: A Modern Bank's Guide to Thrive. We'll have links in the episode notes to relevant articles and information. Now, onto the show. Enjoy.
Jim Young:
Sam, before we dive into some of the concepts that you'll be speaking about at bank on purpose, can you start by giving us some background? Now you're our third 11:S guest on The Purposeful Banker, but could you still give our listeners a refresher about your company, what it does and then what you do there?
Sam Maule:
Yeah, it's funny that I'm the third guest because I'm the first one with an American accent. I can guarantee that.
Jim Young:
That is true.
Sam Maule:
A nice Midwest American accent. So I'm the managing partner for 11:FS for North America. I think we're going to change it to just America at this point. So anything on this side of the Atlantic falls under my purview. I joined the company about two and a half years ago. For those that know me in this space, I've been in banking, lord, I worked for Northern Trust for 10 years on the wealth management side. I worked for TSYS for almost a decade. So on the consumer and commercial card, prepaid loyalty side. And then I worked in consulting for a number of couple of years before joining 11:FS. So I've been around the block a few times.
I've sat, I think, now in every position you can. So whether banking, consulting, services, providing, so I've seen all of it. And that's what made me want to join 11:FS because when the folks that put the company together, David Brear, Jason Bates, and Simon Taylor came to me, they said, "Look, we think that consulting, especially in financial services, is really ready for that next generation, ready for a challenger." And we hear that term all the time in banking, right? A challenger bank. We consider ourselves a challenger consultancy company, one that is really fit for the digital age. And that's what we try to do. And that's what we focus in on is working with financial institutions around what digital is in this day and age, that term that I think we all at one time or another get a little tired of.
Jim Young:
You just read my mind here and you made me feel a little bit better because I felt like this was perhaps a cranky first question to start off with, but it was one I felt like I needed to just go ahead and clear the air on. And that is that sometimes I feel like I'm a little digital-ed out when it comes to banking, and the word sometimes feels buzzy, like it means everything or nothing at the same time. But then I go to the 11:FS website and you guys proclaim front and center that digital banking is 1% finished. So how can I be so fatigued by something that's just barely begun?
Sam Maule:
Well, when it comes to digital, it's very easy to be fatigued. If you're anything like me, I have four kids, watch them every minute of every day. They are not 1% finished obviously, but they've also, they were born digital, whereas a lot of us weren't. I'm sure you're like me. I remember when I sent my first email. I also remember it took me like a whole day to figure out how to send the first email. I remember my first laptop. I remember my first beeper, which then progressed to a flip phone and so on and so forth. So we've all lived that evolution a bit. And so yeah, I think to hear us say digital is only 1% finished can actually almost be depressing, but it's not because what we mean by that is that 1% finished, it's a mindset.
It's an acknowledgement that the current shift from commodity banking and commodity banking products to what we would call digital intelligent services, creates a whole new playing field for the industry. We think we're at a tipping point moment for our industry that we've seen other industries go through. But unlike a lot of other consultancy firms that we would hear from, or maybe other folks that write a bit, we actually believe that the banks are well positioned to win, that they have a natural advantage. Banking is 600 plus years old. The banks that we talk with have a large customer base, unlike maybe some fintech companies that are out there and they do understand a highly regulated, a highly complex industry incredibly well.
So what we believe is you have this new layer, you have this digital layer that sits as part of that, and it's one where the services you provide can shift and change. And we're incredibly excited about that moment. So 1% finished, it's a mindset. It's hey, there's a ton of opportunity there. If it's only 99% done, think about how much opportunity you have to go in and meet the needs of your customers and new customers out there.
Jim Young:
Yeah, and I guess you're basically also sort of saying, Hey, just because you have a mobile app doesn't mean you can now proclaim yourself as digital.
Sam Maule:
Not even close. I mean, it isn't. And everyone gets on stage and gives a million examples, but that's not a bad thing. Look around. Name an industry today that isn't seeing a shift, and you really can't. I mean, we can do this over and over and over again, and even within our own industry, we see it constantly. We understand how our customers are consuming information and also how they're engaging with us. And we know that it's a blend and that the concept of digital, it goes through real life nonstop. Whether your customer is sitting at home, applying for a mortgage or applying for a loan, but then carrying that experience on into potentially a branch or a one-on-one meeting with the relationship manager. It's all interwoven. It's the DNA of how you engage now. And digital is that strength that ties it all together.
Jim Young:
Again, for our listeners, Sam will be speaking at BankOnPurpose this May. And speaking of which, let's take a short break here so you can learn about a promo we're running for the conference.
(BankOnPurpose promo)
Jim Young:
So Sam, your colleague Chris Skinner, who has inspired many a discussion on this podcast in the past, has just published a book called Doing Digital: Lessons from Leaders. Is it safe to assume that's going to be a major source of inspiration for your Bank on Purpose talk?
Sam Maule:
It will. Chris is a good friend. Chris is an excellent author. He's been writing about this mindset and this digital shift now for well over a decade. And his new book, Doing Digital, I've had the opportunity to get an early eye on it. It's fantastic. Again, he's a great writer and he's a great historian too. That's what I love about Chris. And so in April, actually just a few weeks before the conference, 11:FS is going on tour with Chris. We're doing a book tour across, Lord, how many cities? To think about this. Chicago, Charlotte, Atlanta, New York, Toronto. So a road show where we're doing a live show at every event and it's focused around his new book. And David Brear, myself and our media team will be doing this. They are a lot of fun. I do love our live shows.
Sam Maule:
Doing seven shows over a two week period. I'll be taking my vitamin C, but yeah, it's going to be really good. We're actually using the chapters of the book and that will be a topic of each of these city stops that we do, and so it's going to be fantastic. And the timing again is just perfect because I will spend two weeks along with our team and Chris and rooms full of folks in this industry talking about these lessons, talking about how they've been applied, getting real use cases and seeing tangible actions that you can take around this topic. So these will be fresh. They'll be in my mind, and I'll have t-shirts. So, that's everything you need. It's perfect.
Jim Young:
I was just about to ask if we got t-shirts.
Sam Maule:
Always.
Jim Young:
Bumper stickers a possibility too?
Sam Maule:
Laptop stickers, bumper stickers, t-shirts. It'll look like those concert tours. The Elton John on tour.
Jim Young:
Fantastic.
Sam Maule:
Yeah, very excited about it.
Jim Young:
So in some of the pre-press interviews, I was struck by this quote from Chris where he said, "I got fed up with people bank bashing and saying banks are dumb and stupid and don't get the idea of digital." Sam, I've got to admit, some folks might have put Chris under the banner of bank basher. He's not afraid to be blunt about banks and some of their shortcomings. Did he have a change of heart or does this reflect 11:FS thinking?
Sam Maule:
It definitely reflects 11:FS thinking. I don't think Chris had a change of heart. I think if you go back, the good thing about Chris and a lot of his contemporaries too, there's a decade worth of blog material of speaking that he's done to go back. And if you go back and look, what he's doing is calling out folks and calling out institutions, which said really the industry isn't going to change. But what he has consistently done over 10 years is he said, "Here are outliers, what used to be outliers and now are becoming more and more commonplace of institutions that have done this well." They just tend to be from places you didn't think of. For a long time, he talked about the banking innovation that was taking place in Turkey for example, or what he saw in Asia. It's not like, we can be honest, the US to some degree hasn't been the leader when it comes to the adoption of these types of digital tenants.
And we know that. We're a highly complex ... What do we have? Probably 4,900 banks I think roughly in the US. I think the number's a little north of that. And then you throw on, I don't know, another 6,000 credit unions. We're very unique. 50 states. You think about the regulatory environment that we face. So it makes sense why we're a little slower. And yet we also have a very stable banking system, and Chris has seen that and 11:FS would say the same thing. We just do believe that again, you're well positioned, there are things you can do to take steps, but you needed to get moving a little while ago and you especially have to be moving now.
Jim Young:
So if you're a bank and you're getting moving or you're already in those initial stages, how digital do you have to be in order to do digital? And what I mean by that is the two scenarios I thought of about that could be an issue would be one, is you have a bunch of lifelong bankers who don't get tech trying to do this transformation, or B, you end up with a bunch of techies who don't get banking trying to drive this transformation. So maybe how often have you run into that sort of thing? And how should a bank navigate that to end up between those two polar opposites?
Sam Maule:
I've ran into this my entire career, honestly, and I think most of us have. Whether it's an outside consultancy firm we hired or it's the service provider that offers our core banking services where we just take it for granted what they tell us and don't have the ability to influence the roadmap because we truly don't understand it. In this day and age, whether it be a bank board, whether it be the senior executives of a bank, you really do have to understand technology to some degree. You don't have to be able to code. I was a developer. You do not want me sitting down and entering code whatsoever anymore. I wouldn't want me doing that, but I'm close enough that I do understand the concepts of it as I should. And that's not as uncommon as one would think.
Think about Fifth Third and their CEO. He was a former CIO. How many banks can say that right now? And that's at Fifth Third scale. That's a very successful, very large institution. I do think you see the blend. I think my favorite story around this is what I see at 11:FS. I think you need the blend of both teams. I give a military example, I can't help myself because I spent a decade in the Navy. Whenever you bring a ship into a harbor, you always have a harbor pilot that comes on, somebody who knows the channel, that understands the currents, that understands what is unique about that environment and they're very specific to that environment and they've got years and years of experience doing that. Those Navy ships are steered by kids that are 17, 18, 19 years old that are worth billions of dollars, when you think about that.
I started on board submarines. I was 19 when I came aboard the first time. That should keep you up at night a little bit too, by the way, but you have that combination. You have a combination of folks that truly understand technology that are born digital, married with folks that have been doing this a long time and understand both sides of the situation, what dangers are coming, what currents you can't see, what sandbars you can't see. And I think you need to have the two that work together. For Fintech companies, I actually tell them, "Your very first hire should be your compliance officer. Bar none. That's where you should start. And if they're not involved from day one, the odds of you succeeding in that industry I think are slim to none." And that's actually an ethos-
Jim Young:
Interesting.
Sam Maule:
Yeah, that's an ethos 11:FS embraces to no end. We believe that you should be working with compliance and your regulatory folks really from the start of the projects that you're doing.
Jim Young:
Well, with your Navy background it then also gets funny because we often talk about trying to pivot banks as sort of like, the analogy is always trying to turn an aircraft carrier. So I'd imagine you can appreciate that in some of your daily dealings. But during your talk, you're going to go through, and we've kind of touched on this already a little bit, but some of the challenges banks face during that digital transformation. Can you share with us one of them, either one where you really empathize with a bank's struggle and it's sort of a yeah, I get it. This is difficult, but here's what we've seen. Or one in which you just want to maybe bang your head against a wall saying how is this still a problem?
Sam Maule:
Well one, I think the analogy is a good one of an aircraft carrier trying to turn, but in banking, the reality is it's more than an aircraft carrier. And that is a great analogy for banking because it's the entire fleet that has to turn. It's not one ship. And that's the same in banking. The number of partnerships you have, whether it be a core servicing provider or your downstream providers that you deal with, it's a fleet. It's not a single ship. It'd actually be easier if it was the ship. But there's partners you have to bring along with you in any sort of code or any sort of process that you go to update. So that's probably one of the good ones to emphasize.
So when we do this tour, that's actually an entire chapter of Chris's book is called the partnering challenge. And I actually think that's a very good one, because that works at all scales, whether you're a community bank all the way up to Chase. How do you deal with your partners? How do you engage quickly or how do you actually move at a relatively quick pace when you're in that partnership mode? How does your vendor management, procurement, due diligence, how does all of that work together well to not kill the momentum that you would typically have for a program like that? And I've seen this work incredibly well and I've also spent three years of my life trying to get an MSA completed. So I think ... Yeah, there's the sigh. And everyone in the room will nod with me. We've all been there. I think that's going to be an excellent topic on stage to talk through and give some real life examples of, hey, there is hope. There are ways that you can address this to meet your unique risk model that you have without stifling innovation. It can be done.
Jim Young:
Yeah. I would think also that this process would be almost a good way for you to reevaluate, sort of like when you're going through a tough time, you learn who your friends are, and I would think when you're going through a digital transformation, you learn who your good partners are, right? Because some of them are going to be like, hey, we're here for you and we can help you along this and there are going to be some that I would imagine just are almost roadblocks to the whole thing.
Sam Maule:
Yeah. I think it's incredibly important to look at your partner relationships. And the one thing I constantly tell people, make sure your partners have some skin in the game, that they're just not sitting on the sidelines. It's the old Gladiator quote, "When you're in the ring, talk to me then," but offering me advice from the sideline or the stands, it doesn't count.
Jim Young:
Yeah. Finally, I love talks when speakers don't just lay out a how to and a theoretical, but they give you that real world proof that this is what we're advocating and this is what can be accomplished and here's how I've seen it done. Can you share for our listeners, and again I know you'll have it in the talk, but just one real world example of a bank, preferably a US one for most of our audience, that's really in your mind figured out how to do digital?
Sam Maule:
Yeah. I'm glad you asked about the US bank side of this because if you ever listen to our podcast, our corporate office is in London. We'll get into this whole argument of what's the fintech capital of the world. Just for purposes of this call, I'll say London because of my company, but the reality is if you look at the US banking space, there are plenty examples of success stories. I mean, there just are. You look at the moves that even the top 10 banks have made to adopt the concept of digital to put those services in front of their clients and the adoption numbers that they've seen. Now, one could argue that's easier for a Chase or a Bank of America with their spend and with their capital budgets, and I'd argue the size of the fleet that they had to move, our earlier conversation.
There are digital only banks out there that have done an incredible job. Capitol One, Ally, USAA. I would hold them up as institutions that could compete with any other institution globally at what they've been able to accomplish. Just let's give one small example that's really easy to see in the US, and it's really not that small. What's the number one mortgage provider in the US right now? Overtook Wells Fargo two years ago. Quicken Loans, Rocket Mortgage.
Jim Young:
Thanks for not putting me on the spot there.
Sam Maule:
I would never do that because I would be like thanks a lot for asking. Never have a speaker that asks you questions that you have to get the answer for. But Rocket Mortgage and Quicken Loans, what they've done to see dominance happen there. And there's plenty of banks in the US even smaller sizes that you can take a look at, and see how they've been able to work with service providers or with a very small team. And that's something that I'll be emphasizing quite a bit while on stage. A small team of highly motivated, highly intelligent, disciplined developers, engineers, program managers, product owners that understand and truly understand the unique needs, the unique DNA of your institution and can come up with solutions that are very specific and that can work in those environments.
And I'll actually give a couple of those case studies on stage because I know it's great to hear Bank of America, Wells, Citi, Chase, Fifth Third, those names thrown out. But what about maybe a community bank or institutions like that? And believe it or not, they're doing it. It can definitely be done. One of my favorite quotes when it comes to innovation and when it comes to digital and this type of topic, it actually came from the CEO of Dwolla on the payment side because a lot of people say, "Wait a minute, you're based out of Iowa?" And he goes, "Yeah, it's fascinating. The internet works in Iowa. Thank you." I would agree.
Jim Young:
Yeah. Yeah. It's a great comeback. I'll have to share that with some of our clients and co-workers who live in flyover territory. They'll like that. They'll appreciate that.
Sam Maule:
Well, I live in Jacksonville, Florida. Our office is based out of New York. I live in Jacksonville because planes work, the internet works. It's amazing what you can get done if you're, again, highly motivated, connected and working with a team that really does want to change the world if they can.
Jim Young:
Well, Sam lives in Jacksonville, but he will be in Austin for Bank on Purpose. And Sam, I know I speak for all of us when I say I'm really looking forward to your talk and thanks for coming on to The Purposeful Banker to give us a little bit of a preview.
Sam Maule:
Hey, t-shirts coming your way. Don't worry.
Jim Young:
Fantastic.
Maria Abbe:
And that'll do it for this week's show. Thanks so much for listening. Now for a few friendly reminders. If you want to listen to more podcasts or check out more of our content, you can visit our resource page at precisionlender.com or you can just head on over to our homepage to learn more about the company behind this content. Finally, if you like what you've been hearing, make sure to subscribe to the feed in iTunes, Google Play, or Stitcher, and we would love to get ratings and feedback on any of those platforms. Until next time, this is Maria Abbe for Jim Young and Sam Maule, and you've been listening to The Purposeful Banker.
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