Making Difficult Choices During Budget Season

In this episode of The Purposeful Banker, Jim Young and Dallas Wells return to the podcast to discuss how to get the most bang for your buck in the 2024 technology budget.





Related Links

[Article] "How Fintechs Are Dominating New Checking Account Openings," Forbes


Jim Young

Hi, and welcome to The Purposeful Banker, the leading podcast brought to you by Q2 PrecisionLender, where we discuss the big topics on the minds of today's best bankers. I'm not Alex Habet. I'm actually Jim Young, senior content strategist at Q2. And some of you may remember me from previous Purposeful Banker podcasts. Before your mind goes there, no, I have not staged a coup. I'm just filling in for a few episodes to give Alex a well-deserved break. However, in keeping with this sort of turn-back-the-clock feel to this episode, I'm joined again by a man who had been my co-host on many previous Purposeful Banker episodes, Dallas Wells, head of product at Q2. Dallas, welcome aboard. 

Dallas Wells

Thanks, Jim. It's like 2017 all over again, or whatever it would've been that we were doing these all the time. So it's far back. I know if … 

Jim Young

I should welcome you or you should welcome me back. Anyways, on onto this. Yeah. 

Dallas Wells

Here we are. Either way. Yeah, 

Jim Young

Exactly. So today we want to talk about something that's probably been a hot topic at your bank or credit union right now. And that is, of course, the 2024 budget. Budget season isn't fun for anyone because, frankly, it's filled with a bunch of difficult choices. No one gets everything they want when it comes to decide on what makes the budget. But is there a way to, perhaps—and to use a turn of phrase that I just came up with on my own right now—if you can't get what you want, is there a way to perhaps get what you need? 

So anyway, that's where we're going to pick Dallas' brain here to find out. Dallas, going to start you off the way I have often started you off and force you to go back to your banker past. What was budget season like for you and for the folks trying to decide, you know, what made the cut and what was going to get pushed off to another budget cycle somewhere in the future? 

Dallas Wells    

Yeah, I think bank budgeting is like budgeting at a lot of places, which, you know, here it is July, right? And we're talking about next year's budget, and this used to be a fall activity. Now it doesn't feel like we ever really stopped this cycle. But I've noticed that banks in particular are very beholden to this cycle, right? It's kind of how we run the business year to year. And so, I think, even though it's been a while since I've done it from that side of the table, I don't think it's changed much. But what I think is true for businesses of all types is, yeah, there's way more stuff that we want to do than we actually have room for. 

And there's all kinds of frameworks. There are all kinds of processes for, you know, how different institutions will actually go about making that decision of, first of all, where's that line fall, you know, the magic water line of things we will do versus won't do. And then, you know, what things fall below the line or go above it. It's certainly more art than science, no matter how many spreadsheets and how much math we try to put into it. And so I, you know, I've done this from the role of doing the finance end of it, you know, kind of running the show. And then I've done the other end of it where I'm, you know, in a business unit and fighting over some scraps hoping I can get my pet project done. 

I don't think there's any angle of it that's fun. And I think your description of it is right, that like if done well, there's some unhappiness all around, right? So for most folks, we're at the early stage of this, where we're kind of like collecting potential lists of things to do, and we haven't quite started maybe the painful cut process yet. So right now it's like, you know, this kind of shiny exciting thing of like, well, hey, next year's budget, you know, you can't have that headcount right now, but we'll put it in next year's budget. We'll put that thing, you know, for ’24. That list has probably already gotten really long. And so this is the time of year where we start that exercise and, yeah, let's talk through it. Let's talk through kind of where we sit in this particular part of the cycle. 

Jim Young    

Yeah. So, I mean, I'm guessing here, really the first step is before you talk about what you can and can't spend, you pretty much have to know how much you have to spend, right? 

Dallas Wells    

Yeah. So that, you know, that's interesting. Part of the banking business for most, like small businesses, budgeting's pretty easy. It's like, well, what's the balance? Like how much cash do we have? Or kind of how much capital do we have access to? For banks, that number's kind of unlimited. So it's more like, what's our tolerance? And basically what's the profitability profile, right? There's no such thing as there not being cash in the checking account to pay a vendor, right? Like that part is not part of a bank's equation. But I think the top thing on everybody's mind, of course, is margins, right? Net interest margins. So that's really kind of your revenue top line starting point for every financial institution is what is our net interest income expected to be next year? 

So it's a balance sheet business. We can kind of forecast this … You know, the magic of banking is that you get paid while you sleep on that spread between assets and liabilities. But it also means that meaningfully changing that number is not easy, right? So you're kind of locked in within a reasonably narrow range of what top line revenues and, therefore, kind of available budget size for ‘24 is going to look like. You're not going to meaningfully move that number at this point, sitting here at the midway point of ‘23. So for most institutions, increasing rates was this kind of windfall, you know, of “Hey, this is great; loans priced up. We are sitting on so much liquidity that we don't need to chase funding.” We just all of a sudden start to get investing our dollars at higher yield. So you saw this like almost instant change up in margins for the industry.

But now, a lot of institutions have kind of worked their way through that pile of liquidity that they had. So now all of a sudden, they’ve got to go replace it, and they're not replacing it in a zero-interest rate world. They're replacing it in a 5% interest rate world. And the math starts to get really hard, and now all of a sudden we’ve got to compete for deposits for the first time since like 2006. And the skills are a little rusty. The technology's a little different, the environment's a little different, competition is different. So I think that whole mess of stuff is what is going to take up like 90 plus percent of the budget discussions this year, “What does that mix of stuff do for our net interest margins and that net interest income that we have to kind of work from as our top line.” 

And then, secondarily, or, you know, very much related to that is, alright, we've got to figure out the funding side of the balance sheet and not just like, “Hey, rates are higher,” but also just like this foundational change in the business of, yeah, rates are higher and it's the first time since so many things have changed in the industry and in the competitive landscape that the old toolkit, the old playbook, isn't going to work. So you've got a lot of folks with a long wish list of like, “Hey, there's a bunch of strategies we probably need to put in place and we’ve got to figure out how to pay for them. We’ve got to figure out which ones are probably going to work.” So I think this is going to be a … it's a long way of saying I think this is going to be a maybe a more contentious budget season than we've seen in quite a while for banks and credit unions. 

 Jim Young    

OK. Alright. So, but before we get sort of into the specifics of this specific budget season, I wanted to back out a little bit on the … You know, let's assume you're a bank somewhere in the middle here. You're not going to be, you know, putting company cars for everyone into the budget.  You feel confident that you will be able to keep your lights on, you know. You're like everyone else in that middle ground. You touched on this a little bit, but sort of when you're starting with the decision-making process here—business objectives, sort of—can you take me through sort of what that initial part of that is? 

Dallas Wells    

Yeah. So this'll be … You know, I started down the path of like, as an industry, what it looks like, but every institution has their own unique set of circumstances to wrestle with. And that's really the starting point, is like, what are the business objectives for this coming year? So, you know, is it, “Hey, we're way too reliant on commercial real estate.” And the Spidey sense is all tingling around commercial real estate. So we've got to … we want to grow next year, but we can't just keep going back to that, you know, back to the commercial real estate growth area. We’ve got to do it some other way. We’ve got to do it through consumer lending or C&I or whatever the case may be. So it is whatever the unique circumstances and challenges are. 
So it could be funding. It could be where does asset growth come from? It could be that like, fee income has continued to dwindle and we don't have a what's up next, you know, after NSF income and interchange income and those things have kind of been chipped away at over the last decade at this point. What's next? Especially for a community institution, what's our actual realistic, pragmatic way to go drive some fee income? Whatever the unique challenges, I think you have to start with that, you know, what are the business objectives?

Here's the interesting thing when we have this conversation with financial institutions. We try to start really, really high level, like, hey, what's the focus for next year? Are you about growth? Is it about getting more efficient and increasing profitability? Do you need to reduce risk levels? And they're like, yes, all those. It's like, no, that's not a strategy, right? That is not a strategy. Strategy is about focus, and strategy is about, well, hey, we need to improve profitability and we know that to trade that, we may have to give up some growth, or we may have to take on some risk, right? We may actually have to be willing to, because there's no such thing as more income and less risk and more growth, like that’s not realistic. So, I think that's the first, and maybe the most painful step is deciding where the focus is going to be and what business challenges are the ones we're going to tackle for next year. 

And so it doesn't mean that everything else is forever a no. It just means not right now, it's not the most pressing need. So you’ve kind of got to force rank those challenges to go solve. Then the next step gets easier where you start to match those up with potential solutions, you know, in the product sense of thinking about it. Like what are the bets that we're making to go solve that business challenge? But the first step is maybe the one that I see banks and credit unions struggling with the most is getting aligned on, like, this is the number one thing for next year even if we have to say no to some other things. And instead, it's like, well, let's just do a little bit of everything. 

 Jim Young    

Ah, OK. Alright. So I am, and maybe I'm not sure if you can answer this or not, because you put some stress on the, hey, each institution's unique, but I'm sort of wondering if you were like, say, an outside consultant on this and you were trying to sort of nudge maybe not every bank, but most banks, you know, into what they should be focused on in the next year, would there be some objectives that the banks could give you an answer but that you might push back and go, “Well, I know you think that's important, but really this feels like it's going to be more important.”

Dallas Wells    

Yeah, I think that there's a really interesting piece that Ron Shevlin at Cornerstone Advisors put out that we've been discussing a little bit internally. And his title to that may be a little inflammatory, but he has some data points to back it up. But he says the checking account war is over and the fintechs have won—that’s the title of the piece that he put in Forbes. July 5th is the date on that. We'll include the link to it where you can find it.

But what the research that they've compiled there shows is that of new account openings, there's some major trend shifts happening now that's a pretty narrow way of measuring this checking account war, right? Is like number of accounts opened. But the data is pretty clear, and he breaks it down by institution size and by generational cohort. And there are pockets of … I wouldn't even call them strength, but I would say pockets of standing up to that fintech onslaught within all those different segments. 

But the general trend is that digital banks and fintechs are opening more and more of the new accounts that get opened each year. So that's kind of a starting point. And I think this phenomenon, there's some FOMO, right? Some fear of missing out that comes with this. And there's, you know, Ron has some data on this that is helpful, but this discussion is not a new one, right? And so I think this topic gets a lot of attention this year. And I think what financial institutions have to try to tackle with this is to decide that is that the game we want to play and is that the way we want to play it, right? 

So you're asking about, like, what do we kind of push back on? We, on a fairly regular basis, have some of our customers or prospects come to us here at Q2 and, you know, bring some sort of either anecdotes or data like this and say, you know, help us compete, right? Like we're, you know, we're losing accounts to PayPal and to Chime and to Ally’s digital bank and like, help us recoup those. And I think part of the question that banks need to answer is that's the game we want to play. 

So, to me, the logical analogy here is sort of like Uber versus the taxi industry. OK? So Uber, as far as shares of rides, has seen this astronomical growth and they've sort of taken the market in most places. They also still lose billions of dollars per year and really don't have a path to ever recouping the cumulative losses to this point. So they've taken this giant pile of cheap venture funding and set it on fire, so have they delivered more rides and is it a pretty definitively better experience for the consumer? Yes. Like, you know, no argument there. So is the digital bank/fintech account opening process similar to that? Like, is it easier and better for consumers most of the time? Yeah. There's also way more fraud there, there's way more shortcuts, and a lot of these accounts are opened and then never really used, right? It'll be open to get the $150 bonus, right? Or to pay a friend for dinner one time, and then it just sort of sits there unused. 

So could we give you tools to go compete with those fintechs? Yeah. We have some of those on the truck, so to speak. They also take a meaningful investment of dollars in time and attention. Is that the thing that you want to spend 2024’s budget on? So for some, definitely, absolutely right. That’s the right next strategic play for you. But it's not an across-the-board magic answer. And, especially if that's the way you're measuring that success, it's like, “Hey, we need more checking accounts.” Well, do you need more $150 checking accounts that aren't the primary account, don't have a lot of transactions? You know, your acquisition is super high, your fraud losses are super high. Is that what you want? Maybe not. Right? So I think it's, again, about like, you have to turn down the noise a little bit and be willing to look at where is your business. 

And again, back to those business objectives. OK, we need funding. Well, is that going to come through retail accounts where you're competing against Chime? Maybe not. Can you do small business and compete that way? And because you want to drive fee income and you feel like there's a path to C&I lending there instead of the CRE stuff that those start to shape into a strategy. And then some real things you can go spend budget dollars on instead of getting distracted, right? And like, look, you know, at the end of the day, I sell some of those tools for a living, right? So does everybody need them? Of course. But the real pragmatic budget discussion is we can't do all the things. We can't be everything to everybody. So what's the right next thing for us to tackle in ‘24 and be really, really targeted and specific and drive results on that, again, instead of like sprinkling this stuff around across 10 projects that then all kind of get halfway done. 

 Jim Young

OK. Alright, and you're doing an excellent job of refusing to let me put you into a particular square. 

Dallas Wells

I've learned how to play that game. Yeah. 

Jim Young    

Really doing a great … you don’t have a future in consulting, actually. So let's say, I guess let's play the hypothetical game then, I guess of like, you’ve got a clear objective and you can pick it, but maybe it's, you know, we need to do stuff in payments. Maybe it's SMB. Maybe it's, yeah, you know, pricing and profitability, you know, one of those ranges sort of. You’ve got a clear objective. What about the next step of like, alright, this is the objective now. Like, what's the concrete thing that we're going, we're not putting a budget line that just says, “SMB,” or “price liability.” Yeah. How do we sort of go from there to actual concrete solutions? 

Dallas Wells    

Yeah. So I think that's where you go back to, again, the terminology I use for it is the bets, right? We need fee income. Alright, well, what are some bets that we can make that are based on the market? We're in the customer base that we have the kind of core competencies that we have, right? So if we're a solid commercial bank that already has a well-established base of businesses, then you can look at what's the product set that we have and what's the next thing that we're missing, right? So do we have some sort of demand for a lockbox service? Then, alright, well, let's go find is this something we set up? Is this something we partner on? What's the revenue share look like? How do we staff it, right? You can start to get really tactical, and that word has some negative connotations, but it's not a bad concept, right? We go from this kind of fuzzy business problem to solve to here's the thing that might work, right? And we start to size up how many new customers will we get? What will be charged? What's the impact to next year? We start to kind of size that thing and maybe we make two or three bets in that area, right? And so that's what those potential projects start to look like. Now, I've done all the consultant-like hedging of, “Hey, you know, your experience may vary, your mileage may vary.” What we can talk about is what are some of the common ones that we are seeing? Yeah. 

So I'll put them into a couple of buckets. One is all things security and fraud, like setting aside the conversation we had about new account opening, right? That's one part of the fraud surface area, but all of the transaction volume is seeing increased fraud, too. And it's not just the new digital ones. It's also the old-fashioned paper checks, right? So we're seeing a fair amount of demand and already some earmarked budgets for expanding positive pay for your commercial customers that are writing checks. And also how do we start to move positive pay beyond checks and into the coming instant payments world, right? How do we give our customers the same sort of control of verifying payments before something bad happens to them or to us? And then also using some of the data and machine learning to just monitor the transaction patterns and flag more of those for review. So if it's wires or ACHs or account-to-account transfers or whatever, right? That fraud surface area has gotten really big. And so it's not something that you can just like, “Hey, we have a staff of two and these people just kind of watch what happens and look for that stuff.” That's not how that works anymore. You have to have some real tooling around that. 

So that's one category. Another one is, to piggyback on the article we talked about, is still digital account opening. And I think the part that we started to touch on there is it's not just the account opening, but the onboarding that follows it, right? So bankers and credit unions are not in the business to open accounts that don't do them any good. They need balances. They need some transactions. They need some fee income driven from that. The empty shell of an account is actually a liability. It's a worst-case scenario. Yeah, exactly. Yeah. Yeah. You have all the exposure and overhead and none of the upside. So I don't think about it in terms of accounts, but think about it in terms of balances in transactions. And so to drive those two things there, there has to be a very well-orchestrated onboarding process. And we haven't seen very many financial institutions be good at that yet. Right? In a heavily regulated industry and with some legacy technology still to work around, that's a big challenge and one that will absolutely get some dollars and attention. 

Opening, onboarding, the fraud that is associated with those and the ongoing transactions payments, that’s an interesting one in that there's tons of innovation. And again, tons of, I think, market interest in … FedNow’s going live like any day now, and every financial institution wants to talk to us about that. But when we ask them all, “Hey, what's your plans?” And they're like, “Well, I don't know yet. I don't know exactly what the use case is of instant payments for businesses. That's not really how businesses operate, like with this instant, I have to pay you this second.” And so they're trying to figure out … they know that there's going to be fintechs and some competitors making lots of noise in the market about this. But is this something that is critical top of mind to the segment of customers that are important to you and that you're targeting? Is this something that they really need? And do they need it right now? And is there a really clear use case for it? So while there's some institutions that will absolutely use budget on that, I think there's lots more that are still kind of wrestling with, yeah, we need to get it in place and we need to have it available. It's kind of a table stakes sort of thing to be able to do, but is it going to be a big push for us? Maybe not, you know. Maybe. We'll kind of wait and see. 

It's that fast follower approach, I think, that most institutions are kind of looking for. Let's see somebody get traction. Let's see, yeah, this turn into a real business. And then we'll follow along because following along, frankly, is not going to be that hard. You're going to have lots of choices, lots of ways to go about doing that. And it's using largely the same rails that we've already been using. Like, you're going to be, you know, fine to be able to kind of click this stuff in place when you feel like you're ready. 

You mentioned pricing and profitability, where we've seen that shift a little bit. That was with rates at zero, right? Like that was all laser focused on one side of the balance sheet. It was around loans, and it was basically, like, how aggressive can we get to keep growing loans the way we have been? That part never changes. Like you said, you've always got to be good at that side of it. But now with rates where they are and funding competition being what it is, you’ve got to pay attention to the other side of your balance sheet, too. So we're seeing deposit pricing—and both the traditional, like where do you price your retail 12-month CD? Those muscles have atrophied and institutions are figuring that out. But it is also how do you price the balances and maybe more important, the activity for your commercial customers that the competition there really comes down to two things. It is, do you have the feature set to compete, right? Do you have the tooling and all the payment channels and the, basically the ability to kind of manage receivables and payables for your business customers? And are you paying a reasonable amount on whatever excess balances are going  to accumulate there? 

Those are your two levers that are now all of a sudden really impactful, and that interest expense line item, which was always … banks knew it. Like, that's our biggest expense item and we have to manage it. Well, it went to not being the biggest expense item. And so, I think, it was a thing that some old-school bankers used to kind of manage mostly with wet fingers to the wind and a little bit of calculating what's the blended mixed cost if we cannibalize some of our deposits but raise new money with this. Those really simplistic approaches are not going to cut it in this environment. And with the new, I guess I would say mobility of money and of accounts, you’ve to do better than that. And you've got some really sophisticated customers there that are going to require that you do. So that's probably the other bucket where we're seeing a fair bit of activity that's a little new and different. 

And then the last one I'll put out there—nobody knows what to do with this one yet either, but they're thinking about the whole generative AI. How do we use chatbots? How do we provide some better service? Maybe it's tooling for our employees, you know, to do customer service or answer support calls or whatever. Is there something that we should be doing there? And I think the smart play that a lot of institutions are doing is they're not rushing out to like, you know, have a ChatGPT all of a sudden riding shotgun with your customers on everything they do within your app, right? They're not going there yet, but they're seeing that, alright, we’ve got to actually finally invest in some data infrastructure. Like pulling this stuff out of our legacy core system, first of all, doesn't work. And, second of all, they're charging tolls there that make this economically not viable, right? So we've got to come up with a different answer. 

So we're seeing some investments in data infrastructure that we saw some early pushes on over the last several years, you know, larger institutions were doing it. And then there were pockets of banks and credit unions that if they had the expertise internally, they were moving in that direction, creating data lakes, and, again, putting some structure to that data and a layer that they could access it and make use of it that was not trying to query a COBOL based core system that wasn't designed for that. 

So that's the other. And so we get lots of questions of like, “Hey, we're tiptoeing into this and what's that mean for how we interact with digital banking or how we interact with, you know, account opening tools.” Like now, all of a sudden, instead of us just painfully extracting that stuff out of a core and then trying to jam new stuff back in in this expensive and painful for everyone process,  we're going to move it to these modern cloud-based typically data environments. But it's still a project and it still takes meaningful resources to lift and shift those things. 

So I’ve already listed more things than any FI should be tackling. Yeah. So that kind of gives you an idea of how many are out there, but those are the ones that we're seeing that are really common, that we're having at least the most early conversations about. 

Jim Young    

Alright. So sort of moving toward the end game here with this, though. I mean, you've given us a lot of stuff that banks are, and you've used the phrase “thinking about” a lot. Yeah. But, you know, budget season, it requires to actually commit dollars and make a decision on things. And we've heard you hear the conversation a lot. A lot of things you described are things that banks, it's not like they're without it. They just have things that could be better, you know? Yeah. Yeah. The banks have been protecting against fraud and pricing loans since the beginning. But yeah. So how, I guess if you're the bank, and again, you've got to make that decision, what gets spent on and what doesn't? How are you sort of letting … Maybe if you want to use pricing and profitability as the case study or example, like how do you decide, OK, now this is gone from: My 1975 Datson can get me from point A to point B, but maybe it's time that I buy, maybe not a Lamborghini, but you know, a hybrid at this point. Yeah. But that's going to cost me, you know, a lot more. Maybe not a lot more, but it's going to cost me significantly more money. So how, in this decision-making process, how do you decide where we’ve got to figure out what makes the cut and we’ve got to figure out what's gone from “would be nice to have” to “got to have.” And again, if you want to use whichever one of those, but I threw out pricing and profitability. 

Dallas Wells    

Yeah. So here's what I think has maybe started to shift about that calculus. So this always sounded a little, to me, demeaning toward bankers, but you would hear a lot of folks pushing into, “Look, you’ve got to have real tangible ROI on these things. You’ve got to have some path to pay back.” And that got preached because there was … and this wasn't unique to banking, right? This was across our economy, through a zero interest rate world. There's lots of things that can make sense mathematically that don't make sense now, right? When the cost of capital is basically zero, you can take some flyers. So you could do some projects that it's like, well, it feels like we kind of got to do this. 

And it's like, well, what's the payback? Oh, we can never make this money back. Right? Like we saw some projects—and I won't name names, I won't even say a category—but we saw some projects where we would kind of get the whisper off to the side. They're like, you know, including consultants and implementation time and spending up a team in India. We're $40 million into this thing or we're $80 million into this thing, and we can  never make that back. It just felt like we had to do it. I think the knife gets a little sharper on that at this point. There's less room for flyers, there's less room for “Someday this'll work out” and digital transformation for the sake of it being digital. 

Instead, it's like, “No, there has to be a real use case.” If filling out the paper form works because we only do that five times a month, let's not spend millions of dollars to digitize that process when the penny that we save on it never pays back, you know, what we put into it. So that's it. It just becomes a little more critical that we have a path to payback of some kind, and there's lots of ways to get paid back. It can be revenue. It can be cost. It can be, you know, lots of different things. But the real bottleneck is not even budget dollars now. That’s not what becomes the constraint. And instead, I think the constraint needs to be how many of these can we digest at one time? 

So there's a skillset to putting in something new, whether it's new technology or a new process or a new business line or a new product. Whatever that thing is. This is not just a technology view of it, but change, right? And that's really what budgets are about, it’s  what's the new thing that we're doing? Or what's the different thing that we're doing? It takes a certain skillset. It takes certain kinds of people in the organization to make those things happen. You have to retrain employees, you have to retrain customers and users. In some cases, these things are—even if they're free, they have a real significant organizational cost. And so the check that you write to the vendor is just one variable there. And it's not the biggest variable. That's the one everybody gets laser focused on. 

It's sort of like the price of gas gets outsized attention because they put it on 10-story 30-foot-tall letters that you can see from the interstate. That's like the cost of new software or a new platform. We're paying this much per user per month. OK. But what's all the other really opportunity costs, right? Like, what's the things that you can't do because you're doing this instead? So that, I think, becomes the decision criteria: What are the most critical business objectives? What are the potential bets that we could make to solve that? And then of those bets, which ones can we kind of get some sort of effort and likelihood of success, you know, a magic mixture that looks right. And, again, that's where you get to the art and not the science. 

Like you can run out all the math on those, but it is not just a spreadsheet exercise. Some of it is just the experience and, again, the right kind of skillsets in the institution of, “Can we get these done and get these done well? And can we do three of these or can we do six, or can we do one?” You know, some honest assessments of that gets you to your final, “These are the projects that we are capable of pulling off and pulling off together.” And so, therefore, we will write all the checks direct and indirect that we have to write to make that happen.  

Jim Young    

OK. Now throw this one in because it—and I think you answered it, but I want to make sure that I understood it—which was sort of within that is there also a delta between this is something we—and you kind of mentioned it with the example of we're not going to digitize something for five customers that use paper—but what's the delta between what we have right now and what we could have if we spend on this. 

Dallas Wells    

Sort of, yeah. It’s basically how much improvement do we see, right? And if it's this there. So I think what you're describing there is there’s a materiality threshold. And that's another one that will be different for everyone. So for a community bank or a small local credit union, like, “Hey, if we do this, it’s going to be some hard work, but we're going to save 25,000 bucks a year.” OK? Like, that may be a no-brainer for you. If you're a $20 billion bank that's got some things on fire and some burning platforms, and you could do that same thing and save $25 or $250,000, you're like, “You know what? There's not enough materiality to that. It doesn't move the needle enough for us for that to use up some of our precious, precious time and attention.” 

Not just the check to write, but the, you know, if we're watching that ball, we're not watching all the other balls that we have in the air. So yeah, there's absolutely some threshold there. Only each organization has to kind of define that for themselves. But I think what you're describing and what you really get to is this list of potential things. And so, like I described them as, here's some things that we hear folks thinking about. Yeah. Which of those are gotta-haves and which of those are nice-to-haves, right? So there's way more good ideas than we have the ability to actually get done, right? That's what I do for a living is look at the thousand things we'd love to do and try to pick the 10 that we can really get done, right? 
That’s the same everywhere, you know, and budget season, I think, is where that comes acutely into focus. You're going to hear lots of pitches from inside and outside your walls about, “These are great ideas, it's going to make us X dollars. It's not that hard. We can afford it.” But you can't afford all of them. So that's what this process is. And I think that's where you … the most important part is to just have that self-awareness and that clear-eye assessment of, where are we really? And that part's hard. You know, you’ve got to say, “This we're good at and that we're not good at, and maybe we're OK with not being good at that.” That's a hard thing for lots of folks to do. At the end of the day, it's not our human nature to approach it that way. 

Jim Young    

Gotcha. Alright. Well, again, impressive job of refusing to let me pigeonhole you or pin you down on any specifics. 

Dallas Wells    

We've been at this too many years, Jim. I've learned a side … 

Jim Young    

I tried. I tried. Alright, well that will do it for this week's show, Dallas. Thanks again for agreeing to put the band back together even for this limited engagement. 

Dallas Wells    

Yeah, absolutely. Good. Glad to have you back, Jim. And it's good for old time's sake, if nothing else. 

Jim Young    

And thanks so much for listening. Again, if you want to listen to more episodes, please subscribe to the show wherever you like to listen to podcasts, including Apple, Spotify, Stitcher, iHeartRadio. If you like a visual element to your shows, and that may be less with Dallas and me on here as opposed to Alex, but we do now have a Purposeful Banker channel on YouTube that you can subscribe to. If you have a moment to spare, let us know what you think via your comments and ratings, and you can also head over to to learn more about the company behind the content. Until next time, this is Jim Young and you've been listening to The Purposeful Banker.

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