Har Rai Khalsa: So we don’t start with like the number of products on that individual first, we say, let’s get their checking account relationship at all costs because the checking account relationship, um, it’s money in money out, it’s a transactional account. Uh, that’s where we’re going to be able to glean, you know, the deepest insights on this consumer’s behavior, where, where they’re getting paid, how much they’re getting paid, where they’re spending their money, how much they’re spending their money

[00:01:00] ​

Josh DeTar: [00:02:00] Welcome to another episode of the digital banking podcast. My guest today is Heday Kalsa, the CEO and co founder of Swaystack. You know, there are certain people you run into in life that leave lasting impacts on you, even if they do so in just a short period of time. I’m sure you can think of a few people in your own life. Heday is one of those people with a genuinely infectious love for life. energy, people, and making an impact in the best way possible. If you’re having a great day, he’s there to celebrate it with you. And if you aren’t, he’s there with words of encouragement that are meaningful and actually actionable, not just shallow statements with little behind them. When you talk to him, it’s impossible to walk away and be having a bad day. So my question to him was, do you [00:03:00] even ever have bad days? And his answer is a saying I love so much. He said, I try to be a duck on a pond. Look calm on the surface, even if you’re kicking like crazy to make it happen under the water. Had I grew up in a family that set a really strong and lasting impression, an example of building community in both big and bold and audacious ways. And even just in every little interaction you have with people that come into your life. Had I is one of my favorite people to just talk philosophy with. In my humble opinion, he has such a well grounded way of approaching this one shot we get to living a life worth living. Uh, he’s almost insatiably motivated by his mission of doing things that align to his ethos of developing and fostering community and collaboration. And it’s why he feels so home in the credit union and community bank industry. It’s kind of this unforced organic alignment of core values. It’s also his mentality and [00:04:00] heart of care that really propels had I to be an entrepreneur. He says being an entrepreneur is the surest path to accountability and ownership of connecting your soul to the work that you do. He amazes me in the sense of being one of those people that both seems to be moving a million miles a minute and accomplishing exorbitant volumes of impactful accomplishments Transcribed But also he’s somehow doing this at like the calm and collected pace of a giant tortoise. Um, with a long background in both finance and tech and in customer acquisition and, uh, retention, Hedai has some really amazing insights to share with community FIs about not just maintaining relevancy, but growing and using that growth to perpetuate the positive impacts they have in the lives and the communities of the people that they serve. Um, so with that, I mean, I don’t know what else I could do to get people to stick around for an hour to listen to you talk, but I mean, [00:05:00] no, you know, it’s funny. We, um,

Har Rai: Mic, Josh. Drop the mic.

Josh: of you listening and watching, had I, and I met, uh, through a mutual friend, Mr. Jimmy Miller, um, and, uh, a big and, uh, bold and audacious personality in his own right. But I remember I was at a conference and I get a text from Jimmy. What’s that? Yeah, financial brand. And,

um, yeah, shout out to, uh, the financial

Har Rai: Financial brand?

Josh: um, and I get a text from Jimmy and he’s like, bro, there’s a person at this conference just knowing the two of you, like you guys have to meet, this is non negotiable.

Like go find this guy. And I think it was like the funniest, most, uh, like divine intervention moment. I’m pretty sure I like turned around and you were standing there and you were like, hi. And I was like, wow, that’s the world working fast.

And, uh, but man, to Jimmy’s credit, like he was so right. And I really meant every word of that introduction.

Like you’re just one of those people. I don’t, I [00:06:00] don’t know how you do it, man, but it’s just, You, you say all these like wonderful,

like sitting around the fire singing kumbaya, making s’mores things. And so many times that just comes across very, um, you know, inauthentic from people. You’re like, I know that you know the things you’re supposed to say, but like, do you really mean it?

And do you really live it? And it’s just, it’s so incredibly obvious with you that that’s just a part of your core. And you’re almost one of those people where it’s like. If people don’t know you and like they meet you for that first time, like this guy’s kind of annoying, like he’s so positive and it’s gotta be so fake and then they get to know you and they’re like, nope, that’s just how he operates.

Like, um, But, um, but no, I think,

um, 

Har Rai: that before. 

Josh: that’s also why I think it’s this podcast has been so cool for me, right? It’s just, it’s, it’s kind of given an opportunity to get people like yourself, um, on the podcast to just talk and have that long form conversation. And it’s not just about you being this really nice and wonderful human being, right? You’re, you’re also doing some really cool things. And you’ve had some [00:07:00] really. Um, incredible, just like interactions with this industry over the years. And one of the big things that I really wanted to bring you on today to talk about was this whole idea of like customer acquisition and retention. And what does that look like in financial services?

But, but also for community financial institutions, like why is that so important and why is it something that like you’re so passionate about? So I think it might actually be good for you to just maybe give folks a little bit of history and like your background. And I actually think like some of the story of how, um, like your family instilled these ideologies into you is important.

So would you mind kind of sharing a little bit of that background of like how you got into financial services and like why you are so obnoxiously excited about it?

Har Rai: Yeah. No, I mean, it’s a, it’s a great, great intro. Um, you know, my, my father, uh, Eastern European background, Ukrainian Jewish [00:08:00] side. So I always kid and joke that that’s where the banker and the accountant came through my genetics. Uh, my mother’s side, Western European, kind of the Christian, that’s, that’s where my good looks and charisma came from.

Josh, my ability to speak French as well. Um, but ultimately they, they became, uh, Sikhs in the early 1970s in the United States, if you can imagine that, and, uh, they had a very passionate yoga teacher that was also a Sikh that they, uh, decided to change their, their family’s legacy and, and go on a path of, uh, Taking on an Eastern European or Eastern religion, I should say.

And so, you know, when we were raised, it was all about community. It was about, you know, giving food to the poor and to the hungry, giving money, you know, to support those who are less fortunate, um, showing up on, on the, uh, The days where the temple needed cleaning or, you know, kind of going out of your skin To do things to help the broader group of people that we were partaking in in this journey of Spiritual [00:09:00] upliftment and ultimately what I would say is my parents sacrificed a lot along the way They they really trained us at a young age that We shouldn’t expect any inheritance that it was all going back to the community.

Um, and if there’s a surefire way to make sure your kids are entrepreneurs, tell them they’re getting no inheritance. Right, Josh? Um, and so, so that was like from day one, you know, my dad’s like, you see this big temple we’re building? And I was like, yeah, he’s like, if I don’t finish it, you have to. And oh, by the way, you’re getting no inheritance.

And so, so, you know, there was a kick in the butt at probably 10 years old, 11 years old. Um, but I think the, the moral of the story that my parents instilled in me was, was that it wasn’t really about me and, and that the, the work and the sacrifice that they were doing for the community was beyond just our family’s wellbeing.

It was basically us putting our, our livelihoods, our, our wellbeing, our peace of mind. Uh, in the higher powers hands, whatever you want to call the higher power, um, you know, God [00:10:00] hallelujah Rama, you know, Allah don’t care the name, but giving your destiny to the higher power, uh, and doing so through community service.

So I think they, they instilled in me like a strong mindset of what we’re doing to strengthen the community is actually going to leave legacy. And, and that that is work worth doing and, and then how your family is able to rally behind that and, and create an extended family. Um, you know, there, there’s kind of the famous saying, there’s, there’s one type of person who can only care for themselves.

There’s another type of person who can only care for their families. And there’s another type of person who cares for everybody. And so we were always kind of trained to, to be that, that third type of person where we’re, we, yes, we want to care for ourselves and our families, but we also want to care for the community.

And so ultimately, you know, my, my early days in, in professional development were in lending. And my brother and I were starting up a finance company right out of [00:11:00] college. And all of the work that we were doing, Josh was completely on paper. So we had paper applications for, for credit. We had paper retail installment contracts, and we had about 15 stores that we had opened around the country.

Where basically we were offering financial products, uh, for, you know, laptops, electronics, automotive parts, travel, you name it. Uh, basically buy now pay later, just 15 plus years ago, and it was all on paper. And so, there were a few times where we were mailing these packages across the country to start underwriting.

Once the, the paper application arrived at the headquarters, we would start underwriting. And, and we lost one or two of them and we’re like, this is insane. Like, what are we doing? And, and so we, we really set out probably in 2009, uh, to build our loan origination system for our first finance company. And it was in that experience where, where we started to think about, you know, your average customer, your average member, you know, they, they don’t necessarily want to have to come in branch or into the store.

[00:12:00] They, they want to be able to pull up their smartphone or their, you know, Web browser on their laptop when they’re hanging out at home at 930 at night and they want to most people are busy like from 8 a. m. To 6 p. m. Most people are busy So the banking hours just don’t appeal to your average person who has to go out work earn a living to provide for their family So if you don’t have the ability to support the consumer where they are, or the small business where they are, you’re just losing out on everybody who has a regular job and can’t take time out of their job to come and branch and do these things.

So, so I think that was our first click, Josh, where we said, we have to be able to, um, enable our end customer to come through our website or through their cell phone. Find the products that they want, apply for them all digitally, sign their agreements digitally, get approved digitally. So when you, when you think about acquisition, that’s just what we would call like a strong foundation.

If you have a beautiful [00:13:00] website and you can accept applications for your products on your website, that’s just the foundation. Um, everything from there is built on top of that foundation, but tying this back into, um, you know, the intro on community and then starting to find Uh, our ability to build software to enable acquisition of customers for loan products and financial services.

Um, it was ultimately, probably in 2019, uh, when, when our last software company, MK Decision, went into the Independent Community Bankers of America Accelerator in Little Rock, Arkansas. And same accelerator that, for the longest time, Fis ran out and and really when we were talking to the local, uh, institutions, we traveled to North Dakota.

We traveled to smallest towns in Arkansas. We went all across the country. And we observed, you know, not just the, the bankers, uh, and the folks that worked at the credit union, but we, we observed the way that they talked about their end consumer, you know, their stakeholder, their [00:14:00] member, their customer. And that was really the mission that we observed is that their, their inspiration, their passion to show up for work.

Was to make sure that those people’s financial lives were secure, that their education on their finances was strong, that their money was safe, that they were de risked in this age of proliferating fraud. And so as we started to see where they got their mission. It started to inspire me that, hey, my, my culture of community and growing up, uh, where community was, was really the unity being with unity, with humanity, um, how, how the financial institutions across this country were doing that same thing, but with people’s finances.

Their livelihood, their ability to pay their bills, to, you know, support their families, to give legacy to the next generations, to give back to charity, you name it. Um, it became a real noble cause that I witnessed in the credit union and 

Josh: Yeah. You know, as you were 

Har Rai: for that reason, uh, I’ve been 

Josh: I want to say, I think I’ve even like brought it up [00:15:00] in a recent podcast episode with somebody else, maybe around a similar or different topic. I don’t remember. But, um, you know, I was talking to a friend recently who’s not in our industry and he made some comment about like wanting bankers hours and I started laughing and I was like, you know, it’s funny, man, is like, I work with. bankers and people at credit unions. And I was like, man, I don’t know if you want their hours. Like I know how hard these people work. Like, and um, and it’s always fascinating to me too. When you see things in like app store reviews for like digital banking, for example, right. And something goes wrong, right.

Or something doesn’t work and somebody goes on blast and they’re like, you know, are these people even working on it or they should be fired? Blah, blah, blah, blah, blah. And you’re like, dude, And you don’t even know like there was a catastrophic meltdown with core and I know full well there are people at that credit union that are literally sleeping on the floor in their office for like 30 minute stretches at a time because they’ve [00:16:00] been there for 48 hours trying to restore things and get back up because they genuinely care about you. Not because they’re paid hourly and they’re going to get paid more like because they genuinely care about you. And your financial success and they recognize this as an impediment to that. And so they are so dedicated to it. They’re sacrificing their health, their sleep, their families to look out for you. And I kind of like, I was like explaining this to him and I was getting a little bit defensive about like, you know, the people that I work with. I’m like, man, you have no idea how hard these people work. And then at the same time, like sometimes you run into some of these folks that like. I don’t know. I might get in trouble for this one, but if you listen to this podcast enough, people know I don’t really care. Um, but you know, you run into some of those people, like one of them that comes to my mind is like such in Kundra from, uh, Chevron federal credit union, right? Like this dude is And he’s just really, really a next level [00:17:00] dude. And you’re like, you could probably go to another industry and probably make a lot more money.

I don’t know. Maybe Chevron pays him really well. Hopefully they do. But I’m sitting there going, there’s a really good chance this dude could probably make a lot more money. Uh, you know, or work for some fancy big titled company or something like that. Blakey chooses to do really innovative things for the credit union. Because he believes in that mission and stuff. And you’re like, there’s just so many examples of that, right? Like I call out one person, but there’s so many examples of that. And like for someone like you, that does, that’s gotta be really like empowering to you to see other people that are so committed to that.

And you’re like, wow, like if they’re working that hard at that credit union because they care so much about the community of people that they service, like I want to be a part of that. Like that’s what I’m trying to do too. So if I can help that, like, that’s pretty cool.

Har Rai: Absolutely. Absolutely. Absolutely. Yeah, I think, you know, the, you bring [00:18:00] up a good point and it’s so easy to overlook the care that people have for their customer or their member. Um, you know, the, the experiences that we’re trying to deliver, uh, to the end consumer are, are really challenging at scale. Um, and the disparate nature of our industry.

Where there’s so many different column point solutions that have to be cobbled or integrated together to create a holistic banking experience. Uh, there’s a lot of failure points. And, and so I, I think, you know, part of that is, um, you know, unfortunate cortisol that the industry’s kind of bifurcation, uh, puts on the credit union and the bank employees that they have to deal with, you know, such a disparate, disjointed.

technology stack and that, you know, there’s just no one vendor that’s going to build every solution. It’s impossible, right? So, so ultimately the value network of digital banking has to come together to try and create seamless [00:19:00] integrated experiences, but to your point, you know, there’s failure, there’s failure points all over.

And so when, when you, uh, worked so hard to introduce this new modern technology. To your customer, and then it goes down. You feel personally like, like you’re, you’re impacting your customer because you work to set that up. And so, so yeah, we, we all want to see ourselves in our work and believe that our work matters, um, and, and that we’re, we’re doing something meaningful for the world around us.

And so I think that’s why these folks would, would pull to all nighters is because they see themselves in their 

Josh: Yeah, you know, you make a good 

Har Rai: their brand to their end member.

Josh: financial services industry has some unique elements to it, too. And, you know, the more you start to unpack this, like, the more intense the unraveling becomes, I think. When you start to think about just, you know, You know, legacy technology that you do or don’t have to deal with for all sorts of different reasons, right? Regulatory environment, [00:20:00] which that’s a whole nother thing to unpack in and of itself. Um, but like you were saying, like it’s, there’s so many pieces that go into what looks like one piece, right? And you think about the impacts of it as well. Like if a, uh, you know, Facebook goes down, Facebook controls that whole stack.

Right. They own it all internally. They’ve got floors of developers that are working on it. They have no interdependencies, right? They own it. And so they have a lot more control over it. It goes down a lot less often, right? Because they’re not like, well, Hey, we were fine, but those guys went down. Like go point your finger at them. Like if they go down to them, but at the same time, it’s like Facebook goes down for an hour. Like, I’m really sorry. You can’t post pictures of your cat for an It’s not that bad. Like we’re going to be just fine. Right. The banking system goes down for an hour. Like we’re gonna lose our heads. Yeah, that’s pretty intense stuff, right?

Um,

and, 

Har Rai: bills. 

Josh: know, it’s one of 

Har Rai: Trader Joe’s,

Josh: Um, uh, the things that I think gets [00:21:00] talked about with the right people is, you know, especially in software, we talk about percentages are a lot, right? And I credit this, uh, this kind of thought process to, um, to actually, this is going to sound a little surprise, like surprisingly. Uh, somebody from a big bank who a lot of times we paint is not caring about this kind of stuff. Um, but I had a fascinating guest quite a while ago on the podcast, Austin Adams, he was the former CIO of JP Morgan Chase, right? And he was talking about how, yeah, like Facebook goes down, right? For 1 percent of users, like, Hey, I’m sorry.

1 percent of users can’t post pictures of their cats. Like, well, no big deal, right? Right. He said, but you know, he was talking about an instance that happened at chase while he was there and he had a technology team that I want to say was in charge of like their ATM network, right? That was presenting in a big leadership meeting to him and Jamie diamond and like all the, you know, the big wigs at chase about how good they [00:22:00] were and how like their ATM network was up, uh, for like 99.

9995 percent of users that month. And he’s like, and we took a break and everybody goes, gets water, you know, use the restroom, grab a quick snack. We come back to the meeting and he’s like, during that break, he’s like, I did the math and I looked at how many account holders chase had. And so if I took that percentage, how many people were unable to access our ATM network during that time period? And I can’t remember exactly what it was, had I, but I want to say it was something like 50, 000 people were affected. Right? And so he came back to the meeting and he was like, so, um, I want to go back to that stat you talked to me about earlier. He’s like, we do me a favor. Will you go out and tell all those 50, 000 people that couldn’t access our ATM network and get their money? We tell them how great you are, you know, and they were like, Oh crap. Right. And so it’s like the point of that is just the gravity of the [00:23:00] impact of like

that, that small percentage. Right. And it’s like, yeah, RDC is down for one person. Percentages, that’s fine. That’s no big deal. Like we would wipe that, you know, off the table, uh, at a software company all day every day. But if that one person that couldn’t use it is a single mom who works two jobs that only pay her with paper checks and she needs to get her check deposited so she can pay her rent on time. She can’t use RDC and now she’s got to drive 30 minutes out of her way to go to a branch to deposit that check.

And so she misses her kid’s soccer game because of it. Like go look her in the eyes and tell me that like the percentage that she represents and that one user not being able to access RDC is not that big of a deal. Right? Like so, Hmm.

Har Rai: I mean, Josh, there’s obviously the downtime, um, but then think about how this same conversation applies to the open banking dialogue. So whether, you know, you’re opening up a bank [00:24:00] account with a credit union. If you don’t give somebody the ability to link out to their external financial institution through a login and you ask them to type their routing and account number, well, what if they type the wrong account number, then you’re not getting their funds.

Or, uh, if you ask somebody to move their paycheck over to your institution and you require them to go to their payroll provider, log in and type in your account number manually, What if they typed the account number wrong? Like, why aren’t you sending that account number to the payroll system through APIs?

Why are you putting the burden on the consumer to type in these long winded numbers? And so what I’ve seen in two use cases in my own personal life, Josh is one time I was opening an account early days with a mega bank and they didn’t yet have a plaid or a Yodlee. And so I had to manually type my account number.

I typed an extra one. I didn’t fund the 10, 000. I’ve never deposited at [00:25:00] that financial institution ever since. So they lost my entire deposit relationship because they made me manually type my account number. Another example is I, I was switching to a local credit union. I had to update my payroll system so that, uh, they, they could get my paycheck coming into my new bank account, uh, with the credit union.

And I wanted to pay my mortgage and my auto loan and everything. I typed an extra one again in my, my payroll system. Now my check’s not coming in. I can’t pay my mortgage. I can’t pay my, you know, my loans. And so I’m freaked out. And so the, I think the point that you’re making is like, yes, there’s the risk of downtime, but it’s also like, how much friction are we putting on the consumer to, to do these most difficult actions that, that come down to fundamentally how they get money into our account, right?

At the end of the day, we’re trying to make it easier for them to 

Josh: no, and that’s, 

Har Rai: our account, even remote deposit capture, just another 

example. 

Josh: so much complexity to these systems and there’s so many to your point, like points of failure, like potential points of failure and [00:26:00] any of one of those single points of failure, either in obtaining or retaining that account holder could totally screw it over. Right. And, and it is, it’s, it’s not like. Some of the other digital services or even just other, you know, businesses that we work with, like there’s a very different tie to your money and your ability to just survive, right? Like you’re saying, I mean, when all of a sudden you, yeah,

Har Rai: I mean, quick, quick example, Josh, like my, my, my, uh, customer relationship management system is down today. Now, that’s one thing I can’t access my contacts. I can’t, you know, access my email templates. I, I can’t save new people in there and I’m upset, right? Right. But if that was my financial transactions and I, I couldn’t, you know, send my wife 500 to go buy a crib for my son, or I couldn’t use 

my, my 

Josh: and [00:27:00] you 

Har Rai: Um, that’s a lot 

Josh: it earlier when you were talking about your example, right? Of like not being able to pay your mortgage or your loans, dude, that’s like real world stress. I mean, that’s the kind of stuff that, um, that ruins people’s days. That’s, um, you know, that’s the pit in your stomach.

That’s the, I can’t focus on anything else. I mean, if I’m sitting there like, dude, like my paycheck didn’t go through or that check I deposited that should have cleared, hasn’t cleared or whatever it may be, right. I’m not thinking about work. I can tell you that. And, and like, if I am, I am not firing on all cylinders, sir. Like I’m like, uh huh. Yeah, yeah, yeah. What were you talking about? And I’m over here like looking at, how do I manage my mortgage? I’m like, Hey, yeah. How’d I great, great point on that podcast. Uh huh. Yup. Good stuff, dude. Like, no, no. no. That’s not where my focus is. Like my focus is on all of a sudden, my financial life.

Right. That’s what I mean. Like, it’s just, What a complex, uh, industry. And it does, it takes [00:28:00] a really specialized type of personality and individual that like wants to get up and go to work every day and try and tackle all of these things and keep it all running and be the duck on the pond so that all the account holders see is a happy go lucky duck just looking for some bread on the pond and they don’t realize like there’s a million feet going like crazy underneath the surface.

Har Rai: Well, I mean, there’s, there’s kind of already a negative stereotype towards the credit union and the community bank that they don’t have good digital services. So there’s this like predisposition that I should go to a large institution. They’re going to have better digital services. More options, et cetera.

Um, you know, because these megabanks have billion dollar technology spends themselves, right? If you look at one megabank, I bet you they’re probably spending more on technology than the entire digital banking industry. It would be an interesting calculation, [00:29:00] right, Josh? Um, but, you know, way chase against all of the digital banking providers in the nation and see who’s burning more every year.

But, but I think the, you know, The reality is we have to overcome that negative association or connotation that just because you’re smaller means you have inferior digital solutions. Um, if we can actually enable, you know, the local bank, the local credit union, or even the regional to compete with the most high leverage experiences that the largest institutions are barely rolling out just in time.

If we can help them. If we can compete just in time, then we can overcome some of that 

Josh: I’m sure 

Har Rai: then we get more diversified banking across the country.

Josh: get super excited when, um, you know, cause I’ve tons of different accounts with tons of different financial institutions just to see what’s happening. And I love when like I logged, this happened just recently. It’s always kind of top of mind.

I logged into an account I have with chase recently and they rolled out a feature. [00:30:00] And they were like, really proud of it. And I was like, yeah, that’s like 18 months. Like suck it, Chase. You know, but like the point is, is that it’s really cool to see that. While yes, unfortunately that is a perception and perception is reality.

A lot of times that is a perception of the market that community financial institutions are technologically behind. But I argue that in a lot of instances they’re actually not, they’re actually ahead. They’re just battling that perception. And then there’s reality.

Har Rai: There’s definitely perception, and there are systems, there are systems that are behind, right? We know that there’s providers in the space with legacy systems that probably will never be rebuilt. And it’ll just be like a slow death by attrition of the product. Um, but you know, the, maybe somebody had an experience.

We’ve been talking with a lot of, um, folks recently and just asking them the simple question, [00:31:00] Josh, like, Why does somebody open up an account in the first place? Like, no one ever asked that question, like, why? And so, you know, we’ve been asking that question and, um, you know, the credit unions that I talk to say, well, they change where they live, they change where they work, or they change where they worship, right?

And I’m like, okay, well, that’s your eligibility criteria, but it’s a good start. And then, you know, you ask other people and they say, um, they had a really negative experience at another financial institution. Uh, they, whether it was fraud or it was bad customer service or they had a bad digital experience, kind of like the ones I mentioned where they had to manually type some data and they messed it up and then the money didn’t move and it pissed them off and so they just swore off the institution.

Um, you know, it could be their first account that they’ve ever opened in their lives. I mean, we’re already at five reasons. Somebody opens an account, but the one that I think is, is very interesting. And we’re going to write an article on this and, uh, see you insights, Josh, probably. So, um, but it’s basically how a 700.

Introductory [00:32:00] promotion won a seven million dollar customer. Okay, and and so, you know This is the story of how a mega bank offered 700 if you opened an account and you did X Y Z They’d give you 700 bucks and how that customer went on to be a largely successful Entrepreneur and I was seven million dollars in that account So when we when we think about these new account opening opportunities Uh, reasons, like why does somebody open an account?

Sometimes it’s very practical, they move to a new town and they want the local branch. Sometimes, you know, their work sponsors a specific type of banking relationship. That could be the case. Um, and then the others I mentioned, but rarely do I think we focus enough attention on literally how the largest and fastest growing institutions in the country are buying account holder relationships, but then they’re tying the people to those relationships by the X, Y, and Z they 

Josh: I want to go down this path 

Har Rai: to qualify for 

that 

Josh: this is one of the big topics I really wanted to talk to you about cause this is [00:33:00] like your area of expertise and something I know you’ve put a lot of heart and soul into thinking about. But before we go like too far into that, one of the things that you and I were talking about recently that I think would be good context to start with is just this idea of, Of a primary financial institution or being top of wallet And I want to ask you kind of two questions to put them both in your brain um, but One Do you think that’s even realistic anymore?

Do you think there’s even such a thing as a primary financial institution or top of wallet? Or is it multiples of those when you start to think about, you know, Oh, I have a, you know, a bank account here. I have a loan here. I have a, you know, my Venmo account, I have money in my Starbucks app, like all these different places we keep funds. But then too, so. How do you actually define what is a primary financial [00:34:00] institution? Um, so maybe start with like, how do you define what is a primary financial institution and then lead that into like, so what do you think the realisticness of that is and what does that look like?

Har Rai: Yeah, before I kind of give my definition, I’ll lay out the three that I’ve heard, uh, as we’re going to market. Uh, one is, you know, the number of debit card transactions that we’re seeing on this, uh, checking account. If we’re seeing a good velocity of interchange, Then we believe where we have primacy.

Another is a monthly direct deposit over a certain amount, be it 500 plus, but we’re getting recurring deposits coming into this account. And then the third one is almost like an overall relationship. How many banking products does this individual have? And then are those accounts or products being used?

So the way that we’ve looked at it, uh, at Swaystack Josh, [00:35:00] is we say that it’s an overlap of the balance of the account, uh, the direct deposit relationship, and the card utilization. So we, we think that it’s, it’s really all three. Um, because if we can get those three on a transactional checking account, then we have three times more likely, uh, opportunity to deepen that relationship to other products.

So we don’t start with like the number of products on that individual first, we say, let’s get their checking account relationship at all costs because the checking account relationship, um, it’s money in money out, it’s a transactional account. Uh, that’s where we’re going to be able to glean, you know, the deepest insights on this consumer’s behavior, where, where they’re getting paid, how much they’re getting paid, where they’re spending their money, how much they’re spending their money.

You know, then we can try and influence the spending patterns from there. Whether it’s, Hey, you have the X, Y, and Z subscription. Do you really need to be paying these every month? Or it’s, Hey, do you want to get my card on file with X, Y, and Z merchant? Because [00:36:00] you get these great rewards from me if you do so.

So we look at it as an overlap of. How much money is coming into the account, how much money is going out of the account and that, that pattern of money and money out is the propensity to buy more products. So that’s how we’re looking at primacy. Um, and then I, but I know it’s hard for some folks to measure that and to, to overlay the data because you have some data in your card processing system, you have some data in your core and so it can be hard and most people have, don’t even have a definition of primacy.

And so what, well, I think you and I were just. initially kind of debating on is if you don’t have a definition, can you achieve primacy? And, and then the question is, if you don’t have a, a North star or a bullseye on the target of what you’re trying to achieve with your relationship to the member or your customer, then are you actually going to get there?

And, and my answer is no. Because that that’s going to dictate your product strategy. That’s going to dictate your [00:37:00] strategic priorities. That’s going to then dictate your budget. That’s going to dictate your time, energy, and resource allocation. And so if you don’t have a North star or a bullet on, or a bullseye, I should say, bullet hitting that bullseye.

If you don’t have that clearly defined as an organization, all the other steps are going to, Struggle to achieve primacy. So I do see people starting to to define primacy, but to your caveat on is primacy even achievable sometimes, you know, if we define primacy in a way that’s achievable for us, then it’s achievable, but that doesn’t mean that we own that entire relationship for that person, person’s financial reality.

Right, Josh. So I could say primacy 500 bucks a month, but meanwhile, that person has a You know, a million dollars a month going into city, who knows, right? And so, so the, the point being that our, our definition of success will directly impact the business outcomes that our team and our culture is trying to drive.

And that’s [00:38:00] why I think the definition around primacy is so important because that’s going to impact the product strategy, you know, the strategic 

priorities, the budgeting, the resource allocation going into the future.

Josh: I think it’s such a simple, silly little statement, but it should be a very important guiding statement in, you know, all of your boardroom meetings, all of your executive meetings, which is how do you define success? Right. Because yeah, to your point, like if the definition of success to us. is that, you know, we want to have, uh, you know, be the primary financial institution for every single one of our account holders. You, okay, well, how do you define that primary relationship? Well, the answer to that is that they, they have no other financial institution that they bank with. They have no money in their Starbucks app. They have, you know, no relationship with Venmo. You’re like, I mean, you’re kind of setting yourself up for failure on that one. You’re never going to achieve success, right? [00:39:00] Or you’re always going to kind of feel like a failure to that. But to your point as well, on the flip side, like if your answer

is, well, privacy to us is that they have 500 in a checking account and that’s your success metric, but you’re not looking at all the other elements of the relationship they may have.

Yeah. They’ve got 500 bucks with you and you know, they have 10 million they’re transacting daily with it. Like kind of, kind of missing a piece of that puzzle, right?

Har Rai: Yeah. And, and Josh, one, one thing that we, we tried to just ever so slightly caution people on the number of products, meaning primacy, uh, is because what we’re seeing is from an onboarding perspective, once an account is opened, we’re seeing people immediately trying to cross sell products because their definition of primacy is the number of products.

So they’re, they’re actually jumping the gun into selling you more products before they’ve taken the time to make sure that you use the first [00:40:00] product. And so what, what happens is people get a little jaded because, you know, you, you haven’t even helped me completely set up this banking relationship and you’re already selling me.

On these lending relationships. Um, and so, so it, it can kind of tune people out to the communication patterns from, from their financial institution when they’re, they’re hard selling them products, cause that’s their definition. Of what good looks like or definition of done. And so meanwhile, the first product ends up being unused because the person got turned off by the marketing behavior of the institution going for closes on credit cards and loans day one, before even helping me get my paycheck into this account 

or pay my bills out of this account. 

Josh: a part of your conversation has to be, you have to have your definition of success. I think what is the next important like step in that process, And again, this doesn’t just go for like the conversation we’re having about, um, you know, [00:41:00] having, you know, primary, um, you know, financial ownership of an account holder. And we’re just talking globally here is you’ve got to define success and then you have to design KPIs that actually help you achieve that success, right? And, you know, I like, I love to use the silly example. Um, because this is one that gets used in my personal team, right? Like this is something we talk about is, um, I always laugh.

I’m like, uh, and I’m, I’m pretty sure our board members listen to this podcast. So, you know, maybe they’ll call me later, but like, uh, sometimes I’m the least favorite person in the boardroom. Cause I hate KPIs. I hate KPIs just for the sake of a KPI. Right. And what I mean by that, and the example that I use is like our business development team, right? Their job is to go help us find credit unions and community banks that would want to work with us. And so a easy KPI that you see across any industry for like SDRs or BDRs, right, is like how many phone calls did you make? I hate [00:42:00] that KPI, right? Cause I’ve been in that role. Like I’ve been in the dialing for dollars role and it’s miserable. And you know exactly what happens, right? Is let’s say. hypothetical scenario. I’ve made 90 calls. I’m getting close to the end of my day. I know I’ve got to make a hundred or my boss is going to get really mad at me. That 91st call is amazing. Like I have the most incredible conversation with this perspective customer. We have such great rapport that comes out of it. We both share such great insights. The call goes forever. It’s now the end of my day, right? I’m calling mom. I’m calling grandma. I’m calling anybody that may not even pick up so I can just get that call in so I can hit my hundred number, right? But like, what was the definition of success?

Well, hopefully the definition of success was that we made introductions to potential customers where there would be a mutual value ad, right? Where I’m not trying to force a product down your [00:43:00] throat, right? And you’re not my mom. Wouldn’t I rather create a KPI that doesn’t say, Hey, look, I couldn’t care less how many phone calls you make. I’d love to see the number of genuine interactions that you have where you provided value back, right? But then how do you define that? Then that becomes subjective and objective. And so there’s a lot more to this than just saying, like, I need to make 100 phone calls.

And I think the reason I use that as an example in kind of what you were talking about, it’s like you were saying, right? Like if. If the, if the goal for success is we want to have, um, you know, we want to be the primary financial institution. We have a new customer that we’re onboarding. So the very first KPI is, well, our definition of success for that is that they have five products with us.

So the second we get their phone number, like hammer them with five products so we can meet our KPI, right? But then you piss them off and they leave and now you’re back to square one with zero customer [00:44:00] acquisition. It’s a, it’s a track. It’s like, it’s a balancing act.

Har Rai: No, it’s, it’s pain, it’s painful. And to, to your, to your point there, like, um, you know, we, we have a culture of delivering results. That’s, that’s one of our core values is delivering results. And my CTO Simran, uh, is very much in alignment with you. And he, he would say, you know, Did, did the sale close or did the client client get live with their new technology?

It’s like simple KPIs, right? And for what we see so often. Um, with financial institutions as we look at the number of new applications for products. Um, and, and so that’s like a barrier of, of, or a measure of volumes. And then from there we kind of fall off in terms of measuring the utilization, uh, or the percentage of those applications that become fruitful relationships to your point.

And so we’re, we’re saying, Hey, you know, the, the top line call volume is the number of applications. [00:45:00] But, but then a certain portion of them are going to get declined, or a certain portion of them are not even going to use that product that they just opened. Just for what it’s worth, like, we’ve heard at the minimum number I’ve ever heard of accounts that are being opened that go inactive is like 25 to 30 percent, minimum.

So you get 100 applications a month, 25 to 30 minimum are just going to die out. Like within a year at minimum. Um, the most I’ve heard so far, Josh is pushing like 66%, whereas two thirds of somebody’s new, uh, numbers onboarded are going inactive. And so, so when we, when we think about KPIs, what are you measuring?

Like, let’s, let’s measure the accounts that have money coming into them and debit card transactions going out of it. Like, let’s measure that. Um, And let’s use that as a, a measurement of primacy because at the end, at the day, if we’re just measuring how many new applications for products we’re getting, and we’re not [00:46:00] nurturing or engaging those relationships to, to be highly utilized and highly profitable, or as many say, highly engaged, um, we’re kind of missing the mark.

And I think that that comes back to your points, like top of funnel business development rep, making a bunch of calls, if that’s all that you’re tracking. And it’s not like the number of leads that come in for a demo with you or the percentage of those leads that came in with you that actually were qualified for your product, meaning they’re on the right core or they’re of the right asset size or they have the right amount of users, right?

That maybe that’s worth tracking is the lead that comes in that meets your acceptance criteria for a good lead. That’s worth tracking, but the hundred calls. So I, one of my early mentors, uh, Jim Donnelly. Was that Bangor at the time, um, and, and it’s now the CEO of another bank, but he, he basically said that it’s right activity plus right behavior equals the right outcome.

So there’s still validity to measuring, you know, the a hundred activities, but to your, to your [00:47:00] point, if the behavior dilutes on the 91st call or the 92nd, as you put it, because the 91st was great. It drained all the rest of the energy for the day. And then the last eight were just you trying to punch the CRM with activities.

Believe me, I’ve seen it. Um, all of a sudden you don’t have the right behavior in that activity and then you’re not going to get the right outcome. Those last eight calls are for show. They’re not for, you know, dough. And so I would just say that, you know, this is where we saw even fraud coming up in some of the mega banks where they had KPIs to stuff products and it actually created fraud, if you remember, right, where people had incentives to Uh, if they were able to take somebody who opened this checking product and also get them a credit card product.

And, and so it, they were incentivizing, uh, the wrong KPI because now somebody has two products. One that they didn’t actually want to get in the first place, but they got shoved on them, forced on them. There’s, you know what I’m talking about, right? Big time [00:48:00] lawsuits. And, and all of a sudden they lost that entire banking relationship.

Because they were, the, the right outcome wasn’t what was in line with the consumer’s best interest and the consumer’s expectation. And so I think that’s where we have to be very delicate is if our, if our KPIs are just what we want, what our agenda is, and we don’t make sure that that checks out with our member or our customer, 

then we may have misaligned interests 

Josh: is one of the areas where, I mean, you’ve kind of spent the vast majority of like your entrepreneurial career, career trying to solve, right. Is what you guys did with MK decision and. You know, loan origination, new account opening and onboarding. And so it is, it’s that whole life cycle of, you know, attraction, um, of actually acquiring new customers and then retaining and then building that into long term relationships. Um, but that’s, that’s really been a struggle in community financial services, [00:49:00] right? I mean, you know, I’m not trying to be, you know, uh, anything other than report on the facts. Like you look at the growth rate of community financial institutions and you plotted against the FinTechs and it ain’t the same, right?

Like somebody is doing CAC better. Um, and it’s not community financial institutions. Why? Why do

Har Rai: Yeah. I mean, I talked, I talked to a $3.7 billion bank a week ago, and only 12% of their accounts are coming through the digital channel. I mean, it’s astounding, right? To think that you’re, you’re moving towards a $5 billion institution and less than 15% of your accounts are being opened up online.

I think that there’s. There’s an aversion to meeting the consumer in the digital sphere. If you’re prototypically, you know, an in person in branch business, um, it’s kind of like the, the [00:50:00] challenge we had where we were all in branch with our first finance company in store. And then we, we realized that we were losing so much business in the after hours or, or when somebody who finally gets off work, because I think at the day as financial institutions.

We may forget that 

Josh: Yeah, 

Har Rai: financial services isn’t necessarily something that people want to do. It’s something that we have to do. We have to do it. We don’t want to apply for a mortgage. We wish houses were a quarter or one fit the price and we could just buy them cash out, right? Josh, I’ll be a paymaker. Um, but you know what?

Like with all the money printing and asset inflation, even people who are millionaires have to get loans nowadays. Um, so it’s, it’s just a, it’s a reality that we have to do financial services. And, and what that means is that it’s a utility, it’s like we have to have heat in the winter. We have to have AC in the summer.

We have to have water to wash ourselves so we don’t get [00:51:00] infections, right? We have to have water so that we don’t get dehydrated. Banking has become a utility and I think that’s where the pressure that you spoke to in the beginning of this. Podcast is, it’s a utility. It’s like, if the power is not on, you know, this is a first world country.

Like we don’t do blackouts here. You know what I mean? Like this is the first one we expect digital banking to, yeah, this, this has to be working and, but now as, um, I always look to e commerce retail, uh, as setting the standard for the consumer expectation because of the frequency and the velocity of transactions.

And so, so that’s impacting people’s relationship to payments. You, you want to, you want to buy groceries, you want to buy food, you want to buy anything on Amazon. Now they add it to cart boom dot two clicks, right? Just add it to cart, check out two clicks. So everything is fully authenticated. We already have your payment methods saved.

You’ll have to do less than two to three clicks to [00:52:00] complete this process. And so e commerce and retail are setting that precedent. Of like two to three clicks to be done with your checkout process. And so when it comes to banking, um, we’re back to your question of why are only 12 percent of accounts occurring online?

When it comes to banking, we’re asking 21 questions. Compliance is dictating the experience to the consumer completely. And we’re not asking ourselves, how do we meet the consumer’s expectation and then solve for the compliance. Either through data integrations, data automations, um, third party data sources that we otherwise may not use to verify someone’s identity today.

Right? So when we think about the consumer expectation, that’s actually how we design product. So we say, what, what are the business outcomes we’re trying to drive? And the account opening space, Joshua’s, uh, the confer conversion rate, what percentage of people start this application completed the time to complete the application, the automated decisioning on their identity.

The [00:53:00] automated booking of a new account to core the average funding per new account opened. These are like the ways we were measuring success. Um, but we weren’t asking ourselves after that what percentage of people use those accounts. It’s 30 days, 60 days, 90 days, 365 days, three years. And so I think that the, the customer remember life cycle is, is ultimately, uh, what is under attack because of the proliferation of FinTech solutions that are constantly distracting people for niche products and services.

And then they’re trying to deepen the relationship from that niche product and service. You look at Venmo coming in with peer to peer. Now they’ve got credit cards. Now they got debit cards. You look at SoFi. They’re a full fledged financial institution now. And so, so you look at somebody coming in with a niche service where they can only predicate their business model on something like interchange, right?

Interchange. Most of these companies like Chime start out interchange model. And so you would [00:54:00] say, okay, they can only profit on non interest income. They have no interest income. This is not a business. And, and then before you know it, now they have a secured credit card. And before you know it, they’re going to have a secured loan.

And then before you know, they’re gonna have an unsecured credit card and an unsecured loan before, you know, they’re gonna have a mortgage. And so the reality is, is the way that those institutions attract rate, retain their clients is because they’re focused on deepening the relationship of the existing product that that person already has.

They’re not focused on selling you all these other products. Day one. Because they haven’t, they put the thought into deep product enablement, and I, I just use the, the example of if you, uh, subscribe to Zoom or DocuSign or you set yourself up with Dropbox and, and the way or Figma in the technology space, the number of product enablement emails that will come through, Hey, did you know that you can do this?

Hey, did you know [00:55:00] do how to do that? Hey, here’s this educational informational webinar we’re having. You know, Hey, here’s your personal account executive. They’re going to be able to walk you through two times a month. All of the ancillary features that most people lose track of the financial institution is, is like, no, we’re trying to sell you the next product.

We’re not trying to deepen that relationship, give you the high touch service, give you the high tech service on that one product, get you to where you’re up and running. You’ve totally switched your relationship. We’re turning 

Josh: Yeah, that’s an interesting 

Har Rai: we’re, kind of going for the close 

Josh: like if you’re trying to go for primacy at the very second, and if your definition of successive primacy is really intense, For the consumer, then yeah, you, you really do run the risk of turning somebody off. I appreciate that you use, um, retail and e comm as an example.

So funny enough. Um, you’ll love this personally. Um, so the episode that I recorded, um, last that’s going to release before [00:56:00] yours, um, is with a guy named Laszlo who is the, uh, he works for a credit union, but he founded, uh, I guess founded, I don’t know, but he started a joke credit union called flat earth credit union. I’m not even kidding. Had I like, you got to go look this up after this podcast. Do you just go to flat or flat earth credit union. com or. org? I can’t remember which one. Um, are you serious?

Har Rai: No, LA Laslo is a friend of mine. I was on the phone with him yesterday. Yeah, no, I, I know Laslo and I once got an email from Flat Earth and, and I was trying, I didn’t realize 

Josh: he has 

Har Rai: but, so it was a, a, a fake credit union.

Josh: Right. But, um, but I had him on the podcast last and, um, like we started out with the joke of like, why did he start this whole flat earth credit union thing? And like the whole story behind that. But ultimately like the meat of the conversation of the podcast was, you know, his background was e com. Um, before coming to credit unions and we were [00:57:00] talking about just like how incredibly fickle we as consumers are in the expectations we have for convenience and e com. And I was telling him like, I’d actually be really fascinated to see my own data on myself and like how many times I’ve bought stupid crap off Instagram or something. Just because I was looking at the product and it was so easy to literally just double tap the lock button on my iPhone pay with Apple pay. It auto fills all of my details. Auto fills my shipping address. Everything calculates and literally my path to purchase is two clicks on the side of my phone and I just bought some stupid crap.

I don’t even need, right? And it’s like, I’ve probably bailed out of stuff that I should have bought or needed to buy because the process was painful and in turn spent money on stupid stuff just because it was so easy. And then to your point,

like, I was just looking at my, um, I went through and did a, uh, A junk email unsubscribe [00:58:00] recently in my personal email. And I was, I was looking at how many of these things that now I’m getting all of these different, like, Hey, I know you bought this silly little trinket from us, but did you know we have this? Did you know we offer a subscription service? Did you know this? Right? And they just, they got me really entrenched with the first product, got me to use it more and more and more.

And then they’re slowly trying to build that relationship out. And it was just such a perfect example of what you were talking about. If, like, if we can be really, really

Har Rai: Landon expand 

Josh: stinking easy. To sell our value prop, get you to start with a very simple product and then crush it for you. Then we can slowly land and expand and then we can start to have realistic definitions around having your, you know, financial primacy and work towards that. Yeah.

Har Rai: people don’t want to open up bank accounts. They don’t like, it’s not like [00:59:00] something that you get out of bed and you’re like excited to do it’s again, it’s, it’s a utility. It’s something that some, somebody relies upon and they expect it. But the reason that people don’t like to switch or create bank accounts is because it’s so hard to switch your banking relationship.

And, and if it, if it, all this stuff that’s coming around with a 10 33 again. Uh, it’ll be interesting to see how that, that all shakes out, but I mean, just the, the requirement of the consumer to be able to switch their banking relationship in a seamless fashion. It’ll be interesting to see how hard that comes on in the United States.

I think it’s going to take longer than, uh, people expect just because things are so fragmented. You know, you may have card payments in this system and ACH payments in that system. Um, and. And you have, you have all your peer to peer stuff and it’s, it’s so disjointed, but, but I also think that because it’s disjointed, it makes people less loyal and more fickle than [01:00:00] ever before in relationship to that utility.

It’s almost like, um, you know, in, in Florida, like you just go to Florida power and electric. To get your electricity. You don’t, you don’t get to look at the, there’s like 40 financial institutions within a small little geography. Like I could go to any of them. Right, Josh? So there’s not that much, there’s so much optionality in financial services.

It’s, it’s really not a monopoly, which means that we can’t take our customers and members for granted. We really have to say to ourselves, how are we going to create a highly differentiated, meaningful experience? In hopes that this creates a long lasting relationship that is good for the end consumer and good for me.

And that is not going for loan products as soon as they open a checking account and, and vice versa. As soon as somebody who gets an auto loan from you through a dealer, it’s not trying to sell them a checking account day one either. It’s [01:01:00] not that it’s trying to optima. Hey, did you know that this auto loan is, has actually been participated to us and we are now your lender?

Did you know that we have fantastic digital banking, uh, solutions and, and we have all the modern technology that you would expect, even though we’re a local credit union or bank? Um, did you know that you can set up your auto payment in two clicks by double tapping on your Apple Pay? You know what I mean?

Like, did you know that you Paying this auto loan is going to be the best experience that you’ve ever had with any financial institution. And then if you can get all of those did you knows answered, Josh, then maybe you say, Hey, if you want to be one of our deposit customers and you want to set up your paycheck to come into this account, then we will give you an extra 200 bucks and we’ll drop your loan interest rate, 50 basis points.

You know what I mean? So it’s, it’s, it’s, but too often we say, Oh, you got a indirect auto loan [01:02:00] from us. Hey, do you want one of our checking accounts? Oh my God, it’s so great. You know, and, and we haven’t even gotten their auto payment set up. So we’re almost like putting first payment default at risk.

Because we’re rushing to try and close the checking account relationship. So it goes both ways, uh, whether they come in as a loan customer, they come in as a deposit customer, you, you think about some of the early requirements that folks in our space had, where, you know, in order to get this loan, you’re going to have to get a checking account with us, and you’re going to have to take the loan proceeds out of this checking account with us.

And the, all of a sudden it becomes a very dictatorial, uh, And, and the challenge as a consumer, at least, you know, and again, maybe my, uh, my tone and tenors coming from like an affluent person, high FICO borrower, you know, expects that I should get whatever I want when I go out to the market of financial services.

But my expectation is if I’ve got a loan with you, I want to pay that loan from whatever account I want. You’re not going to dictate where I put my [01:03:00] deposits. No, you’re not, but I’m going to pay that loan from whoever I want. But I think that sometimes we’re trying so hard to capture. That it can be off putting and if we just played nice and we optimized for that consumer’s experience with the first product in and we really made it the best impression it could be regardless of product, that we would organically, uh, or over time through nudges, we would win more business 

because we 

Josh: I, uh, I watched this actually 

Har Rai: that first experience. 

Josh: And, um, my best friend bought a new car and, um, he had been working so, so hard. And had gotten himself to like no debt other than the house, right? And, um, and he was like really on the fence about, about buying a new car and taking out a loan. And especially, you know, when you do a look back, not that long ago, and you could get like sub 2 percent rates on an auto loan. And now they’re like six [01:04:00] and, um, you know, He was really on the fence about it and everything. And so he came to me as a friend, but also as somebody who works in this industry.

And he was like, Hey dude, like where can I get the best rates? And I was like, Oh buddy, it’s going to be a local credit union. Like absolutely. And he banks with a big bank. Right. And sure enough, had I his, um, his PFI, right. Um, was a full percent higher than a local credit union for this auto loan. Right? And the car he was buying was expensive enough and he wants to pay it down quick enough, right? That like, that was a pretty significant change in the monthly payment. That 1 percent you want to know something crazy, dude, I literally had to talk him

off a 

Har Rai: sure. 

Josh: of taking out that loan with his big bank just because it was going to be easier for him to make his payments. I was like, bro, you know how much more money you’re giving them literally just because your perception is it’s going to be

Har Rai: [01:05:00] Oh, 

Josh: was like, Hey, here’s how you can do it with the credit union. Like, yes, but it is also such a wake up call that it’s something as simple as that, that it’s like, so let’s say, so he ended up getting it through a local credit union that he has zero relationship with.

Otherwise Dow just has a loan with them. Right. To your point, like if we’re trying to be like, we have all these other services, he’s like, dude, I already have this full blown relationship over here. Everything all set up and y’all are making it a total PETA for me to even just make this loan payment.

Like, no, no, no, no, no, no, no, no. Slow your roll.

Har Rai: I mean, Josh, I, I did a, I did a podcast with the CU 2. 0 folks, uh, Robert over there, and Robert has this story of when he moved to Phoenix, he got a credit card with a local credit union, and their digital banking product didn’t allow him to set up auto payments on his monthly balance on the credit card.

He, [01:06:00] he’s not a revolver. He wants to pay his balance in full every month. But they didn’t have the function. So he completely abandoned the relationship with the credit, just because to your exact example, he couldn’t automate his auto payment to pay down his balance. Something you would think somebody would welcome somebody who’s not going to charge off a card.

They’re going to spend two grand, pay two grand. Like that’s, that’s, that’s a good deal. Like that means, um, yeah, you’re not getting as much interest on them, but you’re still getting the interchange at least. And, and so, and maybe you’re able to peel off other relationships, but just from that one feature, that one example you’re saying, 

Josh: But I love that you made the comment 

Har Rai: Even, even that lone relationship.

Josh: even to our own people. Like nobody wants to lock into digital banking. Like are you crazy? Like think about yourself. Like you’re done. You’ve had a long day. You know, you just got little man to bed. Like you in the midst of sit down on the couch.

You’re like, you know what? I’m going to check out for a minute. Do you [01:07:00] ever go, I’m going to go hang out in digital banking. Like, no, right. You’re not there cause you want to be. You’re there cause you have to learn something or do something.

Har Rai: Yeah, I mean the, you can, you can think of, yeah, you can think of things that somebody interested in. Um, maybe they’re interested in their budgeting. Maybe they’re interested in their credit score. Maybe you’ve been able to bring in a wealth management tools and they’re interested in studying their credit.

More volatile assets and their movement fluctuation. But, but most of the time, uh, digital banking is a pretty static place, right? What money do I have coming in for my job? What money do I have going out for my bills? Um, personally, I would say I study my personal financial management applications more than I do digital banking because I’m a student of my own patterns.

So I, I want to [01:08:00] understand. You know how I’m spending money. I, I’m a, I see, uh, money not unlike a field and, and I’m a farmer and my job is to go till the soil and plant seeds and watch them grow. And when there’s fruit, harvest them and then make a beautiful dinner for the family, right? Or sell, sell the, sell the excess off, you know?

And so when, when you think about digital banking, people are mostly going to expect reliability. And that it’s always up, it’s always working, they don’t have issues where their transactions disappear, where their accounts disappear, where they make payments that don’t go through, where the payments that they schedule are very clearly displayed, and that they know exactly what money is going out when.

Um, yeah, it’s Now, when we think about Where can it go? Where can digital banking go is us seeing the need of the consumer before they know it themselves. The challenge there in this category and [01:09:00] concept of personalization and engagement is, is that their need? Or is that what we want them to need? And that, that is a dilemma because I think if it, it comes back to the primacy definition, if, if we have the wrong definition of success.

Then personalization is really just another word for aggressive marketing tactics. And, and so I think we have to be careful when we use that word is just another word for like marketing. Um, and so, so personally, I think that it real personalization is seeing the need ahead of the consumer expectation.

And then you’re actually forecasting or guiding that person. You’re actually a good custodian. And when I talk to credit unions and banks, Where financial literacy and financial education is a high priority to them. I know that we’re going to have a good relationship because the type of work that they’re trying to do with, with their end user of digital banking [01:10:00] is, is what’s in the best interest of that individual and, and that type of service you can’t get at a mega bank.

You, you’re not going to get folks that actually care about your financial literacy, your financial security at a mega bank. You’re just a number and, and yeah, so I think that that’s why folks like you and I, even though to your point earlier about, um, the gentleman who works at Chevron, he could go, you know, work some high flying job.

We could too. We could go and start selling, you know, to the 50 billion plus. Market, we could, we probably could, and we probably win some deals. Um, but the reason that we focus on the industry and the market that we have is because those people actually care about their end consumer or business wellbeing.

Uh, I, I bring up locality bank. Who’s a good friend of mine, Corey LeBlanc. And you know, we, we did a recent podcast where he said, you know, we need to be giving. [01:11:00] Equal or more than what we’re receiving in this relationship to our end customer. And and so if it ever feels to the customer like we’re taking More than we’re giving they’re going to leave they’re going to go somewhere else.

It may not even be an interest rate decision Money is emotional josh money is just a store of value It’s a store of energy as a result because you put in time you make the money you take the money and you live your life Um But that give more or equal to what we’re receiving mindset as a banker or somebody who works in financial services, so powerful, because I think that the prejudice in our industry is that we are like hawks preying on people.

Banking gets a bad connotation so often because folks think of financial institutions as predators, whether that’s the, you know, the payday lenders or the subprime. You know, which so often creates, uh, the financial issues in our society is preying [01:12:00] on those who are, is, I always thought it was funny, Josh, that the, the people who need credit the most received the worst terms and the people who need credit the least received the best terms.

Like it just feels weird when you say it that way. Um, but at the end of the day, that that’s the paradigm that we’ve been 

Josh: said something else that 

Har Rai: for a long time. 

Josh: thought was, um, It was worth touching on. You know, I think this is one of the areas where I think the future and technology both really excites me, um, but gives me pause for concern to see how it’s actually implemented. Right. And again, I’ll use kind of a silly example in terms of just maybe naivety of how it’s done, but you could also extrapolate to the malicious, like you were saying, I’m just trying to push the wrong thing.

But, you know, you start to think about the, um, you know, the intersection of bringing artificial intelligence into banking. And we start to think about the things like putting, um, you know, actionable insights in front of consumers. [01:13:00] And the easy example I use is like, let’s say the AI is running on my account and is like, Hey Josh, you’ve 3, 000 parked in your checking account. Um, Did you know that you’re leaving money on the table? This should be in a CD. We can open a 3, 000 CD with this and you’ll actually make some money. This is a smarter financial decision. And if I’m like, Oh, okay, yeah, like move my, move my money into that CD. And I don’t understand what a CD is.

I don’t understand how this works. And then all of a sudden, two days from now I need to pay my 2, 200 mortgage payment. And I have 0 in my checking account because it all got moved to a CD. Now I have to understand what it’s going to look like to early liquidate that CD or I don’t have access to it or now I can’t pay my mortgage. Right.

All of a sudden now it made a really, really piss poor financial, uh, you know, advice to me. And like you were saying too, like, or, or is it even being malicious and being like, you should open these products with us [01:14:00] because it’s good for us, not good for you. But at the same time, like if used for good, right? Oh my gosh, like the

financial services system in the U S is really freaking complicated. And,

if a supercomputer can help analyze every aspect of my financial life and fine tune it better than I ever have time for, like, that’s dope. That was great. Then that takes one less stress off my life. I don’t have to focus on it.

I’m thinking about working my podcast with it. I, instead of, will I be able to make my mortgage payment? Right? Like, that’s cool. So I just, I think there’s some real opportunity there. Um, but I still think we’re a ways away from it.

Har Rai: and I’ll, I’ll give you a quick example on that because I love that example. Um, we, we have an account with Brex, uh, Y Combinator, you know, these folks are backed by Peter Thiel, PayPal. Um, and so Brex is basically was like a startup credit card for, Tech companies and they were trying to get venture backs, tech companies to use their credit card.

[01:15:00] And they’ve slowly done that same niche go to market approach where now they’ve gone into the checking account business and they have deposit relationships. So, so we recently, we had a relationship with them. Um, we had some cash in there and all of a sudden they’re just like, we’re proud to offer treasury management and money market solutions.

And. What we’ve analyzed is that your average, uh, cashflow needs on a two month running basis is 6, 245 a month. And so we advise you to keep, you know, 12, 542 or whatever the math adds up to in your checking account. You have two months of runway. We advise you to put the rest of your money, uh, 25 percent interest bearing account.

Keep in mind, you can move it back into checking within one day, uh, and you can start using it for your needs. But we advise you to take, you know, 80 or 90 percent of your money and put it into this interest bearing account. And, and so I just thought that that was like literally the system doing what you’re saying.

Um, it’s bringing [01:16:00] more value to me. I’m getting interest on my funds when otherwise they could just be parked there. And meanwhile, they, they’re also forecasting my cash flows for me and advising me to keep enough cash flows. In my checking account so that there wouldn’t be a bad decision where all of a sudden need to liquidate, you know that that relationship So I think that’s a perfect example 

Josh: Yeah, I mean it needs to 

Har Rai: banking is going

Josh: we talk about just

Har Rai: And so I love that you bring that up

Josh: poor state of financial literacy in the U. S., just bringing, bringing blog posts about it versus bringing that kind of stuff. Like, hey, Josh, we’ve analyzed your household incomes. We’ve looked over the last 24 months at, you know, your income, your expenses, how you spend your transactional behaviors.

We see what you spent last Christmas and the Christmas before. So we’re expecting you’re going to do this this Christmas. Like we’ve looked at all of these things and therefore we feel really confident in [01:17:00] making these recommendations. It’s just some fine tuning things that you could do that could help your financial position. Right. Could you imagine the power that brings to the average person who has very little understanding of the plethora of financial products that are available to them and how to truly leverage them appropriately? Like there’s some real cool power in that.

Har Rai: That’s yeah, that’s that’s huge and I think personal financial management always got a bad knock because it made the consumer feel almost Like they were a bookkeeper And, and then the, the issue is like, even if I go and categorize all of these transactions, that doesn’t help me from like a tax filing perspective.

So, you know, if I’m a business, I could, yeah, I could categorize them, but then I’m going to have to do it again in QuickBooks or Xero or whatever before my accountant files my taxes. So, so I think the, the downfall of the first versions of what we’re talking about was it, it put a lot of burden on the consumer.

Okay. To try and categorize and create the [01:18:00] insights through their manual intervention. And people are just lazy. People don’t want to go in and act like there’s a reason people hire an accountant. They don’t want to do their books. So when we came out with the first version of PFM, we asked them. to be de facto bookkeepers and then only could their budgets kind of hold true.

And so I think where you’re going is, um, you know, using some of these very powerful data insight providers who, who can look at your last 24 months transactions like that and come out with insights for the consumer that are meaningful. That can help them on their financial journey. And definitely data is going to play a big role in the future of banking, but I think it’s more in the way that we just defined where it’s like, Hey, you, your average cash flows are this.

We advise you to keep this much money in this checking relationship, but we want to be good custodians of your money and try and turn you a profit on the rest of it. Why? Because otherwise they’re going to take the rest of it and they’re going to [01:19:00] Schwab or they’re going to fidelity or they’re going to some other fiduciary And that money’s gone.

And I can tell you, there’s a lot of people that have experienced, you know, flight of deposits recently, rate chasers and what have you. But if you give them that confidence that here’s your cashflow, we advise you to keep this, we want to be good custodians of your funds, we’re trying to earn you money.

The mega bank’s not going to do that. They’re, they’re just going to keep the core deposit at all costs. Everybody wants a seven basis point deposit.

Josh: Man, I always have so much fun talking with you. Um, but, uh, you know, hey, before I, uh, before I turn you loose

Har Rai: Likewise, brother.

Josh: evening, um, I got to ask, you know, you were saying before we started recording, you’ve been doing a lot of reading lately. So where are you going to get information about what’s happening in the industry?

Any shout outs you’d like to give?

Har Rai: Yeah, I mean, two clear shout outs, uh, financial brand. See you times, uh, definitely [01:20:00] bringing out some good content and good quality folks over there. Obviously, payments has some good stuff. Um, but I, I also stay on top of LinkedIn. I find a lot of the newest information that I’m getting is just Maybe it’s my friends or the people I’m connected to, but it’s, it’s definitely a portal into kind of what’s happening in the industry.

And again, Josh, there’s, there’s so much, uh, that’s happening at the micro local level in our space, whether it’s the state associations or, you know, now, now we’re seeing this next wave of, um, limited partnerships where somebody wants to create an investment fund and they bring a hundred credit unions or a hundred banks into the space.

And this, this model is now starting to scale, there’s probably six to ten examples of this nationwide where you have a hundred institutions that are bound together under an operating partner who’s now writing checks to fintechs. And so I’m always curious to see the type of content that those folks are producing, whether it’s for [01:21:00] their limited partners or to attract fintechs, because I think, you know, they’re, they’re trying to write the checks.

To fund the innovation that will further the digital transformation of our industry. So I do think it’s a great place to look for kind of the what’s what and what’s new. Um, yeah, see you times and financial brand are always top of mind 

though. 

Josh: just said in a second ago, cause you’re all up in LinkedIn’s business. But, um, if people want to connect with you or if they want to learn more about what you and your team at Swaystack are doing, how can they do that?

Har Rai: Yeah, I mean, Swaystack. com is the easiest way you can request a discovery call up there. Um, had I call so on linkedin, probably one of the yeah. 

Josh: You’re hard to spot. Yeah. 

Har Rai: guy in FinTech. And, and so find, find me up on LinkedIn. I definitely, yeah, hard to spot. And, but yeah, just Swaystack. com we’re, we’re readily available to talk. 

Josh: you’re just a blast to talk to and um, and you’ve always got such interesting 

Har Rai: appreciate you much. 

Josh: think you, your brain just [01:22:00] works in a very unique way to provide some, some cool perspective to stuff. So, uh, I really appreciate you taking time and coming and being a guest on the digital banking podcast. ​