Bank-fintech partnerships have come under fire lately from regulators and industry watchers and new rules are in the making. But Michelle Moore, executive vice president and head of digital at Wells Fargo, is undaunted. She works with many fintechs to harness their technology. Wells Fargo's use of Google technology for its digital assistant is one example. In this Leaders session, Moore shares what she looks for in a potential fintech partner, how she manages those relationships, the advantages for both parties in collaborating and the dangers to watch out for.
Transcript:
Penny Crosman (
Good morning and welcome everyone. I'm Penny Crosman, executive editor of technology at American Banker. Fintech partnerships have been in the news quite a bit lately. The Treasury Department released a 128-page report yesterday calling for firmer regulation around bank- fintech partnerships. The OCC and other bank regulators have also called for more guardrails about around bank-fintech partnerships. And there are obviously a lot of risks to working with third parties such as fintechs. And there are also rewards. Here to talk with us today about all of this is Michelle Moore, executive vice president and head of digital at Wells Fargo. Welcome, Michelle.
Michelle Moore (
Thank you, Penny. Good morning everyone.
Penny Crosman (
Thank you so much for joining us. So if you were in charge of writing rules for bank-fintech partnerships or relationships, what would be on your wishlist or your list of rules?
Michelle Moore (
Well, I would keep it simple and easy for everyone to remember, which is I believe that we all should be held to the same standards for the benefit of all of our customers. We're all doing the same thing with the same objective. We're handling customers' data, their identity, their authentication, their finances, and it is incumbent upon us all to act together as one to make sure that they are safe and secure.
Penny Crosman (
And what do you see as some of the risks that banks and fintechs should be concerned about when they work together?
Michelle Moore (
Well, the risks are really related to my comments around the standards. The risks are as an individual consumer, what is happening to my money, what is happening to my identity? And I put that in the hands of the financial institutions that manage that on my behalf. And I'm putting a lot of trust into these institutions. So the risks are, we're not coordinated, we're not talking, we're not handling the data the same way, we're not protecting it the same way, which therefore if we had standards that were all on a level playing field it would help, I think, all of us to move forward as an industry.
Penny Crosman (
And when you are looking at a fintech that you might work with, what are some of the due diligence steps that you think about and take?
Michelle Moore (
Well, that's a great question. Just last week I was in California meeting with some fintechs and I had one yesterday. I'm always meeting with fintechs. I think partnership and collaboration is very important in our industry. We can build off of each other, but when I'm talking to them, I am talking about the client experience. How does it feel? How does it work? But I am also concerned about their business continuity plans, their operational stability, their operational excellence metrics. So how are they ensuring that they're operating at a standard that if we are in partnership, if something happens, how do we ensure that it it is seamless to customers and that they can continue to go on managing their finances.
Penny Crosman (
Now, an audience member has just asked whether greater opening to fintechs puts at risk the financial commercial separation. I'm not sure exactly what's meant by the financial commercial separation, but how do you feel about that?
Michelle Moore (
I don't see it that way. I see it as partnership. Because if you think of what has happened in our industry from Apple Pay that launched way back in 2014 to what we announced at Money 2020 with our partnership with Google in Fargo is making us a better, stronger value add to our clients for everyone. So I don't know that I feel that if we don't figure out and always have a healthy sense of paranoia on meeting in ourselves, then someone's going to do it and we can either partner with them or we can let them take over, which is not what any of us are trying to do. We have an opportunity to serve millions and millions of clients together.
Penny Crosman (
And we should probably point out there are different kinds of fintech relationships. Your relationship with Google, I would call a vendor relationship, where there's also collaboration because you're using the Google Cloud and you're working with Google engineers to help you with the Fargo digital assistant. I think maybe what the question was about was more where you're working with a fintech that does something really different that's not necessarily a financial business, maybe more the rent a charter type relationships. Does there have to be a separation between the financial work that the bank does and a fintech that does something really different from the basic business of the bank?
Michelle Moore (
Well, and it's where you have to make sure you have all the right controls in place. And so every situation will be different. But large institutions such as Wells Fargo, we have a responsibility to make sure that our risk and controls are proper and in place, whether we're direct or that we're partnering. And that goes back to my comment at the beginning, same standards. Everyone needs to be held to the same standards regardless of size. As you were talking, I was watching one of the questions come up about convincing execs that fintechs are worth the spend and the time, which I think is kind of related to the question that around the financial commercial.
(
I personally am very open to having these discussions with fintechs. As I mentioned, I was in California last week, I had a conversation the other day. Some of them are like you talked about, our relationship with Google is different than the fintech that I met with on Monday that provides a very distinct service. It's worth the investment if you can't do it yourself, if it doesn't make sense for you to do it yourself, you ensure that the continuity is there, that the fintechs can handle the volume of your institution. And that's how I would go about convincing if I wanted to bring on a completely new fintech to Wells Fargo. That's my thought process, are they stable? Can they handle the volume? Do they have business continuity? Do they have the right controls in place to protect the customer experience? Who owns the customer experience? I mean, there's a litany of questions that we go through, but the spirit of all of it is collaboration and partnership for sure.
Penny Crosman (
That makes sense. And I think there was a question about would you prefer to work with a young innovative young company or an older, more established company? Is that part of your calculation?
Michelle Moore (
No, because I'm really evaluating what it is that they have to offer. And so I don't really. I might have to have different questions for younger startup companies on their own financial stability and health and what is the backup plan if something were to go wrong. But I don't look at it that way. I'm more interested in what can they do to help Wells Fargo be more successful with our customers and our clients.
Penny Crosman (
Can you share how many fintechs you work with?
Michelle Moore (
Oh gosh. Honestly, Penny. I don't know that number offhand.
Penny Crosman (
Okay. And there's also a question about whether you have formal agreements with FinTech. I would assume there's always some sort of contract.
Michelle Moore (
Yeah, Wells Fargo for sure, at the big banks definitely. There's very rigid process and documentation and my legal risk and compliance partners are my best friends.
Penny Crosman (
And are there certain things that are always in those agreements, certain clauses or
Michelle Moore (
I'm sure, but again, that's why I rely on my partners because I've seen some of those agreements and I'm not sure that I'm the right person to sign off on them. That's definitely the expertise of my legal risk and compliance partners.
Penny Crosman (
Right. And then I think there's also been talk of monitoring fintechs, especially in those rent-a-charter style relationships to make sure that nothing untoward is happening. Is that something that you've had to maybe do more of, keep a closer eye on fintech partnerships?
Michelle Moore (
Well, I keep a close eye on all of our partnerships through monthly business reviews and metrics and tracking and auditing. And once we're partners, it is as if they report into us, into Wells Fargo. Again, we hold our vendors to the same standards that we are held accountable to working directly with our customers. So I enjoy actually having the meetings to see how we're progressing on metrics to ensure the stability is therem to name a few.
Penny Crosman (
We've also gotten a question about when you do collaborate and partner, how does Wells think about promoting that partnership and talking about the experience and results. You obviously have done that with Google but how do you look at that in general?
Michelle Moore (
Well, again, I do think that it depends on the partnership and what we can and cannot say. I was very proud to showcase and talk about the partnership with Google a few weeks back, but that was the first big one that I've been a part of since I've been here. And I'm just coming up on my two-year anniversary here. So probably more to come on that one in the future that I really have experience with here.
Penny Crosman (
And just to close out the risk side of the discussion... well actually we just got a good question about have you ever worked with a fintech and then they ended up dissolving their business? That's an interesting question.
Michelle Moore (
No, actually, I've been a part of where we've had to make sure that they had enough capital to stay solvent, paying attention to what's going on there. But nothing where we've had to shift course and step into our continuity plans. But that is also why we have the continuity plans. In the event that happens, what do we do? And we are very diligent here at Wells Fargo to make sure that those continuity plans are living, breathing documents.
Penny Crosman (
And then there's also a question about how have your partnerships affected regulatory exams and what kind of feedback have you gotten from regulatory agencies?
Michelle Moore (
Well, of course they're very interested in what are the metrics, how are we monitoring, how are we auditing, how are we sharing the data across, how are we protecting customer data? But nothing different or new to me. I've been in this industry for so long, it just seems like it's normal course of business, whether it's talking directly to me about what's going on in Wells Fargo or what's going on with Wells Fargo and Google, and what did we do there? So to me it's nothing, I haven't seen a change. It seems like it's just part of business.
Penny Crosman (
And then also an interesting question about how important is it for a fintech to offer a proof of value period to help decide whether the solution is potentially viable for Wells or not? And then how competitive is the internal resource allocation for IT staff to be able to conduct a proof of value?
Michelle Moore (
Well, I know this is probably going to sound like a non answer, but it depends on what we're doing. And it depends on the solution and the size of the company and the magnitude of the project. Sometimes we have to do an extensive proof of concept, sometimes we don't. But I don't have a one solid answer because it really is very specific to the partnership, the company and the outcome.
Penny Crosman (
And then we also have a question about how do you think about build versus partner? I'm sure that's a constant question.
Michelle Moore (
A constant question for a long time. For as long as I've been in this space. Look, when we partnered with Google to be the engine for Fargo, Google provides the best natural language processing. Why wouldn't we partner with them to do that? And so for me it is, can we build it? Should we build it? If we partner, can we go faster? Can we go better? So I am in favor of building versus buy decisions. Sometimes companies choose to go 100% internal, sometimes they buy everything. I'm in the middle, which is evaluate all of your options and make the right decision based on the company and the customer.
Penny Crosman (
And there's also a question about, are there trigger points in a relationship where you would decide to acquire the fintech?
Michelle Moore (
I am sure there are, but I have not had that experience, so I don't have a very good answer on that one.
Penny Crosman (
Okay. I also wanted to ask you, I feel like for a fintech, working with a big bank can be fantastic because if they can talk about it, then they can get all sorts of other customers. Because if this big bank has vetted and said that it is using it, then it must be safe good for others. But I've also seen and heard of cases where a fintech team meets with a bank team, shares their ideas, and then the bank team takes those ideas and develops them themselves. And the fintech is kind of cast off. And I just wondered what you think about that. Is there anything that can be done? Is there anything you try to do or think about to make sure that it's fair for everybody?
Michelle Moore (
Well, that's right. I'm just one person, but that's the way I approach it, which is I don't think that is the right thing to do, to take somebody else's idea. But for me it's more about, again, the partnership, the evaluation, what are we going to do? And if we choose not to, then that's their proprietary information. And it is hard for fintechs to work with big banks. I know our processes are cumbersome and require a lot of work. So to be tried and true and tested, that's great. And if we choose to go different ways, I mean the fintech should protect themselves with their nondisclosure agreements and any other legal documents to make sure that their intellectual capacity or isn't stolen.
Penny Crosman (
Can you give an example of a fintech partnership that's worked out really well for you, either at Wells Fargo or at Bank of America?
Michelle Moore (
Not that I could disclose, I don't think. Anything that you've read about, you would know. Obviously I'm going to continue to point to what we just did with Google, because that's public knowledge, but most of the others, I don't know that I could say publicly.
Penny Crosman (
Just further on that, how do you decide what to announce publicly and what not to?
Michelle Moore (
Well, I get a lot of help from legal, risk and compliance. But I mean, the journey with Google started with Wells Fargo's overall cloud strategy the year prior, which was also an announcement. So this was our first rendition of using that partnership to bring Fargo to market. But again, it all is based on a lot of due diligence internally as to what we can and cannot say publicly.
Penny Crosman (
That makes sense. So this is our leader's channel. So we always like to ask a few leadership questions. So you've got an internal team of, I don't know how many people, but a lot of people. And then you have fintechs that you work with. How do you manage these groups of people that are inside and outside of the bank, both from just a management point of view and from sort of a culture point of view? I'm sure there are culture differences between the companies sometimes.
Michelle Moore (
Well, I have a wonderful leadership team and they are aligned to their respective partnerships and fintechs and managing through them. I meet with many of them throughout the year at random different cadences. And I spend a lot of time in California and New York and in other places. I like to be out in the market and out meeting people. A good portion of my team is on the West Coast, so that we are part of the community there. Once we're a partnership and we're in collaboration, to me it's as if we operate as one because we have the same goal in mind, which is Wells Fargo customers. And that is very important to me. By the way, Penny, when I'm evaluating partnerships, do they share the same goal and vision, which is to help Wells Fargo's clients. That has to be paramount to the discussion and where the partnership goes in the future.
Penny Crosman (
That makes sense. And you started at Wells Fargo during the first year of the pandemic. What do you feel we've, from so many people, I'm assuming you don't have a piano in your office, so you're working from home today, what do you think we've learned in the past two years about managing people remotely, from a productivity point of view, from a communication point of view, from a process point of view, keeping everything going?
Michelle Moore (
Well, what I think we all learned is that when the pandemic hit, we all moved fast to make sure that there was no loss in productivity and that we could accommodate the needs of everyone. And then as time progressed, we learned that there is something to be said about being in the office and walking down the hallway and knocking off a few to-dos and the personal conversation that can happen versus a scheduled, got to log into Zoom. There's spontaneity in being in the office and a personal touch about just being there with someone. So we learned we could go home. We learned that we missed each other. So then therefore now we have a hybrid, which I believe should be in Wells Fargo to be in the office a portion of the week. And today I am at home, which I am very thankful for the opportunity to be here today for things I have to get done. But I spent the rest of this week in the office. And so it is possible to manage at home or in the office. And I believe that we're all working to figure out the right balance. But I think remote working is something we learned was possible. I don't believe pre-covid we ever would've thought it was, how could you do that? What is everybody doing at home? And now we all know what everybody's doing at home and that I play the piano. But yeah, I'm a fan of what the pandemic taught us, which is we can do a hybrid work style.
Penny Crosman (
Do you think it's harder to motivate people or is it easier to motivate people, because people need to prove themselves more since they're not in the office every day.
Michelle Moore (
I don't think so. I don't see that, particularly in my experience with my team, everybody, you still have the same deliverables and due dates and execution dates and scrum team meetings, whether you're in the office or you're not. So that is what we all are held to, objectives and key metrics. Those don't change depending on where you're sitting.
Penny Crosman (
All right. And we have another question that's come in from the audience. How do you think about the rapid adoption of digital banking during the pandemic has influenced Wells Fargo's relationships with customers? Do you think the digital banking experience is as strong as the retail experience?
Michelle Moore (
So I always have been a proponent of both, and it's the branches and digital. I'm super excited, of course, from where I sit about the accelerated use of, adoption I of digital, I believe it just helps customers do things that they really don't need to leave their house to go do. Drive to the branch to deposit a check, for example, or call the call center to activate your debit card. Why we want to have our teammates be there in those times of need in those times of opening an account of advice planning. And so there is a opportunity to ensure the bridge exists between digital and physical. But I am glad that the adoption has accelerated so that clients are aware of everything that they have available to them.
Penny Crosman (
And so to kind of close out the initial theme of this topic, of this whole session, what do you think are the biggest rewards and the biggest risks of working with fintech?
Michelle Moore (
The biggest rewards and the biggest risk of fintechs. The rewards are the collaboration, the extension of your imagination of what is possible and different perspectives and diversity of thought and different ways to approach and achieve solutions. Those are the rewards. Because you're outside of the box, you have multiple ways of looking at the opportunity, which is why I like the partnerships. The risks, of course, are related to the controls of the industry that we work in, and we have to get that right. Risks and controls are our business as well. And the fintechs, while it may not be the top of mind, it is what is important to the industry that you're partnering with. And we have to make sure that we get it right. So that's the risks are the controls and the procedures and the stability and making sure that things work as designed.
Penny Crosman (
And I suppose the ultimate risk is if something goes wrong and customers get hurt. How do you typically look at the responsibility if you're working with a fintech to offer something like Fargo to customers, who's ultimately responsible when something goes wrong and who's the throat to choke, is the expression.
Michelle Moore (
Well, that example, me and mine. The customer doesn't know who's providing XYZ service. They know that Wells Fargo is their institution and they're holding Wells Fargo accountable. And therefore we are accountable. And that's why the standards that we have for anybody we bring on board are equivalent to the standards we keep for ourselves.
Penny Crosman (
That makes sense. And would you ever work with an outside third party on your actual strategy? Is strategy ever a shared collaborative thing or is strategy all in house?
Michelle Moore (
Depends. So I have seen it done in different ways and I did spend some time working as a consultant on strategy prior to joining Wells Fargo. So I think it's specific to the institution and what they want it to be.
Penny Crosman (
All right. Well unfortunately we are just about out of time. I wanna thank you, Michelle Moore, so much for coming. I really appreciate it. Great conversation. And I want to thank everyone in the audience for your great questions. I appreciate that and I hope you all have a great day.
