Mark Cuban isn’t a banker.
The billionaire owner of the Dallas Mavericks made his fortune during the dot-com boom of the late 1990s, and followed that success up with ventures into entertainment and technology, ultimately landing as an entrepreneurial kingmaker on the hit TV show “Shark Tank” in 2011.
But the pandemic somehow took Cuban out of his lane, turning him into an unlikely informational conduit between the typically complex world of banking regulation and business owners looking for help.
He was in regular contact with the White House, the Treasury Department, the Small Business Administration and some of the biggest banking executives in the industry as officials looked for new ways to keep the economy afloat. His popular email inbox — normally flooded with business pitches — was suddenly inundated with pleas for information on everything about how to access the Paycheck Protection Program to overdraft protection.
Cuban eventually reached out to Jill Castilla, the CEO of Citizens Bank of Edmond in Oklahoma, about building a website to help owners of small businesses prepare their lengthy and complicated PPP applications. The pair also partnered on a program to waive overdraft fees for account holders, especially for charges incurred for essential needs like groceries, months before the rest of the industry began to follow suit.
Cuban first called Castilla in the middle of a board meeting, she remembers, and they exchanged "hundreds of messages" over email and through various social media accounts as he tried to use what influence and reach he had to "dampen anxieties."
The website on which Cuban and Castilla collaborated helped more than 250,000 small businesses in the first week it launched.
"I’ll always remember the endless Twitter exchanges with desperate small-business owners where Mark served as the conduit for information and access," Castilla said.
Perhaps his interest shouldn’t be that surprising — with social media and his popular blog, he weighs in knowledgeably on all sorts of things, from
Cuban took time during the busy Mavericks offseason to answer questions sent by email from American Banker on issues including bank consolidation, fintechs and the future of finance in a digital world.
What follows is a lightly edited transcript of the interview.
AB: What sparked your initial interest last year into things like PPP and overdraft? Was it a conversation you had with anyone in particular as things were shutting down? Or was it the novelty of such new programs and questions about the best way to help people in such a crisis that drew you into those issues?
MARK CUBAN: I truly just wanted to help entrepreneurs. I knew that there was so much uncertainty about the pandemic, the impact on their businesses and what help there was available.
So I tweeted and posted in LinkedIn that I would answer questions. I was not surprised that I was flooded with questions.
Obviously as PPP was announced and released, people didn't know how to learn about it or how to take advantage of it. So I tried to talk to the SBA and White House and bankers and learn as much as I could and answer as many questions as I could.
We're still winding through the PPP forgiveness process. Anything you would endorse to make it easier?
Expand your relationship with your banker and start the process immediately if you haven't already. Don't procrastinate.
What fundamental change in finance or the way people handle their money in general could have made the pandemic easier to manage? Payments increasingly comes to mind. It took much too long for things like stimulus checks to get out to people. Should there be a major government or private industry effort to make getting people their money faster?
I thought the Treasury should have guaranteed overdrafts for small businesses.
That would have allowed companies to continue to do business as they were, but that was too complicated according to the administration.
That said, there is no question that for individuals, a digital savings account should be created at the same time they are issued a Social Security number. The idea that people have to wait weeks for a check to be cut, delivered and funded is crazy. There will be future needs for the government to distribute funds. The lost time value of the stimulus or whatever the reason for distributing the money would easily pay for the cost of the accounts.
In addition, doing so would require people to enter the banking system and begin to understand how a bank account works, which would have long term benefits for the entire country.
There's been a lot of talk in our world about banking consolidation. The number of banks reporting to FDIC is down 11% since 2018 to less than 5,000 now. I'm always curious how troubling this trend really is to those not involved in financial regulation every day. Is it something that you think evens out on its own or is worthy of more antitrust efforts or stiffer M&A approval from regulators to slow down?
Actually I think consolidation is going to backfire on traditional banks. I'm a big believer that over the next 10 to 15 years, decentralized finance will begin to seriously disrupt corporate and personal banking.
A major driver of the consolidation is the rising cost of technology that smaller banks are having a hard time keeping up with and so, they sell. This is not only a banking problem. But are you concerned about the issue of higher tech costs for small businesses?
No. The exact opposite. The reality is that from the outside looking in, banking incumbents are trying to increase the complexity of doing business. The more IT the better. But the reality is that Fintech has opened the door for agile companies, including small banks and apps, to start to really take business from big banks. First its consumers who feel taken advantage of that will leave the banking system. Then we will say that big banks are the province of the rich and corporate America while consumers bank with the best digital providers.
Are we still in a financial crisis?
I don't know. There truly has been a K-shaped recovery. So it really depends on where someone is on the economic spectrum.
Those at the bottom are still struggling. Those in the middle seem to have benefited from stimulus and extended unemployment benefits. But we don't know what comes next. I don’t know how prudent it is to guess. From my perspective, agility is the needed skill set for the [small and medium-sized business] that I deal with. The banks that can support that agility, usually through digital means, will gain that business.
How worried are you about the delta variant? Will it shut the economy down again?
I don’t think it will shut us down. The response would create too much chaos. I do think smart businesses will require vaccinations. To that end we are requiring vaccination from all of our employees.
Are we all going back to the office? You seem to be the sort to think we should throw out the old office space model and take the chance to rethink it?
We have revamped our offices and gone hybrid. We will have events and get-togethers that create community and allow people to connect. But we aren’t going to require people to be in the office unless there is a good reason to be there. We are going to find out if connecting through scheduled events outside the office enables more productivity. Then we will be agile and determine what puts everyone in the best position to succeed individually and as a company.
Every employee has a different personal story. For some, eliminating a commute or being able to take kids to school or stay at home with them improves their home-work balance and can make them happier and more productive. For others, they need to be in the office to be at max productivity.
Broadly on crypto, what quarter of the game are we into a widespread adoption or usage of these coins and the underlying technology, which I suspect is further along?
Still first inning. But, that said, I think that banks have the most upside from introducing crypto to consumers.
It's a way to open up millions of new accounts, simplify operations and pay greater returns. Opening up an account that can pay 4% is going to make account holders a lot happier than what they are getting now. Of course, it won’t be FDIC insured, but a smart bank can protect their clients’ accounts and pay greater returns. That leads to happier customers and more accounts.
What was the biggest lesson we can take away from the
I don’t think there is any dramatic lesson. There are companies that people own shares in that go bankrupt all the time. There are unsecured debts that become worthless. The greater the expected return, the greater the risk. Crypto is no different.
In a recent blog post you bemoaned politicians that might hold back the crypto growth engine. If you're in front of the Senate Banking Committee or House Financial Services Committee, how would you advise them in overseeing crypto and what would you warn them against? Do you support an independent agency apart from the Fed, SEC, CFPB, etc., that could focus on fostering the kinds of protections for investors or rules for this new world?
I think crypto needs some regulatory guidelines [and a] legal definition for what a stablecoin is. What can be called pegged? What can be called algorithmic? I think we need to fully criminalize
But beyond the above, I think we specifically need to stay out of the way of the applications being built on blockchains. It’s very analogous to the early days of the internet. There will be amazing applications developed and companies that excel and change the world. We want those companies to be based here in the USA. Unfortunately, because of the regulatory uncertainty, too many companies are run by Americans, but based overseas. We need to change that with possibly a moratorium once the guidelines are in place.
