True Digital has hired a new CEO, and his first order of business is to open the company's network — a platform on which more than 300 banks have reviewed the tech vendors they use and collaborate with other institutions using the same ones — for free to any banker.
The new freemium model for the
Cook, who is leaving his post as Chief Innovation Officer for Valley Bank, said "seeing is believing" when it comes to the benefits of the True Digital Network.
At the same time True Digital is opening up access, it will continue to only collect fees from banks,
"As a banker and a user, it makes it more credible," Reuter said of True Digital only taking fees from banks. "If vendors were paying in fees and sponsoring, you would start to get suspicious that maybe what's served up or what's available is impacted by who's willing to pay to play. I think this approach keeps the integrity in place."
The cost of a one-year contract for a bank to join the network ranges from $3,000 for banks with less than $1 billion in assets to $15,000 for banks with more than $10 billion in assets. Contracts come with unlimited seats.
"We're almost giving it away," Cook said of network access. Many of True Digital's more than 300 financial institution customers agree.
The cost is "not significant at all," according to Dan Yates, CEO at Endeavor Bank, which is a customer. Another CEO described the price as low enough that no bank would balk at it. The cost is so low to promote greater participation, which creates greater value for customers, and it is not the only way True Digital plans to make money.
True Digital and TechPassport help banks assess and monitor fintech vendors and partners.
"I think probably from True Digital's standpoint, the more banks that join the network, it starts to make some sense financially," Yates said. "But the real win for them is when banks finally start putting products on Showcase."
True Digital Showcase, which the company launched in October, helps banks turn in-house technology into marketable products. True Digital assists the bank at each step of the productization process — validating the product on the market via the True Digital Network, creating a go-to-market strategy, and finally by leading a venture funding round through True Digital's own venture fund.
Showcase is a win for banks trying to capitalize on technology they have built in-house, and a win for True Digital, which gets the opportunity to share in the equity of the products it helps develop.
One example of a product being developed through Showcase comes from First National Bank of Omaha. FNBO is working with True Digital to develop Ordem, a product for cleansing and labeling transaction data. With Ordem, instead of just seeing a string of characters when looking at a transaction memo — "Target Store#538" for example — the bank and the customer can get more information about the transaction, such as the location of the exact store.
FNBO opted to build their own solution for this task rather than buy one of the many existing products made for this chore, because it wanted to own the model used to enrich transaction data rather than pay a third party for access to a similar model, according to the bank's CEO Marc Butterfield.
Through the process of market validation, Butterfield learned that products built by banks tend to get a lot greater interest from other banks than similar products built by fintechs or other non-bank companies.
"This product that I talked about will never get a seal of approval by our regulators. They will never just say 'it's okay,'" Butterfield explained. "They make what I like to call 'the vote of non-objection,' so the reason banks like other banks' innovation is because there's a general assumption that the innovation has already gone through some of the rigors of these regulators."
Butterfield said this type of product promotes competition in the vendor marketplace by enabling entrepreneurship, but True Digital is also helping make community and regional banks
"I think it levels the playing field in the way that we were unable to do on our own," said Endeavor CEO Yates. "I think regulators and clients would be very pleased with the ability of [smaller] banks to finally have another tool to be more competitive on the technology front."
