This session will focus on how a community bank rethought their growth strategy, and augmented their traditional brick and mortar tech stack, with modern, cloud-born architecture, product differentiation, and scalable delivery to enhance the small business experience.
What you'll learn
- How banks can rethink their growth strategy
- How implementing technologies and strategies provide quicker loan approvals, personalized product offerings, and robust fraud detection
- Actionable strategies to better support SMB growth through advanced, data-driven approaches.
Transcription:
Jody Guetter (00:11):
Perfect. Good morning. It's wonderful to see everyone this morning. My name's Jody Guetter. I am the CMO of Nymbus. We are the very prestigious wifi sponsor today, so please make sure you see Nymbus in the wifi. Make sure you take advantage of that. I have some of my incredible colleagues here today, but more importantly, I have Meggin Nilssen here with me sharing the stage. Meggin is a thought leader in the industry. She's an absolute powerhouse. She's the CMO of CrossFirst Bank out of Kansas. And today we're going to talk about strategizing for success. We're all here because there's something captivating, compelling about the small business space, and today I'm going to take you on a journey, Meggin's journey at across First Bank, how she really tapped into a new market opportunity and identified a small business strategy that was unique to her organization. So I'll get us started. Just Meggin, let's anchor today's conversation. I think it's important within the group today to understand a little bit about you, your role at CrossFirst Bank, but certainly your bank's history and the strategy and your growth to date. It's a very interesting journey to date for sure. So please kick us off.
Meggin Nilssen (01:30):
Well, I'm going to blow up the script. Jody's probably not going to like me. First of all, we're marketing people and we have no slides. I know. Crazy concept here. So just us talking today, I want to get a little show of hands. Anybody go watch Tropicana, get blown up, anybody. Awesome. I'm so glad. I did not know this was happening. I was at the airport yesterday and I overheard a gentleman saying he was coming here to see that, and I thought that was really fascinating. And then I thought, Jody, we totally missed it. We could have totally played this up. We could have had an experience. But you're here because like Jody said, we all have a passion for small businesses and I had the opportunity working at CrossFirst to really engage in this set. And I'm excited to share our journey a little bit about CrossFirst.
(02:12):
We are seven and a half billion dollars in assets. We started as a Denovo 17 years ago in Leewood, Kansas, which is part of the greater metropolitan area. So go chiefs, apologize if there's any Raiders fans. If there are Raiders fans and compliance people. I'm an equal opportunity fan. So just so you know, I crossed all lines. But we are really interesting because over 17 years we've grown predominantly organically. We've done four M&As roughly about a billion in assets. But we really just doubled down in our strategy from the beginning, which was branch light technology focused and hire really great people. We are in seven states, we have 16 locations. We've stayed true to that strategy to date, and we've really just served businesses, professionals and their families. So we just are really kind of embedded in that that strategy has helped us grow over the last 17 years. And that's just kind of where we continue to anchor ourselves as we look at new segments, new markets, new products. And so that's just a little bit about us.
Jody Guetter (03:16):
That's fantastic. So when we think about growth strategies, there's some predictable growth strategies that we all have. M and a is certainly one of them, and we're seeing the uptick in m and a, certainly with the change in the rate environment, it's certainly a seller's market. We could have a de novo expand the existing branch footprint, double down, create an LPO and activate digital bankers. So there's some of those predictable levers for growth. As you just alluded to, crossroad Bank historically has been pretty creative in how it's removed some of those growth blockers and how it approaches and certainly m and a has been a part of that. But talk to us about how you really challenged the crossroad bank leadership team and really uncovered that there was a gap in your growth strategy. And walk us through how you uncovered that and how you brought that to surface within your strategic planning.
Meggin Nilssen (04:17):
So the bank was founded in 2007, and if anybody remembers oh 7 0 8, it was like who wanted to start a bank during that time? But really the founders saw a gap in the sense banks weren't really, they were worried about all kinds of other things. I remember I was in banking, we were worried about a whole subset of other things, and Crossroads was founded really to serve in extraordinary ways. And so they really came to market during a time when there was a huge gap and they filled that gap and they were very successful. And I think we saw that gap in 2020 during PPP, we've always served small businesses, we've always been a part of that community. But in 2020 we saw something really interesting. We all did small businesses, especially really engaging with banks and how they were getting the response that they needed.
(05:01):
And we saw a lot of small businesses moving banks because their traditional bank wasn't responding, wasn't really providing that service that they needed. And so when that kind of happened, we had to really pivot. We are a traditional bank in the sense that from a marketing perspective, I call it handshake marketing. We are a true relationship based organization. And in 2020 that completely went away when we all were home and having to do things differently. So that really opened up our perspective. We've always been innovative, we've always been entrepreneurial, but I think in 2020 there was fuel that was kind of dumped on that. And that really made us start to think about small businesses when we were the recipient of a number of new clients. And most of 'em were saying it's because you guys just called me back. You guys were, you had a great process. Things were going really smoothly. And that's when we started looking and we're like, why are we not growing this set? We do things really well. Why are we not growing it? And that's really what challenged us in our small business strategy.
Jody Guetter (05:56):
Yeah, that's really fascinating. And I think the other thing that's really unique to CrossFirst Bank as well is you've typically been a very high touch relationship driven organization as well. High income, high commercial focused organization as well. So you also start to kind of question concentration limits overcorrection in a certain segment too. So there also then becomes this balance sheet diversification strategy too. And I think we saw that a little bit with some of our other banks within the industry as well with this need to diversify the balance sheet as well. So what type of data did you uncover through some of your research, particularly as you're looking at your strategic planning that really nailed down, whether it be through the PPP program, through some of the new SMB audiences that you acquired during that time that really kind of said, Hey, we really need to pursue this further. Maybe we don't have all of the information today, but this is a strategy worth exploring.
Meggin Nilssen (06:59):
Well, it's interesting. We want to dive deeper. We want to really get to that segment, but we need to do it in a profitable way. We're relationship focused, like you said, we're very handshake driven, high touch, but how can we do it in a profitable way? I mean, we're all battling that, right? It's like we need to grow small business, but we need to do it really profitably and we want to be relationship focused. And so there's all these things that you're trying to balance and we explored a number of things. We looked at how can we just band a bunch of products together and really sell that, but it really wasn't driving the profitability. It wasn't driving efficiency really is what it was. And so that's when we had to take a step back and say, you know what? This isn't going to work. We've really got to take a look at this and find a more efficient solution. And then we started digging into the subset, all the segments of small business. I mean there's a number of them, and really had to find this segment that was going to work for what we were trying to achieve,
(07:57):
Which is where our partnership evolved.
Jody Guetter (07:59):
Yeah, absolutely. I know the presentation touched on some data points before this session, but just some additional numbers to leave you with 28.5 million solopreneurs in the United States today. Non-employee firms, right? One individual sole prop contractor, freelancer 12.9 micro businesses, and that's kind of that two to five, six to nine employees as well. Last year. Record breaking SMB applications, 5.5 million SMB applications driven through rising entrepreneurship, the gig economy, and certainly shifting priorities post pandemic as well is also considered to be an 800 billion lending opportunity for financial institutions. So the data is certainly screaming to add us very loudly that there's a significant opportunity for us that we need to be proactive in pursuing as well. I think all community banks say that they serve small business, but I think something that's really unique that you touched on is with such a large tam, there's an immense amount of diversity in verticals of business, in geography, in demographics.
(09:19):
We're seeing a much younger resurgence of individuals start businesses out of college or aren't even pursuing college. They're very entrepreneurial. So how did you start from this? Hey, there's a gap in the market that we're not serving today to hey, we've now kind of scratched the surface that SMB should be part of our strategy to then getting really narrow and going, there's a subset and a vertical and a geography and a market that we want to be really intentionally focused on. Walk through some of the data, your methodology to help you get to that point of view.
Meggin Nilssen (09:58):
So we put together a team of people to really kind of dive into this. And it was interesting, I get to sit in those and listen, and I know we've all have this potential obstacle is you probably in your credit philosophy or your credit underwriting processes, you underwrite a $50,000 loan, you do a $5 million loan. And it is like we were going through this and we were seeing this obstacle, this challenge. We could be really great marketing, we can have really great products and services, but then when we start putting it in the funnel, it just takes forever. And small businesses. I come from a generation of small business owners. My dad owned a business and I remember him saying all the time is money, and I hate to tell you guys this, so it's probably going to be the bum of the day. But small business owners don't wake up thinking about their bank. I mean they don't.
(10:43):
They're thinking about everything else that they have going on in their bank is probably not one of the top things, but they will think about their bank when something doesn't go right or it takes 'em forever to get something done. If they need a loan and they call their banker and it takes two weeks to get done, it's probably not going to work for a small business owner. And we all know that, but oftentimes we don't really go to the root of a problem and we're not looking at how can we be more efficient, how can we get things done faster? I talk a lot about digitization and so how can we bring in digitization to the process, not digitalization. We're not turning excel into a Smartsheet, but digitization. How can we truly automate the process so we can get more services and more ingrained into the small business so they can scale? And so that's really where we started to see in our environment that we just were putting, and I worked for a lady and she used to say this lipstick on a pig sometimes. And that's when we had to start breaking down and think, how can we really digitize?
Jody Guetter (11:42):
Yeah. And I think what we're seeing within this audience as well, particularly the solopreneurs too, is a greater propensity for a digital experience. It's banking on my terms. And some of the research that we've done with Meggin as well is to really identify that some of these solopreneurs, micro businesses have five to seven different technology and financial relationships, not just their bank but their outsourcing or using some kind of accounting software or CRM software. So they're very self-service and self-sufficient as well. And that was another part of what led you down this strategy of going through to creating a digital bank separate from your legacy system, correct?
Meggin Nilssen (12:26):
Yeah. So that's kind of where we started to really ideate and think about how can we innovate in this space but not really disrupt our brick and mortar. I mean, we have a great commercial lending machine. We do a fantastic job. So we didn't want to disrupt the process, but we also didn't want to go hire 50 more people to try to digitize a process within our organization. We're a highly efficient company. And so that's really where Nymbus came along and really started to help us dive into this segment and say, where can digitization really play? And that's where the solopreneurs, the micro businesses came along and that's why we really started to target that industry and build a digital experience, a digital bank around that group to help them. And so I think that's really where your team on the lab side helped us dig into it, get to the numbers, get to where we needed to get comfortable saying, yeah, that's where we want to start deploying and investing into.
Jody Guetter (13:19):
Yeah, so part of Meggin's strategy as well is we've got this very established CrossFirst Bank legacy institutions still very young in the scheme of community banks, but certainly established infrastructure, established processes, established technology people, et cetera in Meggin really identified that if we're going to serve this audience really well, we can't just kind of force them into our existing infrastructure. That infrastructure was built for commercial customers, not for solopreneurs. And so the strategy for you was determining to create a new sub-brand in the cross first bank house of brands and brand architecture, but also to create a digital experience, a separate digital experience. And that was really paramount to you and really serving this audience strategy really well. So some folks may ask why not just market to them who they are now, where they are, their motivators and drivers or just create a new product line describing a little bit more detail for the folks, the technology challenges at your existing FI that I think probably a lot of you are experiencing some way or another that really took you down this alternative tech path or as we really refer it to, as this sidecar technology modernization approach.
Meggin Nilssen (14:54):
We obviously are part of the big three just like I know many of you are. And so it's really we all go like, oh, we want this. And they're like, yep, we'll put a statement of work in and you'll see it in three years. Well, in three years it's like it's old. We needed something else. And so that's why we knew we had to really think outside the box, think something different. And I mentioned we're a highly efficient company and so we wanted to make sure that when we put something in place that we were really leveraging the technology, not just putting technology in and then having to put a bunch of people around it. And that's really why the Nymbus Bank in a box, sidecar core really resonated with us because we could put the process in place, we could set the parameters, we could put all the risk deterrence in, so all the risk people in the room.
(15:37):
I'm marketing, so don't ask me a bunch of risk questions, but we have all the security and everything around it, but we know that it was a self-sufficient process. And then there's a whole component that's going to service that from the Nymbus side, but yet we're still going to be able to get insights into what our small business clients are doing. I'm sure many of you look at data, look at insights, dive into segmentation, and we can market to that. We can do it all day long, but we bring 'em to our traditional brick and mortar. We can't get 'em through the process. It just takes too long. And so that's why we can still segment market to 'em, but now we can put 'em through a process that's going to be self sufficient, it's going to be fast, it's simple and they can get what they need in a pretty efficient manner.
Jody Guetter (16:27):
And that's so important for everyone in the audience here. It is delivering on the customer promise and it is more than just the marketing, it is the complete digital experience, but the digital experience is not just customer facing, it is organizational facing too with how you operationalize and service it as well. So if your people can't service the customers in a meaningful way, all of those investments are at risk at that point. So you talked a little bit about the driver and the motivator of doing this sidecar technology approach, this separate brand. Talk to me over time what you feel are the advantages long-term with having this type of modernized approach.
Meggin Nilssen (17:14):
So it's not just about technology and efficient processes. One of the things that we really uncovered as well is we want to provide resources for individuals that are thinking of starting a small business. I have two boys, one of them is very entrepreneurial. He got into this whole social media thing and he is making a bunch of money. I'm a marketer and I'm still scratching my head how he makes the money doing this, but he had to pay taxes. And he is like, I got to figure this out. I'm like, you got to start a business. And he is like, how do I do that? So we want to provide resources where I think there was a study that I don't know who did it, and it said, how many times have you asked your bank for advice on your business? And it was like 59% said they never go to their bank.
(17:52):
I'm like, that's alarming to me. We know more about how to start a business than probably most out there, so why aren't they coming to us and asking this question? So that's one of the things that we've really kind of put a lot around in regards to resources. There's a lot of generational shifts that are going to be happening. People, my son are going to be thinking about starting a business and I want to make sure we have a solution that they can go to. They can learn how do you start an LLC? I had the blessed opportunity to meet a brilliant young lady a couple weeks ago. She's going to be graduating, she does beautiful videography work. And of course I'm selfishly like, Hey, you should come work for me. But she was like, man, I don't want to just work for one company.
(18:30):
I want to work for a bunch of companies. It was her polite way of saying she did not want to work for a bank, but she wanted to start a business. And she was like, I just dunno how to do it. My parents work for a company and they don't know much. And so it really kind of opened my eyes that we can provide these tools, these young, this next generation smart. They know where to go find it. They literally get on their phone and ask ChatGPT, and it tells 'em everything they need to know. And so you got to be able to provide that tool. And we knew that. And so that's why we are really leveraging this digital bank to provide a resource and really kind of be the catalyst to when those small businesses kind of grow up to become big businesses, that we also are there to serve 'em from the traditional brick and mortar side. That's our tagline's pathway to possibilities. And so that's really what we're trying to do is create a place where they can go learn, scale their businesses we can support, and then when they need those bigger loans, those more complex services, they have that connection to across our banks.
Jody Guetter (19:27):
Yeah, yeah. I'm certainly biased on the tagline pathway to possibilities, but it also resonates internally with the entrepreneurial culture. We're building a solution, an MVP solution. We have a thesis today, very much data driven and research, really immersive audience focus as well. But this allows us to really create personalized banking experiences and it also allows this sidecar approach partnerships and integrations that may not necessarily be available or flexible solution for your legacy operations as well. So why do you think this type of solution for at least your organization will give yourself a competitive advantage in the marketplace in the short term and certainly the long term, but also how this going to compliment your brick and mortar operations?
Meggin Nilssen (20:26):
The side park core gives us the opportunity to make changes. If something's not working right, let's look at it, let's make a change and let's make it quick. Let's make it efficient and let's see how this is going to respond. And in our traditional brick and mortar, you can't just go in and just turn something and there's a number of things, a myriad of things that you've got to go through and test and validate and all that. But with this sidecar core, it just gives us the ability to be a little bit more flexible. We could be more responsive. So when we're doing surveys, I have to say this, I'm a marketer, I love banks, and I'm sure there's some in this room that like, oh, we have the best customer service. And then you see their net promoter score and you're like, is that really the best?
(21:02):
It makes sure. So now we can get this feedback. And when they say We don't like this, and we're just like, thanks for telling us your feedback, we can actually say, let's take this and really put this through some thought on how we can change things and be really effective in that. And so I think that's really where I see a lot of value in this sidecar core concept because we'll be able to be flexible if we want to target a different subset. If we're not seeing the response that we need, we're not getting that ROI, we can easily adapt, pivot, change.
Jody Guetter (21:31):
It really becomes this, we talked about balance sheet diversification as the driver, but then this also becomes a growth strategy diversification where M&As maybe one lever. Again, market share, share of wallet is maybe another lever, but this digital bank concept now becomes another lever and it gives you also enough latitude in the strategy, like you said, to lean into other verticals of business within that. So if there are economic impacts and shifts, we haven't niched down too far to where we have to course correct in a really aggressive way. Absolutely. Yeah. So who here has had a really great idea and your CEO has shot it down or your CFO? I see why that hand went up really quickly, went up really quickly. There's no shame in this game. Yeah, I see someone's, right? You see some nods. So I do want to bring up the cultural aspect of innovation because it's very easy again to, I go back to legacy thinking that's based on legacy systems as well. The way we've always done it. It's too many blockers to achieve that seems out of the realm of possibility. Talk us through today, Meggin, how you really built a business case around this strategy and certainly got the buy-in of your CEO and your board, but you're also a publicly traded company and there's another layer of individuals that you report to tell the audits about the experience building the business case and how it's been received culturally in your organization?
Meggin Nilssen (23:15):
We have an entrepreneurial mindset just amongst every employee. They're always thinking about how can we do things different? How can we turn things on its head? I am blessed. I get to work with a number of individuals across our company that are always ideating and we're a strengths-based company and I have ideation in my top five, so that's my best day is to ideate. But I'm also blessed to work for A CEO that really does think entrepreneurially. He thinks like a business owner. He's like, yes, we have to be thinking differently. We have to be doing things different. And so how can we do that? And we have to obviously fit within the risk framework. We have to be compliant. We have to meet all the regulatory demands. I mean, we understand that, but there was somebody that commented at a conference that I was at here recently said something about, do we have to get their certificate of good standing?
(24:00):
Do they have to print that out and bring it into the bank? We were laughing. We're like, yeah, why is that? There's just things that we've just done over and over again and nobody ever thinks is that really needed. And so we've really challenged ourselves and I think culturally everybody, it's like a breath of fresh air. Everybody's like, this is really cool. I've been saying this for years. I've been taking this to my CEO. And everybody's just like, whatever. That's not the time, not the priority at the moment. And so I think this has been a really great opportunity for employees across our organization to really kind of rise up and think differently and think how we can be more efficient. And it's even kind of spread amongst other projects that we've been on. I get the beauty of overseeing PMO too. And so that's really resonated there as well is just how can we do things differently? Do we always have to do it the same way? And is there a more efficient way of doing something? It's been great.
Jody Guetter (24:49):
That's fantastic to hear. And I think something else that's important to underscore as well is Meggin came to the table with data insights, a validated thesis and business case. You came to the table with the numbers as well, which is really important, right? Because then that's allowed you to kind of speak to we're this investment because we have a thesis that we're validated, we have conviction behind it. And I think the way that you present it amongst your m and a strategy, which is a big part of your growth strategy, certainly in the next 12 months as well, really kind of secured the attention and sparked the curiosity of the leadership team.
Meggin Nilssen (25:32):
When you look at client acquisition costs, I mean, I don't want to bore you with numbers, I'm a very numbers driven person, but when you look at client acquisition costs, this makes sense. I mean, we spend a lot of money. I know all of you do as well is really trying to get in front of clients in whatever facet that looks like. And so we really broke down a lot of the things that we did and say, this is what the client acquisition cost is for this, and then this is what it is for this, and there's not much difference. And I think that was probably really eyeopening to our executive team. We were sitting around the table just like, wow, this really does give us the opportunity to get in the digital space, really kind of see where we can go with this, but also serve a subset of clients that we know are very important to our economy. And so
Jody Guetter (26:16):
Yeah, that's fantastic. So you talked a little bit about the cultural excitement today. How do you think an initiative like this long-term will have an impact on your organization? Particularly as we think about culture, but also additional investments and even partnerships as we think about FinTech partnerships or even increasing the risk appetite for innovation, because we all know as well, these are big capital investments as well, but it's not a one-time purchase and then the technology sits there. It's a constant evolution and investment's, a very agile approach to digital growth and technology. What are you hoping to get out of this long-term as well from an organizational impact?
Meggin Nilssen (27:00):
We started our journey with Nymbus. I met the team a year plus ago and we contracted at the end of last year. And here we are 10 months in and we're about to drive the car off the lot. It's really exciting. And so I think that's the part that's been really an interesting kind of piece is that we were able to do this from start to finish in roughly 10, 11 months. I don't want to, hopefully, no Nymbus people are going to say no, it's not that quick anymore. But I think that's been really something that's been a very unique piece of what we're looking at. And when we look at other partnerships, it's like how fast can we get to market? What are they providing to us? Jody and the Nymbus Labs team have been phenomenal. They've been providing us a ton of research that we all have to go pay for anyway.
(27:42):
And so I think that's just been a piece that's just been valuable. So as we continue to look, it's like what other opportunities are out there? What other partnerships are out there? What else can we do in the digital space? I mean, more and more, obviously you guys know this. I'm like, it's mundane. Everybody's going to digital. But I think it's truly how can we digitize things and how can we keep it personal at the same time? And I think that's just something that we're just continually evolving and it's partnerships what you guys are providing to us that I think is going to be a key driver.
Jody Guetter (28:10):
Yeah. Yeah, I really appreciate that. So I know you very well now and you're a very intentional strategic individual. I know you're already thinking about version 2.0, right? Whether that's spinning up another digital bank or having a vertical approach to these digital solutions, think about 12 months from now you've got your crystal ball out. What are you hoping to have learned and gained and what are you seeing kind of the next innovation around this digital bank?
Meggin Nilssen (28:44):
It's the hot topic everybody's talking about. It's AI, AI, AI. And I really think this is giving us an opportunity to build a subset of data that we can start to turn and really provide a value add to small businesses. They don't have time to think about what's going on with all their financial pieces. And we humans can't look at something and become a CFO and go to the small business center and be like, this is what you need to be doing. I mean, we try, right? But we just don't have the bandwidth to do that for every single small business client. And so it's really how can we leverage AI to really offer solutions that are going to be value add for them so they can continue to scale their businesses? What's going to create that loyalty? That's when they start to grow up and they're coming back to you and asking you for that bigger commercial loan or treasury management solution. And that's when they become profitable, really profitable. And so that's where I think we're already looking for is how can we put solutions like that in place to help them?
Jody Guetter (29:32):
That's exciting. So I've got 27 seconds left closing remarks. Any advice, anything that you want to leave the team with today?
Meggin Nilssen (29:43):
A couple things. One, I hope all of you had the opportunity to meet the person next to you and make that connection. I tell people all the time, I think your best allies are your friends that work at another bank because you guys all have a number of ideas. People are like, well, I'm not telling the bank next to me because this is my idea. But small businesses are the catalyst to the business economy. There is enough small businesses for us all to get our fair share. So we have to be collaborative and share, Hey, did you read this article? Did you see this survey? I think that's just important that we all are being collaborative in this because if we all do our job and we all really help small businesses grow, we all benefit our economies, benefit our communities, benefit us as a bank benefit.
(30:26):
Somebody quoted, I dunno who it was, it says, pennies turn into dollars. And I think that's really important. Small businesses turn into big businesses and we all need that. And so I think that's just a really important piece. And then the second thing I'll just leave you with is we adopted a management framework called EOS. If you haven't heard about it, there's a book called Traction. You should go read it. It's really cool. It gets just a very simplistic approach to running your management meetings, but it's also a simplistic approach about what you're prioritizing in your business. And this has been key to us. Less is more. So I think it's really just keeping things simple. And that's something that we've been really intentional with Nymbus, is we don't need this thing to go and clean their car. We just need it to work and be efficient and be simple. And so that's something that we've really adopted is just less is more. Keep it simple. And I think that's something that we'll continue to drive as we grow.
Jody Guetter (31:18):
So that's fantastic advice. So as we wrap up trusted QR code on the screen here, Nymbus commissioned a study with finally Research Institute as well, a great white paper with a ton of data points and research as well to help drive some of your strategies and thinking here as well. But I really want to close out and just say thank you so much for your time, attention. I'm always so grateful to share the stage with someone as smart and as passionate about the industry as Meggin. So please give Meggin a round of applause for her time today and I look forward to learning with you over the course of the next couple of days. So thank you so much. Take care.