What you'll learn
This presentation delves into the critical challenges posed by onboarding for digital banking and financial services platforms/apps. Speakers will discuss how and why they broke free from the traditional model, and offer a fresh perspective on customer onboarding that can meet compliance requirements while exceeding customer expectations.
- Rethinking the customer journey - not just as an extension of traditional on-location services, but plotting an entirely new path for entirely different customer expectations.
- Understanding and deftly mitigating the challenges and risks of fraud with digital onboarding
- Innovative Ideas - A new approach to identify verification in a branchless, pure-play digital realm without sacrificing compliance standards
Transcription:
Stu Richards (00:00:11):
Well, thank you everyone for attending this session. We're going to talk about onboarding small business customers. Yeah. Can you hear okay?
Kimberli Green (00:00:17):
I don't think your
Elaine Szeto (00:00:18):
Microphone. Yeah, you're,
Stu Richards (00:00:21):
How's that? Oh, that sounds a lot better. All right. We have liftoff. Well, I'm Stu Richards and on behalf of the conference, I'm a Co-Chair so I get to have fun putting together the agenda. And I hope you guys have all had good sessions today and found value and I think you're definitely get great value from the panel today. And what I wanted to do to kick things off is to ask each of our panelists to introduce themselves and then I'm going to share a little bit of Braden research on onboarding. So Herman, do you want to start?
Herman Man (00:00:58):
Sure, yeah. Really nice to meet you. My name's Herman Man. I'm the Chief Product Officer at Bluevine. And for those that aren't familiar with Bluevine, we're a FinTech that is focused on small business. So what Chime is to consumer think Bluevine is to small business. And so I lead our product and our design and our product marketing teams here at Bluevine. I've been there for a little over five years and having a lot of fun, building new stuff in technology.
Elaine Szeto (00:01:28):
Hi, my name's Elaine Szeto. I'm the Chief Innovation Officer and Co-Founder of Integro Bank. I've been in banking for over 30 years and I always tell everyone I start at age 12. Time flies when you're having a good time. So a little quick story. I've decided to start the bank from scratch and it's a long story. Maybe we'll continue the dialogue at the reception, but I couldn't believe that the problem and the gap we're solving for is very meaningful and it is all around small business. So I'm thrilled to be here to share some stories, lesson learned pitfall that I think you all will appreciate to know. Thanks.
Kimberli Green (00:02:17):
I'm Kimberli Green. I currently serve as Vice President for Business Services and Development for America First Credit Union. We are headquartered in northern Utah and cover a six state territory. We are 20 billion in assets, 1.3 million consumer members and approximately 90,000 SMBs. And my territory that I cover at the credit union is anything non-ending for business. So onboarding products and services, remote deposit, ACH, and then outside sales teams than relationship managers that go and deepen those existing relationships. I have worked for the credit union for 25 years. I'm saying I'm starting lower than 12, but a long time. Very passionate about our business owners. My family is a family of entrepreneurs and so I have that on the personal side and it makes it easy to find my drive every day to help our members find that same success with their businesses. So I'm excited to be on the panel today.
Zarina Tsomaeva (00:03:18):
Zain Reva, I'm the Founder of Loquat. We are a FinTech company, small business banking platform. My background is in legal and banking as well, and I started the company four or five years ago and now together with Kimberli now we're going to be launching very soon. America First is our first client and very proud of that. Very excited, thank you.
Stu Richards (00:03:42):
Okay, great. What I wanted to do is share with you a little bit of research that we did on onboarding. Do we have a microphone? I wanted to gesticulate. Is that working? Alright, thank you. So Braden is a SMB market research firm and we put together a little bit of research on how small businesses feel about onboarding. And this was really specifically in the context of with a bank and really in the context of for checking. But we wanted to set a little context. We asked them what kind of bank they bank with. We asked them how satisfied they are with their bank. And as you might imagine, national Bank, small business owners tend to be very satisfied and actually online banks have the highest second highest satisfaction regionals, community banks a little bit less. But then when you ask how likely are small business owners to defect or depart from their bank, the numbers don't correlate with satisfaction.
(00:04:51):
So larger small businesses and we just broke them out under 500 K or micro businesses on the left, small businesses, 500 K to 5 million and commercial businesses 5 million plus. And you can see 14%, one in six or so said very or extremely likely to leave our bank in the next year and a total of 23%. So almost a quarter of reasonably sized small businesses, even though many of them are happy with their relationship are actually likely to defect. So point is just measuring satisfaction is not necessarily a gauge of defection propensity, but a key thing to keep in mind is that satisfaction starts with onboarding. So we wanted to drill into what makes or effective onboarding, or in this case what would get them to switch. Now there's a lot going on here if you want the full slide, see me if you want the full deck.
(00:05:52):
But when we ask about what are drivers of switching, as you guys probably all know rates and fees, and you've probably heard a lot about all the different kinds of rates and fees today that, and by the way, you don't need to take pictures of these slides are all in the app if you downloaded it, but rates and fees are big concerns. So these top two things as drivers are basically saying the same thing. If I got a higher interest rate on a loan than I was hoping for, or there's fees for opening account or what have you, that can be a disincentive to stay with a bank. The thing that I think is most interesting about this slide is the third biggest potential driver, which is their bank's financial stability. So you wouldn't necessarily think that that's top of mind for small business owners, but they pay attention. So to the degree that you can message like, Hey, we're stable, we're going to be around, your money is safe, that's important. They're paying attention to that.
(00:06:54):
So this is a little bit closer to the direct question of onboarding, and this is I think really good news for all banks and credit unions, which is basically when do small business owners want to hear from you and how often do they want to hear from you? And the answer is they want to hear from you very often. And you can see at the top, a very large percentage of small business owners say they want to hear from you every day. Now that doesn't mean they want to hear from you every day for the rest of the relationship, but certainly when you're onboarding they really want to understand, tell me everything I need to know about my account. For example, how do I authorize my employees to use our accounts or whatever the details are. They really want to understand that. So you should assume when you initiate a relationship with a small business owner, you have permission to engage with them implicitly.
(00:07:52):
They really want to understand how to get the most from whatever kind of offering they're working with you on, whether it's a checking account or a loan or line of credit or payment form, what have you. Another question that we wanted to ask was how open to cross-sell? Are you at the point of opening a new relationship and the answer is very open. So again, at the point at which they've switched from wherever they were, they're opening and started a new business, it a fantastic opportunity for you to say, Hey, you're opening up a business checking account, but let us tell you about how else we can help you. Whether it's with payments or embedded payroll or lines of credit or loans or what have you. The majority of small businesses in every case are very or extremely interested in learning about how else you can help them from a product standpoint.
(00:08:49):
They're also interested in understanding how you can help them from an advisory standpoint, whether it's content on your site or seminars or whatever you're doing to provide advice to them. So really great opportunity right at the point of inception to engage with advice and with content. And then last slide, we would just want to ask, okay, how do you want to hear from banks? And the answer is via email of course. And it doesn't really matter who that comes from. It can be from the bank as a brand or it can be from a relationship manager, bank branch manager, whomever. And we give 'em a lot of options in hearing from bank representative. And again, that can be someone in a call center or can be someone who's assigned on an account basis, but they're very interested whether it's a meeting and even the smallest businesses, the micro businesses are open to meeting with bank representative or calls or even in some cases texts direct mail, not so much, but in some for the larger businesses, a fair number, you're going to video calls. So that's it. So just a little bit of context in terms of the onboarding process, but what I wanted to do is now get the wisdom up our panelists and not small business owners. I'm going to transition on Mike.
(00:10:15):
Alright, so what I wanted to do is, Elaine start with you and you mentioned that you're building an online bank and I'd love to have you discuss the approach you've taken specifically to the onboarding process in the development of the plan for the bank.
Elaine Szeto (00:10:33):
Great, thank you. So it's really not a digital bank, I would say it's not going to be a brick and mortar across the nation or headquarter in Phoenix, Arizona. But our approach is very unique knowing that the adoption of digital went up by 90% after Covid, we understand that it's an opportunity for us to roll out digital solutions with very, very deep consultation and we develop our own technology in terms of providing our clients complimentary evaluations. A lot of small business don't even know where they stand, where their value's at. The reason why I'm so excited about embarking on this journey is that imagine that you get to build your bank with any technology and that's dangerous. You don't have to worry about legacy that sign me up. I would do that all day long during my career I have rolled out over a hundred product solutions.
(00:11:40):
So I was very intrigued in doing this, right? So the challenge is when you start a new bank, you don't have a big budget to work or much a budget at all. So you had to purchase a core system, right? You got to build layers of digital solutions and you had to hire people and you had to stand operations and you're counting pennies every day. So I was being approached by a really good FinTech partner who refer this great FinTech and they started digital onboarding product literally just maybe a year and a half ago. So they approached me asking me if I want to do pilot, I don't have to pay that much in terms of starting this whole platform with them. And when you work with FinTech, and I love FinTech friends, don't get me wrong, but they tend to sell you and say the things that you want to hear.
(00:12:40):
Oh, integration to your core, not a problem. We have friends that can integrate into your core using API, no big deal. We'd done it before. And so everything was so rosy, I was so excited. We're going to be able to dictate. And the problem is when we got into it, it was very clunky. The integration was forever long, never got halfway through. So he created a lot of work. So not only we're trying to fill in the blanks and then we have to go into the system and we do everything all over again. So the adoption was horrible. So I just wanted to kind of present to everyone that you got to do your due diligence, you have to really know what kind of risk and return you're taking. So it wasn't a surprise that we said, Hey, halfway through this is not working. And understand that we didn't provided with tools also making changes and you know how fast we all move with the small business needs and wants, even changing the rates. I had to wait for three weeks for them to change it on the platform. It was horrible. But Nina, Nina to say, I feel that now we're smarter about what we're looking for and we're going to be really strategic. And not to mention when you develop a platform, you have to think about different generations and how they want to be interacted with the platform and when does the human intervention comes in. So these are some of the things that I want to bring to the table and for you all to think about.
Stu Richards (00:14:26):
Sure. And can you tell us a little bit about what you were designing for the user experience during the onboarding process? How did you optimize that?
Elaine Szeto (00:14:34):
Yeah, so my requirement at the time was it's not just about account opening. Every time you help a small business, you have to help them with consumer and business account. And by the way, they need ACH, they need online wire, they need QuickBooks, they need QuickBook integration with online banking, they need debit card. So how do you service through a digital channel that is so intuitive? What if they come back and it's existing client with the system, be smart enough to say, I have all your information. You don't have to retype everything all over again. But there was so many different process because nothing was integrated so it was so choppy. So once again, that was the goal is to allow folks to bank any way they want. With us there are baby boomers that won't touch the system, so you have to be ready to service them differently. So I'm actually excited to embark with another FinTech, so more to come, but I also have friends at the table that I want to talk to as well.
Stu Richards (00:15:44):
Yeah, no, thank you. And Herman, actually, I know we talked a little bit about the Bluevine approach to integration and you talked about the importance of really designing with a platform mentality. Do you want to talk a little bit about that?
Herman Man (00:15:59):
Yeah, I think similar to what Elaine was talking about, there's a lot of different technologies out there, but I think when you build, and again from Bluevine's perspective, we're fortunate in the sense that we don't have legacy. So we built from day one on AWS and we built a services platform model. And what that means is within our set of products, so to take a step back, Bluevine, think of it as a hub and spoke model where the hub really is the Bluevine business checking account and you have spokes and your different spokes include lending products. We have a line of credit, we have a credit card product, we have an AP product that we built as well from the ground up. And so really there are two doors into Bluevine. One is through lending, another is through business checking. We actually started with Lending first.
(00:16:49):
So Bluevine after the great recession, as you know, many small businesses weren't getting access to capital. There was a crop of cabbage on deck and so forth. And Bluevine actually started with invoice factoring. So that was our legacy. We've since sold off that business and we've focused on line of credit. And so what this really means with a platform in mind is the small business can onboard as a lending first customer, not have a business checking account or they could sign up with a business checking account and then get AP products as well as the lending products and credit card products if they want to continue to bank with Bluevine. And so the way that we think about it is regardless of which door they come into, it's the same building. So we need to provide the exact same experience for them regardless.
(00:17:41):
So on the left nav, within the Chrome of that experience, the small business that logs in, whether or not they come in through lending first or business checking first, we'll have the exact same experience. We'll have the exact same experience. To your point around cross-sell because they often want products from Bluevine. That's why we're building more and more. They get that exact same experience. And I was at a few talks earlier where they talked about specifically knowing the information about your customer and not having it to be repunched in or retyped in, that's a single platform mentality where you could actually use that data across, share it and do all the back office, but also give a great experience for the customers as well.
Stu Richards (00:18:24):
That's great. And Kimberli, you mentioned that American first you have a goal of doubling your portfolio without doubling headcount. Do you want to talk about how you and Zarina are approaching that?
Kimberli Green (00:18:37):
I would love to. We like lofty goals, so why not the stars? So I remember sitting in this conference, I think it was when it was in Nashville and listening to my counterparts at other credit unions or small banks and what are they doing for onboarding? And we spent a lot of time looking at not only did we need to improve the member experience, the client experience on the front end, but I've had this goal in mind in our leadership. We've had a very specific strategic strategy to really go all in on our commercial services. And if we can't get 'em at onboarding, I'm never going to be able to sell them all the great products and services that we have. And I have to be able to scale that growth and be efficient. So we started asking a lot of questions about the front end looks good, but also what does integration look like?
(00:19:26):
We have a homegrown core, so that is also something that adds a lot of complexity when we look at working with FinTech and third party vendors. And it had to do more than just solve for the front end. I needed help on the back end. So for those of my friends in the room in business, when you think about backend verifications on know your customer, know your business, there's over 30 checkpoints. America First Credit Union does on every business account, and we have a team that does that, and I can't scale that growth without doubling those FTEs. And so we needed a solution that would help with automation, it would help improve the experience. Our application was very clunky. It was based off a consumer model. So our credit union has been around for 85 years and at 1.3 million consumer members, that's the primary platform.
(00:20:15):
They took a consumer app and fix it up a bit to help businesses, but businesses need and deserve an entirely different experience than onboarding and help with going through that application. So this is all the research and the questions that we've been asking as we started to venture out and find a partner that was going to be able to help not just the front end, but the back end is we had some lofty goals in mind and it was much more than just the user experience. I needed a solution that was going to help my current staff be efficient and take those 30 manual checkpoints and decrease that, increase our automation and help us achieve those growth goals. And that's when we found Serena and the low clock team.
(00:21:00):
I know she has some slides to share with you, but just another perspective that my counterpart brought up about asking the right questions when you're working with a partner, Loco originally came to America first with a lending platform for our commercial lending and we loved it so much we got to sit in and see the demo and we thought, why not ask could you deliver an onboarding for new accounts? And Zarina and her team have been working hard. It's been a two year, three year journey together to get there, but I'm so excited for her to share some of those solutions because they delivered and we ask good questions and I can say with confidence, we are in implementation. They are coming through with those promises that we were very worried about in the beginning because it's very complex. It sounds great upfront, but then once you start peeling back the layers and connecting all the dots, that can be a process that doesn't always work out.
(00:21:55):
And so working with a partner that was able to listen and be innovative and work alongside us to figure out what our businesses need. One more plug and then I'll turn it over to Serena. The compliance piece of business is not something that all of our third party vendors understand. They are in sales and they are in innovation and building and it's not always sexy to have to talk about compliance and all the checks that I have to ensure that our credit union is being protected and our membership is being protected. What was great about the team at Low Quad is she had individuals that had been working in compliance and security up through FBI chains and they spoke the language and understood the importance of making sure all of those checks and balances were in place and I never felt like it was brushed off and I felt like that a little bit with some of the other application products that were out there because again, they were in my perspective, providing a better display on the front end, but nothing was really solving on the back end. And I needed more than just icing on the cake. I needed the entire cake in order to achieve my goals. So I'll turn it over to her.
Stu Richards (00:23:14):
Wow. Yeah. Do you want to stand up or do you want to go through your slides?
Zarina Tsomaeva (00:23:19):
I think it's fine. Just put the slides. There you go. Okay.
(00:23:29):
Yeah, I think that's why when we are putting the slides together, sorry, my voice is getting down the air conditioning. I was trying to think what are we actually trying to achieve, right? We are a FinTech and for us we are innovative. That means we have to solve somebody's problem. And I know what Kimberli was saying that yeah, we are trying to listen. I think communication and listening is the most important thing, right? You're trying to listen to the business owners. We are trying to listen to the clients and without them we wouldn't be able to build the best product because we need to sit and listen. But I really have to give a credit to A FCU. They listen to us because the way we were approaching things, we question every time we come on board. You're saying you have this process in place, why?
(00:24:17):
Please explain. Every time A FCU as well was able to sit down with us with our specialist and say, okay, we've been doing this like this for so many years. I'm like, so right. The regulation is not there. Are you sure? Actually right now what you're doing, you're treating your business customers exactly the same way you're treating the consumer customers, but that's not the same. So this communication that actually helped us to build the product together, coming back to the slides, what is it to deliver this amazing experience for SMB is not complicated. That's what I've been trying to tell our IT team, trying to tell the customers as well. It's not complicated. The technology is there, right? You just have to sit down. You have to think, what do people expect when they want to open account the same as all of us expect.
(00:25:09):
You want to have a positive experience, right? And people are questioning me. Why positive? Every time I can tell you I have to call no one from Chase or Citi customer support. I'm trying to postpone because I know it's going to take enormous amount of time. I have to repeat myself all the time. I don't like that experience. It's not a positive experience. I have so many things going on that I have to go through during the day. I am constantly saying, I'll do it tomorrow. We don't want to achieve that. We want to have a positive experience. When people exactly receiving this email, your account is open, it's easy, it's nice, it should look good. Fully digital. No one is questioning this anymore, right? I think four years ago when we just started, when we were starting, we would contact the banks and they would say, we don't need to change anything.
(00:25:57):
Yeah, COVID happened. Everyone realized it's time to change. We are onboarded fully. Digital is important, personalized, different panelists. Were talking about being personalized. Is it possible? Absolutely. Do we know the clients? Yeah, we better, right? Because they're different. They're different. Small businesses, different industries. Are we treating them the same way? Absolutely. Is it the right thing? No. We started, like Kimberli said, we started in business land. You're saying why the cards, why the payments, why the landing products are exactly the same, whether it is a coffee shop or it's a construction industry. It's a completely different proposition. It should be completely different risk model. You have to approach it this way. Transparency. Sorry. I think people these days, and I think it doesn't matter, right? What generation it is, whether it's the 15 year old's or 90 year old's, people expect transparency these days. People know that if you are asking for something, you better explain why.
(00:27:01):
If you want me to connect with pla, who is pla? Why do I have to do it? So this approach, and that's exactly what we've been using when we were building the app because we are thinking you have to communicate, you have to be transparent. And the last inconvenience, right? Again, what do they expect? Whether you're on the mobile phone, whether you are on iPad, desktop, I want to be able to switch, I don't care. And if I have a question, I want to walk into the branch and I want the employee of the branch to help me. That's what people expect these days. Is it doable? Absolutely. Technology is there. Absolutely. You just have to sit down, communicate and design the process that works. So that's the first slide. Alright, how to achieve this. It's exactly the same approach when you're trying to build something, set partner, collaboration, we've been talking about it.
(00:27:54):
You have to talk, collaborate. And again, huge credit to America first, credit union implementation difficult. Absolutely. When we walked in the first time, the technology team, and again 40 people, no one is speaking, everyone is silent. Then step by step, you start realizing that even within the big company, and it's a FCU, I'm sure citizens of the other banks, they have the same issue. People work in Silas, they don't communicate. People don't communicate between different divisions and especially tech. Normally the expectation is you tell us what to do and we will do it. They don't even understand why. And then it's difficult for people. When people start working together as a team, then it works. And again, credit, credit, credit. Because now our team really working together successfully have all the meetings with technical teams between our team and their team, it works. So collaboration, elite, ui, ux.
(00:28:57):
Again, yes, it has to look good. We know there is a reason why Apple is making that much money. We know are they innovating? Not innovating, but touch and feel. It does matter and people expect this as well these days. Omnichannel, I talked about it, right? You have to be able to switch from one device to another and it has to be easy building verifications. That what Kimberli was talking about. Again, there are not that many providers out there. And the approach that we chose because we were choosing our partners for vendor verification, we are looking for the direct access to the regional data. People have to ask questions. What I'm noticing more and more people don't ask too many whys, right?
(00:29:45):
Where are you sourcing this data from? Do you have a direct integration with the secretaries of state? Do you have a direct integration with the IRS? How are you running these checks? We do, right? And I think everyone should because if something happens, we will have to answer why it didn't work, why there is fraud. I think we have to bear all the responsibility because yes, to have and to keep other people's money, that's important. Especially for small businesses. They're not just falling from sky on them. They work really hard. Alright, advanced employee portal. That's what we talked with Kimberli about what we have as well, what we built because we realized it has to work together. If someone is opening the business account, then the A FCU employees have to be able to track the application in real time. Is it possible? Absolutely. They should be able to see what checks, what are we checking?
(00:30:44):
Are we checking the document? Are we checking the address? They should be able, again, it's going back to transparency. It's the same humans. They also want to have and they have to have and deserve to have a good experience, user experience. So I think it's important. We don't have to talk a lot about data. I think everyone knows that it's important because if you do have access to data, if you understand data and you have use it in the right way, that's gold. We all know this. So that's how we are thinking about how to achieve this. And I think the last line, that's about the numbers, right?
Kimberli Green (00:31:26):
Yeah. Stu, do you want us to keep going or do you want to,
Stu Richards (00:31:29):
If you've covered the main points, I think we're good. Yeah, I've got tons of questions, but I actually just want to make sure everyone knows we have the full hour until the break. You don't have to stay, of course. But what I wanted to do actually, Elaine, is to go back to the bank you're building and I was really intrigued by a conversation that's come up, A topic that's come up a couple of times is optimizing the trade-off between automation and the human touch,
Elaine Szeto (00:31:56):
Right.
Stu Richards (00:31:57):
Especially for account education or exceptions. So how are you handling that?
Elaine Szeto (00:32:03):
That's a great question. So ideally what we would like to do is to really be able to roll out a onboarding platform that is fully digital, but at any given point in time, they need help. They should be able to reach us. I never want to have a bank that there's no human touch. And just give you an example, the other day we had someone who was literally 90 years old that want to open a cd and my team came over and said, Elaine, this person's dead. I said, dead. What do you mean? Well, she's dead according to the verification. So come to find out, she mistyped her social security number and it took us about 45 minutes to walk her through how to DocuSign, just a few pieces of documentation. So I do like to believe that you can build as intuitive as you can, but there's still, you have to have human intervention and that's where the trust comes in. So I hate to say this, that there's so many different generations. I just actually reminded myself there's a silent generation because of that individual. We help with silent generation who does not like technology. And you have the I generation, they don't even want to talk to you. So to answer your question, I think it's really important to have the sense of balance and give folks a choice of how they want to bank with us.
Stu Richards (00:33:43):
Yeah. Then Herman, same question. You mentioned the Bluevine, it's all about efficiency. So I'm intrigued at how you're balancing the human touch with automation.
Herman Man (00:33:51):
Yeah, yeah. So as a FinTech, if I take a step back at what are the guiding principles that we have, we think a lot about the customer experience. We think a lot about the back office compliance angle of things. In fact, I'd argue we our sponsor bank underneath because not a bank is a coastal community bank in Washington state. And we actually have torque reviews, we have credit reviews, we have everything with 'em, and they're impressed by the compliance layer that we built. But when we think about the experience as a FinTech and as frankly a ventured fund funded startup, you really think about two things. You think about the customer experience, how can we differentiate that? And then the second thing is you care about the cac. So what Kimberli said, you want to double volume, but you don't want to double cost. That's something that we really care about.
(00:34:46):
And so the ability to go automate and use all the different data points to do KYB, to do KYC, to do the selfies, it's really important. But at the same time, when they do run into issues, the customer wants to reach out to a real human being. And so the ability to talk to somebody is really important. So there's different modalities by which they can go talk to Bluevine. There's chat and using chat agents and using AI around that. But specifically they can reach humans as well. They can reach humans through chat. They could also reach humans through a call. So really the flex between the two is really important. I think before this session here, the gentleman at Citizens, if you were here, he kind of talked about basically over the long term the digital experiences that we're all building on stage here and that all of you are building as well. That's going to be commoditized. That's the experience. How do you differentiate is really the customer support and tying that back into a real human level company and one that actually cares about their customers. So for us, that's the whole package around the experiences combining both the automation so it's quick. They can get decision within minutes, but at the same time, if they need to slow down and talk to someone, they can.
Stu Richards (00:36:09):
Great. Kimberli? Yeah, same question.
Kimberli Green (00:36:12):
So one of the thoughts that came up while you were speaking in part of this, figuring out what is going to be the best business onboarding application for our members. Some of the things that we took into consideration. So a lot of our organic growth were already consumer members that started up a hobby business and we have a lot of our growth goals are leveraged toward medium and high value businesses, but we needed a solution that's going to be a pleasant experience for all three. So part of the application process that was important to us to build in was to walk that business through why do I have to list anyone with more than 25% ownership and what documents do I need to upload? And keeping in mind that they're doing this after hours because during the day, well a business owner is 24 7, they're focusing on their shop and their widgets and the last thing they want to do is spend hours finding paperwork and having to go through a clunky onboarding system.
(00:37:11):
So that omnichannel approach and meeting our businesses where they are at, whether it's midnight during business hours, I start on my phone, I can pick it back up on my laptop when I get home after I close shop or I'm done with my employees and then also our employee side at America, first Credit Union, for them to call in and talk to someone or go into the branch and be able to pull up, oh, it looks like you stopped right here at this part of the application. Let's pick that up and I'll help you finish that out. Because not any one business two businesses are built the same. And so it's really important to figure out a way how to build a customized experience that is not going to shut down your business profitability and do it with efficiency. So those are some things that came to mind as it's a difficult process and there's a lot to take into consideration and not only having that user front end experience, but also how do we incorporate improvement and growth in the backend as well.
Stu Richards (00:38:08):
And I would imagine negotiating with your suppliers, because each
Kimberli Green (00:38:15):
Just
Elaine Szeto (00:38:15):
Me ask questions, it's all very important. Add to what you just said, I really think that we ought to think about how do we leverage AI to just have some basic logic built in there to shorten and increase that efficiency. But I don't know you all looking to that as of yet.
Herman Man (00:38:43):
Yeah, so I'm happy to go unless someone wants to go like it says, I think about, so I'm a technologist at heart, so CS degree went to Microsoft developer at Microsoft and then I moved to Xero. I was doing a whole bunch of stuff. I care a lot about AI and when I think about AI in our space, I actually break it down into three categories. Number one is really productivity. The second one is kind of proven external use cases. And the third one is kind of feature driven experiences. And so what I mean by that is the first one is productivity. I don't know what your policies are within your financial institutions of whether or not they have access to your employees, have access to ChatGPT. But obviously the studies have been out there around productivity, around what you can do. So our HR teams, our compliance teams, our product managers have access to ChatGPT to make them more productive along that process.
(00:39:40):
The second one I would say is like proven use cases. So chat is a proven use case within there you have a corpus, our corpus, you have a library that you can feed in, you can use it to actually communicate with your customers with relatively guarded rails. The third one though that isn't proven yet is really what is the aha moment. So there's back office capabilities that you could do around OCR and digitization that really help with processes, but what's the delight feature on the front end that you can build? Is it forecasting? Is it really segmentation? Is it really understanding and benchmarking? I think that third category is the one that's not clear yet. I think the first two are relatively clear, but the third one, I think there's a lot that are seeking that answer ourselves included. But there's an opportunity there. And obviously in a market or in a vertical that we're in where it's heavily regulated, we also have to be careful. So
Elaine Szeto (00:40:44):
Yeah.
Herman Man (00:40:44):
We don't want the models to hallucinate and give small businesses completely wrong erroneous advice. And so it's really finding that balance.
Elaine Szeto (00:40:53):
Yeah, you're missing a zero.
Herman Man (00:40:54):
Yeah,
Stu Richards (00:40:56):
Exactly.
Elaine Szeto (00:40:56):
I know zero. Yeah,
Stu Richards (00:40:58):
That's right. Zarina, I'd love to get your POV on AI.
Zarina Tsomaeva (00:41:03):
Yeah, I just thinking I think quite a few are thinking about the application of AI. From our standpoint, especially now we are focusing on onboarding, right? AI, it's data. AI is ultimately still thinking there's a lot of money to think. So for us, for onboarding, we are still answering the questions. So it's like use ai, why do we need to use AI? Do we need to use AI for onboarding? What question are we trying to answer? Because when you are opening the account, you just want to open the account and you want to make sure that you follow all the regulatory rules basically, and you want to make sure that you don't let the fraud step in. And then let's go back to ai. Absolutely. In terms of self in of the verification of the documents, close again, based on the experience, based on all the questions we've been asking our vendors, but by the end of the day, I don't want any human to some extent if they want to get verification, okay, does this document, does it match the database?
(00:42:16):
Do you have this company registered and it exists and it's still operational? Is it in the Secretary of States files? Basically that's the question I wanted the answer, right? That's it. Because in order to open the account, I want to understand that business exists. Business is legit, and the business owner or beneficial owner of an authorized sign, everyone we have, they also, they go through this experience and they exist. They're alive according to the records. That's the only questions we are trying to answer. So that's why when people start throwing for me, right from my perspective throwing, okay, do we need to use AI first? That's the question. What question are you trying to answer? Can you help for developers? Absolutely. Right. ChatGPT questions again, careful, careful. The only thing still saying, please use your judgment. I can tell you now in marketing sales space you see so well, when someone is using ChatGPT and someone using AI, it's not human is writing. I don't see the best journalists you can tell them. You can tell right away. Is it the journalist who writes very well or it's Chad Chi's writing. So I think that humans, we still need to ask ourself, do we need this a lot? And then and use our own brains basically to understand and even if we have the answer from ChatGPT, still question, still question.
Kimberli Green (00:43:47):
Well, and I think it's a combination. So I'm thinking about AI and the onboarding. I have a question and I'm going to have a level of virtual assistant help me answer that before I connect to somebody and letting help, helping different levels of AI on the onboarding process. And even when they come to our website, there's that chat with me now. And that to me is a portion of AI, but still that human interaction, I think it'll be a nice combination moving forward and you'll know you're successful when you can have those efficiencies and have a solid AI integration that you trust that mimics the culture of your financial institution without having to have as big of a workforce on the backend to support that.
Zarina Tsomaeva (00:44:34):
Maybe. You mind just a little bit on that note. I keep thinking, I think the biggest challenge, two challenges the industry, especially finance industry is going to be facing is fraud and security. With the AI I
(00:44:50):
Fraud. I mean how do we know, right? Because we are trying to understand how we dealing with the right human, how we dealing with someone who say they are who they are. Is it a bot or is it an actual business? That's the biggest challenge and that's the biggest challenge and that's why especially I think that financial institution should use technology park. I'm not talking about us, I mean it's your judgment call, but you have to select and be careful in selecting the ones and go and ask the questions. A CU have to give them again, a credit for two years. But the cybersecurity team will asking questions after questions. It was like more than 200 s. How do we build the model? What data we using? I'm like ask Altman what data did he use? But it's the right due diligence and we could be frustrated but to do the job, that's the only thing I can tell, right? Because we have to do our job and yeah, Rob, that's the big issue that's facing the industry I think.
Stu Richards (00:45:54):
Thank you. Okay. Who out there is challenged by onboarding or afraid of AI and has questions for these guys? Okay, well I have questions for you guys. Oh, I'm sorry. Go ahead.
Elaine Szeto (00:46:09):
Yes.
Audience Member 1 (00:46:11):
Think that essentially we try to force ourselves to use AI in every component of the business basically. And it's not wrong, but it's not right. AI essentially is a robust solution that can be used in different areas. What is the need? This is the question that we need to ask, not just force ourselves to implement AI.
Kimberli Green (00:46:32):
Just to use, to use.
Audience Member 1 (00:46:35):
So to your point in the leading principles that you presented at very beginning, yes, AI can serve us during onboarding process as a convenience recommendations. For example, from my own experience, we faced with a challenge with Nick code asking the business owners what is your next scope?
Kimberli Green (00:46:55):
And they say which one,
(00:47:00):
It's true.
Audience Member 1 (00:47:01):
Kind of using AI to help them determine what is their next scope?
Kimberli Green (00:47:05):
Correct. Yeah.
Audience Member 1 (00:47:06):
So this is the convenience.
Elaine Szeto (00:47:08):
Yeah, absolutely.
Audience Member 1 (00:47:09):
And I agree to your point that essentially the risk is in fraud in the future and this is a problem that we need today, but we going challenge to be this in the near future.
Herman Man (00:47:23):
Yeah, I think right now AI is definitely in a hype cycle. I think we've seen that. And to your point really, AI is a how not a what and you just need to be very clear on what it is that you're going to go use AI for. And it's a how in terms of getting there and frankly it's an unproven how. And what I mean by that is there's been a lot of hype around developers using AI to go generate code, but nothing has proven that it could scale to the size of Amazon or Microsoft as a company. Anybody who's been a developer knows that one of the hardest things around fixing stuff is actually understanding what was broken in the first place. And when you have a machine that generates things and you don't understand the nuances, it's super hard to actually dig into those details and it's super hard to continue to build something and scale. So how do you know if developer one and developer two actually can talk together and that the AI systems generate code that are symbiotic? And so again, it's a how, and we're still learning the how is and we're early on, but everything else when you get into it. And so while there's a great potential and hype cycle right now, I think the key thing to get grounded on is really the what and what are you trying to solve and how can that potentially try to help you.
Stu Richards (00:48:56):
Anyone else have comments on AI? I'm Jason. More questions? Oh, whoa. Okay. Yeah, it's right there. I'm sorry.
Elaine Szeto (00:49:05):
I thought he was going to come over and see the bar open.
Stu Richards (00:49:09):
Any other questions? That's great on AI, thank you. Sure.
Audience Member 2 (00:49:14):
Is there really any success in identifying frauds for opening up legitimate accounts? Meaning that they're doing the secretary of state registration, they're getting their IRS number, but they're opening that account for nefarious purposes. Any way to catch them on the front end?
Kimberli Green (00:49:37):
From my experience, I mean I'm certainly not in our fraud department. We have a very robust fraud department. I'm sure they're listening. In my 25 years, I have seen one that went through all of that to get into the name of someone. Another business actually here in Clark County, we have 14 branches here and we're cashing checks. I'm in that business's name, but I think that's very low because that's a lot of work for a criminal to go through. And that's actually false. There was a second one in Arizona, so two out of that many years, and it's actually one of my selling points to my fraud friends about geofencing and threat matrix. I'm like, do you know how difficult I make it to open a business account? Nobody's going to want to fraud that because it's going to be like time and all of these things. And so I have only seen it those two times from my perspective in the business realm.
Elaine Szeto (00:50:34):
On the reverse side, we had false positive situations where we really had to peel the onions just to make sure that we're not just using what the system's telling us. So you have to have a check and balance in place as well. So it's a great question, but according to some of my friends, they did share as soon as they allow customer to open accounts digitally, they identify more than 50% of all fraud. It's pretty scary out there. So it depends on where you are doing business as well. Right. Did we answer your question?
Audience Member 2 (00:51:17):
You did. Thank you.
Herman Man (00:51:18):
Yeah. And for us, I think as I think about it, and I think there's first party and third party fraud, maybe that's kind of what you're somewhat getting to as well.
(00:51:28):
So there's stolen identities or synthetic identities, and I think there's a lot of technology that we use and some of the vendors that Kimberli mentioned there help solve a lot of the third party fraud. I think what's harder to detect is first party fraud. And so when it is a true identity of 'em and there is no history of fraud, you start looking at behavior and what that behavior is. Now, as that first party identity does more fraud, you get more age data on bank accounts and history of said person. And so you're able to use signals through that to determine and have a better accurate read on first party fraud. But for us, we generally break down first and third party and then solve it appropriately.
Zarina Tsomaeva (00:52:22):
But just to add to that, I don't think we ever going to be able to solve for a hundred percent.
(00:52:28):
That's another thing always to approach, right? Because when we've been having conversations with A FC, we're always asking how many of these use cases you had, like Kimberli just said over the last 25 years too. I'm like, okay, then we use the manual process. There are always signals there. There are always the red flags, then push it to the manual process. But at least for 80% you have to solve it in a digital way. We are never going to be able to catch every single fraudster because they're always ahead of us by nature. That's what feeds them. But 80%, that's amazing if we can do that, and they're not that many process in reality. So we have to, that's what we are trying to focus on. Even introducing some features or additional checks. Do you want to overcomplicate because that's what we've been seeing, right?
(00:53:26):
So many now. Yeah, so many now ago and let's digitize everything. No, it doesn't make any sense. It becomes clunky, too complicated, and there's no need for that because if you are digitizing something, there is one use case in a million, there's no point. There's no point for that at all. So that's why it's important to just sit down and understand your client base and look your history and see, okay, what are those fraud cases you've had because your clients are different from a CU client, but not the same. The geography is different. I'm based in Florida, there is different level of fraud. Let's put it this way, not, but it's the same thing. Majority of central are. I mean, oh, they good sum times. And it's a communities, that's another thing. Credit unions or community banks know their customers. They're communities. They were born there, they went to school, they lived there. They know each other so well. They know these shops. They know moms and pops. Why are you introducing so many questions? 'em applying for a loan, they're going to pay back because they have to run their business because they want to apply for another loan. Anyway, it's just all these questions for us, I think that's where we were starting, try to learn and understand your customer. And so for 80% of the use cases, not for hundred, I don't know what's your experience?
Herman Man (00:55:00):
Yeah, a hundred percent agree, no pun intended. I think anything that you try to solve for a hundred percent accuracy is just, it's really, it's near impossible. And I mean there is one way to do it, which is to onboard nobody, right? And then you're guaranteed you hundred percent say That's not going to get none of us. Exactly. Then you run up against other goals. So to your point, really at the end of the day, you have to be practical and anything else, those in the lending business, you have lending thresholds in terms of what your loss targets are and what's acceptable and likewise as you go through around fraud.
Stu Richards (00:55:38):
Alright, we have time for one last question. Anyone else? Okay, I'm going to ask one and Elaine, I'm going to start with you again. Okay. So on the positive side, how do you optimize the onboarding process for Cross-sell? Is that a focus for onboarding?
Elaine Szeto (00:55:58):
Absolutely.
Stu Richards (00:55:59):
Yeah.
(00:55:59):
Tell us how you've designed it.
Elaine Szeto (00:56:01):
So one of the reasons why we embark on this journey with this FinTech was that they're willing to allow us to really be holistic. When you open a checking account. We ought to make sure that they can order checks and then by the way, you need debit card. And in many ways I was a little worried too that the client would not know which checking account is the best for them. That's why I really think that somehow, and I don't want to go a little crazy about AI again, but imagine that you ask 'em a few questions is more like consultation. And they really, really want to just open accounts online. If I have a number of bundled products and solutions, we ought to be able to ask a few very quick questions and make it so easy for micro small business. And I packaged five solutions for them.
(00:57:02):
And then imagine they go online, they answer some questions and then boom, we give them basically, okay, your account's open now here for you to order checks. And then for your debit card it is underway and oh by the way, your bill payment is ready to go as well. And then how would you fund your account? The whole cross-selling should be really well integrated that it's almost intuitive. If we can do that, I'll be very happy. But I haven't solved for RDC and ACH yet because a regulatory requirement, depending on your policy, you may have to do a site visit. So it's not like where you just give everybody a scanner and deploy it that way. So there's some complexity, but I think that if you do it right, it should also allow us to get a quick alert and then we can follow up to complete the whole fulfillment for other complicated solutions.
Stu Richards (00:58:05):
Great. And Herman, how is Bluevine managing cross sell?
Herman Man (00:58:10):
Yeah, I think it's kind of like where we started around the platform piece. I think what Elaine's saying absolutely makes sense, which is I think when you start thinking about your solution as a platform, it automatically follows that you're able to cross-sell because you have all the common pieces that exist for you to be able to, and I think when I think about my own personal banking experience where I bank with one of the largest banks in the US so you can figure out one or the other. They keep on telling me to get a mortgage and I have a mortgage with without. So why are they telling me this?
Elaine Szeto (00:58:49):
You buy a bigger house.
Herman Man (00:58:51):
And so the ability to have a platform, have that data, be there and be intelligent, I think is basically the groundworks. And look, all of us want to be able to go cross-sell because we think we could provide value for our customers by doing so, and that's why we're building more products to cross sell to them. But it starts with making sure that the right plumbing and infrastructure exists for you to be able to go do that. And so that's how we think about the problem.
Stu Richards (00:59:22):
Kimberli, how are you and Zarina approaching that?
Kimberli Green (00:59:25):
So that was one of the important parts of our discovery and conversation. So we front load, which of these products and services would you like to have with your business account? ACH business remote deposit merchant. As she was saying, there's not a lot that are self-serve when it comes to those more complex business products, but we did have the ability to integrate direct referrals so a human doesn't have to be involved. Our back office teams gets those In addition to instant funding, right now we have most financial institutions. We have a large focus on deposits. I want to make it extremely easy with the click of a button for a business to fund their new business account at opening. And we offer certificates. By the way, did you see our fancy money market rate that we're offering right now? So those things are being worked into the application. And then after the account was opened, most do we have a 90 day onboarding program and we front load our most profitable and highest usage of business products and services to make sure that that business knows. If you didn't understand this, that account opening and you haven't heard from a relationship manager yet, here are some things available to you at America First Credit Union, that should make your business banking a better experience and easier.
Stu Richards (01:00:45):
Great. Good. Good. Well that brings us to time. Thank you all and I want to thank this amazing Panel. You guys are fantastic. Thank you so much. Thank you very much.