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James Robert Lay: 

Data offers a tremendous growth opportunity for financial brands looking to maximize their deposit growth. That's even more true for financial brands who commit to putting people at the center of all of their thinking, and all of their doing. That's because behind every data point is DNA, real people who have real questions real concerns, real hopes, and yes, even real dreams. But how can you use data to craft and create memorable money experiences that put the transformation of people over the commoditized transaction of dollars and cents? Well, let's find out together on today's episode of the banking on digital growth Podcast.

 

Greetings and Hello, I'm James Robert Lay and I'd like to welcome you to another episode of the banking on digital growth podcast. Today's episode is part of the exponential insights series. And joining me for today's conversation is Raymond den Hond. Raymond is the Chief Commercial Officer at MX, and today, we're going to explore the biggest growth opportunities for financial brands for banks for credit unions, when it comes to using data to create memorable money experiences that put the transformation of people over the commoditized transaction of dollars and cents. Welcome to the show. Ramin, it is so good to share time with you today.

 

Raymond den Hond: 

Appreciate you having me today. Thank you, James. Absolutely.

 

James Robert Lay: 

And before we get into talking about deposits and deposit trends, and in really growth opportunities for financial brands, what is good in your world right now personally or professionally, and as always your pick to get started on a positive note.

 

Raymond den Hond: 

Firstly, professionally, I'd say personally, it's great to to have the ability to travel between Georgia and Utah. So I get to see the two different climates changes, and I was late last week, and there's already snow on the mountains, which is fantastic. Professionally, I would say this, this industry is ever changing and is always a challenge, right? When you when you're trying to help the financial institutions out. And I love a challenge, right? It's it's a great spot to be in to help the financial institution and ultimately help the consumer.

 

James Robert Lay: 

Absolutely. And to your point, challenges, do present opportunities, it's a matter of perspective, some come up to a mountain, and they see oh, it's an obstacle, some have come up to a mountain and see it as an opportunity. And I think you mentioned on a key point, there's there's a lot of changes that have transpired. From a personal take on your end, and things that you've been observing. How are you personally navigating the complexities of change right now in the present moment just has a leader.

 

Raymond den Hond: 

And James has to frame that up that is in the context of the financial services industry? That is correct. Yeah, they there there is unprecedented change, right in terms of just banks, or financial institutions, in general just clamoring to get deposits in the door and to retain deposits retain consumers. And then at the same time, there's this extensional threat from from the fintechs, that are also trying to grab that, though the same consumers and anchor that business and actually find the niche markets that financial institutions tend to overlook. So it's, it presents a lot of opportunity for the for the industry itself. But I think generally speaking, we we want to make sure that the financial services industry and industry itself remains prestigious and grows as the industry grows from a financial services standpoint.

 

James Robert Lay: 

Well, let's talk about some of those opportunities. And one of the ways to remain competitive in this environment is to use the data that financial brands already have to create. We'll call them more data driven, more personalized marketing strategies so that they can deliver the right message the right time, the right incentive to the right customer. How, how can we do that? Because if I think about a financial brand, and we have this data, it can almost feel overwhelming. Where do I even begin to look for these opportunities within what I have today?

 

Raymond den Hond: 

Yeah, so, James, if you think about what works well, in today's industry, just think about the social media side of it, right? So Facebook, Instagram, Snapchat, it's very consumer centric. It's designed around the consumer experience. The way I see financial services industries needing to evolve is to involve into the similar type of financial wellness feed where you actually have your financial services in more of a wellness fee that is presented to the consumer so it's more interactive. And it presents the consumer with information that is relevant to them at the point that they're actually going through the transaction feed, primarily Institute their financial institutions. And I think this probably is the case for every single financial institution, whether you're small or large, it's very transactional based. If you log into your online banking or whether it's a mobile experience, it's all the same. It's you see your transactions, but it's your transactions with your primary financial institution, it's not taking a look at a holistic financial experience, or a 360 degree view of the consumer itself. Now, the way you do that, and in my opinion, this is where changes the whole perspective around traditional banking is if you if you provide the consumer the ability to connect all of the different accounts. And just like myself, I'm pretty sure you James, you have multiple different financial relationships, you got probably credit cards of different institutions, you've got a investment account, a crypto account, a five oh, 25 29k, a 401. K, I mean, the list goes on. And if you look at your your, your iPhone or your Android device, you probably got about seven to 10 different disparate apps on that device that basically manages your financial life. Now, if you bring that together with your primary financial institution, giving your consumer the ability to connect all of these financial experiences into one central location, utilizing technology that that exists there, such as index provides is to aggregate all that data and all that transaction data now now you're looking at transaction data that exists across multiple financial data streams. And if you're able to categorize it, data, enhance it enrich the data itself. Now you can apply intelligence on top of that, right, everything from machine learning to AI capabilities on top of that data. And if you bring that all back into this new financial wellness feed, so instead of just being purely transactional, your primary institution, you'd can now as the primary financial institution, bring all this data together and actually serve something up that is meaningful to the consumer. And you can by by by bringing the data together, you can now have the ability to detect duplicate accounts, duplicate subscriptions, you can see based on deposits that are coming into your primary institution versus direct debits that are going out through multiple different other external accounts you have, you can determine in advance that the person is potentially going to overdraft on their account. So instead of making the consumer do the homework and figure that out, and try and keep on track of it, it's effectively now using the intelligence that comes with the data to prompt the consumer as they log in, and they have this transactional feed. And they can immediately then say, Oh, this is this is meaningful to me, thank you financial institution, you're actually doing me some good by presenting that information to me, at the point that it's relevant, right. And by doing that, you can make it an actionable event for the consumer. So I could through the the intelligence, you can now immediately tell the consumer, you're about overdraft by $100. Do you want to take immediate action and do that transfer from your savings to your checking account, at the point that it matters most in that feed, without having to click out go to a different side menu, going to the transfer option. And by the time you've clicked four or five times that about you, James, but I tend to forget the exact amount I have to transfer and I have to go back and figure it out are recalculated. So taking those extra unnecessary steps away and the hassle away, making it so easy for the consumer. It really takes financial wellness and financial services to the next level, making it actionable and relevant to the consumer. Now I say all that because our financial institutions need to make sure that the consumer rich still retains their deposits with their primary institution. And you can do that by making it a relevant experience that they want to come back every single day to their log into their mobile banking and the online banking because now you're serving up relevant information at the point that it matters most to them. So think of your typical social media feed. you're logging into that multiple times a day, because it's something new, they could get refreshed regularly, and it's interesting. So take the same concept and put it into a financial perspective and you get something so A model that's meaningful to the consumer,

 

James Robert Lay: 

I appreciate that it's meaningful, and it becomes memorable. And it reshapes why we're logging in in the first place, because historically, it has been to quote unquote, to check the transaction. But now the opportunity is deeply rooted in putting the transformation, if you will, of people and their money experiences over the commoditized transaction, I appreciate the perspective around the wellness component. Because we think about financial services, there's such a strong correlation between a person's financial well being and their physical well being between their financial well being and their mental well being, they're all interconnected here. And we're we're no longer playing a reactive role in the financial narratives of people. But we're playing a proactive role a helpful guide, by making even recommendations based upon their own personal Choose Your Own Adventure life experience. You've touched on this idea of financial wellness a couple of times within your thinking and even gave some practical examples. And I can see how that can deepen share of wallet, increase the relationship and then as a result, further grow deposits. Question for you, though, is the role of mindset, if you will, because this is really rooted in not just data, and not just technology, but the mindset of the internal team, the leadership team needed to see the same opportunities. What would your recommendation be for a leadership team, that some understand some share the perspective as you as I wrote about this, and banking on digital growth, and had been making recommendations now for multiple years to move down a similar path? Some are seeing that some are still seeing the transaction, the dollars and cents, even looking at data as just ones and zeros? But I've been saying no, behind every data point is DNA. It's a person it's a human being with real questions, real concerns, real hopes, real dreams. How would you recommend the internal conversation be to help get everyone aligned on the same page?

 

Raymond den Hond: 

Yeah, it's a great question, James. I mean, if you think of that, about banking, 1015 years ago, you had one primary financial institution. So the way that banking was originally designed, was designed around you having a singular relationship with your primary financial institution that no longer exists, it hasn't existed for more than a decade, right? And, and it constantly evolves as new entrants into the marketplace, etc. Right. So well, financial institutions and the leadership of those those institutions to think that they are still the singular point of contact for for a consumer, or for a business for that matter of fact, right is is very old school thinking from my perspective, but what I think makes it relevant for them if they if they really embrace the change that we're in, and take a look at the data that is available to them as a financial institution. Now, I explained my vision from a financial wellness perspective for the consumer. But conversely, that has an even more profound impact on the financial institution, if they know what to do with the data itself. Now, where we come into play, what we offer our institutions from MX is we we have analytical products and capabilities that take a look at all the data that the consumer is now linked because they've given consent. They're aggregating accounts because they want to see something that is meaningful to them in terms of creating a complete 360 degree 360 degree view of their financial health and wellness from it. Once you've done that, from a financial services perspective, the institution can now see where for example, Raymond is now doing banking elsewhere, where my deposits are flowing outside of my primary financial institution. I can also see that Raymond, for example, is interested in refinancing his mortgage because he's just connected an account from Rocket Mortgage was connected Rocket Mortgage to his primary financial institution. So immediately by using the data and the fact that you now have real time connections, the institution is sitting on a goldmine of data to retain the deposits, you want to retain the business you want to grow your business. So the institution's now have that capability. For example, in the mortgage example, they can see that I linked Rocket Mortgage As to my primary institution, immediately signalling that I'm either going to refinance. So when I'm looking for a new mortgage, why would I do that outside of my primary financial institution? Well, it's probably because I want a better rate. I mean, that's the most obvious thing, right? I want a better rate. So if you use that information together with the marketing capabilities that also exist within the industry, right, and we can provide a campaign list using this data to marketing engine, so the financial institution does not have that capability, we can serve the data that campaigns up based on what the institution has selected, so that they can reach out to me proactively and say, Oh, by the way, Raymond, I actually have this offer for you, for a mortgage at whatever percentage rate, which they know is probably going to be better than what Rocket Mortgage can offer. Point being is, you would rather be able to secure that loan and secure that business at a few basis points less knowing that you can do that ahead of time, versus having to go after the after the fact to figure out oh, I now have a mortgage at Rocket Mortgage, what can I do to ensure that Raymond brings it back into my primary financial institution? At that point, it becomes difficult because you have the whole stickiness right, I'm now I've gone through the process with Rocket Mortgage. And I don't want to do that, again, with my primary institution. So again, using the data, that is real time available, the analytics that come with it, and I just gave you one example, right around mortgages. The the the, the the the use cases are essentially endless, right, because any financial transaction that you do, if you have a product that is relevant for your institution that you want to be able to offer to your consumers, you can now do so using the analytics behind it, it could be fine to drive, crypto exchanges, maybe you want to open up your own crypto partner with a different crypto partner so that you can secure those funds differently versus having a go to Robin Hood, for example. And so you have a wealth of information that the institution themselves can now leverage to actually retain the consumer and retain the deposits and actually grow your business.

 

James Robert Lay: 

That that is such a practical example, around the mortgage. And even thinking a little bit more future focus also, from a deposit stereo standpoint, the crypto exchange, and perhaps building or partnering to bring that capability internally. When you think about these opportunities, I always like to look at the opposite side of the spectrum as well, potential roadblocks that we may or may not be aware of that could prevent an organization from moving down this path to create these opportunities to craft memorable money experiences that really are rooted in more emotion to because money is a very emotive subject. Money has questions, it has concerns money also has hopes and dreams associated and tied to these money experiences. What are the roadblocks when we think about using data to craft and create memorable money experiences that someone who was watching or someone who was listening could be aware of or they might even be thinking, my goodness, this is something that we're dealing with right now. We're trying to work through that? What are common roadblocks that you help organizations work through?

 

Raymond den Hond: 

Yeah, I would probably categorize it into two areas, right? You have the regulatory side of it. And then you have the consumer fear that I'm doing, why am I connecting all these accounts, I'm getting my financial institution too much insight into my personal life. So if I have a look at the first letter, actually, from a consumer perspective, it takes the first financial institution to make that step to build this new experience for the consumer to fully realize the benefit that it's going to have on the industry, right. And we're doing this now, right now we're we're engaged with some some pretty deep product discussions with some of our strategic partners that provide experiences to hundreds of financial institutions. So we're trying to do this at scale, which benefits the smaller financial institutions, right, because they don't have the capacity to build their own digital experiences that they're having to go to their partners to do that. So we're taking the approach to actually help the individual institutions and some of them are actually quite big institutions, right. So at the end of the day, they all benefit from this, but it still takes it takes the first step into moving into that into that space to convince the consumer that it's okay to connect your accounts. If you think about the traditional PFM capabilities, right I mean, that that caters for a very small portion of the population that actually sees benefit in that. And so changing that whole mindset, and now you're ultimately changing the way that those users use their PFM capabilities with their primary institution. And now trying to broaden that to one where it is for all consumers or consumers will not benefit. And it's largely your gen Z's and millennials that probably need to really feel comfortable with this. But again, I think it takes the first couple of institutions to really change how this data is served up and presented, for them to realize, like, you guys have got something really awesome. And I want to come back to your institution. And ultimately, I think it's going to attract a lot of new customers to that institution, by just changing how you present your data and your information. Right. So I think the one is, is is convincing the consumer that it's okay. And there's a benefit to the consumer, right. And a lot of them are going to want to see a different user interface, different interaction, and probably more than mobile first approach to everything that they do. The other is the regulatory side of it, right? If you look at open finance, open banking, you have the CFPB. That is what they've been trying to make a rule now for a couple of years. And we keep on hearing that it's going to be next month next month, I heard it was October, I'm now hearing, it's probably the first or second week in November. So they keep on kicking the can down the road here which is unfortunate. From from my viewpoint from MSS viewpoint, as well as that, you need to be able to ensure that you can openly share consumer data and you need to be able to do that financial data that is not necessarily all consumer day, but financial data and your transaction data between these accounts. And you need to be able to do so securely and sanction with the consumers consent. So once that proliferates through the industry, and that's also going to take couple of years, but now you have both both worlds working together, and you have your institution that is now able to share that data securely at the consumers request and get their consent with other third parties, which could be other financial institutions, right. For example, I have a merge American Express credit card, but I bank with Wells Fargo, right, so the two of them need to be able to share data at my request. So once we open up the industry to be able to do that more on a standard basis and the standard front. And again, I think Amex has taken a bold move to deliver that technology for free to the industry to really try and accelerate it. We're also embedding that with our key strategic partners to be able to, again, offer that to the individual financial institutions that don't have the the the the technology or the development capabilities to do that themselves. Right. So I think it's on both fronts. James, if that answers the question,

 

James Robert Lay: 

it does, and I want to come back to a point you're talking about on the consumer front, but also the regulatory as well. If I think about regulatory, I think about relating this back to health care, it's like kind of like a HIPAA, of sharing of information sharing of data, quote, unquote, across different doctors, or who we can share this data with this information about your health. The same is true with financial services transactions. But coming back to the consumer front, it's coming down to one thing, it's trust. And trust is built upon two things, its words and actions. So there's that whole marketing component here. But if you know, when we show the value creation, that can be yielded by taking all of this information in. And then providing recommendations providing guidance to the consumer side. And whenever I wrote banking on digital growth, one of the key themes in the thesis is, if you will, was we if we put people at the center of our thinking and doing, we will always come up with consumer centric approach to growth. So I appreciate the the perspective that you shared on that front. But it's trust words and actions. And when you think about financial services, the organizations, the institutions that lead that front, which back to your point, you're even opening this capability up to institutions and organizations who wouldn't have the ability to build this internally. So there's this collaborative approach to growth. Now, these new opportunities, as you look out towards the future of financial services, what are you feeling most hopeful about? What are you feeling most excited and energized about as we can continue to think about where the opportunities are today? integrate data to further craft and create memorable money experiences.

 

Raymond den Hond: 

James, you bring up a very good point there around trust, right? Trust is probably the most important factor when it comes to any industry. But again, in particularly with with your finances, you need to be able to trust the institution that not only is managing your money, but that's providing you with all this data and these insights, right, but it's got to be relevant to you. The minute you you question, the insight that's been delivered to you is like, Well, I'm not quite sure that I have three Netflix accounts, right, for example. You need to be able to trust the data that's been provided. And some you need to get past that. And I think once you've connected all the accounts in this in the industry to be able to deliver that, you will start finding that consumers will regain trust with a primary financial institution. I know that I read a survey and I forget the exact benchmark statistic there. But financial services are probably second to last, just a hair above the big It's the social media industry itself, right. But it's really second to last on the scale. And right on the first part of it is technology companies like like Apple now, right, which is which Abood brand centric and all that. So the game, the whole premise of what I've described here earlier is to try and rebuild that trust and make it a very consumer centric experience, because you want to make sure that your financial services sector is not second to last than that scale. But right up there by by your big technology vendors like Apple, etc. I do think that the industry is going to change. But the The downside is, even though that we're in this heightened rate of acceleration when it comes to fintechs, and the financial services themselves, the banks and credit unions move incredibly slow. So we need to help them through this journey to try and accelerate some of that. Otherwise, they're just going to find themselves with less and less of a market share, and less and less trust with the consumer because they will go to brands that deliver these services for them that they're looking for right then and there. Right. So that that is definitely a threat. But that we'll see coming.

 

James Robert Lay: 

It's interesting that you note, and I've seen the same study around the trust index, looking at social media and fin surf compared to that of Google, Amazon, Facebook, etc. The big tech, when you look at that, I think back and this is more of when we review history. And we see where we've come from, at this point almost a decade. I think it was Viacom back in 2014 did a study. And one of the key findings that came out of the study was that at the time, millennials, which you know, if we think about where Millennials were a decade ago, back in 2014, to where they're at now, they have continued to navigate their own financial journey. So they're at a different stage. Now where Millennials were back then it's almost like Gen Z has entered. But there's common trends and patterns. Now across these two different generations. I've often said how old you are in 1994, is directly influencing how you're perceiving reality right now, because 94 was when the internet reached the mass consciousness of humanity. So if you go back to 2014, which was 20 years after 94, the Viacom study found that millennials at the time would be more excited from a financial offering coming from, say, a Google or an Amazon or an apple flash for now almost a decade later. And we see research that's coming out of Cornerstone advisors that found that 47% of new deposit accounts opened in 2023, the first half of 2023 came from the fintechs came from the Neo and the digital banks. So it's almost like what was being thought about back then is now turning into reality. Even when we look at Apple, when they launched to the Apple savings account within the first six months or so it was 10 billion in deposits. So back to your point, the idea of an incumbent financial brand, a bank or credit union, the speed of change, if you will, having capabilities that you're building and bringing to market through the work that you're doing at MX to provide them with a path it gives me a lot of hope. It gives me a lot of optimism, because they don't have to do this alone. There's collaboration available now to increase speed internally, which then externally also increased speeds of trust with their account holders and also prospective account holders going forward into the future. I always like to wrap up One a very practical perspective that someone who is watching or listening can take and apply what we've been discussing here today. And once again, when you think about data, it's just such a large subject, it can feel almost impossible. It's like, where do I get started? What should I do? So with that in mind, what is one small things someone who is watching or listening can do to at least take a step forward on their own journey of growth, to increase and retain deposits. Through the perspective of data, like we've been talking about here today.

 

Raymond den Hond: 

I think it comes down to partnerships, find the right partner that can help you accelerate in this industry, trying to build it out yourself. There's a handful of large big, the big five, they probably will say, we've got it, we've got a covered rain. But I will even tell you that we have big five financial institutions that they will come to MX to help them with their data journey. Right. So partner find somebody that can actually help you. And again, I mentioned earlier, we're working with some of our strategic partners, channel partners, right? Think about the the the folks that provide online banking services, mobile banking to the financial institutions. So in order to help them bring to bear this new vision, this idea of it because it's going to help the financial institutions, right, what I would say is for from a, from a from a bank or a credit union standpoint, have those conversations with whoever is providing those services to you, right, in terms of what should they be doing to take the next step at really evolving the whole typical concept around standard transactional banking. And it's not just the user experience, it's the data that comes with it, right. So the analytical capabilities, we have some great tools. And again, we're trying to make sure that our channel partners themselves are well equipped to provide this to their financial institutions. Because we know that we could probably give this capability to hundreds, if not 1000s of those financial institutions that do not have the capacity to do it themselves. Right. So I think what I would say is James is reach out to your your banking, your core digital banking provider, or go through a channel partner, reach out to them and ask them, What are they doing to help move this industry forward from that perspective, reach out to MX we're happy to be involved in those conversations as well.

 

James Robert Lay: 

And that's a great point. It's about the conversations about the ongoing dialogue and the discourse that I'm gonna come back to the point that you just mentioned, to level up the discussion from transactional banking to one that I look at now as transformational making because it is one that puts the transformation of people over the commoditized transaction of dollars and cents. Speaking about the conversation, this has been a fun one today with you, Raymond, what's the best way for someone to reach out say hello to you continue the conversation that we've started here today?

 

Raymond den Hond: 

This way is to take a look at our website, and that is m x.com. You'll find me on our corporate website. Or you can look me up on LinkedIn.

 

James Robert Lay: 

Connect with Raymond learn with Raymond grow with Raymond Raymond, thank you so much for joining me for another episode of the banking on digital growth podcast. This has been a lot of fun today. Thank you, James, for having me, as always, and until next time, be well, do good and be the light

 

 

Brief Summary of Episode #348

The industry is at a crossroads, with banks and credit unions clamoring for deposits and customer retention, while fintechs are rapidly innovating to attract the same customers.

The transactional nature of current financial services fails to provide a comprehensive view of a consumer's financial health, leading to missed opportunities for engagement and support.

Raymond den Hond, Chief Commercial Officer at MX, joined the show to share his vision for the future of financial services, which involves creating a consumer-centric financial wellness feed, similar to the interactive nature of social media platforms.

By aggregating data across multiple financial relationships and applying machine learning and AI, institutions can offer actionable insights directly to consumers. 

 

Key Insights and Takeaways

  • Financial wellness and data-driven insights in banking (10:02)
  • Using data to create personalized financial experiences (14:37)
  • Rebuilding trust in financial services through consumer-centric approaches (23:11)