Andrew Witherbee:
I'm having some really relevant conversations with both fintechs and financial institutions around innovation and more specifically how to begin or better align those two organizations with each other.
James Robert Lay:
Greetings and hello. I am James Robert Lay and welcome to the 174th episode of the Banking on Digital Growth Podcast. Today's episode is part of The Exponential Insights Series and I'm excited to welcome Andrew Witherbee to the show. Andrew is the CEO at Engage Partner Group and is a former senior digital banker who is fueled by innovation and technology that propels regional and community financial brands to modernize platforms that elevate operational efficiencies while accelerating growth. Welcome to the show, Andrew. It is so good to have you on today.
Andrew Witherbee:
Thanks, Rob. I appreciate the time and I really appreciate you having me join into your conversation.
James Robert Lay:
Well, before we get into a conversation about collaboration, about innovation and the opportunities that are available for really both fintechs as well as financial brands, what's going well for you right now? Let's start on a positive note, what's good in your world personally, professionally? It's always your pick to get started.
Andrew Witherbee:
All right. Well, personally, I'm just happy. I'm located up in the New England area that there's been some snow on the ground and it's allowed me to venture out during the weekday to recharge the batteries, go and skiing. And it's always a good thing when that happens, so it puts a sharper point on my next day.
James Robert Lay:
Yes.
Andrew Witherbee:
So that's all good. Professionally, I'm having some really relevant conversations with both fintechs and financial institutions around innovation and more specifically how to begin or better align those two organizations with each other. So that's good. There's a momentum there. There was a lull because of COVID, but I think middle of last year, some deeper, more relevant conversations are happening and actually execution is happening. So that's always a good thing. You can talk about it for a long time, but if you don't execute on it, it's a different story.
James Robert Lay:
Exactly, turning insight into action and it is these conversations that you've been having that I want to have a conversation around here because I think there's a lot to learn. Because all transformation that leads to future growth begins with new ideas, it begins with new insights and then be able to take those distill them down, turn them into action, what are some of the top trends that you're seeing right here that that we should be paying attention to, that the dear listeners should be paying attention to when it comes to fintech and financial brand partnerships?
Andrew Witherbee:
Well, I think, for the most part, holistically looking at the innovations in tech space, rightly so, there's been a lot of attention on the B2C side, the screen forward, as it relates to it, "Are we delivering as seamless as best we can digitally a customer journey that's meaningful and needed at the moment?" It really depends on where they are in the customer lifecycle. And that's something that's certainly not necessarily a big surprise because a lot of fintechs out there are getting funded that are serving the B2C space. One of the things that I spent a fair amount of my time, just I'm a research junkie myself, is the B2B side.
Andrew Witherbee:
There are significant momentum in not only capital being available to pure play B2B fintechs out there, that see something in the community financial space that needs to be elevated in regards to improving back office efficiency, but at the same time, it's a win-win. They can pass that value out through their customers because we know that small business owners occupy a good chunk of our economy, that maybe the 10 employees or lower. That's really the sweet spot for a lot of the community banks serving those folks above and beyond, just providing the capital of more equipment and such. So it is a space that I think there's massive opportunities for both the fintech and the community brands.
James Robert Lay:
It's interesting that you say that. I remember last year in 2021 to start off the year, so right about a year ago, I did a top 12 prediction of what are the top 12 trends going to be that are going to play out over the next three to five years. The SMB space was one of them. Ron Shevlin, came on, we had a conversation, he said the same thing. And then we're starting to see that pattern, the speed pick up more and more. Who in your mind, from a technology standpoint, should we be paying attention to? Who's doing some interesting things on the B2B front?
Andrew Witherbee:
Well, I'm in their backyard, so Numerated is one that can be brought up to the front and center. There's a bunch of folks. Autobooks is another one that really do look at holistically looking at the small business owner and saying, "Where can we fit in and how do we fit in with the technology? So do we fully integrate or do we just plug in?" And I'm a big believer on the B2B fintech space and innovation spaces. These small mini-wins are great. Don't look at it and say, "Okay, we're this bank. We're a midsize bank. We have some large demanding customers, but if we're going down this path for the first time, internally, what can we do to achieve a mini-win where it might not be full integration, but the time to market is in months, not years?"
James Robert Lay:
Correct.
Andrew Witherbee:
And that's a really convincing conversation to have internally at the financial brand because when they think about technology, they automatically funnel that to IT which sometimes is a good thing, I'm a former banker myself. I witnessed this and experienced it, sometimes delays on the action and resources behind it for full execution. So I think that some of the differentiating trends out there are in the B2B space that doesn't require a really heavy lift to get up and running, not only for the bank to use, but to pass that technology onto their customers to make their business run more efficiently.
James Robert Lay:
Yes, I've had Derek from Numerated, Derik from Autobooks both as guests on the podcast here. It's interesting you talked about that idea of going into IT, but that might not necessarily be the best path internally. I want to get your take on this. I was just having a conversation yesterday with a peer group coaching session and one of the things that we were talking about, they were launching a new fintech internally at this community organization and the adoption wasn't there. And I said, "It sounds more like a marketing or positioning thing," and they're like, "Well, we marketed it." And I said, "Well, it sounds like you created a lot of awareness, but then there's that pull through for adoption."
James Robert Lay:
And one of the things that I was thinking about is it's almost like the idea of running pilot programs and turning over insights more rapidly, back to your point of going from years to months and shortening that cycle down to learn at an exponential speed, where's the opportunity to transform because I think there's a lot of cultural elements that go into this, a culture of innovation, stemming from a culture of collaboration? What are some of the ways that we can inspire a culture that values innovation because it is different than say what has been done historically over the last 50, 100, 150 years in banking?
Andrew Witherbee:
Yeah, I totally agree. There's certain elements that make up a modern, forward-thinking bank culture and it starts with people, people and people. So leadership first needs to clearly communicate the why and then champion the value. So I'm not sure where the study was, but I recently read that studies show that only 7% of employees fully understand their company's business strategies. So you have to have the people before the technology clearly articulate, "Boy," this is something that we've been talking about internally and want to open up the lens internally and say, "Let's get your feedback. You talked about the adoption piece and how sometimes organizations struggle there. Before you even go down and do a deployment, why don't you turn the glove inside out, see sometimes it doesn't look pretty, but if they're stitching is pretty well made and ask your customers and ask your employees to get their engagement level about, 'Yeah, you know what? In the back office, this has been a problem for ours. We have to touch it X amount of times to close a loan'?" as an example.
Andrew Witherbee:
"What can we do to minimize that so it's easier for our job to provide that great customer experience, and at the same time, allow for our customers to adapt that technology?" There are a couple different things that you can kind of bounce back and forth in regards to taking the right steps out of the gates, but you often hear about taking an agile approach innovation, right? And I was lucky enough to work for a bank actually embraced that type of innovation and culture. And at the time, we were using the lean method, where, if listeners don't know, it's basically how to look at a project holistically and create a standard of a way of working to increase efficiency and eliminating waste along the way.
Andrew Witherbee:
And there's other frameworks out there. OKR would be another one that was developed inside of Intel. So I would recommend if you're finding that you don't have a solid project management model internally is to look at some sort of approach that will help guide the initiative. You'll have hiccups along the way and some unexpected, but it will help provide keep people accountable and hit your marks in regards to go to market.
James Robert Lay:
Yeah, one of the things that we teach is what we call the 90-day growth method and it cycles through these four exponential growth environments of learning, thinking, doing and then reviewing and then you just repeat that process going forward. I liked what you said about people, people, people when it comes to creating a culture of innovation, has nothing to do about technology. I think we need to probably put more of a focus on people first. Human transformation must precede digital transformation because when you think digital transformation, we almost forget the people who have to deploy that thinking on the other side.
James Robert Lay:
And there's two books that I recommend on this subject. One is Humanocracy and then the other is called Open Strategy, subtitle, Mastering Disruption from Outside the C-Suite. We talk a lot about open banking.
Andrew Witherbee:
Right.
James Robert Lay:
But I think it's this idea of open strategy, back to your point, 90, was it 90, 93% of team members don't know the corporate strategy to begin with in the first place. And I think if we can communicate back to your point the why, then we can talk about the what and ultimately the how. When you think about innovation, it's that word, it's a word like experience. It gets thrown around a lot, customer experience. We're talking innovation here. It can mean a lot of different things to a lot of different people. How would you define innovation?
Andrew Witherbee:
Well, going back to, I guess, it's just my training and the hands-on experience I had through the years consulting with banks, and prior to that, I worked in the tech space, software space here in Boston. And one of the things I heard over and over again from my direct report at a software company was the word value. And that is sometimes an overlooked word, as it relates to how to define innovation. And value jumps off the page with me emotionally and also just professionally. You have to first ask yourself, the team, holistically looking at, "What value would this bring to us as an organization and to our customer relationships?" And then you take those baby steps and say, "Okay, let's throw up another thing on the whiteboard. What opportunity or [inaudible 00:13:18] are you trying to meet and solve and why?"
Andrew Witherbee:
So those basic questions need to come out of the gates, as it relates to what innovation looks like and how it behaves here in our organization and then identify, "Is this," meaning technology, "aligned with our core values, our strengths, our vision? And how will it meet our desired outcomes, be it short or long term?" It's a lot, it's a mouthful, but at the same time, it reverts back to the value word.
James Robert Lay:
Yes. And that idea of value, I think, is one that we should think about because particularly when it comes to product design, when it comes to technology selections, I see financial brands thinking from an internal to the external world where the external should drive the internal decision-making process. It's the key thesis of human-centered growth in essence. And I want to keep on this idea of innovation a bit. What is a common belief that others might have in financial services around this idea of innovation that you would just disagree with them on?
Andrew Witherbee:
Well, I don't know if I have really super strong feelings in regards to what others and other beliefs are about innovation. As long as they're talking about it that is on topic, if you will, I'm all for it. I think that the word innovation, for lack of a better word, is a cross-functional term.
James Robert Lay:
Yes.
Andrew Witherbee:
It lives and breathes in so many different industries, right? So it's not specific to financial institutions. It's a word that has different meanings to different organizations and people So I think that once the organization, in this case, financial brands, start talking about ways to shift or operate and behave, if you will, differently from what they've done in a transactional world as they live in, then they can talk, they can call it whatever they want. They can call it, "Our way," or, "It's just the way we do business," type of thing. But I think that often it reverts back to my core marketing strategy skillsets that I've touched upon this a little bit earlier in the conversation is, yeah, we might think we're becoming more innovative, but are we?
James Robert Lay:
Yeah.
Andrew Witherbee:
And it starts with asking your customers, your team members, "What does that word mean to you?" It's like, as you well know, in the branding world, when you think of a brand name, "What emotional things surface?"
James Robert Lay:
Correct.
Andrew Witherbee:
"How do you respond? What colors are the logo? How does it make you feel?" but really asking that internal questions first because we know that there's an external brand and there's also an internal brand. "Is our organization actually managing that brand differently from the external?"
James Robert Lay:
Yeah, one of the things that I would say it gets under my skin a bit when it comes to innovation is people who are like, "I'm just not that innovative. I'm not that creative." And I'm like, "Yes, you are. It's just we got to figure out a way to break free from that mental block." Because I think a lot of times people think about innovation, they think about exponential innovation. It's like the big idea, something revolutionary, but I'm like, "No, if we can maybe create some incremental innovation, and over time, that then ultimately leads to the exponential innovation."
James Robert Lay:
It's the big ideas that I think that hold us back from even having some innovative-like conversations to where when you can think incrementally to begin with. That creates some progress. That creates some momentum. That ultimately then leads to some confidence like, "Ah, yeah, we can do this." What's your take on that like big ideas versus, "Let's just get the ball rolling and start moving forward and then that could become a future big idea there"?
Andrew Witherbee:
Yeah, I applaud that approach with regards to those. Let's take those mini-wins, if you will, as I said before, that don't require a lot of internal resources. And I'll just stop there because many of the listeners today on the banking side, they know they have to shift and what that looks to them, it's maybe been answered or they're still searching, but I think that the resources and talent, the people, I think that's the key ingredient here is, "Are we aligned? Do we have a team in place, or if we don't have a team in place, how do we go find that talent, be it an individual?" Because as you all know and everyone listening, there's a talent challenge out there.
James Robert Lay:
Right.
Andrew Witherbee:
There's recruitment and retention and it's not specific to ... It's all across all industries in verticals. So that's a challenge in itself. But to answer your question, I think that there's a fair amount of complacency still out there and try not to automatically look at the big picture, the big wins, the big projects, the big technology, start out with the working together, taking that framework, if you will, to reach those outcomes. And it could be just a tool that plugs into your online banking that helps manage cash flow for small business, great. That's that mini-win. There's going to be some involvement with IT obviously.
Andrew Witherbee:
They're going to have to go through their due diligence process and making sure that the fintech partner is compliant and provides all the [inaudible 00:19:37] and docs to have them check their box and say, "Okay, these guys, they got their game together," so it minimizes the risk but stays compliant. So I'm a big cheerleader, if you will, of looking at ways to take those baby steps and those many wins, and in theory, not only the financial organization is going to be happy, but the fintech is going to be pumped. They're going to be aligned. And I wouldn't necessarily, I throw out the red flag for the bank, treat the fintech a little bit differently than your typical larger scale IT project like the old RFP model. It's probably not going to work in this situation.
James Robert Lay:
No, and that's a great point because I think when it comes to innovation in incremental innovation for that matter, it's so easy to get stuck thinking, "Oh, my gosh, that's a great idea, but how are we going to do that?" back to your point of the resourcing piece of this. And that's where I recommend putting the who before the how. And I had a great conversation with Dan Sullivan, episode number 69, why exponential technologies demand exponential teamwork, which is where I think the work that you're doing is fascinating because you're almost curating and facilitating these relationships to bridge the gap. You are a who finder to people's how, and when you think about that, it's a model that I teach called growth ability.
James Robert Lay:
And growth ability is made up of three key elements. It's where you feel capable, it's where you feel confident and it's where you have capacity. And you can be capable but lack confidence. You can be capable but lack capacity. You can be confidence and lack both. And I think the idea is you can bridge capability and capacity gaps by looking externally to external whos through collaboration to find the who, to put the who before the how and that becomes an exponential growth cycle right there going forward. You mentioned this idea of complacency and complacency is something that I also speak a lot about. I use an analogy, the cave of complacency.
James Robert Lay:
What happens when we get stuck there and we don't move forward, we don't feel like we're making any progress? What's your recommendation to help financial brands that might feel like they're trapped in the cave of complacency, get out, get unstuck and keep moving forward with innovation?
Andrew Witherbee:
A good question. I think that I try not to over engineer it, I guess, what process you're trying to improve, not only for the organization and improve internal operational efficiencies, but to deepen those relationships because you have now offered a different way of applying for a loan, as simple as that.
James Robert Lay:
Right.
Andrew Witherbee:
And I have a terminology, is like, not myself, but I would advocate that organization to stick to their knitting, really focus on the market they plan. If you're a commercial bank, not to go off haywire and say, "I'm going to go chase retail dollars and refis and car loans." You're commercial bank. That's your DNA.
James Robert Lay:
Right.
Andrew Witherbee:
Then look at ways to play upon those strengths with innovation that leads to elevated technology that helps both parties, both the organization and the bank. Because at the end of the day, there's a fine line that that bank is walking, as it relates to what else they can bring to the customer relationship ...
James Robert Lay:
Right.
Andrew Witherbee:
... on the B2B side. Plenty of products on the consumer side, but most, not a sweeping statement, but a lot of banks typically walk in above and beyond providing that loan or that capital and that reputation of service.
James Robert Lay:
Yup.
Andrew Witherbee:
They're carrying the same bag with the same tools.
James Robert Lay:
Yeah.
Andrew Witherbee:
So if you can provide a different tool that might serve a niche market that you've never marketed before or you've done it or we have to have those accounts, because by law we have the management, the compliance and taxes, etcetera, but what about maybe looking and putting some more resources behind that vertical or multiple verticals that not only help us internally offset all the manual steps that are involved to manage those accounts, but at the same time, add that [inaudible 00:24:20] value, going back to that word value, to that relationship.
Andrew Witherbee:
And as a small business owner myself, I have multiple banking relationships, not uncommon, but when that happens, that typically puts a flag in the ground saying, "I'm looking to expand my business. I'm going to probably look at that grouping or that few banks that are really looking after me and they're giving us technology to help me grow my business.
James Robert Lay:
Yeah, I think that that idea, you touched on niche and we were talking before about the whole SMB space. That's a massive space. Just when you say SMB, it's a huge space, and within the SMB space, there's multiple niches that can get moved underneath that. It's so interesting to see what the team over Nerve is doing around the musician space. Then you've got the idea of the gig economy. I think another very unique space in the SMB space is family business. There's opportunity and challenges there. One of the things that you touched on before I want to come back to was the idea of the RFP, the vetting process when it comes to searching for and selecting a relationship for a financial brand to collaborate with a fintech. What's the best path forward there because it might not look like it has historically when it comes to selecting technology. Any thoughts on that?
Andrew Witherbee:
Yeah, I think that, above and beyond, when we've talked about in regards to the line, the right resources internally, having some model or framework in place or you're in the process of uncovering a different way of partnering with a third party is what I recommend is not to take a reactive approach. That's something that a lot of financial institutions have a history with regards to, "Boy, we have a gap. That bank down the street or the one we don't even see, is offering and what we're hearing from our sales team or lenders is this information." And it's like that, "Okay, let's forget the shallow and let's just jump into deep end."
James Robert Lay:
Right.
Andrew Witherbee:
"And we're not going to use the diving board, we're just going to jump off the side." So I would really recommend to take a step back, a deep breath and say, "Okay, we do it in strictly competitive reasons or without having a clear understanding of what resources are involved."
James Robert Lay:
Correct.
Andrew Witherbee:
That's the key thing is those questions need to be popped over with a hammer and say, "Okay, yeah, we can handle it," or, "Maybe that's not our niche. That's not our market that we want to chase because that doesn't fall in line on who we are." So I would first recommend that, is be proactive in an authentic way.
James Robert Lay:
Pause. Yeah, pause and reflect, learn, think because this is where R&D can be deadly. And what I mean by that, it's not research and development, that's when you're ripping off and duplicating something else that you're seeing. Because I think you're right. It's comparison and comparison can be a killer because it's like, "Oh, well, we need that too." "Do you really? Do you really?"
Andrew Witherbee:
This comes up all the time, because as you all know, in the FFI space, or insurance, it's commodity. So it's very tricky and challenging to really flip a switch and try to look and behave differently. And unless that customer really knows the culture and can really speak to it outside of the bank, that's your best advocate right there. "It's a bank, it's keeping my money safe. I trust those folks. They're my friends" That goes a long way no doubt. I'm not doubting that at all, but it's a tricky thing to speak into shift. And the banks that I've seen a shift, they're both. They're the pure play digital startups.
James Robert Lay:
Right.
Andrew Witherbee:
The neobanks and a few out there that actually have transitioned not totally out of the normal business of mutual savings bank but still got the bricks and mortar and things like that and they're still lending, but it had to do with the people, going back to that, and shifting and say, "You know what? We're going to be less dependent on our traditional commercial real estate loans or C&I. We're going to dampen down a little bit and focus on trying to be future ready today or whatever that looks like." And I say that term because that happens to be my bank, BankProv, here in Massachusetts, give them a plug, because they had transitioned.
Andrew Witherbee:
And again, this wasn't like a light switch. It took about seven, eight years, but during that period, there was really deep conversations with customers, employees and all stakeholders from board on down and saying, "Okay, this is why we're heading down this direction."
James Robert Lay:
Let's talk about future ready as we wrap up and this has been a great conversation around innovation. What's the recommendation, something small, something practical, tangible that the dear listener can do next to keep moving forward on their own journey of growth when it comes to, we'll just say building a culture of innovation so that they are future ready? What would that one small practical next best step be for them?
Andrew Witherbee:
Well, I guess I look at this point, as of today, after Valentine's Day and Super Bowl Sunday is that we're one to three years away from that future.
James Robert Lay:
Yeah.
Andrew Witherbee:
And without question, I'll just toot the horn a little bit on the B2B side and taking the approach of not having to lift a thousand pounds, but let's just go over to that 50-pound dumbbell and say, "Okay, let's tackle, now that we have our internal research and we've done our due diligence, there is a need out there. It's going to add value, etcetera and increase our growth opportunities. Let's focus on it doesn't have to be massive, let's just focus on those mini-wins and we'll just check off one win at a time that will lead to being looked upon internally and externally, 'Hey, these folks are changing. They're being a bit more nimble to the marketplace,'" based upon the technology in this case and/or combination, people and technology.
Andrew Witherbee:
Because you said earlier the importance of adopting the technology is critical, not for the customer but also as the team members as well, so they're comfortable with using the technology, seeing, "Boy, this is really going to be easy for us to process a loan. Oh, by the way, it's going to help our folks not have to go to our website and download a PDF to send my financials."
James Robert Lay:
Yes.
Andrew Witherbee:
It's as simple as that. Let's just start there. Let's just take a mini-step and say, "Well, let's try to think of ways to not allow or not have require our customers to go through those steps. Let's just make it one step, not four."
James Robert Lay:
And this is where incremental innovation leads to exponential innovation over time resulting in improved experiences that yield positive feelings and emotions. Great point to wrap this up, Andrew. What's the best way for someone to connect with you and continue the discussion that we started here today?
Andrew Witherbee:
Sure, through LinkedIn, Andrew Witherbee, Engage Partners Group on LinkedIn as well and then engagepartnersgroup.com on our website.
James Robert Lay:
Connect with Andrew, learn from Andrew, grow with Andrew. Andrew, thank you for joining me for another episode of Banking on Digital Growth. This has been a lot of fun today.
Andrew Witherbee:
My pleasure, sir. Have a great day.
James Robert Lay:
As always, and until next time, be well, do good and make your bed.
