Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.
While the fintech industry is growing rapidly, it is still rare to see women as fintech founders or women holding leadership roles. More concerning is the fact that women fintech founders are lower in North America than other regions of the world.
In August, a collaboration between BMO Harris Bank and 1871, a #1-ranked private business incubator, provided women entrepreneurs the opportunity to bring their innovative technologies and products forward.
My guests on the Banking Transformed podcast are BMO Harris’ Niamh Kristufek, US head of business banking and Andrew Harrison, Head of US Digital Partnerships. They share the results of this year’s incubator program and the importance of greater inclusion in the fintech space.
This episode of Banking Transformedis sponsored byMicrosoft:
See how Microsoft can help to unlock new opportunities at speed through innovative business models, deliver differentiated customer experiences across channels, products and services, and redefine new ways of working.
This Episode of Banking Transformed is sponsored by FIS
When customers need to pay, borrow, or invest, are you there? FIS believes the future of financial services delivery is giving customers what they want, whenever and wherever they are. SMB Embedded Finance enables Financial Institutions and Technology Companies to deliver critical financial services to small businesses at their point of need.
Jim Marous: Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, founder and CEO of the Digital Bank Report and co-publisher of The Financial Brand. While the FinTech industry is growing rapidly. It is still rare to see females as founders of FinTechs or at senior level positions within these firms. More concerning is that the fact that the women FinTech founders are lower in North America than in any place else across the globe. In August, collaboration between BMO Harris Bank and 1871, a number one ranked private business incubator, provided five women entrepreneurs the opportunity to bring their innovative technologies and products forward.
Jim Marous: My guest on Banking Transformed podcast today are Niamh Kristufek, the US head of business banking at BMO Harris and Andrew Harris, the head of US digital partnerships at BMO Harris. They share the results of this year's incubator competition and the importance of greater inclusion in the FinTech marketplace.
Jim Marous: FinTech continues to be the leading sector for venture funding. Yet female founders are woefully underrepresented, despite raising far less in having far fewer female led founders. The reality is the research shows that they generate twice a level of revenues and returns compared to their male counterparts, according to Boston Consulting Group. So, how do we increase the number of female founders and provide the opportunity to get funds in a marketplace that's still way dominated by men?
Jim Marous: So Niamh, let's start with you. Can you share a little bit about WMNfintech, the award-winning program part by BMO Financial Group, that allows startup founders to create services or solutions for the financial services industry?
Niamh Kristufek: Sure. So, WMNfintech is an incubator for women led FinTech startups that BMO has partnered with 1871 to support their launch. They're in various stages in their business, but we put them through a cohort for a 12 week program. 1871 brings their expertise in startups, in technology, and we bring our corporate expertise and help them on what is it like to work with a big corporate partner and what do they really need to know? So, we put our arms around about six women-led companies, and we try to help them get to the next level.
Jim Marous: So, why is it so important to have a special program directed specifically to female FinTech founders? What challenges do women face as opposed to their male counterparts?
Niamh Kristufek: Oh, well just like banking used to be the old boys' club. It turns out women's FinTech is, and FinTechs in general, is still the old boys' club. Venture capital is really, really hard to get for women FinTech owners. It's less than 3% of all FinTech investment from VC is going to women. Women are still 50% of the population, but they're way underrepresented in the FinTech space for women. So, when that started coming out in 2020, we were like, "Okay, time to make a change." We were already partnering with 1871, but we pivoted it to make it an all women's program.
Jim Marous: So, it's interesting, is it partially caused by lack of females on the venture capital side, but also caused by the fact that there may not be as many women that are putting themselves forward as FinTech founders also? I mean, is there a supply and demand issue on both sides?
Niamh Kristufek: Oh, I think it's on both issues. I'm not beating up the VC firms, they're still super critical and they're doing great work. I think it's on both ends. I think it's a layered, complex issue. So, we're working on both issues. So, we're getting more exposure to VC firms as part of this program for women. And then we're coaching them and working with women founders on what's holding them back. So, there's a lot of research out there. Some people believe it, some people don't, in the confidence gap. There's still a push to put women in STEM. There's less women engineers. Women engineers make great FinTech founders because they understand the technology behind it. So, it's a lot of women out there who have great business ideas, but do we have enough engineers in the women's space to lead a FinTech?
Niamh Kristufek: So, it's a multi-layered complex problem. We're not here to solve at all. We're here to help the people who've taken the first step to give them a better chance to succeed. They have to have the idea, they have to have employees. They have to have a viable product before they're in this incubator, but we're just making sure that ones that are viable are getting a leg up. So, we can't solve the whole problem. It's pretty much a big ecosystem problem right now.
Jim Marous: Well, it's interesting because there's really a chicken and the egg situation. I had a discussion with some women yesterday around female participants in events, that we keep on trying to have equal representation. But part of the problem also is, women do a lot behind the scenes that is just totally amazing, but somewhat silently. They're not nearly as self-promotional as their male counterparts on any phrase. I mean I can at attest to it from my own perspective, but it makes it difficult, but that makes it even more important, to have an initiative that really draws these people out. And Andrew, how long has WMNfintech initiative been in place? And can you share some of the success stories you've had from the past?
Andrew Harrison: Yeah, sure. So in short, it's been in place in some form for the past, call it six or seven years. As Niamh highlighted, we actually started it as a mentorship program with 1871 and it was very quick. I think that people actually at BMO and 1871 realized, "Hey, I think there's something to this. I think there's something that we could do besides just mentoring people." And so, the WMNfintech brand name as it is, has been in existence for about three years. But through those six or seven years, we've mentored now 23 different women founded FinTechs.
Andrew Harrison: And a couple of the highlights. I mean, here at BMO, we have a company called SpringFour, who actually helps provide resources to folks that are finding it difficult to pay their bills on time. So, instead of getting a call from the bank asking where is my money, we actually have resources from SpringFour that we offer our clients to say, "Hey, you live in this county. Did you know that these resources are available for daycare? Did you know these resources are available from your electrical provider?" So, it gives them a way out of the situation that they're in.
Andrew Harrison: I can't tell you the benefits that we've seen on the BMO side. And it's one of those perfect business situations, where the financial results are great. Our customers are happy, our leadership is happy and frankly, everyone just feels better in the process. And the relationship that we're having with people is so much stronger.
Andrew Harrison: There's so many examples like that, I could go on and on, but as Niamh has told me I can't take up the whole time with my stories, but I get very excited about it. But maybe I'll just highlight one more. We have a founder who went through our cohort this summer and the SpringFour is a great solution, it's a great story. Sometimes you also find these founders and you're just like, "I'm a 100% in, I'm 100% behind you. Whatever you're doing." She was in the Forbes 30 under 30 in the medical field. She ran into a problem as she started to gain wealth and she wanted to reinvest in her local community, and she realized local banks and CDFIs couldn't handle large volumes of cash, frankly.
Andrew Harrison: She went and started her own FinTech that focuses on the middle layer of banking. And so, you just think about that pivot. This is someone who was unbanked as a child. This is someone who lived in their car at some points during college, went on to achieve these great things in the medical field and then spun off of FinTech. So, I mean these stories and the people that we meet at BMO, I can tell you, it makes it easy for me to go to people like Niamh at the bank and ask for executive sponsorship, because the joy that we get out of working with these people, is sometimes exactly what pulls us through the week, I'll be honest.
Jim Marous: It's interesting. I've been in a couple incubator situations, where they've had a weekend long event with people building things and you're right, the energy in the room, the energy of the people, the enthusiasm, I hate to say it, but in banking, you sometimes lose some of that. And when you see it in real life, and you see these people so ... and I'm going to call it naive, but not in a bad way, but naive to the world to say, "Geez, this is a little bit harder than you think."
Jim Marous: On the other hand and you brought it up Andrew, the emergence of leaders, that at the end of the day, we find this in traditional banking, we find it in FinTech firms, we find it in startups, that the importance of strong leadership, the ability to communicate, the ability to put forth your ideas in a cohesive and understandable way, but more importantly, to fend off all the negative things that can come into your way, especially when you talk about compliance and regulations, and all these things that people go, "Really?" And it's what every FinTech feels somewhere along the way they go, "Well, I didn't know that. We thought we had it all mastered."
Jim Marous: So, Andrew, in the three month mentoring initiative, what do the female founders actually receive in support? I know Niamh brought up some of the ideas, but what do these people get that really gives them the springboard for success?
Andrew Harrison: The key word I like to use is ecosystem. Really what they get access is two very powerful ecosystems. 1871 is the largest private accelerator in the world. They're based here in Chicago and there's a lot of energy around Chicago and building our tech scene and especially in a diverse way. I've actually learned a lot about that recently. And then I would say the second thing is our own ecosystem.
Andrew Harrison: Niamh highlighted, we talk about everything from supplier management, we'll bring in our supplier onboarding folks to help them go through what it's like to onboard for an institution of our size. But we also, frankly, tailor to the people that are in the program. This year, we actually brought in a communications expert and we talked about influence, not communications but influence. And they did a one day course on how to effectively influence people that were listening.
Andrew Harrison: I can tell you, that was probably one of their favorite days in the 12 weeks because they all walked away ... And we happened to have some of our own internal folks that are working on women's FinTech that said, "Hey, can we bring those people back?" Because it's just helpful to remember how to actually influence people, not talk to people.
Andrew Harrison: So, we do everything like that. And as Niamh said, we'll try and bring in our VC partners. BMO has a big name, we're the sixth largest commercial bank. So, we have connections that some of these people can't, and again, the leadership and the excellence that we've brought around the program, and I have to give credit to the people who did this before me, because I got to take over an award-winning program.
Jim Marous: There you go, that's great.
Andrew Harrison: People answer the phone. People answer the phone. Yeah, it's great. So, we've really tried to do a good job of introducing people to law firms, like we said, consulting firms, VCs, but everyone up and down the line to help them out.
Jim Marous: So Niamh, what are the eligibility requirements to be part of this program and are they all just Chicago based organizations, or does it go broader than that?
Niamh Kristufek: So, you're going to stump me. Yeah, so it is not Chicago based because I know we have people who come in. So, the way this works is that they come in for a week at a time over a four month period. So, they will travel for that time period and come in and be in person, and then work remote the other times. But in general, we're looking for working assumptions-based financial model with some analytics, that has a specific customer journey and a value prop to their product. So, it's a little bit more refined. They have a minimum viable product, which is a very techy buzzword, but there has to be something there.
Niamh Kristufek: It has to have meat to it, you can't have an idea. You have to be in a minimum viable product stage and it can't be just them. There has to be a little bit of a team. This is not like you hanging out in your basement with one employee. So, they have to have gone at least further enough in their stage if they have at least one other person with them. It has to be a US-focused product, we're a US bank, we're supporting US FinTech.
Jim Marous: We have enough problems, so yeah, there's enough to work from. Yes, exactly.
Niamh Kristufek: And in all honesty, we are not a good partner for someone working in the foreign markets because we know US regulatory. We know US subs, we know US info sec, so we're not going to help you as a really good partner if you're building a product for Europe. So, we want you to have a US based market. Now it doesn't mean we don't have someone who might be based in Canada, who's selling in the US but it has to be a US based market. And it has to be at least 51% women founded. We're here to celebrate women. So, that's where we're at.
Niamh Kristufek: So, you have to be a little bit more mature on your curve. This isn't the part-time hobby job. You're not working one place and doing this, but we have people very early in their journeys and some much more mature. So, we customize it from there but that's what we're looking for.
Jim Marous: How many participants actually put a application into being included that got down to five? How many did you start with at-
Niamh Kristufek: Oh Andrew, I'm going to have to punt to you because I get to see them when we get down to the the top 10 and then maybe I get to weigh in, but I don't sift through all the applications. So Andrew, I'm going to punt to you on how you do that work.
Andrew Harrison: Yeah, no problem. It's not as many as I would like it to be, I'll be honest. Usually it ranges between somewhere around a hundred applicants a year.
Jim Marous: Wow, it's still a lot.
Andrew Harrison: It's a lot, but it's also ... We have this stat that we always talk about. There's only been something like 250, it's probably closer to 300 now, women founded FinTechs in the United States in the past seven or eight years. So, it's hard to think about 10% of those people have come across ... are alumni of ours, let alone come across our desks. So, it's about a year. We try and narrow it down to five. And the good thing, is with 1871 support and their ecosystem and how they run a little bit wider network than we do in this space, we're able to have repeat applications. So we might say to someone, "Hey listen ... " to Niamh's point, "You're a little too fresh this year. The product is not quite there. The timing's just not quite right, but come back next year." And there's a couple people that have done that and they've been really successful.
Jim Marous: So Niamh, you said you get to the point where it's the cream of the crop that you're cutting it down. What can you tell us about some of the solutions and some of the winners this year? I'm going to call them winners, the winners this year and what set them apart? What is the difference this year between those who had it and those who maybe didn't have it quite as much?
Niamh Kristufek: I think it's really a defined problem. What are you solving for? Why are you different? Which is for any ... I mean, I'm the head of small business for BMO, that's the critical answer in all business, but in FinTech there's a lot of competition, so you have to be solving for something. So, I think about Sign-Speak. Sign-Speak, Yamillet Payano is the founder and that is a digital technology that allows the hearing impaired to work with a financial partner or any partner in sales. And so, that is them signing into a digital translator on an app, that then can speak directly to a banker. So, we are getting beyond trying to have financial conversations using Post-it notes and communication back and forth. That is a specific problem and a specific need with a really strong value proposition. The hearing impaired community is a wealthy and prosperous community, so that is a very-
Jim Marous: Right and very underserved.
Niamh Kristufek: And very underserved. And so, that one's near and dear to my heart because I have a son with disabilities. And so, the disability community is often discounted, but they're a valuable customer base. So, that's solving a very specific problem, with also a social consciousness to it, so that's really important. So, that one is super attractive. Debtl, Debtl is a cloud-based software on bill collection, but it's also, it serves two problems. Software that helps that can be easily plugged in into a collection process, so you don't have to sell your debt to a third party servicer, think about a medium sized medical professional [inaudible 00:17:29], they don't want to sell their debt off. A lot of times they don't even bother, so it just goes uncollected or it gets sold off and it really dings people's credit. But if you can have a really good software program that heads that off, makes it easier for people to pay, makes it easier for people to go on payment plans, you're savings people's credit and you're helping the medical professionals actually get paid. And so, it's stepping into where is there a gap, affordable technology solution, so it doesn't cost a fortune to plug it into your ecosystem. Human UI, so it's easy for people to use. Good or bad, amazon and Apple have made all consumers of technology, want everything as simple as possible. And that's the bar.
Jim Marous: And immediately, yes, exactly.
Niamh Kristufek: And immediately. We're not compared to banks, we're compared to Amazon. We're compared to Apple. Everyone is, medical professional collections, everyone else. So, this is stepping into a real problem and making it easy to use that solution, is what we're looking for. So, that's what I think is a standout. So that's just two examples, but really, when we look at what really is a winner, a winner is someone who knows their problem statement and has a really good, easy to use, even though it might be complicated behind the scenes, solution that we know that the marketplace will be ready for.
Jim Marous: Andrew, I'm wondering, you're in charge of FinTech partnerships for BMO. And so, you go beyond this scope of this program, but as you look at these, do you look at every one of the solutions from the perspective of BMO? I mean, are you really saying which ones are these firms that I'd really like to collaborate with and bring to our customer base, as opposed to just being a really good solution? Because it sounds like quite a few of these are far from plug and play, but they're initiatives that really help a financial institution. So, has this been a really good source of the ability to bring both speed and scale from a FinTech and innovation standpoint for BMO?
Andrew Harrison: Yeah, it has been a great source, I'll be honest. The first question is the lens of which we pick these folks, are they always going to be a BMO partner? I would say it's like 75%, yes. This year specifically, we were actually ... Maybe I'll step back. In the past, we've really focused on B to C FinTech, how you can serve a retail customer, the normal average person, if you will. And this year we took a little bit of a pivot to say, "Hey, it's really interesting to see how FinTechs are serving commercial customers. Now there seems to be this trend in the market. What if we tried to focus in that space?" And so that's what we did this year. And frankly, we just said, what FinTechs exists that could help our business customers run their business easier?
Andrew Harrison: So, the line was that simple and exactly what you said, Jim, it's almost inevitable that the people that come out of a question that are people that were like, "Hey, this would actually be really cool for our commercial customers." Or, "This would really be cool for this segment of our population."
Andrew Harrison: So, it's a little bit of a yes and no. I will say though, the innovation and learning piece that we get on our side is the unsung ... or the unsung hero, if you will, of all this. Us getting to meet with these FinTechs and learning about how they think about a problem and frankly, giving us a chance to step back and say, "Are we missing something in our products and services?" And watching them innovate has been ... I don't want to put words in Niamh's mouth, but I think for leaders like her, that are running an entire business, this is a great source of thinking outside the box, or bringing their teams into a certain problem. And not only just energizing their teams, but helping them say, "Hey, look at what this other person is doing. What other problems could we solve like this?"
Jim Marous: Obviously Andrew, these firms need money. They need financial support to move forward and to grow, but what does the bank, what does BMO, bring to the table beyond money to make it so that these organizations get to the next stage of growth as a FinTech, but even more so, to become more likely to be a great partner for BMO?
Andrew Harrison: My first answer is going to be Niamh.
Niamh Kristufek: [inaudible 00:21:46] about that.
Andrew Harrison: But really, frankly, we bring people like Niamh. We have the head of the business bank, has been an executive sponsor. The head of our financial institutions group has been a sponsor for us this year. Our chief executive or the COO of the commercial bank was an executive sponsor this year. So really, that's what we bring to the table. We bring people that normally you would absolutely not have access to. And not only would you probably not have access, but you wouldn't even know some of these people's jobs exist. We just talked about supplier onboarding. We have two or three different large teams that deal with that at BMO, that a FinTech doesn't even know that those are roles, doesn't even know that [inaudible 00:22:31]-
Jim Marous: By the way, you won't get in the door without dealing with these people. Yeah, exactly.
Andrew Harrison: Right. So, I think that's what we bring is that kind of perspective on how a bank operates and the access to the leadership. And then the bonus on top, is we make all of our ecosystem partners participate as well. So, the venture capital firms that we invest in, you better believe that I make them show up to things, and it's not make, most of them love doing it. So, I don't want to make it sound like that. But for sure, just bringing that ecosystem has been the most beneficial part.
Niamh Kristufek: I would also say they have access to us, but they're also assigned a working team of mentors here at BMO, some of which work on my team, others around the bank. And what they do is they work with them through the whole cohort. And they really, for lack of better term, they kick the tires and they ask them very specific questions like are you ready to answer this question when someone asks you, why do I pick you? Are you ready, do you know that ... When they come in and they say, "I'm solving this problem," and they'll nuance it and say, "Do you know, that's actually not the problem the bank has right now, they have this, can you solve this problem?" And so, they spend four months meeting on a regular basis with three or four, five people, who might be one layer down for me and my peers, who are really kicking the tires on their business assumptions, their financial assumptions, how they're really ready to serve a big company and what space they're really ready to go into.
Niamh Kristufek: And I think that might even be more valuable than the few meetings they have with us, but more like, "Wow, they really put me through my paces," and I feel like they come out the other side a little bit more mature and a little bit more ready to talk to corporate partners. And then those folks really push for them internally to say, "Hey, I know our head of retail banking is going to meet with some of the folks from this year, just because they need exposure to the retail bank." So, they push them into other areas that a bank and they have their internal champions inside who got to know them over four months.
Jim Marous: It's interesting. I've been fortunate to be involved with a incubator program at a bank in Italy, Intesa Sanpaulo, and a lot of it was ... The best part of it is what they built a structure, that made it very easy for these FinTech innovators to really get a footing. But it was interesting because I sat there and go, "If I'm a banker and I'm getting involved in this, I don't want to tell anybody how much fun it is."
Niamh Kristufek: It is.
Jim Marous: I know Niamh, you're the executive sponsor and Andrew, you work with FinTechs all the time, but when you start to see the growth of these people and you start to see the enthusiasms and they have it, is beyond a job. And yeah, I know that, especially near the end, there's weekends involved, there's some strange hours involved, because one thing for sure, the FinTech firms do not work normal banking hours, but it's an amazing motivator to say, "You know what, banking isn't just boring. It can be really, really exciting." And the solutions, you mentioned a few already today, that the solutions are so instrumental. And so out of the box that would've never gotten a voice in a traditional banking environment if somebody didn't bring something to the table and said, "We've got an idea and it's exciting." Let's take a short break here and recognize the sponsor of the podcast.
Jim Marous: Welcome back to Banking Transformed. So, today I'm joined by Niamh Kristufek, head of business banking at BMO Harris and Andrew Harrison, head of US digital partnerships at BMO Harris. We've been discussing the exciting incubator program that is sponsored by BMO Harris that focused on female FinTech founders. So Andrew, beyond the FinTech initiative for women, how does BMO Harris partner with FinTech startups and how has the focus changed since over the last few years since COVID?
Andrew Harrison: That's a great question. So, the how has always been a hard part, because safety and security frankly, is paramount for us. And so, what we have done is found ways I would say, to work with other accelerators in FinTechs in a lower touch manner, using things like smaller pilots, frankly often we'll use fake data to test out a FinTech partner, and see if the solution is really working. We'll try and launch something in very specific geographies. Niamh has a pilot actually that we're considering right now, where it's just a very small number of customers that it would touch. So, our risk is very low, but we can test our hypothesis.
Andrew Harrison: I'd say over the past three or four years, how it's changed is just that. I'll be the first to admit that there's other banks that have done this longer. Some of them with more resources to build out entire innovation departments and they bring a FinTech into the entire organization and put their arms around them. We don't have the resources necessarily to do that, but also we've found there's some FinTechs don't actually want their arms around one bank instead of many banks. But really, I guess the short answer to that is, we had to get more nimble. These people are not ... They don't have the cash to go through an eight month supplier onboarding program. And frankly, they don't have the time to dedicate to that. So, we've had to figure out how we can execute pilots quicker, but in a safe and secure way, that people are very comfortable with.
Jim Marous: So, you're actually representing the interest of the FinTech, as well as having actually have the interests of the BMO at the same time. How important has the speed of innovation become and how has it changed since you've been in charge of it? Because I sense that across the entire ecosystem, we're really looking to FinTechs to accelerate our innovation cycle to a degree that makes it so that we don't have to go through what used to be the 18 to 24 month cycles. I actually have examples, where an organization or a couple organizations, announced a brand new digital banking platform that's going to be introduced in eight months. And they said they've been working on it for six months and you go, "How does that not become out of date before it gets introduced?" So, how do you balance Andrew, the interests of both the bank and the FinTech?
Andrew Harrison: Yeah, that's the most fun part of my job. I get to be the champion of the FinTech, but like Niamh said, the most helpful thing that I can do is kick the tires for people. Sometimes you're selling us an answer to a problem that doesn't actually exist or there's a different problem that's bigger, that you could actually be solving for us. So, I'd say the first thing is helping FinTechs understand what our unique BMO problem is. Being a North American Canadian financial institution, we're not the same as everyone else.
Andrew Harrison: And then I'd say the speed of innovation, we really try and focus on a specific ... I'm trying to not say a product issue, because we don't want to talk in our product, but a specific customer issue. And most of the time, if you focus on a very specific customer issue, there's something that's been unsolved for a number of years. So, the speed of innovation doesn't cancel itself out by the time you bring it to market. So, I guess that's my cheating way of saying, as long as we are focusing on the customer, we can usually find a way to make it work.
Jim Marous: So Niamh, from your perspective at being the head of business banking at BMO, how does the bank try to promote diversity in the businesses you're providing funding to, both the FinTechs, but beyond that to overall? Because that's become a big challenge. And how are you focusing on that and how are you making that an emphasis at your bank?
Niamh Kristufek: Well, it's a passion of the bank to break down barriers to inclusion, financially as well as otherwise. And so, the area that I most focus on is small business owners and access to capital and education and mentorship. So, we actually have launched, and launched I'd say it was about 18 months ago, a specific program for women in business, as well as Black and Latinx owners. And we'll be expanding that to Native American business owners in November. And so, that is a lending criteria change. So, we've actually opened up our risk appetite to small business owners in these categories to try to break down barriers to access to capital and any type of prejudices that might be in the underwriting systems today, as well as, and even more importantly, is mentorship and education.
Niamh Kristufek: We like to say that even if we do have to decline you, it's not a no, it's a not right now and let me explain to you why not right now. And especially, we really do focus on the dollar amounts of 50,000 and less. Because what I hear from so many-
Jim Marous: Wow, okay.
Niamh Kristufek: ... so many business owners, whether they be commercial owners that are 10 million in lending, or small business at 250, it wasn't the 10 million that was hard to get. It wasn't even the 250. It was the first loan that was hard to get. Once you are getting a loan for a million dollars, every bank on the street is begging for your business. So, it's the who gave me my very first loan is the one that really matters. And so, when we think about really small business owners and especially as an early cycle, working with your accountant not to write off every single one of your expenses so that you show no cash flow, while good for the tax man, really bad for applying for a loan. So, have a good conversation with your accountant about what's your plan for the year.
Niamh Kristufek: I can't tell you how many times that's a light bulb conversation for a business owner, who don't understand, "But I have a ton of deposits." "Yeah, but you don't show any profit." So, we have to make sure that they're really planning accordingly.
Niamh Kristufek: And then growing smart. We have a lot of customers that we have to explain growing smart. Unprofitable customers are unprofitable customers, they're not really how you want to grow. So, we do a lot of coaching conversations, educational content and then we just really stepped into our risk appetite and said, "We're going to give people the leg up." And we have program managers around it. We have training for the branches and we have partners in the community. We partnered with CDFIs. CDFIs are amazing. They helped us develop our program because I said, "We're not stepping into your space." And they said, "Well, there's way too much demand and not enough money. So don't worry about stepping into the space." So, we partner with them and we also, there's ... What I say when people ask me, "Why did we do this program?" Because the CDFIs do a great job. There's something to be said for walking into your bank and getting a loan down the street and letting your kids see that you are a bankable customer and that your business is bankable because that's how you make generational wealth and you make a difference.
Jim Marous: You know what? It's interesting. Because I'm a small business owner and I rail on my traditional bank quite a bit in a kidding way because I also understand banking. So, it's one of these things that, yeah, I know why you're saying what you're saying, but I'm not agreeing with it totally. But a lot of times, your branch banker doesn't understand small business. And you mentioned those organizations looking for $50,000 or less, and it being early stage startups. Usually, I would imagine, these are cash flow issues. These are timing issues. These are issues that PayPal can answer many times because they sometimes see the inflows and outflows easier than the bank does. They don't understand those necessarily. How do you get the message out to small businesses, both the ones that are underserved, as well as the ones that are just traditional small business, how do you get the word out that you offer the kind of mentoring services that you offer?
Niamh Kristufek: So, we partner a lot with other nonprofits in the community as well. So, we look for other organizations that aren't just CDFIs, but that are there to help in the community. And so, we do that. We have those conversations ... You know what? We have a lot of conversations with people walking off the street who are opening checking accounts. So, we're making sure that it's not just a checking account opening conversation, but also have you gone to our webpage? We have a ton of curriculum on our webpage that is in plain speak. I fight a lot with my folks who say, "If my mom doesn't understand it, I don't want you to print it." Because we talk like bankers, it doesn't help anybody. So we ask about, we're making sure our bankers know that that's there.
Niamh Kristufek: And even our bankers, some of our bankers are young, they need to learn. So, I ask them, "Did you read the content because you can't help the customer if you don't know it either." So, we spend a lot of time making sure our bankers are feeling comfortable as well, so they're in position. But really community partners, we partner with The city of Chicago, there's things like the Latin Expo. We're always at events to make sure that we're there to offer guidance because people do look for other community partners. Our community partners are looking for financial expertise, so that's where we step in and partner with them.
Jim Marous: I'm going to stay with you here, Niamh but there is greater gender diversity in financial service, both on the FinTech side and the banking side. But research shows that while there are women in more important managerial roles than in the past, and there's even faster advancement for women than men, the challenges at the very top level of management, the change in gender bias, has really not changed as much. So, you get to a point where the advancement's going well, everything's going well. And then there's this ceiling and it doesn't matter if it's a FinTech firm or a traditional financial institution. What advice do you give to women? Because I think it doesn't change how you have to be if you're at a big financial institution, or if you're a FinTech, as far as how you move forward and become important, for lack of a better term. What advice do you have for women that you can really set the stage for ongoing success?
Niamh Kristufek: It's probably not the most popular opinion, but advice I was given early, was take the P and L role, grow revenue, because at the end of the day, if you haven't proven that you can make money, it's often very hard to go to the highest level of an organization. So, we often, as women, are very comfortable in support roles. We're very comfortable, as someone would say, HR and marketing, and other support roles, and compliance, but are we running business segments? Are we owning the P and L that at the end of the day, the decision and the buck stops with you. And so I tell people early in their career, when you're looking at opportunities to go lateral, because you can't be afraid to go lateral, you're not always going to go up. It's like chutes and ladders these days, you might go down, but are you going into a role that is really going to push you? And also, if you're not afraid of the role, don't take it because you're wasting your time. And so, I think sometimes-
Jim Marous: That's key.
Niamh Kristufek: ... that's where we miss out.
Jim Marous: Yeah. And it's interesting because surely it was well before my time, but it was more of a being put into it than anything else, my mindset was always in marketing went to university, but I majored in finance and accounting because I realized early that marketers were being seen as a cost center, and unless you could talk to the finance people, you're not going to get funding for anything. And it really helped me more than anything, but it's interesting because you put into the framework of the female and you're right, you mentioned that it's very easy to get into that middle management role of human resources and a support function, but you really have to think differently to move forward.
Jim Marous: So finally, this is to both you, what is the future of FinTech collaboration with major financial institutions going forward? And how do we do a better job of getting minorities and women more involved and active in this space?
Niamh Kristufek: Well, I'll go first and let Andrew go from there. The future is now. I would say, thankfully, we've moved from a place where we used to say, FinTechs are going to eat the banks for breakfast. And instead it's, FinTechs are the partners so we stay relevant with our customer base. You're not relevant if you're not partnering with FinTech because they're moving faster. The energy they have, the innovation they have, we want to partner with them. And we don't want to eat them for breakfast. We don't want to buy them. We want to be their partner, we want them to succeed.
Niamh Kristufek: And then as far as how do we get more women? How do we get more minorities in that chair? I think this is an important step because people need role models. I want my daughter to see women in FinTechs. I want her to see that this is a viable career. I want other of her friends to see the same. And the same with minorities, role models are important. So, supporting them so we can see early success stories, which I would say is not early, because we're a little late, we need to get them caught up. And then publicity, making sure they're known, making sure they're not the best kept secret in the industry, so that people will be inspired to follow. That's how it is, that's why it's important in all industries when we have women in business awards and things. It's so that the next generation can see and be inspired. It's why we're pushing so hard women in STEM. It's the same here, we need to celebrate the wins and keep supporting them up the way.
Jim Marous: Great, Andrew?
Niamh Kristufek: Andrew, I'll let you kick off.
Andrew Harrison: Yeah, well I'm going to steal a little bit of Niamh's answer because I think the ecosystem is the answer, the path forward. Really, we will continue to partner with FinTechs and I think we will partner with FinTechs in new and different ways. And maybe the piece that I would add onto that, is we're seeing a lot of regulatory changes right now. I think we will help FinTechs grow and make sure we're not putting customers at risk. It's very easy, as we just said to be ... My partner, for example, hates to tap on the card because he doesn't understand it. He thinks it's scary and he's convinced someone's going to steal his information from the tap. But there's people like all of us, normal people outside of banking, normal people outside of banking-
Niamh Kristufek: In quotes.
Andrew Harrison: Yeah, have no idea what those things are. So, I think that the banks will help FinTechs grow safely and securely, in a way that's responsible to both business and retail customers. I would say, what we really need to do is I need more things like this. I'm trying to get into university settings. I sit on the advisory board for DePaul's Females in Finance and giving people at that stage in their career access to female founders, or getting on Banking Transformed so that we can talk about this, so people have real conversations about this outside of just the one event. That's what we need to do because there are some great programs and I'm obviously biased, that I think ours is one of the best, but there are other programs out there and we need to make sure that people are talking about them and finding the program that works right for them, so that people continue to ask more questions.
Andrew Harrison: Somebody says, "Hey, did you know about this?" Maybe I'll just leave with the founder, the very first founder to present at our last event, she started the conversation by saying, "My ask is that if everyone in this room would just make one introduction for one of the founders that's presenting to you today." And it was one of those moments, everyone was like ... No one told her to say that she made it so inclusive to say, "Not just me, just make one introduction for someone in this room." I felt that that was so, so powerful. And I think that's what we need a little bit more of.
Niamh Kristufek: I would be remiss too, if I wouldn't say we are so, so lucky to have 1871 as a partner. We're lucky were co-located in the same city. They have been amazing. As you say, other banks have tried to do this, or would try to do this. We didn't do it alone. 1871 is an amazing partner with such resources and expertise in the field, that we are leaning in with our expertise but theirs is 10 times fold.
Jim Marous: Well, it's interesting how it's all changed so quickly, where FinTech were seen is competition. And now, if we'd be honest with everybody, financial institutions need FinTechs to innovate quickly and at scale. We don't have the mindsets internally, in many cases, to build some of the things that are being built. I mean, who would have taken on the FinTech solution for hearing impaired? Who would have taken on the solution for the bill payments? Who's doing this without really understanding all the problems of the financial institution? Because we're not going to do this alone. We need FinTechs to grow and FinTech really need organizations that are endorse them, but also give them a voice, especially with women.
Jim Marous: I'm sure I'm going to rub some people the wrong way and probably not going to say it the right way, but women are very empathetic and very quiet about promoting themselves. What you just said, Andrew, about the first person getting up there and saying, "I need people to help me get a voice out there." I usually tell people the influencer status that I got was because I reached out to everybody who I thought was like me and said, "Connect with me and I want to connect with the people that like you, because I'm kind of like you." That's what this is all about and it's interesting because you talk about the hearing impaired and I've got some minor issues right now, but they're not getting better. And the whole issue of hearing aids is insane. You have to pay for it entirely yourself. The ones that are going to be available as of October 1st in drugstores is simply amplification, which you might as well put megaphones on this side of your rear head. The reality is, we've got to look at this whole challenge.
Jim Marous: And when you get your foothold on a solution like that, it expands the universe of what you can provide beyond financial services, which again, most founders don't realize, as financial institutions we are really looking for broader based solutions, in and out of financial services. So, thank you so much for being on the show today. It is exciting. As Leah and Sean know, we don't accept many opportunities where people offer their people to talk about something. We usually go out and find what's out there. We did not see this and it was a great topic and a great solution that we really wanted to amplify. Thank you for bringing your expertise to the table and sharing it with us.
Niamh Kristufek: Thank you, Jim. I appreciate the time to talk about it. We're really proud of the program and our founders. So, anytime we get to brag on our founders is a good day.
Jim Marous: Well also, I'm going to reach out to both of you to find out because Chicago's like ... Being a Clevelander, Chicago's like heaven for me, it's like the lower pace, New York City. So, I'm going to get to Chicago and I'm going to find out if I can't time it around one of your events, because I'd love to see these people. It's such a rush. It's like watching little kids, which in many cases, it is little kids compared to me, but it's fun to see the energy level and the naivety which we sometimes lose and put barriers in place that really shouldn't be there. So, thank you again for being on the show.
Niamh Kristufek: Nope, thank you.
Andrew Harrison: Thank you, appreciate it.
Jim Marous: Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoyed our show, please be sure to give our show a five star rating on your favorite podcast app. Also, be sure to catch the articles on writing for The Financial Brand and the research we're doing for the Digital Banking Report. This has been the production of Evergreen Podcasts, a special thank you to our producer, Leah Haslage, audio engineer, Sean Rule-Hoffman, and video producer Will Pritts. I'm your host, Jim Marous. Until next time, remember, we need to open the door to more female FinTech founders who can provide ideas that have never been thought of before.