Becoming a Leader in the Commercial Banking Marketplace

Jim Marous (00:10):

Welcome to the FIsionaries Podcast, sponsored by Alkami. I'm your host, Jim Marous.

Jim Marous (00:14):

The FIsionaries Podcast shines a light on financial institutions at the cutting edge of digital transformation, provide you with the tips and tricks to elevate your digital game no matter what size your organization.

Jim Marous (00:27):

On today's episode of FIsionaries Podcast, I'm at Alkami's Co:lab event in Grapevine, Texas. I'm joined by Matt Singleton, vice president payment and business solutions at Star Financial Bank.

Jim Marous (00:40):

Matt's going to talk about how, despite having a modest size, it's not impossible to have a mighty vision proving that innovation isn't just for the big players.

Jim Marous (00:52):

From harnessing cutting edge innovation and technology, to fostering deep personal relations with clients, Matt’s going to illustrate how Star Bank is redefining what it means to be a commercial banking partner.

Jim Marous (01:03):

So, Matt, welcome to the FIsionaries Podcast. We talked a little bit before the podcast. You have a very diverse background. So, can you talk to a little bit about what your background career's been.

Matt Singleton (01:14):

Yeah. So, I've been with Star for about four and a half years, started just pre pandemic. And prior to that, I spent time at a large regional bank, Huntington Bank and super regional Midwest player. So, just taking a lot from what they did from a digital perspective and very digitally focused, very forward thinking bank.

Matt Singleton (01:36):

And so, yeah, I've been able to kind of parlay that to being at Star. And prior to that, I spent some time bouncing around playing baseball for a while and didn't ever expect to land in a banking job.

Matt Singleton (01:48):

But it's fun. It's something new every day, and especially in the payments world and on the commercial side of the house, there's always something, as you know, happening every other day, every other week.

Matt Singleton (02:00):

So, happy to be here and looking forward to conversation.

Jim Marous (02:03):

Well, what's interesting is most organizations at the event here in Grapevine are talking about digital transformation. They're talking about innovation, they're talking about technology. Most are talking about the retail side of the bank because it's the side that has more customers from a numbers standpoint.

Jim Marous (02:19):

But the commercial side of the bank is very serious. There's a lot of money there. It's a lot of funding, a lot of lending, everything else that's being done. But it's just getting into the digital elements of what's going on and how you can bring new digital solutions to a commercial space.

Jim Marous (02:34):

What is Star's vision with regard to the commercial space and the integration of technology and digital transformation?

Matt Singleton (02:42):

Yeah, no, I mean, I think the biggest thing for us is just ease of use for our customers. On the consumer side, they're used to just having a nice, easy, simple way to transact.

Matt Singleton (02:53):

And then they go to the commercial side and even at the larger institutions, you have to deal with a very robust system. And sometimes it's not the easiest thing. And there's tokens and just everything that goes into it.

Matt Singleton (03:03):

So, really for us, it's about creating that same journey on the commercial side and just making sure that the way that you bank on the consumer side fits the commercial side and is very simple. And to your point, the dollar amount of payments going through, it's extremely important.

Matt Singleton (03:23):

But we realize that our customers want to be able to get online and make a payment easily and not feel like they have to go into multiple systems. And it's an important piece of obviously their business. And for us, we're very focused on the C&I side of the house, the commercial side of the house.

Matt Singleton (03:40):

And we've been able to utilize our platform with Alkami really and create some of that easy functionality for our customers that they've really enjoyed coming to what in theory is, to your point, a smaller community bank from some of the bigger players.

Matt Singleton (03:56):

So, that's really what we're trying to do, is just create the easiest path for our customers and make sure that everybody gets paid when they're supposed to get paid, and bills get paid, and employees get paid on time. And that's really our main focus.

Jim Marous (04:11):

It's interesting because I came from the retail side of National City Bank, which where my career started in Cleveland, Ohio. And most of my focus have been on the retail side.

Jim Marous (04:20):

But as I understand more and more about the commercial side, it used to be how do you deal with the organization? How do you provide payroll? How do you provide all kinds of other commercial lockbox, all these other trans ... but it was about the commercial.

Jim Marous (04:34):

It now, appears that we've really come full circle, and we're talking about the people within the organization, Matt. Because you can't make it easier for a company, you got to make it easier for the person.

Jim Marous (04:45):

And the digital transformation journey is really about, as you said, how do I make payments? How do I make it so the person's in charge of these areas, don't just spend so much time with the banking component of that. So, it's very much taken on the feel of the retail side as far as what our objectives are.

Jim Marous (05:02):

What has Star done with Alkami and beyond Alkami to make that process better?

Matt Singleton (05:09):

Yeah. We've focused a lot in the last year on just expanding our payment channels. And then we've, in the last two, three weeks here, gone live on the receive side for both RTP and FedNow.

Matt Singleton (05:21):

And our focus is knowing that from a liquidity management perspective, commercial clients, that there's tons of money coming in and out. And our focus has been on how do we make that easier for our customer? How do we get money in their accounts quicker? How do we get money out of their accounts quicker?

Matt Singleton (05:37):

So, our main focus has really been on expanding what we do digitally again, and we expect that a customer logs on and they can submit a payroll file, they submit an ACH file, they submit a wire.

Matt Singleton (05:50):

And Alkami's been a wonderful partner as far as the integration that they provide, because again, there's a lot of different vendors in the market and everybody's got their own flare on how to make payments, how to send payroll.

Matt Singleton (06:03):

So, we've trusted Alkami as far as our journey goes to integrating into our system and making sure that it just feels uniform for our customer, like to log in and make a payment. They don't feel like they're being outsourced to another third party.

Matt Singleton (06:17):

And so, that's really where our focus has been. And we looked to Alkami first to help us in that journey, and they've been a very good partner for us.

Jim Marous (06:25):

So, when you talk about payments, I was at an event, oh gosh, now, it's a year and a half ago when we were talking about rapid payments in the potential of the instant payments scenario wasn't in place yet.

Jim Marous (06:37):

We had major financial institutions from across the country at the meeting, and we asked, "How many of you are going to implement instant payment solutions, FedNow, at the beginning?" Nobody raised their hand. Now, the person who invited me, I'm looking at him going … like blew my mind. I could not believe nobody raised your hand.

Jim Marous (06:55):

I go, "Why is that?" Some institutions said, "We got to see what the finances are going to be, what the numbers dollars and cents are going to be. Got to figure out who does it, and if the consumer even wants it."

Jim Marous (07:07):

All these, what I call weak answers to a very basic customer experience question, which is what is the consumer going to want? They're going to want rapid payments. They're going to want instant payments.

Jim Marous (07:17):

How did you go about that decision making at Star? Because we see most of the organizations right now, still who have implemented this either more modest sized organizations.

Jim Marous (07:28):

Why is that? Is that the customer focus, or what's the rationale? Because it's not necessarily a money maker. In fact, you could argue that it's not. Why that decision? Because as an industry, it's all about the money.

Matt Singleton (07:42):

Yeah. I mean, I think for us, the biggest thing is you want to get it right. You want to be able to say, “We want to get money out the door and in the door quickly.” And if that's real time, awesome. And I think most institutions probably take the same spot of saying, "Alright, we want to see how they come in."

Matt Singleton (07:58):

When we turned on the networks, I wasn't sure what was going to come in the next day. I mean, it could have been $10 million, it could have been $14. And that's really where we've looked.

Matt Singleton (08:10):

But most importantly, we want to get it right for a customer. We want to know that if they're clicking on a button to send a payment out, that their vendor, their payroll, whoever they're paying is going to get that instantly. And it's going to go out without cause, without concern. That's the route we've taken.

Matt Singleton (08:24):

But at the same time, we wanted to be not on the forefront of the change because there's obviously several institutions that are way ahead of that, but for our side, we feel like it's a competitive advantage in the commercial space specifically to be able to offer that to our customers.

Matt Singleton (08:38):

But again, from a digital experience perspective, you want to get it right or else it's really going the other way if you're not doing it the right way by-

Jim Marous (08:47):

You just shot yourself in the foot.

Matt Singleton (08:48):

Yeah.

Jim Marous (08:48):

It's interesting because if you build it, they don't always necessarily come. You just referenced that. How is your organization now, making it so it actually has an impact on the consumer? Because they'll know it.

Jim Marous (09:00):

I've seen a lot of the organizations that have it, and it's kind of like invincible. Okay, we got it. We have it for those who ask, as opposed to we're actually promoting the fact that we are different than the bank down this way and down that way.

Matt Singleton (09:13):

Yeah. I mean, we're in that phase right now, really, on how do you market it? How do you get the word out? How do you attract and retain new customers because of it? Because I truly do feel like it's a competitive advantage.

Matt Singleton (09:24):

And for us, again, the benefits of being a commercial community bank is we have that touch that just some of the larger banks just don't really have. I mean, it's hard to have that community feel at a larger institution.

Matt Singleton (09:39):

So, our focus is kind of matching up the two. We have the ability of sending out payments with some of the national banks. But at the same time, we still have that community feel. And if you want to pick up the phone and talk to somebody, we're here to talk to you.

Matt Singleton (09:53):

So, I think that's really where we're at right now, how do we get the word out? How do we try to attract customers that way, and use that to our advantage to help out customers.

Jim Marous (10:03):

So, the commercial space I mentioned is something that is getting more and more attention right now. You're obviously spending time on it as well.

Jim Marous (10:11):

You're playing against some really big players, especially in the Midwest. Because it's not just that they're big bank, you got a lot of them. All in this good mid-range, mid regionals, the number 5 through number 10. But the reality is you got number 1, 2, 3, 4 as well.

Jim Marous (10:27):

How do you stand out when you're going against these type of companies that have the con outs, have all the other elements? How do you make a difference within your marketplace?

Matt Singleton (10:39):

Yeah. Well, I mean, a lot of it is the community feel. Being a privately held bank that's Indiana based, customers like that. I mean, and that's a benefit for us. Most of our colleagues are born and raised in Indiana and they have a deep sense of community. And so, we want to use that to tell our customers.

Matt Singleton (10:59):

So, that's probably the first thing. But then too, again, you have to have the tools and everything else necessary to actually help the customers. I mean, large banks have departments that are bigger than our full employee base that are running their digital teams, things like that.

Matt Singleton (11:14):

So, you have to be able to compete with them in that stage. And so, a lot of what we do is just really focused on how do we enhance the customer experience so that if they come from a large national bank, a Chase and other banks, they don't feel like they're going to a small community bank. The digital space is-

Jim Marous (11:33):

That's a balance act. On one hand, we're a small community bank. On the other hand, well, we can do everything the big guys can. It's a balancing act at times.

Matt Singleton (11:41):

Yeah. Well, and I think a lot of them, and we've heard feedback is they feel like you go to a smaller community bank, you're going to be going back in time and you're going to be using tools that are no longer existing.

Matt Singleton (11:52):

And it's not that way. It's just a matter of us getting our name out there. And Alkami's platform's been really, really great as far as customer feedback and on the commercial side too.

Matt Singleton (12:03):

So, it's definitely a balancing act. We want to say we have everything they have to a certain degree. But realistically, they're always going to be a step ahead of us from-

Jim Marous (12:12):

And somewhat, somehow.

Matt Singleton (12:13):

Just because of the sheer size of who they are. But the community competitive advantage is one that's hard to recreate across the board.

[Music Playing]

Jim Marous (12:24):

So, let's take a short break — the sponsor this podcast, Alkami Technologies.

Jim Marous (12:34):

Welcome back to the FIsionaries Podcast, sponsored by Alkami Technologies. So, your organization relatively recently made the decision to join the Alkami Group and then have them support your digital transformation. What did that look like inside Star? How did that decision come about?

Jim Marous (12:52):

Because bottom line is most organizations can live with the way they've done commercial banking for a while still. Not every customer's asking for it, but it's a differentiator.

Jim Marous (13:02):

So, how did Star come across that decision to say, “We're going to make this leap and we're going to make this commitment.” Because it takes time and money.

Matt Singleton (13:10):

Yeah. I mean, I think a lot of what has been a benefit from Alkami's perspective has been just, they're very forward thinking. They're always looking forward, the partners they choose to work with. We've implemented their positive pace system, they've chosen the right partners.

Jim Marous (13:26):

To vet on your own in some cases.

Matt Singleton (13:28):

Yeah. And we know that the integration they're going to provide through some of these partners is going to be topnotch. We're not going to have to rebuild the whole system because they've already worked on it.

Matt Singleton (13:39):

So, a lot of what the benefit of Alkami is just that thought process of they really are focused on finding key partners. Some they've acquired, some they haven't.

Matt Singleton (13:50):

And that's huge for us because there's just so many vendors out there anymore that everything you do … you want to deposit a pay vendor, there's a thousand of them out there.

Matt Singleton (14:00):

And so, just knowing that you have a partner that's looking forward, that's always saying, "We're going to try to build an actual digital experience and not just a product that sits in the middle." That's been huge for us. And really one of the reasons that we stay with Alkami.

Jim Marous (14:15):

You have this treasure chest of things you can do on digital platform. You don't implement at all once because, especially in the commercial space, it's very different than in the retail space.

Jim Marous (14:24):

What's on your near term horizon to do list on what you really want to get implemented that's already available out there, but you're going, "You know what, we got to get this right."

Matt Singleton (14:36):

Yeah, I mean, ERP systems are really big for us right now. I mean, if you go to some of the larger banks, they have systems where you essentially submit a template and it's got wires, it's got ACH, it's got payroll files, it's got all these different things on it. It goes into a system, and it gets paid. And then on the user side, they don't think anything about it.

Matt Singleton (14:57):

So, I'd say that's the next step for us, is finding a good partner where we can enhance the full stream of payment processes. And again, extremely important from a commercial banking perspective too just to have that available for customers.

Jim Marous (15:12):

How do you see or do you see the immersion of ChatGPT and AI playing a role, not only in payments, but in the whole commercial space?

Matt Singleton (15:23):

Yeah, I mean, well, it's the hot topic to talk about for sure.

Jim Marous (15:28):

Going to come into every conversation here.

Matt Singleton (15:30):

Yeah. And it's going to play a part. I mean, obviously, I think the biggest thing for us is just how do we utilize it from a data and analytics perspective? And I think that's probably the first and easiest way to utilize it.

Matt Singleton (15:42):

But that's the next stage of how do you react and who's going to take the first step and how much is it really going to change how we do business every day?

Jim Marous (15:52):

Yeah. I mean, it's an open field here and there's as many disadvantages as advantages. We haven't even defined where the world can go in this area, but the consumers are asking for it, which means the companies are going to ask for it.

Jim Marous (16:03):

Some of these companies are more advanced than any bank is with regard to already using generative AI. So, it's going to be interesting to see how that whole dynamic works.

Jim Marous (16:11):

So, as you look forward, and you've mentioned the ERP, how do you see commercial banking as an entity changing?

Matt Singleton (16:21):

Once real-time payments becomes kind of ubiquitous across the market, I think that is going to be the biggest change because the expectation of if I have a line of credit and I pay interest on a daily float, well, that goes away because I'm getting my payment today versus tomorrow at the end of the day.

Matt Singleton (16:39):

So, I think the speed in which people are paid, the speed in which vendors are paid, I think is going to become just normal at some point. And I think that's going to be something where if you're not prepared for that it could really hinder some banks and institutions from-

Jim Marous (16:56):

The consumer sees it, which means your corporation. Because their employees are asking now, they're asking their bank, "Can I get a payday as a day and a half out of my payday?"

Jim Marous (17:09):

Well, that's going to happen corporate and how corporations can be prepared for that? But more importantly, the consumers getting their own education. Now, we're not directing that. We used to be able to direct Word Bank, even in the banking industry, know we used to be able to call the shots. That ain't it anymore.

Matt Singleton (17:24):

Yeah. They're coming to us and asking about real time-

Jim Marous (17:28):

And especially the payment and funds transfers. I get crazy around the fact that I had a situation where I had an automatic withdrawal for putting the savings through Acorns. It was coming out an account I didn't realize it was coming out of it. And it got depleted.

Jim Marous (17:41):

My business bank said, "You got an overdraft fee, but we paid it. I come to the branch. I go, "Can I avoid that?" "Yes, we can." And I said, "Good because I already transferred money internally to make that payment." And this happened a while ago. I don't think it happens anymore.

Jim Marous (17:57):

But next day, geez, I got another hit for a insufficient funds. Well, being a banker, I knew what that was. And I go in, I go, "Guys, really? I transferred internally." I know why you do this when it's external. You go, you process withdrawal before payment, but not when it's internal.

Jim Marous (18:19):

The consumer, I think one of my point, is becoming more and more aware of what's acceptable, what's possible, and what they need to stay in business.

Jim Marous (18:29):

Again, you're dealing with commercial organizations that are large, that their employees are another element within that ecosystem. And you as a consumer are aware of what's possible.

Jim Marous (18:39):

So, what recommendation would you give financial institutions that are just starting to embark upon the digitalization and the transformation of the commercial space?

Matt Singleton (18:52):

Yeah. Well, I think the biggest thing is you kind of have to work backwards. You really, from a departmental perspective, from an FTE perspective on the processing side, you got to know what you want, what do you want to offer your customer and work backward-

Jim Marous (19:08):

And your destination, yeah.

Matt Singleton (19:09):

Because there's a lot that goes into it. And even having a very digitally focused brand that sends out payments, somebody still has to process them.

Matt Singleton (19:19):

So, I think you got to know where your destination, to your point, and really work backwards to say, why do we want to offer these types of payments to the commercial space? Some people get in and say, “We want to just offer payroll.” And that still takes people, it still takes processes. And some people say-

Jim Marous (19:35):

Because it changes a lot.

Matt Singleton (19:37):

“We want everything.” Yeah. And so, I'd say that's the biggest thing is, is know where you want to land and then work backwards because you're going to need more resources than you think. And-

Jim Marous (19:46):

Either internal or through your partners, which is one of these beneficial things that we didn't have 10 years ago, where these composable solutions are out there.

Jim Marous (19:54):

You had partners that had to be best in class. And you wouldn't have had the employee base available to be best in class in eight different areas. Well, now, we can kind of partner that solution.

Matt Singleton (20:06):

Yeah. There's a lot out there too. And it can be overwhelming at times when you start to say, "Hey, we want to send real-time payments." And then you start to look through the list of who offers it. And it's like, "Okay, well, we got some work to do."

Jim Marous (20:21):

Finally, what's the biggest threat to the payments in the commercial space right now?

Matt Singleton (20:25):

Well, I think just larger banks using AI, using some of the things that are out there to essentially try to swallow up the market. I mean, that's my concern all the time, is that they just have the resources to be able to take out smaller banks, unfortunately.

Matt Singleton (20:42):

And so, I don't think customers want it, but I always worry about that. If they say, you know what-

Jim Marous (20:47):

But you got to be good at what you do.

Jim Marous (20:49):

Yes. You got to own the community, you got to be really good in the community and that's never going to go away. And I think that's why the mid-size community banks are always going to be around because people want to talk to people no matter what they're doing.

Jim Marous (21:02):

I will probably agree with you. Matt, thank you so much for being on the survey. I really appreciate your time.

Matt Singleton (21:10):

Thanks for having me. Yeah.

Jim Marous (21:10):

Thank you.

Matt Singleton (21:11):

Thanks.

Jim Marous (21:11):

Thanks for listening to the FIsionaries Podcast. We hope you enjoyed our deep dive into all the tips and tricks you can use to elevate your digital game.

Jim Marous (21:19):

If you enjoyed this episode, please be sure to not only share with those people within your organization, but people outside the organization that may be interested in what's going on in the community banking space.

Jim Marous (21:31):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, and our audio and video engineer, Will Pritts.

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