Banking’s API Revolution • Paul LaRusso (Akoya) & Nicole Elam (NBA)

Akoya CEO Paul LaRusso and National Bankers Association President & CEO Nicole Elam join Niki in the studio to break down the API revolution in banking. They explore why, after decades of traditional banking, there’s been a growing demand for so-called “open banking,” what the CFPB's new rule means for consumers and financial institutions, and how organizations are navigating this tech transition. Plus, Niki shares why screen scraping makes her nervous, Nicole predicts that the future of banking means being both high-tech and high-touch, and Paul makes the case for consumer control of their banking data. 

 “As a consumer, I should be able to choose what application I want to use, what data I want to use, and with who and for how long. And we're trying to empower that consumer to do that.” -Paul LaRusso

“Fintechs were thought of as disruptors and now they're not seen as disruptors. Now they're a necessary partner that you've got to have at the table to help you serve your customers.” - Nicole Elam

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• Learn more about Akoya
• Learn more about the National Bankers Association

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Transcript

Niki: I'm Niki Christoff and welcome to Tech’ed Up. Today, I'm joined in the studio by not one but two guests, Akoya CEO Paul LaRusso and Nicole Elam, President and CEO of the National Bankers Association.

Paul and Nicole will help us break down open banking in the US, a trend in financial services that has happened slowly and then all at once.

Thank you both for coming in today. 

Part of why I wanted you to come in is, I think about a year ago, I had two people come in and just explain a little bit about open banking, but we have accelerated into this new era.

And I want to talk about what each of you do, what's the current state of play, and then your vision for the future and why this is important for consumers. 

So, let's start with Paul. Paul, you're the CEO of Akoya. 

Paul: I'm the CEO of Akoya. Akoya is a data access network. We help consumers get their data from one company and share it to another so they can do a number of financial services, whether it's payments, financial management, and lending. We serve two sides of a network.

On one side, we help, um, a lot of financial institutions, mostly banks. Credit unions actually get into the open banking ecosystem so that they can help their customers actually securely share data.

Then the other side of the network, we help financial apps. That could be fintechs, other data networks, even other banks who want to provide services for their customers. 

Niki: So, connective technology. 

Paul: Exactly! 

Niki: Okay. Nicole. 

Well, first of all, Nicole, we discovered right before we started taping that we're both named Nicole and we're both from Indianapolis.

Nicole: Woo hoo!  [Niki: Which was very excit-] I agree, very exciting. Although we both discovered that we cannot take the cold, air quotes, cold in DC. 

Niki: No, we've become weak. 

Nicole: Yeah. We're weak. 

Niki: We're so cold. 

Nicole: It's a sad state of affairs. 

Niki: We also are, well, I want to talk a little bit about your background, too. But both of us are attorneys by training who are not practicing law. [Nicole: mm-hmm]

So, tell us about your day job right now. 

Nicole: So, I'm currently President and CEO of the National Bankers Association, which is a trade that represents minority-owned and operated banks. And when you think about the larger financial ecosystem, minority banks are truly just small banks that sit in and serve communities every day.

Their asset size ranges from 18 million to 74 billion dollars but the median asset size is 475 million. So, they are the smallest of the small banks that are helping people build businesses, buy homes, and save for their future every day.

So, that's what I get the pleasure and opportunity to do every day is serve the minority banking sector. 

Niki: And you're based here in Washington and have a background [Nicole: I am] in kind of navigating the D.C. levers of power. 

Nicole: Yes. Yes, yes, it's a, it's a fun, it's exciting, and sometimes you need a break from it. It's, it's interesting because, y’know, you talked about how I was an attorney and practicing.

I came out of the womb thinking that I was going to be an attorney. I became an attorney. 

Niki: Really?! [laughing] [Paul: chuckles]

Nicole: Yes! For Halloween, I dressed up as an attorney. [Niki: No! No!] I had the whole blazer with the big shoulder pads. [Niki: laughs] I had my mother's briefcase, like, I was ready. I was going to be an attorney. And then I graduated, went to Aiken Gump. I was a practicing attorney at Aiken Gump, which is a law firm here in D.C. Loved it. 

The market crashed, and I ended up doing congressional investigations. That was, like, Financial Services 101 to be doing it during, y’know, 2008, 2009. And then, from there, I kind of pivoted and started doing more and more financial services and public policy.

And so, it's been an interesting journey going from, “I want to be a lawyer!” to now I'm in these mean streets of D.C. talking about policy day in and day out. 

Niki: Well, and by the way, the entire city is filled with 

Nicole: Lawyers! [Niki: Recovered lawyers] Lawyers who don't practice. 

Niki: I was actually a jury foreman or foreperson, whatever, for a January 6th trial, which is like a topic for another podcast. And I couldn't believe that they put me on the jury and the judge said to me that, “There are 70,000 attorneys in D.C. [Nicole: Oh yeah]  And if they start excluding people for being lawyers, 

Nicole: They would not have any jurors.”

Niki: They wouldn't have any jurors. Yeah. Anyway. Yeah. Here we find ourselves. Saturated.

Nicole: It's saturated. 

Paul: Well, I'll, I'll confess. I was an aspiring attorney as well. 

Nicole: Yeah?

Niki: I did not know that?! Did you dress as a lawyer for Halloween? 

Paul: Just, just LSATs and acceptance. And then that was that. 

Niki: chuckling

Nicole: What discouraged you along the way?

Paul: And then I kind of saw the real; I think I saw what really goes on and I was like, “Oh, let me try something a little bit different.”

Nicole: Smart, smart man! [Paul: chuckles] 

Niki: And I remember sitting in law school, like, there was a whole class on “Who owns the land telephone poles are built on?” I'm like, why am I here? This is so expensive. 

Nicole: That was a turning point. 

Niki: That was a turning point for me. [Paul: laughs] 

Okay! So, Paul, you have been in banking and at JPMorgan Chase for a long time before heading to Akoya.

And I heard you on another podcast talk about this pivot away from traditional banking and financial services into where we are now, which is the new era, I would consider a new era of open banking. 

And I was wondering if you could just look back a little bit and talk about how we ended up here. We'll get into what “here” is, but just kind of this evolution. 

Paul: Sure. So I spent about almost 15 years in banking, particularly building digital products and services for, for customers. The concept of a consumer simply wanting their bank data is not new. This has been going on for, y’know, over the past two decades. The early days of customers trying to reconcile books and get access to Quicken and, and QuickBooks and things like that. And they were doing it through, y’know, in the late 90s, early 2000’s through desktop applications. 

Fast-forward over the next 10 years obviously the introduction of smartphones. [Niki: Right] The first iPhone comes out in 2007. The app store gets released in 2008, right? Google's not even in the space at this point, [Niki: right!] Just Apple. But then, all of a sudden, the ecosystem of the app community and the network, it was the same time actually when I joined Chase in 2008 and like my first job was like, “Go build a mobile banking app, get us in like this new app store that's going to come out” and then like, “Go figure out how we attract customers to it.” 

Then you saw these apps, whether it was like the Mints of the world and then later on the Venmo's and the apps were free. You had this super increase of consumers doing a number of financial applications, y’know, outside just their bank. 

The tipping point was probably, probably, y’know, somewhere around 2015, 2016, where there were, y’know, hundreds and hundreds of apps, almost everyone, kind of, at this point is operating on a, on a smartphone.

And so, you had this huge spike of customers managing stuff. And you saw this inflection point with banks where traditionally the biggest volume was coming directly to the online or mobile banking website. And now, you started to see traffic coming from actual third-party applications that were getting close to what the bank was receiving just directly from their customers.

Niki: So, I want to talk more about that. It's, it's funny that you mentioned Mint. So, in 2007, I moved to Palo Alto. I got a job at Google. I had a Motorola Razr flip phone because -

Paul: Those were the best!

Niki: I actually miss it. I would get a Jitterbug if I could, like, I don't want my smartphone anymore, but, yeah, so I had a Motorola Razr.

Paul: So thin. [longingly] [Everyone: chuckling]

Niki: It was so thin! 

You'd have to push the button three times to get a letter. So, and I lived, my neighbor, I lived in this little apartment, and my next-door neighbor was the founder of Mint, and he was in this tiny little apartment. He had patents in his bedroom [Paul: laughs], and it was exactly that. 

It's exactly your point that all of these apps started proliferating and people want to be able to use money management payment systems. And it's just exploded since then, which isn't really that long of a period of time, but everything is now mobile first.

Nicole, I want to talk to you about who uses these. I get the impression that it's younger people, but maybe I'm wrong about that. Is everybody just using all of these apps to manage their money now? 

Nicole: Everybody is using apps to manage their money right now. And it's not really a surprise, right? 

When you think about our day to day life anyway, we're all using apps. When we want to catch a ride, what do we do? We get on our app. When we're at a hotel and we want to get in our room, we use the app. So, everything that we're doing is on our app. 

It used to be the case that it was certainly the younger demographics, right? The next generation of customers. But now it's the case that everybody does it. You're certainly starting to see more of a proliferation of the younger generation using it. They've got eight or nine different apps that they're using to manage their finances. But everybody uses apps. And again, it's no exception from anything else that we're doing in our day-to-day life. 

We're all relying on apps. We're living our lives on apps and banking is no exception. 

Niki: Okay. So, now that we're, however many minutes into this conversation, what is open banking? What's the concept and how does that fit with what we're talking about? This evolving ecosystem where Paul talked about traditional banking, and then you had Quicken, and then you suddenly have smartphones and all these apps. 

What is open banking? 

Nicole: So, because banking is now more than going into a brick-and-mortar bank and conducting your financial services.

Because so much of it is online and it's not just about your bank, there are so many different fintechs and apps that are a part of the process. APIs, things that you don't even see, that are a part of the app. That means there's so much financial data that needs to go back and forth. And what open banking does is it allows consumers to have more control over their financial bank data, so that, in turn, they can get connected to other financial products and services.

So, what it leads to is more consumer empowerment. It leads to more access to information. Access to financial products and services because they have access to the bank data. And that's what open banking is all about. It's allowing them to have more control as consumers over their data. 

Niki: So, basically, this idea of, “It's my information. I wanna be able to seamlessly go between Venmo, my bank, my [pauses] [Nicole: PayPal] PayPal.”  Right. Exactly! You wanna go between that. Okay. 

Nicole: And I don't care how it happens. Just make it happen. Right? Because we are certainly in a microwave society. I want it to happen now. And I don't want to hear from my bank: “You can't do this.” Flip the switch and get it to PayPal. Get it to Venmo. Get it to whomever. 

Niki: Right. And there's definitely a huge frustration when you're like, “This is my money and my data. I don't want a bunch of friction between these things.” Okay. 

Paul, this is a little bit of a leading question. Banks, historically, they've got all this data.

They've gone to great lengths to create really secure systems to protect their customer's data. They have all of this information. Why would they want to participate in this? We're going to talk about why they have to. Nicole's going to talk about that. [chuckles] But why would they even want to participate in open banking?

Like, what's in it for them? 

Paul: Yeah! It's, it's a great question. 

Companies need to be where their customers want to be.

So, if a customer really finds value in a tax preparation software, and it is very difficult to integrate with their primary bank, and if the bank can't figure that out, they run the risk of maybe no longer being that primary bank. You still need to be relevant for wherever your, your customer wants to be.

I think the other thing, um, that banks started to see was some of the trends going on outside the U.S. So in 2016, you had something called the Payment Services Directive 2, the, the fancy acronym of PST2, which was basically what Europe was doing to put regulation around open banking, where a consumer would have the right to permission and choose applications that they want to do.

In 2017, the CFPB director, Richard Cordray at the time, actually put out the first guidelines on, around consumer permission data access.

You started to see things shaping up that there could be some sort of regulatory movement. Even though the U.S. was predominantly market led, there was that idea of like, there could be regulation in this space and we might as well go and, and figure it out.

Niki: And you've also talked about; you alluded to this earlier, but you were mentioning traff - almost like traffic jams, right? So you've got banks suddenly getting all these requests for data from customers. 

So we're going to talk about how Akoya can help solve that traffic jam problem. But that's part of it too, right, that they have to find a solution because this demand is just going to happen. 

Paul: You're exactly right. And I think you, you get to this point where you've got to make a decision. You either put up the wall, right, and kind of block everything, or you figure out a way to do it in a safe and secure way. And I think that was a big question for banks.

When you look at the data of the actual customers using this service. Y’know, at the time it was over-indexing in three categories, youth, wealth, and digital savviness. And those are very important customers to keep happy and to continue to serve.

Banks looked at that and said, look, we need to keep customers happy with what products and services they want to do. And let's go and figure out how to do this in a safe and secure way. 

Niki: That's so interesting. [chuckles] The young, the rich, and the very online is who they want to keep. I mean it makes sense those are, like, probably heavy users.

Paul: Yeah. Yeah, for sure. [Niki: They want to keep them happy] I mean digital savviness, I mean it's all, it's all gone up since the amount of logins, frequency, and the transition from the amount of visits to a branch versus visits to the mobile app and so forth. 

Niki: I don't even have a branch!

I bank at USAA, which does not have branches, which by the way, if you marry someone in the military and you get divorced, you get to stay at USAA. [Everyone: chuckles] And I think it's a great bank. I'll just make a plug for them. 

Paul: I have USAA as well. 

Niki: I love them. They're great. 

Paul: I'm a son of a captain in the army.

So I was, I've kept a USAA account for a while. 

Niki: I know. I thought they might kick me out, but they did not! 

Nicole: They did not kick you out. I love what, Paul, you said about these three demographics, though, the youth, the rich, and the online, because I think it really speaks to the now and the future of banking.

When you think about the youth, that's the next generation of customers. That's who you're going to have to serve. When you think about the rich, unfortunately, financial services has over-indexed and historically has only served the rich. And then, when you think about online, that's every industry.

Customers are demanding and consumers are demanding to be more tech-savvy, mobile-first. And so those are the three things that are really indicators of not just the now of banking, but the future of banking. 

Niki: Okay. We're going to talk about the future of banking. I am going to make you talk about the policy landscape [Everyone: chuckles], but since you brought this up, the work you do, you actually started out in civil rights work.

Tell me a little bit about the mission behind what you do and how that fits with your background.

Nicole: So, I started in civil rights just really from this idea of wanting to make sure that equality was something that we just talked about, but it was something that we did and we experienced. So, I was at the NAACP Washington Bureau, which is the public policy arm of the NAACP. And so, the work that I did day in and day out was all about equity, was all about making people, ensure that people had a fair shot.

I think financial services is a place that you truly see a huge gap. And when there's a wealth gap that wealth gap is oftentimes an indicator of so many other gaps in people’s lives. And so now I'm at a place where I can take this mission mind that I grew up with. I grew up in a household where Thurgood Marshall was the person that we loved in our household, to now a place where I'm at the National Bankers Association, where we're all about making sure that everybody has access and has the ability to buy a home and build a business and save for their future.

And one of the ways that, unfortunately, we've seen these gaps be perpetuated is through public policies. When you think about the fact of redlining and housing, when you think about the GI Bill, all of those things were wealth growers but they were perpetuated by public policies. 

And so to be in a position where I can help close that gap is, is, been truly, truly awe- inspiring.

Niki: And I've heard you talk about, and this is really interesting to me too, the idea that some people, not some, many people are credit invisible in this country. [Nicole: mm-hmm] So, it's not that they're really a credit risk, they just don't fit squarely into, having a, history of paying a mortgage.  [Nicole: mm-hmm] It doesn't mean they're unreliable in their ability to pay. [Nicole: mm-hmm] 

And one of the things we've seen is fintechs, and neobanks, and, and startups seeing a business opportunity to get these folks banked, right. Or  [Nicole: Yup] find loans for them or whatever. 

Do you have thoughts on that? 

Nicole: Y’know, the reality of it is we have to reframe the way that we think about risk. I think we oftentimes think that if you don't have a credit score, you have a low credit score, you're risky.

But sometimes people don't have a low credit score because they were excluded. If I live in a, in a community that has historic redlining, I may not have a house, but I'm consistent with my rent payments. I'm consistent with my utility payments. All of these things, things that don't necessarily oftentimes go into credit reports.

I also think that when it comes time to redefining risk, I think there are promises and risk when it comes to fintechs. I think fintechs allow you to do things at scale that maybe you wouldn't be able to do before, but you've got to make sure you're not perpetuating the wrong thing because garbage in, you get garbage out. [Niki: Right]

So the great thing about community banks, particularly minority banks, is that they're in the business of saying, “Yes, I want to get to yes.” And the reason why I'm able to get to yes is because I'm looking at data that oftentimes other people aren't looking at. I'm looking at a wider swath of data. 

Well, here comes fintechs and it allows me to look at a wider swath of data, but I need to make sure that that data is actually accurate and I need to make sure that that data isn't flawed with a lot of biases.

And so, if you can figure out a way to be high-tech and high-touch, I think you've got the perfect future. 

Niki: I'm not sure if this is true, but it is something I heard, so I'm going to repeat it on this podcast. But I heard once that nurses are, like, the most reliable people you can make a loan to. They’re constantly employed.  It's just whatever their history is, whatever their FICO score is, they are incredibly creditworthy or should be creditworthy.

You don't want to put bias on top of an already broken system and make, y’know, more problematic decisions on creditworthiness. But I think we can think outside the bounds of how we have traditionally. 

Nicole: Yeah, absolutely. You think about the Great Depression and what happened and well, the Great Recession rather, I don't want to go that far back, so we'll just go to the Great Recession.

[Everyone: laughs]

When you think about, you know, 2008, 2009, there were a lot of black and brown communities that people are, like, “Oh my gosh, they're not going to pay back their loans.” But when you look 10 years out, when you got to 2018, they had paid their loans back. 

I think that's the biggest thing that we struggle with is this perception and this misconception that certain communities are not creditworthy or certain jobs are not creditworthy and that's not the case.

Paul: And one of the things with open banking of expanding that data set and unlocking some of the data that traditionally hasn't been used by the bureaus, cashflow data, transactions, and things like that that can actually help with cashflow underwriting and actually more loans or easier loans to, to more people who are applying.

Niki: Yeah! So, thinking outside how we traditionally think. 

Okay. So we've discussed all these trends. Apps, everybody's mobile. People are going to demand that they're able to move their money and their information between things. 

You've explained why that's good for banks, too. In fact, sometimes it's the information going back to banks. It's a, [Nicole: mm-hmm] it's a two-way flow of information.

Explain what Akoya is. 

Paul: Sure. So first and foremost, the mission of Akoya is, we want to give people more control over their money. And we think if we can do that, we can help them live, better financial lives. So Akoya was built, on principles of security, consumer control, and data privacy.  It is new for a network to come in and to do things in ways that where consumer privacy is put at the forefront.

So, with Akoya, every single transaction goes through an API. It's a hundred percent API-based network. So what that means is that we actually never take a consumer's username or their bank password. We never screen scrape a bank website, which is, y’know, a pretty risky practice where you basically go into the back end of a bank infrastructure, and you take a consumer's credentials, and you could, basically as a third party, see and access everything that a consumer could access.

Niki: This is kind of like, I mean, I've done this and it always, y’ know, my life pauses briefly when I put my banking password in to use an app where the app may not be someone I trust as much as I trust my bank. But that's screen scraping. The idea is you're literally giving your login credentials to a third party, which I do consider, or at least it feels risky to me.

And so, and it also, by the way, screen scraping sounds terrible, but the idea is it was a kind of kludgy way to get your information. So, via APIs you can do that in a safer way. 

Paul: Exactly right. Exactly right. And in a controlled way. A screen scraping model is almost like you're having work done on your house, and maybe you need to have something done in your basement, and you have the repair team come in, but they're only working in the basement.

You don't give them keys to the entire house, they're not roaming around your bedroom, they're not going into your drawers, your attic, your bathrooms and so forth. And so, screen scraping is really this idea that you're kind of getting all access to everything in the, the banking online site.

And with an API, the consumer controls what accounts they actually want to share and what data they want to share with who. And they have the ability to toggle that off at any time. 

Niki: So, this is data minimization. Only giving the information you actually need for this thing to work, and then being able to turn that access off.

Paul: Exactly. 

Niki: Okay, so control. 

Paul: So it's, it's a great benefit for consumers. The idea behind Akoya was like, let's build this network with consumer privacy with consumer control where consumers are controlling their data. Not Akoya, not other companies. It's the consumer who can control, “I want that data to go from one company to the other.” 

A little bit as Nicole was talking about these themes of open banking, there should be choice. [Nicole: mm-hmm] As a consumer, I should be able to choose what application I want to use, what data I want to use, and with who and for how long. And we're trying to empower that consumer to do that.

So, everything's API, everything's secure, privacy for the consumer and then we also took a mindset where we're not taking that data, sitting on it, storing it, and trying to build maybe a different service that the consumer didn't want to intend. You can kind of think of Akoya as really just that secure pass through, that bridge from one company to another so that the consumer can actually complete that financial task they want to do.

Niki: Like a tech layer. 

Paul: Exactly. 

Niki: By the way, I have repeatedly tried to get people not to sell my data, and then it asks me if I live in California, which I do not. [Paul: chuckles] And they're like, “Too bad, so sad, we're going to sell your data.”

I'm very weird about my, maybe not weird, but I'm sort of old school about protecting the parts of my data.

I hate screen scripting. It makes me uncomfortable. 

Okay, which leads to Nicole, Washington D.C., something very exciting in our world happened, which is the government did something: they issued a final rule on open banking. 

Can you explain just for lay people [Nicole: yeah] because most people listening to this are in the tech world and the policy world, but they aren't necessarily in, like, the financial policy world.

What recently happened? What does it mean? 

Nicole: So this, a new reg came out, right? And the great thing is, is that it tries to put guardrails around everything that we've been talking about. So, this idea of balancing consumer control, consumer empowerment, with consumer protection. And so, it just outlines all of the guardrails to do that.

One thing to note is that it's only applicable for banks that are over 850 million dollars in asset size. The reason why that matters is if you're a small bank, it's great to say, “We want you to go out and do this thing,” but it's not as simple as flipping a switch and giving consumers more control over their data. You have to update your tech stacks. Technology is expensive. You oftentimes don't have in-house technology. 

So, I like the fact that they are being, being very thoughtful and mindful of the fact that if you're a small bank, you don't have to do this. But if you are a larger bank, it basically sets the stage of how you do this, how you balance consumer protection and control with this idea of consumer protection and guarding for data privacy. 

Niki: Essentially, like, big banks have to do this in a shorter timeline. 

Nicole: There's a timeline associated with it.

So it's not just the how, but it's the when. 

Niki: The when. 

Nicole: And there are some things that are still up in the air, right? So, the larger you are, the less timeframe that you've got to do it. But there are some things that are still up in the air, like who's going to control it. They're still putting some things together, but it's the who, how, when, and why.

And that's, that's what it outlines. 

Niki: So it essentially is forcing bigger banks to [Nicole: do it quicker] to do it quicker and to, to allow and enable what we've been talking about. 

Okay, Paul, do you agree that it's a good thing that smaller banks were excluded? That's also a leading question. 

Paul: So look, I, I think there are some positives on the rule and then I think there are some things that could make it stronger.

On the positives, I think as Nicole mentioned, there are, there are a number of controls and protections that they put in for consumers. Things like, you can only use the data explicitly for what the consumer is signing up for and not for something else. That's a good thing for consumers. 

You have to get a re-consent every year. That's also a good thing. I can't tell you how many apps I've signed up for. And then I forget that I actually still had them and they were kind of consuming my data. So this concept of like asking the customer, “Do they still want to use the service?” is a good thing. 

And then it also allows protection over high sensitive data elements like an account number that maybe the full number shouldn't be passed in the clear and you could tokenize that and put a security on it. 

So, I think those are good protections. I think the other positive thing, the timeline, I think is generally realistic. Y’know, the big banks will start a year from this upcoming April. So 2026 will be the first, first one. And that phases out over the next five years. 

I think the other positive thing about it is that the Bureau actually calls out that banks can use service providers to actually help them meet these obligations. 

So that, to Nicole's point around costs, because it's, it's timely and costly for a lot of banks they can rely on partners in the ecosystem. 

Niki: Like Akoya! 

Paul: Like Akoya.

Niki: They can just buy what you're selling to help them comply. [chuckling] But it is actually true because it's expensive to your point and goal. It's super; compliance is expensive for everybody. I mean in this- 

Nicole: [interrupting quickly] But particularly for a small bank. [Niki: Yeah] So, to your question about small banks, since that's who I represent are these small banks, it's expensive.

I think about my former employer, Paul, our former employer, J. P. Morgan, [Niki: Oh yeah right,  you both worked at, yeah!] They spend 17 billion dollars a year on technology. Billion dollars a year on technology. The average asset size of my member bank is 475 million dollars. So, there is no way that they can keep up with this whole technology thing.

And so it's great. They've got to do it. Consumers are demanding it. Their customers are demanding it, but it costs a lot of money. And when it comes to partnerships, I'm going to need a fintech partner. I'm going to need Akoya to do it.

I probably don't have in-house support personnel because I am a small bank, so I don't have a dedicated IT staff person who's focused on integration. So, it's like my mother used to say, like, “You can eat all of the cookies in the cookie jar, but you will get sick.” 

[Everybody: laughs] 

And so, there are a lot of great things about open banking, but there are a lot of challenges that you've got to be thoughtful and mindful of, and a lot of those challenges come to play when you're thinking about small banks, but also when you're thinking about protecting the data of consumers.

Niki: And what we might see, I don't know if this is, if you guys agree with this, Paul, but the things you just outlined, like reconsent. 

There are some things that you could voluntarily do if you're a smaller bank that would still, like, make customers feel seen [Nicole: Right] and respected and build trust with them that are not as expensive as building an entirely new tech stack that has this, y’know, continuously updated compliance software.

So, maybe we'll see. 

Nicole: Compliance, compliance cost, and capacity. Those are the big challenges. Yeah. 

Paul: My hope is that banks will do it and give, deliver the protections for their consumers whether they're above or below the asset minimum. I think it's up to industry. 

There's a lot of smart participants in this industry with great technology and great solutions that should really be thinking about how we can help everyone in the ecosystem get the benefits for their customers.

So, I'm optimistic, but I do think it should be applicable to all because I shouldn't have to worry about, if I bank at a smaller or larger bank, “Am I getting some of these protections around my data and privacy?”

Niki: Well, this is a super helpful conversation because we are in a moment where people are going to start seeing new and adjusted features and applications and customer service from their banks.

And it's important that we have the smaller bank voice here too, because I mean, I love a smaller bank. My mortgage company is a small bank, and I absolutely love them. And so, I think that there's a world in which, y’know, your old employer, J. P. Morgan, down to credit unions and small banks, and customized banks are really going to have to be part of this whole ecosystem.

You talked about an inflection point, Paul, but we're in a new inflection point because we have the government involved saying you have to do this and we have so much market demand for people to do it. 

So, any final thoughts, Nicole? 

Nicole: Yeah, I think you said it best. It's, like, customers are demanding it, and customers drive it, and customers vote with their feet every single day. It doesn't matter what industry you're in, they vote with their feet. And so if you're not providing them with something, they are going to leave. 

So, even if you are a small bank, you certainly have to find a way to stay on top of it. I think you're going to continue to see collaboration amongst traditional banking and fintechs because you're going to have to figure out how to be high-tech and high-touch.

You're going to have to respect what both of you guys are bringing to the table. And so I think you're going to that's that's the now of banking and the future of banking. It's going to be more of a hybrid model between traditional banking and fintechs. 

Niki: Paul?  

Paul: Yeah, if there's anything we've seen in this, in this digital space over the last 20 years, it's choice for consumers and consumers will go where the best options for them are, convenience, security, privacy, and so forth. 

So I think it is up to the industry to provide consumers with that choice, convenience, to move and to give them the best products and services while also looking after them and giving them a trusted solution.

Nicole: Yeah. How do you make it more accessible? How do you make it more affordable? 

And then, y’know, just last thing, it blows my mind because I remember when I was at JP Morgan, fintechs were thought of as disruptors and now they're not seen as disruptors. Now, they're a necessary partner that you've got to have at the table to help you serve your customers.

Niki: I think that is a great point because I used to also think of it as we were talking about how many apps you have on your phone. As a person who has to pay people and move money. I've got Venmo. I've got Cash App. I've got Zelle pay.

 I think that's, like, the fundamental point. Like, it's just absolutely not going to go back. Well, thank you guys for both coming in today. This was very elucidating and I'm looking forward to seeing what both of your organizations do.

We'll put some links in the show notes that people can find out more about you. 

Thank you very much. 

Nicole: Thank you! 

Paul: Thanks for having us.