Let's Talk Payments . By: Patrick Rivenbark
I’ve had the pleasure of getting to know Dave Mayo from FedFis over the last several months and it’s been a real pleasure to talk to him and his team. Dave knows banking, data, and technology; his experience gives him a unique voice that we think is important to share. We hope you enjoy our conversation with Dave!
Patrick Rivenbark: Thanks for being with us, Dave. Give our audience a brief history lesson about you.
Dave Mayo: Way back in the ‘80s, a company named Sheshunoff, became the first to do in-depth analysis of the banking industry. You may remember the bank books that every banker had in their office, that was the beginning. Everyone knows Austin today as a tech hub, but back then the first software firm in Austin was BPI, the predecessor to what we now know as QuickBooks. Sheshunoff recruited these accounting software gurus to create the first Bank Financial Data Analysis software and an industry was born. FedFis pioneered the financial data industry and I have never done anything else. We are the financial data experts that started it, all those years ago. Many of our clients have been following us for over two decades, the really smart ones. LOL.
PR: What is FedFis? What does it do for your customers?
DM: We are not a bank, we are not a FinTech…We are the enzyme between them. We solve problems using FI financial data and the Bank Technology Platform (the digital vendors the FI uses). Our FinTechServ division even has contact emails and merger risk scores. We have all of that for every FI.
For FedFis alone, we serve 13 market segments and inside each segment there are multiple departments, all working to solve different problems. We provide a depth of information that allows them to solve their problems at a complex level. From Mergers & Acquisitions, to Credit Risk, Counterparty Risk, Investment Banking, Insurance, CPA firms, Banks, Credit Unions and Regulators, all are part of our client base. FinTech firms became such a large segment that we created a new division, with products specifically designed to help them increase their presence in FI’s. From the biggest FinTech in the world, down to incubator companies. I particularly like the little guys. They have passion. Payments is another segment that is growing rapidly and may require its own division in time.
PR: You’ve been in the data business a long time. What are your thoughts on the hype around data in Financial Services?
DM: So many people misunderstand the word “Data”. There is a big difference between decision driven data and big data or raw data. To reverse engineer the data, to resolve the desired problem you are trying to solve, you better have an expert or your decisions will be driven by poor analytics. Example: If you want to know who is the top mobile vendor, you do not look at who has the most, OR even who is taking the most business, trajectory will be influenced by partnerships or loss of partnerships. Sounds strange, but that is why you need an expert. In the old days, they used the term “garbage in/garbage out”. When it comes to the data business, I wish more people understood that at a granular level.
PR: Follow up: Are you seeing any mistakes repeating themselves?
DM: Everyday! Yes, the rush to predict how this or that will change the future and how we had better get on board. The message still sells well, because all it has to do, is sound good. Grandma warned us about that and we are still acting on it. Stop listening to the sales person tell you about the future and instead turn that problem over to a real data expert. Quality data predicts the future for you. Want to know if mobile will take over online banking, it is in the data. Here’s the deal…You don’t predict the next crash, you read it in the data.
PR: Congratulations on your recent education engagement with Texas A&M. Can you explain what you’re doing in education?
DM: In order to adequately manage a Financial Institution, you need a solid base of banking financial analysis skills. Banking is highly regulated and for most people it is upside-down accounting. What we measure (rates) and what we assign weight (assets) is not intuitive and must be taught. We take pride in helping shape new banking experts and it’s fun! I think I have met about 4 people in my life that really know banking. Very few really understand the digital compatibility space. So, I tell them, if you like complexity and many moving parts, you will love learning banking.
PR: We think financial services education is critical to benefiting the ecosystems. What do you think FinTechs could learn about to be more successful with banks and other financial institutions?
DM: This is where we confuse each other. First, we should separate FI Fintech from challenger Fintech. Typically, FI fintech firms are made up of product people. They underestimate how to get their products into banks. They know little about core integration and the costs and complexity and even less about which point solutions would be the best options to partner with. Consequently, you must understand your partners’ market relationships because their interests are not always perfectly aligned with yours. Heck, they are there to sell their own product, not yours. We see it over and over, a significant market event (someone buys or sells or changes a major relationship) could be a big deal to you, but not to your partner. You need direct market intel on your partner. When an event happens, by using data, you find the exact clients that would benefit and get that intel into the hands of your people and your partner. Now the question is, will they act on it and what is the impact to you if they don’t? These are the questions that most FinTech firms are not answering. I hear, “we don’t need data, we sell through partners”. I think to myself, you will be the next victim of a market event.
PR: What about the banks – what advice would you give on how they need to get educated in FinTech?
DM: Bankers, FinTech is not a catch-up tool. It is a get ahead tool. Listen and find what issues will bring in or lock-in, your target market and secure their deposits. Everything gets easier after that. Then, find products in FinTech that are more nimble than the large banks can take advantage of. Use those products to protect or grow market share. The fastest, easiest way to move money, lend money, pay money, and deposit money. That is the path. Let the fintech do the regulatory leg work. Trust, but Verify.
PR: What’s next big milestone for FedFis?
DM: The Technology platform of the bank is what we call the FinTegration Ecosystem. We continue to blend that with financial data and improve on ways to use it. Since that is the future, we will be focusing on more ways to help Fintech sell to FI’s.
PR: In financial services, what’s the last idea you changed your mind about?
DM: Open API.
DM: Once we had the banking technology vendor platform, it became clear that the idea of a true open API was never going to happen. Maybe one other idea I am holding out on, is that they would eventually break up the big banks. The harm being done to community banking is horrific. We need more strong community banks to lead the innovation of FinTech. Fintech needs customers to grow and the FI’s are the future customers.
PR: Dave, thank you so much for taking the time to be with us and we look forward to your continued leadership in the industry!