Scarlett Sieber: Forward Focused Episode 11
Donna Peeples
Welcome listeners to Forward Focused brought to you today by Pypestream Digital Labs, a thought series on customer experience, artificial intelligence, and enterprise automation. I’m Donna Peeples from Pypestream and I’m here today talking with Scarlett Sieber. Scarlett is a senior editor at Money 20/20, and has served as an advisor to NASA, Village Capital, and Techstars. She was also Chief Innovation Officer at Opus Bank and co-founded data visualization start-up Infomous. She was recently named Top 20 Women in Finance by Contentworks, and is regularly recognized as a global fintech influencer. Scarlett is currently the Managing Director, Chief Strategy and Innovation Officer at CCG Catalyst. Hi Scarlett!
Scarlett Sieber
Hi Donna! Thank you so much for having me.
Donna Peeples
We are delighted to have you here today, such a treat to talk with you. And, kind of, wanted to start off, you know, totally absorbed with what you’re doing, all the changes that have gone on and finance, and technology enabling a lot of those changes. And in one of your past roles, you were Chief Innovation Officer and so, you know, from that perspective, what do think innovation in the financial sector looks like – not only today but give us a glimpse of how you’re thinking about innovation tomorrow.
Scarlett Sieber
Absolutely, I think innovation continues to evolve within financial services, and depending on where you are, that spectrum it could be something as basic as having new and creative ways to do things that you‘ve already done, and that could be something as simple as it takes up seven different pages as a consumer to go through an onboarding process moving that down to two. In one way that’s innovation, in the sense of the truest definition of the word and so I think they are certainly still part of the spectrum within the financial services that is looking innovation and small tangential increments, and then there is broad scale innovation; and so people are now thinking of creative ways of really redefining their business models, expanding their capabilities, expanding their products and offerings, and that’s really about adapting existing business models and shaping them up for the future. And so, in terms of the second part of your question which is – what is innovation in financial services look like moving forward? I think that in reality, the innovation world will stop existing. We won’t be using that word innovation anymore because everything that innovation is, is supposed to be doing should be naturally embedded within the DNA of these banks, of these FinTechs, of these other providers within that ecosystem and it will just be happening ubiquitously and seamlessly, so there will not need to be an innovation department moving forward. That’s my, that’s my hope and that’s my belief.
Donna Peeples
Wow! So innovation actually just becomes a way of working.
Scarlett Sieber
A hundred percent. Exactly!
Donna Peeples
Awesome, awesome. Well, now, today, you know, the giant banks and institutions are feeling a lot of pressure; like other industries, it’s fraught with start-ups like N26. So what’s the effect that the banks are feeling right now and I guess should they really be concerned about all these changes?
Scarlett Sieber
Yeah! So, you know, it’s funny that you mentioned N26. So we’re certainly seeing a rise of the neobanks of the global scale, this certainly isn’t new. So, if you look in the US for a second, if you think of Simple and Moven, they are the first kind of consumer neobanks that was 10 years ago that they really started this and entered into the market of the United States. A lot of all this goes back to timing, and when is, when is the right place and right time. Then, outside of those two you start seeing what’s happening in Europe. You mentioned N26, there’s Starling, there’s Monzo, there’s Revolut, all of these neobanks have, you know, really taken off and many of which are valued at over a billion dollars. We do have another one in the United States, Chime that has really taken the market share within the US. But in all of these cases and by the way, another trend that’s happening is, these have all been focused on consumers you’re now seeing that same thing with small businesses. Actually here in New York, the last time Donna, you and I saw each other at Pypestream office in New York, it was just announced two weeks ago that there is an all-female team – female CEO, female CTO – neobank called Grasshopper that raised I believe the number was $116 million and has applied for a banking license to go directly after the SMB market. So I think the short answer is that banks are striving to continue to add deposits and they want a greater wallet share, so I think that these neobanks are certainly taking a piece of that puzzle from them and they’re certainly aware. And I’ve spent time with some of the mid-sized banks in the United States and they’re doing this on somewhat of manual scale right now, but they’re going and looking and seeing that – not only with the neobanks but with the digital lenders especially both on the consumer and small business side, that their customers are now preferring in some cases to partner with or to work with one of these providers. So they should be concerned, but there’s still plenty of time and I think one of the best things that’s happening, specifically within financial services, is the opportunity for consolidation and, really, collaboration where these banks and FinTechs can work together to offer better experience for customers. So they should be concerned but there’s still plenty of hope.
Donna Peeples
Well, that’s great news. So, you know, as we are seeing all these changes take place, you know, it’s been really interesting to watch the emergence of a digital experience in the context of just how we do business and, you know, you and I talked about it before, I don’t think it’s one channel or another, I think it’s all channels all the time because we all have to try to be where the customer wants us to be and deal with them on their terms. So thinking about digital, I mean, what is the importance in banking and finance that, they start to think about digital first in relation to interactions with end users?
Scarlett Sieber
Yeah, I mean, digital is and will continue to be ubiquitous with peoples’ lives moving forward. If you don’t have the digital strategy, I believe that you will be left behind. It’s certainly possible to walk before you run, it is actually a bit surprising that, you know, let’s go back to the fact that the number of banks that we have in the United States, especially on the smaller side, there are a handful of them that’s still do not have digital capabilities and the ability to do things like online and mobile account opening. It’s still, not going to say new, but it’s certainly something that has still taken a bit of time to fully adopt. So, it is incredibly important to have that, that digital first mentality, especially as the big tech companies – the Amazons, the Facebooks, the Googles of the world are getting more into financial services, you want to make sure that where banks have that strong hold, which is really around their trust and data, that they have the ability and they’re using their leg up in a smart way and that’s really through digital channels and being digital first.
Donna Peeples
Absolutely, you know, I think about a time before even ATMs and how things have progressed along that electronic interaction and, you know, how common place it is now, I mean, you don’t even think about it anymore, but we all carry these smart computers in our hands all the time and gosh, what a wonderful thing to have your banking and finance right at your fingertips, literally. So, I wonder too, Scarlett, how do you think about these – the banks, are they in danger of being displaced at the top? I mean, do you see an emergence of the new models that you were talking about, taking the place of some of those legacy models?
Scarlett Sieber
It’s a tough question, so I think if we look at the United States banking ecosystem, we are around roughly 5,000 banks or financial institutions however you want to define that, right. Now, just look a few years ago and that was more like 7,500. So, we’re certainly seeing the traditional space being condensed as is and I think that it will continue to a degree. In terms of the top, the top players, the top banks, top ten banks in the United States. I’m not sure of them being necessarily squeezed out but I do think that the – what they’re core offerings are will shift slightly and there will be certainly more opportunities for the other players in the space. If you think about someone like Goldman, who wasn’t in that traditional, top five biggest one, they had very different model. What they’ve done with markets to reinvent themselves is, I think, a really interesting use case where I think it said in markets under Q4, their 2018 Q4, they talked about Goldman reported $35 billion in deposits for markets. So that’s a big amount of money, so there is certainly a movement there where the FinTechs haven’t been able to necessarily get to those numbers yet. So, if the banks, the core providers and the core banks, still have a lot of opportunity if they execute in the right way. And I do believe there is a lot of opportunities there. Another thing they’re doing is they are responding with acquisitions and mergers and so one of the biggest ones to happen this year was SunTrust and BB&T that now put them in the top 6 biggest banks in the country. And then the other players make assumptions sometimes forget because they think of the banks and the FinTechs are the core providers. The FYS is a FiServe and there is a lot of movement there this year as well with both FYS and FiServe making mergers, FYS with World Pay and FiServe with first data. So there is certainly reacting by finding ways to come together and offer stronger, more digital capabilities.
Donna Peeples
Well, that’s very interesting and, you know, change is hard, even if it’s for the right reasons. I agree with you that deciding that you are going to make the changes and having the culture to do it and, as you said, to execute is going to be really important. So, I’m fascinated to see your forecast come to be. So, Scarlett, I’m so proud of you; you were recently named one of the top 20 women in finance.
Scarlett Sieber
Thank you.
Donna Peeples
So, there is a lot of conversations going around, about women and their place in different industries and how that’s changing. I mean are you seeing that first hand. Are you seeing more and more women entering into the financial sector especially in leadership roles?
Scarlett Sieber
Yeah, absolutely. I certainly have seen that continue to evolve and so when I was thinking, and I think a lot about this, financial services now and from my seat it’s always financial services plus tech, and people had visions of what it means to be working in financial services but really there are so many opportunities for diverse and unique backgrounds and women have certainly taken a key role there. We talked a little bit earlier about innovation and then these digital titles, those roles have been, more often than not, filled by women, and there’s some great examples, here in New York, in this case of the CEO role but the CEO of City Fintech, one of the largest financial institutions, is a woman, Yoland Piazza, and then we look over in Europe, you look at Societe Generale, their Chief Innovation Officer, their group Chief Innovation Officer is women, Claire Calmejane. So there is definitely more and more examples of women in leadership and I think that with all the emergence of Fintech and all these creative and great opportunities that there is now more than a time than ever for women to enter the space. And I was actually sitting down with a friend of mine in Amsterdam two weeks ago, she has a financial education platform that’s, I think, 45,000 people or something have gone through globally and almost half of those have been women. That was an incredible statistic for me to learn about because you know, I’m seeing but then data at scale is also very important so, I think now there’s now more than an ever, now is the time to enter, and any market that I go to, any geography, there is some type of females and Fintech type of group or events going on. So there is really a community built around helping women succeed in this space and pushing each other up and it’s incredible to see and I’m happy to be a part of it.
Donna Peeples
And I am too. You know, I have had people ask me before what’s it like, I’ve spent my career in male dominated industries, and you know I will smile and say there’s never a line at the ladies room but you know it has been, you know, a twisting and turning road. I absolutely agree with you, I mean the time is now and we’re seeing a lot of change and change for the good.
Scarlett Sieber
Absolutely.
Donna Peeples
Let me ask you Scarlett, now of all the trends in financial technology, I mean which one do you think is going to be the biggest game changer for these banking and financial institutions?
Scarlett Sieber
There’s so many for different ways, so, I mean, the buzz worthy one of course is something like a blockchain but I’ll start with that, but I think that that’s a long way from really having the impact that it can but I certainly think that will be one of them. The immediate one is around data. So, we talked a little bit in the beginning, you know, you talked about the customer experience, so if I think about what are the biggest assets that banks have like, I believe the biggest asset is actually is the data, so they often talk about trust and that trust with their clients, which I think is 100% true but in terms of what makes them unique, and what do they have that one one else really has is piles and piles of data that tells them so much about who we are. What our spending behaviors are, where we are, what we’re doing, and why and so, there is opportunity now to offer a seamless, enhanced, truly customized experience where you’re meeting your clients and customers at that right point in time, at that right geography right when they’re about to make a purchasing decision, I mean I think it could be incredible with that data as well. There’s still so many people within the United States and then, of course, the emerging markets that are under banked or unbanked. And now through different sources of data that have not been thought about before there is tremendous opportunities to service those people in ways that haven’t been thought of and now are really, really transformational for their lives and, like, now you’re really impacting people’s ability to buy a house, to get a loan, so I would say data on the bank side and then also the customer side which is really about bringing the ownership in ways back to that customer. So, that same example I gave you is that customer saying, I’m allowing you to use my phone bill, I’m allowing you to use this part of my social media or that part of my social media to offer me better experiences.
Donna Peeples
Right.
Scarlett Sieber
So it’s putting control back in the consumers hands but then really allowing the banks to build off of their capabilities of data in smart ways, so, not an easy task because there’s so much of it but that’s where I see is the biggest opportunity.
Donna Peeples
Yeah. I think that’s fascinating, you know, there’s this whole world of data, it’s almost – I don’t know what year was the year of big data, I know 2016 was the year of, you know, chat and messaging and, you know, we’ve seen these buzz words come about but the reality of data, to your point, is a very valuable commodity out there and, you know, I think we could have a whole other podcast on, you know, the regulatory implications of the data and privacy but clearly, you know, as you said, there’s a trade off. The more personalized you want your experience, the more data the enterprise is going to need from you to tailor that experience. So I agree, I think that’s a huge impact on consumers in all segments. So Scarlett, which strategy do you think out of all is the most underutilized for these banks and institutions? Is it data? I mean, are we you know, are we swimming in it or are we drowning in it?
Scarlett Sieber
So, data is definitely part of it, but actually you mentioned this earlier and I think it’s going to take a little bit different track, you mentioned change and the culture to do it. So I would say in terms of underutilized strategy it’s really the importance of culture, so when I say that, that encompasses so many things: it’s about attracting and hiring unique and diverse talent who thinks differently and who maybe doesn’t have – depending on the role of course something like risk and finance and legal they need to have the exact expertise – but for other more strategic roles it’s who people have different backgrounds, who maybe don’t meet the requirements but have that potential to really have an impact and challenge the status quo, but does so in a way that aligns with the existing teams, because I think what happens more often than not is these organizations bring in great talent from different industries and give them this, you know, mission of going and changing the company for the better or really changing the business model but there is not enough of a thought about strategic alignment within the existing lines of business, making sure that everyone is on the same page. All these innovation or you know, transformation initiatives actually align with the line of business leader and how it’s impacting them for the better, because change is scary and there is a lot of feelings that come with that. So, I think making sure that the leadership team is communicative about these changes and why they’re happening and all the positive impacts because with this – and this is nothing about financial services this has to do with the future of technology in our world. In general, people are afraid of job security, and technology and AI taking over jobs and so it’s having conversations on and developing your talent in ways where, you know, they will still have the job but might just morph from what they have now. I would say but they definitely – and I have seen this myself so many times, it’s like even if you have the right data, even if you don’t have legacy tech, which is another challenge, if you don’t have that right cultural alignment it’s very challenging to have true progress and true success.
Donna Peeples
It’s ironic isn’t it, that you know that we talk and we’re almost all consumed with technology and the variety and the volume and the velocity of the change but at the end of the day you nailed it, it’s still all about people and culture.
Scarlett Sieber
Yeah.
Donna Peeples
And how we interact and communicate with each other, you know, you kind of mentioned the business units working together and it’s always been, you know, fascinating to me. I almost had to laugh whenever people talk about busting down silos because I don’t think we can ever bust them down completely, I think they are the cockroaches of organization and they are going to out live us all. But you know, it’s that elegance of the hand offs between departments, business units, and functions, that’s so important and that doesn’t just happen you really got to work at it. So, I am so sad that we are running out of time here but I did want to thank you again for joining us today and why don’t you let our listeners know where they can find you and I’m a follower of yours and love reading your pieces on LinkedIn and on your blogs, so tell us where we can find you.
Scarlett Sieber
Well, Donna, first of all thank you, it’s always my pleasure and you can find me at Twitter. Twitter is probably one of the easiest it’s just @ScarlettSieber like Justin Bieber. I hate saying that but you’ll never forget it.
Donna Peeples
I get it.
Scarlett Sieber
Same spelling but – and then as well as LinkedIn and one of the best parts of LinkedIn is my weekly series Tech Tuesday which featured Donna from a few weeks ago, so listeners can certainly go check that out, where we elaborate a little bit on some of the more crucial components we were talking about with AI and really providing the awesome customer experience.
Donna Peeples
Yeah. Well thank you for that plug too and it was so much fun talking with you on Tech Tuesday and I encourage everybody to follow you and I find it very valuable to hear your perspective and learn more about what it is that you’re doing in the world of finance today. So, let me thank you again, Scarlett and let me thank the listeners for tuning in today and you can access more Pypestream Digital Labs content at pypestream.com/insights. We hope you join us for the next Forward Focused podcast. Thanks everybody. Thank you, Scarlett.
Scarlett Sieber
Thank you, Donna
Check out the previous episode of Forward Focused where we spoke with April Rudin.