Editorial Team

The Braintrust: Dave and Tanner Mayo (FedFis) on Fragmentation and Fintech Cowboys

When people think American tech, people still think Silicon Valley. The same is true of Fintech. But out in Texas, father-and-son duo Dave and Tanner Mayo have built FedFis, a platform that delivers data on the banking and Fintech space — it delivers a digital peak under the hood to let the industry know what technology everyone is relying upon. 

“You might not know this, but everybody calls us the Fintech Cowboys,” Dave Mayo tells me through a grin early in our call. The nickname is well-earned. They were the first interviewees in our Braintrust series to use a Chevy truck in a metaphor about lead generation and the first to offer a room on their ranch next time we’re out near Austin. 

We called the Mayo’s to learn more about how underlying technology has created opportunities for personalization in personal finance and why a vertical approach has kept Fintech from solving macro problems so far.

You guys know more about banking and Fintech’s technological stack than almost anyone, so I really wanted to pick your brain on this call.

Tanner Mayo: We cheat, man! We've got all the data.

Dave Mayo:  Last week someone asked me: where are we at? I'm like, 'See that glow over there on the horizon. That little sunrise. That's where we're at.’ Things are about to get real good.

How have you seen new entries change banking within this last decade?

Dave Mayo: I look at it like: community banks have struggled so hard to get money out of big banks. The big four banks are just walking off with it. They kind of set the rules with the Dodd Frank, the Durbin amendment, all that stuff — they kind of just changed the rules after the 2008 financial collapse. It was tilted so far in the scale of the big four banks versus the smaller community banks that it just destroyed the community bank market. And it's still that way today. But what I find super cool is the Fintech guys — Unifimoney and Chime, as well as the niche players — are all taking market share, not from community banks, but from the big banks. And that's, like, super interesting to me; I smell blood in the water there.

How do you think that’ll impact the way the average consumer banks in the future?

Dave Mayo: Man, Tanner predicts the future better than I do [laughs].

Tanner Mayo: Something I heard some years ago that is a favorite of mine is: niches to riches. And that's what I really see going on. There's no seismic shift, but there's a ton of little ripples that kind of move like the tide. And so when you stand back and look at things, it seems like we're in this period of massive shift, when really, it's a lot of little minor moves. That tide is the stuff that we're able to see and track in the data, and kind of see where things are going. 

From that perspective, personalization is a big topic of the day and I think that niches to riches theme fits that well. So far, a lot of the Fintech innovation has been on the retail side, because when you put your product hat on, that's how we all think, right? We can walk in our own shoes. But from the business-owner side, it's a little little bit more complicated, right? And so I think the business side — and that niches to riches vein — that's where we should see a lot because there's just so much opportunity to make money there for everybody.

Dave Mayo: Can I say something real quick? Hats off to you guys. Sometimes you stand in a room and there's an echo; there's nobody listening and there's nobody there. Then one day you look up and the whole room is full and everybody's like, ‘Dude, you're smart.' It's like, I've said the same thing for 10 years. But that's what's going on with Unifimoney. I get Chime — we go to college campuses and we recruit them into Chime by getting rid of overdraft fees. It’s cool, but also it’s a bunch of broke college kids. What you guys understand is that one day they grow up. They become doctors and lawyers and now they need a better account for their primary banking. Rich folks, people that have means people that are not the underbanked, that's who we all aspire to be as we go into this world, right? That is a market that Fintech has basically ignored. And Unifimoney is after that market. 

I've been pounding the table. I'm one of those guys that grew up so poor, it's unbelievable, and I have more than I ever should have in life, so I feel really comfortable and really blessed. But at the same time, I feel pain in banking that's different from what your underbanked person would feel. So I see a need for change on the high side — is that the proper way to say that?

Tanner Mayo: You're not known for being proper [laughs].

Dave Mayo: Yeah, I'm not really articulate at all. But that need is there. I want the convenience of not having to go to a brick-and-mortar and still be able to do the things that function in my life as a high-income person. Hey, you could charge me $500 even — but I just don't have time to go to the brick and mortar.

Just to use friends of mine as an example. These are hard-working guys, blue-collar guys that started a company that turned out and made it big. Whether it's being able to mobile-pay their contractors or any other small issue, the problems they run into in banking are just not solved by the incumbent banks; somebody like Unifimoney can really take over and grab that market.

I think that actually segues nicely into a question I had. You guys have talked about personalization as the next big thing. What have you seen in terms of backend software and the financial stack that has kind of opened up the ability to make a much more personalized personal finance? 

Tanner Mayo: It’s kind of frustrating, but the innovation arrives in tiny fragments but doesn’t incorporate well. The ecosystem has become more fragmented as we get more and more small players, which is outstanding, because the larger legacy folks are a mile wide, but just an inch deep. The most successful Fintechs over the last decade have been ones that go deep, but that also means they’re very vertical. It’s created a fragmented ecosystem that doesn't partner together very well, and doesn't see systemic problems very well. 
With our data set, we're really, really wide and also pretty deep, which gives us this rare visibility. But for most of the industry, that vertical problem is the big issue. The challenges that should be solved that are plain as the nose on your face; why hasn't anybody done this? Well, because you need to take three or eight people and squish them into one brain. And that's a really hard concept. 

Dave Mayo: We can see the whole landscape and we'll talk to the big guys and tell them, 'You have all the parts and pieces necessary to be very competitive with FinTech. But you don't know how to talk to each other, and how to implement those things that are plain as the nose on your face: buy now pay later or installments or different things.' Why aren't those innovations coming from the incumbent banks? Because like Tanner said, the players are perfectly siloed. 'We are a core company, then we got an online, then we got a mobile, then we bought a payments company.' All these different areas are what they would look at his revenue centers. But where they fall short is that they don't communicate across channels. 

Tanner Mayo: Yeah, the way I always say this is: it's vertical organizations facing horizontal problems. That fragmented concept is why we've got zillions of little changes, but no real systemic shift. 

Looking back at the last five years, what is the most unexpectedly impactful innovation in financial infrastructure that you’ve seen?

Dave Mayo: What I see that's comical is that there has been hugely impactful infrastructure innovation, but not enough people are taking advantage. If I'm starting something and I'm VC-funded, what I tell my team is that I have to build a wheel and I have to roll it 360 degrees one time to show somebody that it actually works. Okay, how the hell would you do that? Well, you have to build the APIs if you want to move money in and out savings and if you want a debit card, you've got to get a debit-card processor and on and on. You have to do all this stuff before you can get a sponsor bank. And then you go to a sponsor bank and guess what the sponsor bank already has? A debit card, API for ACH, etc. They've already got all of that. 

What we think is pretty obvious is that Fintechs should be tapping into the infrastructure of the existing players. Besides Unifimoney, almost nobody does that. Instead, they go out and take a cool idea — 'Hey, man, let's do this neat thing that'll eliminate overdraft, or will have early direct deposit,' and they'll rebuild the damn thing from scratch. Then they're running into compliance problems and KYC and BSA and AML. Why? All of that was already built into the core of the bank that you sponsored with, and could have written your APIs to that core. So when you see somebody like Cross River Bank, they built APIs onto their existing core for lending, and just took over the friggin' world. Likewise, I think there's an opportunity there for banking to emulate a lot more of what FinTech is doing. Because they already have the parts and pieces. But it's back to Tanner's point: Horizontal problems, right? So, now they can't see how to get there.

Tanner Mayo: So, to tie this together, my view here is that the most interesting technological advance in the industry has been intellectual property. It's the IP, man. There's a lot of second, third, or fourth time entrepreneurs with this huge knowledge base that are now succeeding in the space. Look over at Moca Financial — that's led by John Burns. Well, John Burns is the guy that invented online banking with FundsXpress back in 1995. Many of the real ground shifts in Fintech are coming from folks with lots of years of experience in this business. 

I think it's the biggest misnomer in the industry: that FinTech is new. I'm a pretty young guy, and I've been here more than a decade. Folks like my dad and Burns and others have been doing this for 40 years. API is not something new to anybody. So, I think the biggest technological advance is the IP of all those different lives coming together and solving those macro really wide problems.  

Dave Mayo: One thought I want to leave you with: the cool Fintech kids, they grow up, and they're getting smarter. 

Tanner Mayo: It's so cool to see. Fintech is pushing banking now. Fintech has been very open and very collaborative, while banking has historically been more close. It’s forcing the banking ecosystem to partner and share, and it's making us all better. 


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