Dion Lisle has spent years on both the legacy and disruptor side of finance — in 2010, he even left an Executive Vice President job at Citibank to start (and eventually close shop on) a mobile payments startup called NeuPai. While working for two different Corporate Venture Capital teams, Lisle curated Fintech startups for investment and was early on Shopkick (and just missed out on Plaid and Feedzai).
Four years ago, Lisle started FACERE25 (pronounced Fah-Cherry) which serves to help legacy banks and Fintechs collaborate and better understand each other. He thinks the incumbent banks need help with R&D and that the new players in finance can be innovation engines for them. His job is consultant, matchmaker, and translator.
We called Lisle to ask what is currently keeping incumbent banks from rapid innovation and what might spark Fintech’s Tesla moment.
I was at Capgemini as the head of Fintech for about 18 months. What I saw was that legacy banks and fintechs didn't know how to work together. So I launched FACERE25 to be the Rosetta Stone between legacy banks and Fintech startups, because too often the Fintech startups don't understand compliance or what to do with the chief information security officer or 'why do we have to do it this way?' or 'why does it take so long?' Conversely, the legacy banks are so slow, so I'm trying to help both sides — you, be a little more agile, and you, be a little more compliance focused. I'll help both sides move ahead.
It's funny. Just the other day on Twitter, somebody wrote, 'Oh, the incumbent banks don't have the talent.' I'm like, 'No, no, no, they have plenty of talent. They've got a lot of smart people. The smartest people I've ever worked with in my career were at Citibank, by far.' So, what is the issue? The issue is bureaucracy. But very specifically, finance and procurement are two of the worst problems they have. If you're with an innovation team, and they say, 'Hey, we want to do this thing. You have 90 days and we want to get the new hire onboard and get the strategy going.' Recently, I was brought in for a project just like that and procurement and finance took 90 days just to get me onboarded to do the "90-day project." There's so much old-school, double-check bureaucracy in the legacy banks' onboarding, but it's not just onboarding; it's throughout their business.
I was working with a team at a large client who will remain nameless. And we sent out a contract to a Fintech startup, that was 17 pages, but of those 17, 8 to 10 were not relevant to this deal. But it was their template. They try to forcefit innovative projects into their existing systems — it's like pushing pieces of the puzzle into spaces that just don't have room for them. I've always argued, a legacy bank should have a fastlane for certain projects — like, here's $250,000, no questions asked, go, go, go and if you screw up, you're fired, but just go. You need procurement, do it. You need a contract, make your own. But that fastlane for bureaucracy; that would be the biggest difference maker.
Ron Shevlin framed it perfectly when he wrote that, suddenly, a bank account is a “paycheck motel.” So, you work for a big company and your paycheck goes into your Bank of America account. But then you put some in Acorns, then you put some in E*Trade, then you put some in Bitcoin. The fact that Bank of America is your primary bank account doesn't matter, because it gets divvied up. So where do you go to manage your money to get wealth accumulation? Where do you go to actually build your financial future? That's the more important controlling point and banks honestly don't get that yet.
Google just announced their checking account — so, they went from Google Pay to now also offering a checking account. How long are banks gonna let Amazon, Google and Apple eat at the edge of their business? I love the Jeff Bezos quote: "Your margin is my opportunity." Bankers are sitting there going, 'Oh, we're fine. We still have trillions in deposits, we're fine. We're fine. We're fine.' But they're getting eaten from the edges on their most profitable business. A decade from now, they'll just be a big dumb place to put money for a minute, while you decide whether you want Bitcoin or Acorns or to buy stocks.
Great, great question. The fact is, Innovators' Dilemma prevents anyone with an existing business from changing that business. How did Tesla become more valuable than the top three or four automakers? Because they didn't have any existing thing, right? There's a great Silicon Valley joke: how did God make the world in seven days? He had no installed base. When you're not serving a current customer base, you can do anything. You shake the Etch-a-Sketch; you can draw on a blank sheet of paper. Look at the Tesla: it's not an automobile; it's transport as a service. There's an OS. There are pieces that you can plug and play. Well, by the time Ford wakes up to that and takes three to four years to build a new car, Tesla will just send you an over-the-air upgrade. That's the kind of sea change that's coming to every industry.
Banking is spoiled and protected by these gross profits that they've enjoyed for all these decades. But while Amazon, Microsoft, Apple and Facebook spends tens of billions in R&D, banks spend next to nothing. How are you going to stay ahead if you don't have R&D? JPMorgan deserves a little credit — they've started to build that muscle a bit. But most of the other banks have none.
I don't know that there is one determined yet. So, I look at B2B banking more than B2C but I think it holds true in both — someone's going to figure out how to charge for a bank on a subscription basis and it's going to be such a great service that they win. But there's really no 800-pound gorilla in this change yet. Unlike in automobiles, I don't think there's been the Epiphany Moment yet.
But I always think of this when I think of the banks’ position: If you ask someone who filed for bankruptcy, how did you go bankrupt? They'll always say slowly at first and then all at once. That's what's going to happen to banking. Eat at the edges, eat at the edges, and then the middle collapses on itself. Is that one vendor? Is that Google? Is that Amazon? I don't think so. I don't know who it is, but look at Amazon — it's already doing billions in small-business lending. Well, small-business lending is a really important business to a bank. But they're losing that, because of the embedded nature of an Amazon loan. Or look at Shopify — they are executing brilliantly on everything payments and money movement right now. Well, that's just going to eat and eat at the core until banks are basically a utility like the carriers, right? Do you care who your mobile carrier is? No. It's Sprint. It's T-Mobile. It's whoever. I happen to get the phone from whatever store I walked by, or whoever locked me into a contract.
Banks are going to have to really up their game for service. And I don't know if they know how.
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