Fintech Meetup provides an opportunity for the fintech industry to connect and collaborate to shape the future of fintech. PerformLine and FS Vector were both in attendance and had a birds-eye view of this event and were able to glean some great takeaways for us to share with our listeners.
In today’s COMPLY Podcast episode, I am joined by Ethan Singleton, Principal at FS Vector, and Alex Morris, Sr. Account Executive at PerformLine, where we will chat about:
- BaaS partnerships—is there light at the end of the tunnel?
- The growing fintech community and the blooming collaborations
- Compliance still matters!
- Regulators support innovation while warning about consumer protection
Show Notes:
- Ethan’s Debut COMPLY Podcast Episode: https://performline.com/blog-post/episode-41-building-evolving-and-automating-fintech-marketing-compliance/
- Why Banks are Investing in Marketing Compliance Technology Blog: https://performline.com/blog-post/why-banks-are-investing-in-marketing-compliance-technology/
- Learn more about FS Vector: https://fsvector.com/
- Connect with Ethan Singleton: https://www.linkedin.com/in/ethan-singleton-esq/
- Connect with Alex Morris: www.linkedin.com/in/alex-morris-jones/
- Connect with me, Rhonda: https://www.linkedin.com/in/rhonda-mcgill/
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The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY Podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level.
Episode Transcript:
Rhonda:
Hey COMPLY Podcast listeners and welcome to this week’s episode on today’s episode. I had the pleasure of being joined by Ethan Singleton of financial consulting firm FS Vector and Alex Morris, Senior Account executive here at PerformLine. Ethan and Alex just returned from the Fintech Meetup, which was held in Las Vegas last week. Today, they sit down with me to share some takeaways from the meeting and some thoughts on the evolution of BaaS partnerships and their observations on the overall atmosphere of the conference. So without further delay, let’s hear what they have to say. Thanks for listening and enjoy.
Rhonda:
All right, so welcome to you both. I am so excited to have with me today Ethan Singleton from FS Vector and Alex Morris from here at PerformLine. And you guys recently went to the Fintech Meetup, which took place in Las Vegas last week. So, we’re just as excited to hear from you all. Definitely lots of time change things going on, which I’m excited to hear about that too. Because it seems like you guys were what three hours back and then came back into daylight saving time and so all kinds of things. So I know you guys are tired, so I appreciate you taking the time to come back and join us and share with our podcast listeners a little bit about your experience at the recent Fintech Meetup in Vegas. So, welcome to you both and Ethan, if you would just take a moment and reintroduce yourself just in case we have some new listeners.
Ethan:
Yeah, thank you, Rhonda. I’ll refer our listeners back to I think part one of our podcast that was released a couple weeks ago. But for those who weren’t on that episode, my name is Ethan Singleton. I’m a principal at FS Vector.
I help fintechs, banks, and other financial service companies kind of rethink how compliance impacts their business, which as we know is a really important part of any financial service company, but particularly these days.
Rhonda:
Absolutely. And Alex, please introduce yourself in case again.
Alex:
Yes, thank you, Rhonda. For anybody new, my name is Alex Morris. I am a Senior Sales Executive here at PerformLine, I’ve been here now for a little over seven years and have the privilege to work with some of the biggest banks in the world now as some of the smallest. And as I say, just about every species of financial services and fintechs in between.
Rhonda:
So with that said it, we’ve got the right people for this discussion. So last week, Fintech Meetup, it sounds like there’s a lot of things that were going on. I was kind of hearing things wasn’t there, but definitely hearing updates about things that were going on there and it seems like there was a lot of developments in the BaaS space. So Ethan, would you share a little bit about what you learned out there and what you observed?
Ethan:
Yeah, absolutely. Well, first off Fintech Meetup, just a general feedback, amazing event. I think all the attendees were really excited about getting together and seeing each other in person. And I think the conversations over the course of a few days were really great, really good takeaways. But of course, BaaS was kind of top of mind for all attendees, particularly some of the just recent developments around regulatory enforcement actions and less funding on the fintech side and some BaaS players getting out of the space, some recent news on the middleware side around strategic plans changing. And so I think the question, I was kind of asking myself going into the conference was the the light at the end of the tunnel that we might be seeing in BaaS?
Is it the train coming to kind of wreck us all in the space, and it’s the death of BaaS as we know it? Or is it the light at the end of the tunnel that is the clearing and we’re kind of coming out on the other side? And all these difficulties that we’ve had in the BaaS space over the past year or so, are really learning opportunities and it’s going to be kind of greener pastures from here. My resounding response is that it’s daylight and things are looking up from here and there’s a lot of learning opportunities from the past year, year and a half or so, as we flushed out on the prior episode of this podcast. But the sentiment among the attendees from the banks to the fintechs, some of the investors as well is that, things are starting to look up if you’re a bank that’s maybe looking to get into the Banking as a Service space. All of the headlines might seem like it’s a bad time, but it actually is a probably a good time because like I said in the prior episode, there’s a road map for how to do things right. There’s still a a really good amount of fintechs out there that are looking for bank partners that want to use that bank sponsorship model. But yeah, in summary, I think the mood was a bit tense but I think after like a lot of conversations between the attendees about like where BaaS is headed, I think everyone is pretty optimistic. I don’t know Alex, I’m interested to hear your thoughts.
Alex:
Yeah, I would say that the overall energy of the event it was high energy. And I think if I remember correctly on the survey form that we were asked to submit about our experience at the event, the one word I used to describe it was I think prolific. It was highly, highly productive, I think overall energy was positive, a little bit tense when it came to discussing BaaS, but I believe that just the level of collaboration that I’ve witnessed and what was discussed of banks collaborating together, collaborating with regulators and kind of taking a step back to re-vision or I guess re-shuffle. I think that there’s a lot of positive change that is happening and I think that we’re still in this phase of like a major growth spurt and growth spurts, they hurt. But I think it’s all going in the right direction.
Rhonda:
Yeah. And I think that just from listening to both of you, there’s definitely the growing pains in that space. It’s been there. But it’s really positive to hear that things are starting to kind of come together and so hearing that is great and it sounds like there’s a strong community that’s in the works that is really starting to form. So did you feel that there was a lot of collaboration? Was there opportunities to collaborate that were missed? Give me a little bit of your insights on that.
Ethan:
Yeah, I’ll start it off. I think the really cool thing that happened at the beginning of the conference is an event that was put on, a side event that was really just focused on banks in the space and it was really a safe space for bankers to get together. Kind of talk about like what they’re doing in the BaaS space, maybe some troubles that they’ve had, some feedback they’ve had from their partners or the regulators and really just like have a learning session where each bank can kind of just share and kind of vibe off each other. Which I think is really cool because there are a lot of banks in the BaaS space and I think it would be easy if you’re a bank to be like, I’m not going to talk to another bank in the BaaS space because I don’t want to give away my secrets or like they’re a competitor, or it just wouldn’t be good, like for my business, if I talked about how we’re doing things like maybe the right way.
And that’s not the feedback I got, and I know the banks that I work with directly that were in that session. It was a closed door session but it was like open area for sharing ideas. And the feedback that I was getting from my bank clients is that this is how BaaS is going to survive and thrive—it’s banks working together to collaborate. And there is plenty of fintech target market out there. There’s a lot of fintechs that need bank partners and I think each bank partner can have like their specialty and still be able to find a fintech partner and not feel like having these discussions with other banks is going to hurt their business too much. But overall, I got really good feedback on on that session.
Rhonda:
That’s great to hear, and Alex, were you able to jump in on some of those collaborative opportunities?
Alex:
I wish that I had the chance to, but I had 33 meetings, most of which were through the app in the speed dating round. So I was back to back to back and unfortunately, I did not sit in on any sessions.
Rhonda:
So for the folks that probably haven’t been to Fintech Meetup, can you talk a little bit about that speed dating process?
Alex:
Sure, it’s definitely unique compared to other big industry events that we’ve gone to in the past. If you think about Money20/20 and how big that event is, it’s very unstructured. It takes months of planning to even get meetings on the board and sometimes those meetings just don’t happen because it is just chaos. This event, I love it because it is quite structured. You are matched up with people who are looking for XYZ and the way that they match you up it’s kind of magical. Every single one of my conversations had purpose and made sense. And a lot of follow ups to be done, I can not let those conversations or opportunities die on the vine. But I think just the way it’s structured is so productive, meetings do happen. Yes, it’s still chaos, but I just love the way it’s set up.
Rhonda:
That sounds awesome. I mean, like what a great opportunity to be able to connect with folks that have an intentional connection. So that’s really great. Ethan, did you have an opportunity to do a lot of those meetings as well?
Ethan:
Oh, yes, yes I did. I mean, it’s one of the coolest parts of Fintech Meetup is, I guess this year, was like 3,600 people and like one huge exhibit hall having kind of 15 meetings, one-on-one and then kind of bouncing around. So they do a really good job of the initial screening part. Prior to the conference, was building your dating profile and then that dating profile is put out into the world for other people in fintech and they can like swipe right, or swipe left and then you get matched. I know it’s a terrible analogy but it’s exactly what it felt like when I was going throught it.
Rhonda:
I had a full image of swipes.
Ethan:
And all of the meetings that I had were really productive, it was a good mix of banks in the space, of fintechs, of service providers, of tech companies, middleware. It was kind of all of the different players that I wanted to interact with in my job with my clients as their advisor and they were all really good conversations. The one interesting thing, and I saw a lot of feedback about this like on LinkedIn, is the sheer number of people talking at once and a huge exhibit hall that has like concrete floors and high ceilings and like no carpet. It was like, and somebody use the term, it sounds like a jet engine—that’s exactly right. So if the people of Fintech Meetup are listening to this, maybe we can get carpet on the floor, and that will help with that.
But I was lucky enough that FS Vector, we got a booth and it was positioned right next to the one-on-one meeting hall. So I was able to grab my one-on-one and just bring them over to my booth where we had a nice wall that it was just enough to cover up the jet engine sounds. But overall, I mean, it’s a really cool environment, it’s like very fast paced. You kind of forget who you talk to, but like if you take good notes, you can kind of go back and reference them. But overall, I think that the way they set it up, even with this sheer number of people, I think they still did a great job.
Rhonda:
That’s great. Oh my gosh, sounds like a super busy, but extremely productive opportunity, so that’s really great, glad you guys were able to be there. So let’s talk a little bit about some compliancey-type things. I know that the banks had their session. Did you see anything in terms of collaboration with folks as it applies to compliance? I know in the fintech space, sometimes they are in that just getting started phase and those are typically the folks that you work with Ethan trying getting them set up. What were your thoughts on some of the things in the compliance space that were going on? Anything new and cool or?
Ethan:
Yeah, I think I have two things there, one is there, I think we had talked about last episode, of the lack of maybe a compliance specific conference for fintechs, but maybe like they just needed to be more sessions focused on compliance. There actually was a couple of good panels on compliance and without naming names, there was one that was kind of talking about where middleware providers sit potentially in between banks and fintechs and like, what is that compliance lift look like? And should the bank be owning all of the compliance with the fintech? Is it ok that the middleware is in the middle but not really in the middle? So there’s a really good panel on that and I think that the takeaway for me at least is, the bank still really needs to be involved at a minimum, like on a day-to-day kind of oversight of the middleware. Maybe that’s acting as a program manager at the end fintech. And a lot of the talk on that side is what is the shift going to look like, is if the middlewares do decide to kind of get out of the program management space and really just focus on tech and selling to banks, which I think is actually like a really good idea. Who’s going to take on the compliance, will it be the fintech at the end of the day? Are they ready for that? Are they sophisticated enough to build that out and own it on their own or it really just going to be on the bank side and the fintech can really just act as like a marketing and customer service platform. But that was one really cool takeaway for me on the compliance side. Another one is there was a lot of new fintechs there, like start-up fintechs that maybe we’re looking for their first bank or first partnership.
And I get asked those questions a lot of what is that process look like? And the finding the bank partner, it certainly isn’t easy, but there’s enough information out there now that you have a good idea of what banks are in space and if you can kind of connect the dots, maybe get an introduction there. But a lot of the questions I was getting asked by some of the start-up fintechs were how do we even think about like building the compliance program and making sure it’s meeting the requirements of bank partners and a lot of them might not even know like what that entails. Like, how do you get from 0 to 1? And for FS Vector, we’ve been doing this for over five years now and we’ve probably built maybe like 250 or so compliance programs from scratch. So for us, it seems like it’s a relatively simple process because we’ve done it so many times, but when you’re going to a founder, who’s maybe coming from a product or a tech side, who doesn’t get what is AML or what is third party risk or information security, all these different things and how they tie together. There are so many good questions being asked by founders there, which really meant that like they’re thinking about it the right way, which is for me, it’s like comforting.
Rhonda:
I was about to say, that’s great. That’s what you want.
Alex:
And it’s very refreshing, I think because in the past these brand new fintechs, their whole purpose is go to market as fast as we can, but now founders and their banks really, compliance is vital and these fintech they see that compliance is really a business differentiator for them and they can’t exist or even partner with a bank if they don’t have that foundation, so I found that to be refreshing. Many of my conversations with fintechs, compliance was the major topic.
Rhonda:
That’s great, that’s great to hear that because it seemed like for a while it was everything but compliance, so it’s so great and refreshing to hear that compliance is back. It’s awesome.
Alex:
Aside from compliance being back, I mean with my conversations with the banks, of course you can’t avoid the topic, they know it’s important. I think that a lot of these banks in the BaaS space or partner banks, they are really focusing more on the larger scale things that come down to things like payment processors, connectivity, the cyber security, data warehousing, and payments. I think payment rails, it’s kind of out of my wheelhouse, but that is definitely top priority for a lot of these bigger players or even small ones.
Ethan:
Yeah, I think the data warehouse component is something that kept popping up and it’s popped up with my banks that I work with, as we’re trying to figure out like how do we collate all of the data from the different fintechs and normalize it and use it for like reconciliation or compliance monitoring and oversight. Maybe this leads us into our next discussion which could be like, what are some cool products or companies that we saw at Fintech Meetup?
And there were a couple on the data orchestration side that I ran into. Like one really focused on rebuilt data warehouses that a bank can plug in to oversee all of their fintech. As opposed to like what some banks might do, and if you have like the engineering and IT talent to do this, yeah go for it but building out your own iteration of Snowflake, and then figuring out how do we get all of the data from the fintech partners, extract it, get the data that we actually want and then normalize it and then make sure it’s being housed the right way. And then from there, like how do we pull from a Snowflake instance, for example, to pull it into like our transaction monitoring systems or like data reconciliation systems.
And so I saw a couple like prebuilt tools made just for this purpose, which I thought is really cool and it could save a lot of money on the the spend on the bank of the fintech side. So looking forward to getting into those and exploring those a bit more, but Alex is interested to see if you had any other ones, you maybe you wanted to call out.
Alex:
Oh, I did not get a chance to speak to many vendors. But I would say from my conversations with banks, they’re definitely rethinking their strategy for, back to, middleware. Some banks who are working with middleware, are they going to sunset those relationships? How do they roll off of those? How do they go direct?
That’s definitely top of mind for many banks and you know, a lot of the bigger established partner banks, they do have relationships with these middlewares and there’s many newer or not newer banks, but smaller community banks that haven’t even started a program they’re looking to, and they need to figure out how to go direct. They are, I guess, avoiding that middleware route now. So I don’t know Ethan if you had conversations with banks about that.
Ethan:
Oh yes, oh yes, it is one of the major questions of, do we build or buy? And there is no uniform answer. It totally depends on your bank, how big you are, what your ultimate strategy for BaaS is, kind of what is the resources do you have to spend on BaaS? But there was a ton of new providers out there that help banks, get into the BaaS space quicker. Whether it is on the data orchestration side or the middleware, like ledger processing tech side or the compliance side. There’s a lot of good stuff on kind of initial first line of defense, of KYC onboarding orchestration, the second line, a lot of cool transaction monitoring tools and then third line, some of like the effectiveness testing that oversees all of the bank’s compliance management system. Overall, I think the key takeaway is that there’s like tech across the board that is coming up that the banks can use.
Rhonda:
How great for everybody to be in one space to have the opportunity to collaborate.So definitely that’s awesome, so I guess and before we close, I definitely wanna touch a little bit on regulators. How were there a lot of regulators there? Are they starting to grasp the technology piece? And was there any thoughts around the direction the regulators are going? I hear they’re pretty tech savvy now.
Ethan:
Yeah, I think that was a good call back to the last episode. There definitely was some regulators there, I think they spoke on some of the panels and sessions. I think I was probably harsh on the regulators last episode to say that they’re not thinking about maybe Banking as a Service in a certain way that is innovative. Because I think they are actually, and I think what they’re doing is that they are pushing technology to banks in the space and in the sponsor bank arena. Even to some extent they’re pushing AI or machine learning, although we know AI that term might get thrown around a little bit loosely, but probably LLMs is the better tool or better term for these tools. They are pushing it but I think what they’re doing or maybe saying to the banks is please be innovative, figure out where you can use technology to make your customer experience better or make your compliance and monitoring program better or your overall operational structure better. But be very careful when you’re plugging in new technology, particularly those that have AI or maybe LLMs. And even more so if you’re plugging in this technology for credit underwriting for example, you better have a really good sense of how that model is working and maybe some of the assumptions or limitations of that model, particularly if it has AI. Can you explain the AI portion of credit underwriting and why it’s giving a consumer a thumbs up or thumbs down?
So yeah, I think that the tech side is not going anywhere and I think banks are going to find more and more that they should be plugging in across the spectrum of bank operations. And actually it might seem expensive, but in the long run, it’s probably going to save you constantly reviewing resources.
Rhonda:
There can be some long, long term savings for sure. in closing, I wanted to give you each an opportunity to share some takeaways, some last thoughts or are you excited for the next Fintech Meetup?
Alex:
Oh yeah, definitely. I think that Fintech Meetup for me and PerformLine at least takes the the cake for conferences that we go to and I think that next year we’ll be sending a few more people.
Rhonda:
I was about to say, we had a pretty decent group that went this year, but hopefully we’ll have more next year.
Alex:
And just to add on that, I think that the energy of this event is again, one of a kind. And I think people go in just very motivated to learn from each other, have conversations, and ultimately get business done, which is super productive. And I think that the overall vibe is just everybody seemed happier than I’ve experienced at other conferences and I think just in general very open and happy. People were very nice.
Rhonda:
That’s awesome.
Ethan:
Yeah, I echo that sentiment one hundred percent. Everyone wanted to be there. And even the people that you run into the hallway, for example and you start a conversation with it, you either like could have worked with them directly either as like maybe like selling a tool, like if you’re PerformLine or maybe advising them if you’re FS Vector or being like, oh I know who you should talk to at this event, let me introduce you. So it’s a really cool small community, as opposed to some of the bigger conferences where it’s hundreds of thousands of people, at least it feels that way and you might talk to someone for five minutes and be like, we will never interact in my day-to-day business. But overall Fintech Meetup, highly recommended for anyone that was thinking about it that didn’t go this year.
I feel like there’s one thing we didn’t touch on, which is how do you go to a conference that’s as big and intimate as Fintech Meetup, it’s in Las Vegas, and not get sick—there has to be some tips of the trade. So maybe Alex, can I hear yours first, and maybe we can all share?
Alex:
One stay hydrated, definitely load up on waters, if you’re at the Venetian, go to the Walgreens and buy a case of water for your room. My other tip is green juice. I have, thanks to PerformLine, allotted budget for my green juice consumption, because it’s not cheap in Vegas, I can tell you that. But that and, hand sanitizer, and sleep if you can.
Rhonda:
Wonderful
Ethan:
Sleep is always the toughest part, but you can get that. And then I have a similar strategy of just trying to boost my immune system as much as I possibly can. So I just stock up on Emergen-C, like the powder that you could put into water and shake it up and have like a little drink. And then same thing with like the liquid IV powder. And like your body is overhydration, but you’re ready to go, your immune system working. And like ready for all of the face-to-face and handshaking.
Rhonda:
I was about to say a lot of handshaking. Well, I’m glad you guys both went, and you both came back healthy and strong and that’s a great thing for all of us because we definitely need you guys out there. But thank you both so much and hopefully the time change didn’t drain you too much.
Ethan:
Let’s just say, I’m glad this is the audio only.
Rhonda:
I love it. Thanks again for joining us and sharing your insights from the Fintech Meetup. I’m so glad that PerformLine was able to get out there and shake a lot of hands, over 60 hands, and we’ll be doing some follow ups. And definitely Ethan, we hope to have you back again soon for webinar, or podcast, or whatever. But definitely thank you for taking the time to come back and share your thoughts.
Ethan:
My pleasure, thanks Rhonda.
Rhonda:
Thanks again for listening to today’s episode of the COMPLY Podcast. As always, we hope that you were able to take away some useful information that will help you better prepare your compliance program.
If you would like to connect with me, please don’t hesitate to drop me a line and you can always find me on LinkedIn. You can find additional resources including our blog on why banks are investing in marketing compliance technology, as well as a link to FS Vector, and Ethan Singleton’s LinkedIn information and so much more in today’s show notes. You can also find a link on how to connect with Alex Morris.
As always for the latest content on all things marketing compliance, you can head to content.performline.com and for the most up-to-date pieces of industry news, events, and content, be sure to follow PerformLine on LinkedIn. Thanks again for listening and we’ll see you next time.
Xavier Holland 