Sage Advice: What Mint’s Merger Means for Banks and Credit Unions

Mitch Woods: Welcome to another episode of Lending Made Easy. Today I'm here with Bryan Peckinpaugh and Mike Horrocks and we're going to discuss Mint. And I'm not talking about the aromatic herbs. So, Mint and Credit Karma are about to join forces. According to some recent articles, Mint, which was bought by Intuit back in 2009 for 170 million, is no longer going to be operating on its own starting January 1st.

So instead, it's going to become part of Intuit's Credit Karmic business. So this merger is a big deal, reflects some of the ever changing landscape of the, of the financial industry and specifically around personal financial management tools. And the goal sounds like to create a more streamlined user experience by bringing these services together, right?

But what does this really mean for banks? is there considering how They're purchasing and using software tools to strengthen relationships with their clients. Where does PFM software play a role? So Bryan, Mike, I know you guys were just at American Bankers Small Biz Banking Conference down in Nashvillewas this part of the conversation there? Did you all have conversations with bankers around how banks should be approaching,strengthening relationships with their small business customers and where software like personal financial management might fit into the, into the playbook there?

Bryan Peckinpaugh: it's, it's interesting that you threw small business in there, Mitch, cause,I think that was always a vision of some of these tools was to start bleeding into that sector. I would say that I probably personally am a prime target and candidate for using personal financial management tools.

I'm I'm in the FinTech space. I've got a background in tech. I've got a thousand apps on my phone that do one of everything you could possibly think of. And I've just never gotten behind them. They don't make sense for me, so it always makes me wonder who, who the intended market really is and, as it relates to scaling up into the small business, I would see similar concerns of who is that really for, coming back from the small business conference that just was held in Nashville, The common refrain across the board, whether it was talking to other vendors, talking to, banks and credit unions, or listening to the presentations that were given is the continued kind of number one demand from small business owners of the financial services industry is the desire for expertise the desire for education and Information on how to better run and fund their business. So they are looking to that small business banker to, to be almost a, I hesitate to use the word free, but free consultant, who you are paying for through your, your fees and, and other aspects of the services you from your financial institution.

You lose that in the realm of tools like, a Mint, you lose that, that human interface, we continue to see improvements there, whether that's, things like robo advisors and wealth trying to, help provide that expertise without one on one necessarily human interaction. maybe we'll get there we're not there yet. And then I don't think it's these kinds of tools. It's, it's the insights, it's the advice, it's the understanding of the broader, business,aspect that the banker has access to and working with multiple customers that that is of value, not just, can I see my balances? Can I see my net worth and things like that?

Mike Horrocks: Bryan, I would, I would echo exactly your sentiments there as well. And, the, the one thing that, I was really amazed that we kept hearing over and over is that, behind every small business is the small business owner, right? And how you can interact with that individual and how you can help, him or her, make more out of their business and, and it's interesting, like, when you think about the Mint and, and the, the Credit Karma, in terms of feature functionality and kind of looking at this from a product point of view, everyone keeps saying that the, the number one features, that people used in Mint to basically track and look at their, their spending and their net worth aspects. Those will all still be available in Credit Karma and so that's a good thing, right? But, again, going back to, I think banks have the possibility of doing PFM right? But again, none of them do it well.

And, there's little tools that they do make it convenient, right? If I, if I have like a bad charge or a duplicate charge, My bank lets me know that, right? but that's not PFM that's just, being alert to your, your, portfolio and, and looking at the transactions. one area that I look at is again, when you have PFM and you mentioned the advice and the expertise that a bank could offer, it's really making it so that the bank knows what I'm trying to accomplish, right? And I know there's banks out there that, have catchphrases like my bank does. I don't know, Mitch, if I'm allowed to say this, but, my bank has what,I think it says, What do you want to accomplish today? Right? Or something like that. That's their catchphrase.

And that's a perfect role for PFM, right, to, to come in and play. but at the same time, I don't feel like my bank and it's a big one knows me really well. And that's what I think, again, I don't think Mint knew me really well. So to me, it's kind of a yawn. If they go to Credit Karma, maybe it will be a little bit better, but I think for banks, this is a good opportunity for them to try to look at their PFM. And say, how can I get to know my customer? How can I get to know my small business owner better?

Bryan Peckinpaugh: Yeah. My guy, I, That knowledge of who it is that you bank is the key piece,and, and kind of stretching this beyond the, the PFM concept, it's something that here at Baker Hill, we talk about with our bank clients all the time, specifically around a solution that we offer called portfolio monitoring, again, that's one we've talked about on here previously, where there's a lot that happens.

Inside of the relationship you have,with a person or with a, a business that you can glean insight into by what is happening day to day, week to week, month to month. in the transactions that they are conducting with your bank and, pointing tools at that to better understand what those behaviors are telling you.

And not just that, but what to do with the behaviors when you find them, that I think is really interesting and under, under tapped in our market. Digging into that data and seeing what trends exist, over time, what singular events might tell you something, or what combination of events might tell you something, to, to really understand what is going on in the life of your customer that starts to become fascinating, I think for the first time ever, we're at a point where that is possible. it's certainly always been, the target of financial institutions to understand where you are in your life journey and, and bring financial products to you that, that makes sense for where you are. And with the amount of data and how much you can enrich it and bring it all together, we are certainly close to being able to do things like that.

That to me is a whole lot more interesting than just, showing you graphs about, what your current balances are across multiple different products. what your spending habits are. and then kind of leaving it up to me to make interpretations of that, try to take it and make the interpretations for me, make those suggestions, dig into, what is it telling you and what, what should you be doing for me as my financial institution and,helping me live a better financial life. Yeah.

Mike Horrocks: Yeah i mean dont tell me how many times I've gone to Starbucks, right. But maybe tell me, if I wouldn't have gone to Starbucks, what I could have been doing with that money instead. Right. So. Yeah, no, absolutely. Great point. the other day also, I was when we talk about the data that you that, can be utilized in PFM and how you can get to know folks. I had a conversation with a friend of mine. He's works for another, thought leader in the fintech industry. and they're talking about churn and they did a study of, I think, about 1300 businesses. And it was really interesting that, even though they felt like the bank knows who they are, that still wasn't a big factor in whether or not they'll, like, leave their bank, right?

And I think it goes back to exactly this concept of you need to know more than just what their balances are. You need to know where they're going as an institution or as a business. 

Bryan Peckinpaugh: And that becomes more and more complicated, Mike, as you said, business versus consumer, there's, there's a lot of easy. Indicators, maybe easy is not even the right word, but there's a lot of indicators I can look at from an individual perspective. The, the business becomes much more complicated, as you try to understand the total relationship that, that they have as a business, as, as one of our partners, Tim Keith loves to say the number one indicator that a a particular client has a significant financial relationship with somebody else is if they have a significant financial relationship with you,because that usually is a, they're a heavy user of banking products. It's usually across more than one institution. and trying to gain insight into that by looking at, enriched transaction data.

If you see ACH is always going out to a separate account,scheduled monthly basis, very similar amounts, strong indicators that there might be outside relationships again, trying to find and understand, how they operate as a business as a whole. But nothing will ever replace in the business sector sitting down and having the conversations about how they run their business and providing that, that guidance and expertise, which again is why I think that's the, as I mentioned earlier, the still the number one ask that small businesses have of their financial institution is help me run my business and help me do it profitably. So, trying to do that via just a tool probably isn't going to cut it. you still have to sit down and talk with them, ask the tough questions and, you'll spend the time investing in understanding them.

Mike Horrocks: Yep. Nope. Absolutely.

Mitch Woods: Well, Bryan, Mike, I think a great conversation and thank you guys for for your thoughts on that. I think, banks, it's all about getting back to the basics of relationship banking, right? Bryan, like you, like you were saying, understanding your customer, where they're going, where they want to go and being able to help put them in a position to achieve their goals and that requires that human touch. And so, yeah, Bryan, Mike, thanks for, for the conversation today. Thanks for your insights and thanks everyone out there listening to today's episode of Lending Made Easy.