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Enabling Small Businesses with Local Financial Institutions from AutoBooks CMO, Derik Sutton - Episode 22
Episode 2220th September 2022 • Fintech Confidential • DD3, Media
00:00:00 00:49:22

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Episode Overview

Derik Sutton is the CMO of the embedded payments and invoicing for financial institutions company, AutoBooks.

He shares the importance of solving customer problems when building a product or service and what it means to be the Mustard on a financial sandwich.

Three things in this episode that we dive into.

1️⃣ Being okay with not being the entire sandwich

2️⃣ The importance of customer empathy

3️⃣ How segmentation of customers holds small Financial institutions back

Links

Autobooks

Website: www.autobooks.co

Linkedin: https://www.linkedin.com/company/autobooks-co

Twitter: @autobooks_

Derik Sutton

Linkedin: https://www.linkedin.com/in/deriksutton

Twitter: @deriksutton

Watch On Youtube

Time Stamps

[00:00:00] Intro

[00:02:03] Falling into Fintech

[00:03:43] Crux of the Product Experience

[00:07:24] The Path to Autobooks

[00:09:29] CashFlow is KIng, Especially in Small Businesses

[00:10:44] Journey to Enabling Small Businesses through their Local Financial Institutions

[00:14:07] The first 100 Customers

[00:14:46] Partnerships drive Mass Enablement

[00:18:30] Is it too late for Local Banks and Credit Unions to catch up with innovations

[00:20:54] Why FIs should offer embedded invoicing and payment acceptance

[00:22:58] How financial institutions can retain customers

[00:26:37] Competing with Headless banking

[00:31:53] Starting a business is easier than ever

[00:39:21] The Key advice to succeed with small business banking

[00:43:37] Closing thoughts

[00:43:49] Happy being the mustard on the FI sandwich

[00:45:07] Lean into Marketing

[00:45:39] Contact AutoBooks

Support is provided by Solvpath, an A.I.-driven customer support system that uses a visual format and self-serve technology to quickly and effectively resolve issues, resulting in satisfying support experiences for customers.

Get the best customer support system for your business. Get Solvpath. Get started by visiting www.getsolvpath.com

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Transcripts

Tedd Huff - Host:

Derek welcome to the show.

Tedd Huff - Host:

You are the first guest whose company is focused on helping the

Tedd Huff - Host:

financial institutions be successful.

Tedd Huff - Host:

And

Tedd Huff - Host:

I'm excited to learn more about your FinTech journey and how it

Tedd Huff - Host:

led you to join AutoBooks in 2018.

Derik Sutton - AutoBooks:

:

Thanks for having me, Tedd.

Derik Sutton - AutoBooks:

:

Yeah, really, really happy to be here.

Derik Sutton - AutoBooks:

:

And at AutoBooks, we love talking about small business banking and

Derik Sutton - AutoBooks:

:

most importantly, like how we.

Derik Sutton - AutoBooks:

:

Small businesses get paid and financial institutions stay

Derik Sutton - AutoBooks:

:

ahead of the competition.

Derik Sutton - AutoBooks:

:

So let's dive in.

Tedd Huff - Host:

So I noticed that you spent some time at Banno and Wade.

Tedd Huff - Host:

Arnold was one of our first guests here on FinTech confidential, but

Tedd Huff - Host:

wait, I'm, I'm skipping way ahead.

Tedd Huff - Host:

So I'm guessing you fell into FinTech, like most of my guests.

Derik Sutton - AutoBooks:

I actually was recruited by a

Derik Sutton - AutoBooks:

family friend right outta college.

Derik Sutton - AutoBooks:

And so I was going to college.

Derik Sutton - AutoBooks:

I played soccer and was pretty dead set on being a college soccer coach.

Derik Sutton - AutoBooks:

And I got asked to be an internship for a community bank,

Derik Sutton - AutoBooks:

data processing company, Tedd.

Derik Sutton - AutoBooks:

And if you don't know what that means, I didn't either for the

Derik Sutton - AutoBooks:

first two years I was there and was a, was it literally an intern?

Derik Sutton - AutoBooks:

Did everything from helping.

Derik Sutton - AutoBooks:

Banks move off of serial connected environments to network connected

Derik Sutton - AutoBooks:

environments, move off of dumb terminals to, network connected PCs that had a

Derik Sutton - AutoBooks:

new gooey interface and helped process items in the data center, run updates

Derik Sutton - AutoBooks:

on a Unix file processing system.

Derik Sutton - AutoBooks:

And you.

Derik Sutton - AutoBooks:

Just continued to stay there and just ended up being in financial services.

Derik Sutton - AutoBooks:

And then along the way got really interested in digital banking and helped

Derik Sutton - AutoBooks:

a company called CSI build and launched their first digital banking platform.

Derik Sutton - AutoBooks:

From there I met Wade, Arnold and Wade was running Banano and building

Derik Sutton - AutoBooks:

really like a next generation digital platform for financial

Derik Sutton - AutoBooks:

institutions was had the pleasure of being part of that team for a while.

Derik Sutton - AutoBooks:

Was acquired into Jack Henry, stayed at Jack Henry for a while, had a great

Derik Sutton - AutoBooks:

time there and then ended up starting my own product and design agency

Derik Sutton - AutoBooks:

that eventually led me to AutoBooks.

Derik Sutton - AutoBooks:

So kind of all long and winding tale, but that's, how I got into it.

Tedd Huff - Host:

So with your career and experience your career

Tedd Huff - Host:

and product and experience, what have you learned the most?

Tedd Huff - Host:

The relationship between financial institutions and user experience

Tedd Huff - Host:

that has surprised you the most.

Derik Sutton - AutoBooks:

I actually really, really love to talk about this.

Derik Sutton - AutoBooks:

So here's the, crux of it.

Derik Sutton - AutoBooks:

So what I love about product and experience, and now I've actually evolved

Derik Sutton - AutoBooks:

into marketing and see it as, kind of one and the same in many ways, but here's,

Derik Sutton - AutoBooks:

what's happened in banking financial institutions and really the technology

Derik Sutton - AutoBooks:

companies that, that power them like the, core companies that you hear about in

Derik Sutton - AutoBooks:

market they got their dominance because they had this geographic advantage.

Derik Sutton - AutoBooks:

And the geographic advantage was they built really great service and experiences

Derik Sutton - AutoBooks:

around people, walking into physical locations, having an interaction with

Derik Sutton - AutoBooks:

people that really cared about the progress they were trying to make, had

Derik Sutton - AutoBooks:

empathy and concern for their financial wellbeing, and generally wanted to

Derik Sutton - AutoBooks:

see the best for their community.

Derik Sutton - AutoBooks:

They wanted their communities to thrive and therefore the people

Derik Sutton - AutoBooks:

within those communities, they have a vested interest in them thriving.

Derik Sutton - AutoBooks:

What's happened over time is that has not left really community

Derik Sutton - AutoBooks:

mid-market regional banking.

Derik Sutton - AutoBooks:

But what's happened is, we've built out the digital banking channels

Derik Sutton - AutoBooks:

and those have started to mature.

Derik Sutton - AutoBooks:

We've, as an industry really placed an emphasis on having

Derik Sutton - AutoBooks:

customers interact through digital.

Derik Sutton - AutoBooks:

And it's not just that we wanna have them interact through digital.

Derik Sutton - AutoBooks:

Customers, want to interact through digital.

Derik Sutton - AutoBooks:

, but what happens is, is when customers basically just focus on leveraging

Derik Sutton - AutoBooks:

digital to get access to information, that removes the physical connection

Derik Sutton - AutoBooks:

between the banker and that customer.

Derik Sutton - AutoBooks:

And what happens in, the loss of that physical interaction is the

Derik Sutton - AutoBooks:

loss of connectivity to the market connectivity, to the customer.

Derik Sutton - AutoBooks:

You don't get to see the problem on their face.

Derik Sutton - AutoBooks:

or the delight, that they may have in your banking experience.

Derik Sutton - AutoBooks:

And so everything starts to become grayed out if you will.

Derik Sutton - AutoBooks:

what I believe to be most important and valuable in product today, for

Derik Sutton - AutoBooks:

banking is getting banks out of the boardroom and back on main street.

Derik Sutton - AutoBooks:

And what I mean by that, Tedd is even though you prioritize digital

Derik Sutton - AutoBooks:

banking, your team, if you're in a financial institution, or if you

Derik Sutton - AutoBooks:

work for a technology company that powers financial institutions.

Derik Sutton - AutoBooks:

You have to get back in front of the customer and understand at the end of that

Derik Sutton - AutoBooks:

mobile app, there's a person, you know, there's Tedd Huff on the other end of

Derik Sutton - AutoBooks:

that line, we've gotta go back out and, and talk to those customers, understand

Derik Sutton - AutoBooks:

their needs, their wants the progress.

Derik Sutton - AutoBooks:

They're trying to make, interview them and let that inform what

Derik Sutton - AutoBooks:

we build and do as an industry.

Tedd Huff - Host, Fintech Confidential:

:

WOW!

Tedd Huff - Host, Fintech Confidential:

:

That is, amazing.

Tedd Huff - Host, Fintech Confidential:

:

I'm a technology first type guy, which you probably guessed.

Tedd Huff - Host, Fintech Confidential:

:

I can't remember the last time I physically walked in.

Tedd Huff - Host, Fintech Confidential:

:

Actually I can, it was in 2019 chase bank forced me to go into the bank

Tedd Huff - Host, Fintech Confidential:

:

to change my address on my Account.

Tedd Huff - Host, Fintech Confidential:

:

Which I thought was just, it was crazy.

Tedd Huff - Host, Fintech Confidential:

:

but that's the, , that's the world that we live in, lived in period, past tense.

Tedd Huff - Host, Fintech Confidential:

:

I'm curious.

Tedd Huff - Host, Fintech Confidential:

:

what was the biggest reason that you decided to join AutoBooks,

Tedd Huff - Host, Fintech Confidential:

:

especially with, that perspective?

Tedd Huff - Host, Fintech Confidential:

:

What was it.

Tedd Huff - Host, Fintech Confidential:

:

That got you excited about joining AutoBooks?

Derik Sutton - AutoBooks:

I was, working at, Jack Henry CSI before

Derik Sutton - AutoBooks:

that being part of the Banno team.

Derik Sutton - AutoBooks:

I had experience working with financial institutions and helping to really

Derik Sutton - AutoBooks:

craft and build out their digital banking, roadmaps, and strategy.

Derik Sutton - AutoBooks:

one of the things that, quite frankly, if I'm just being honest was a little

Derik Sutton - AutoBooks:

uneasy for me at times was, how much of the responsibility there was on

Derik Sutton - AutoBooks:

our team to craft the strategy for, all these financial institutions.

Derik Sutton - AutoBooks:

And I love community banks and credit unions, and I, I

Derik Sutton - AutoBooks:

just love the whole market.

Derik Sutton - AutoBooks:

what I realized was I was getting really pretty good at, at building a story and

Derik Sutton - AutoBooks:

a strategy and a roadmap that appealed the financial institutions, but I

Derik Sutton - AutoBooks:

didn't necessarily know as much about their customers as I would've liked and

Derik Sutton - AutoBooks:

understand really what they were looking for and the progress they were trying to.

Derik Sutton - AutoBooks:

It was more like we were building Tedd.

Derik Sutton - AutoBooks:

this is kind of an indictment on the industry.

Derik Sutton - AutoBooks:

If it will, I was building towards, RFPs designed and constructed by

Derik Sutton - AutoBooks:

consultants more than anything else.

Derik Sutton - AutoBooks:

And so my whole shift out of that industry at that time was really around,

Derik Sutton - AutoBooks:

Hey, I, I kind of just wanna reset.

Derik Sutton - AutoBooks:

I'd like to go on my own for a minute and see what it may look

Derik Sutton - AutoBooks:

like, actually going out and practice what I preach, if you will.

Derik Sutton - AutoBooks:

so I started to consult with companies on user research, hearing from customers, and

Derik Sutton - AutoBooks:

then coming back with the recommendations about what a product should or should not

Derik Sutton - AutoBooks:

do based upon what the customer wanted.?

Derik Sutton - AutoBooks:

I joined the AutoBooks team as building my own agency and meeting.

Derik Sutton - AutoBooks:

The CEO, co-founder Steve, Robert.

Derik Sutton - AutoBooks:

We really just clicked on, that conversation.

Derik Sutton - AutoBooks:

And then we since added, team members that are even deeper into that than

Derik Sutton - AutoBooks:

I could ever care or imagine to be.

Derik Sutton - AutoBooks:

And we all just clicked on that.

Derik Sutton - AutoBooks:

rather than getting wrapped around the latest thing that we could build doesn't

Derik Sutton - AutoBooks:

mean that we should be building it.

Derik Sutton - AutoBooks:

we're really just trying to focus on,

Derik Sutton - AutoBooks:

Hey, we've got the, the core of a problem of small businesses have a pain.

Derik Sutton - AutoBooks:

And a small business's pain point is cash flow.

Derik Sutton - AutoBooks:

it's the hottest of the, of the stoves.

Derik Sutton - AutoBooks:

If they reach their hand out, right.

Derik Sutton - AutoBooks:

It's, they're gonna get burned on that real bad.

Derik Sutton - AutoBooks:

82% of small businesses fail because of cash flow problems.

Derik Sutton - AutoBooks:

if they have this pain point, as a team, most all of our energy and

Derik Sutton - AutoBooks:

effort is focused on helping them with that pain point first and foremost.

Derik Sutton - AutoBooks:

There's a lot of features and capabilities we could build in our current solution

Derik Sutton - AutoBooks:

that do things that bankers think our solution should do At a high level.

Derik Sutton - AutoBooks:

That doesn't mean that the end customer cares about that thing.

Derik Sutton - AutoBooks:

that's a delicate balancing act.

Derik Sutton - AutoBooks:

what you have to do in this industry, I believe it is grooming very, very focused

Derik Sutton - AutoBooks:

and intentional on talking to customers.

Derik Sutton - AutoBooks:

and letting them drive what we build and do, because that is the only way to

Derik Sutton - AutoBooks:

maintain relationships with customers.

Derik Sutton - AutoBooks:

Because if you don't do that, you're just in an arms race with the biggest

Derik Sutton - AutoBooks:

technology providers in the country.

Derik Sutton - AutoBooks:

And that's probably a losing battle.

Tedd Huff - Host:

What is the AutoBook's origin story.

Tedd Huff - Host:

And how has the vision evolved in order to achieve the mission of being

Tedd Huff - Host:

able to enable the small businesses through their financial institutions?

Derik Sutton - AutoBooks:

AutoBooks was founded by Steve Robert, Aaron

Derik Sutton - AutoBooks:

Schmid They were also co-founders of another business called bill highway.

Derik Sutton - AutoBooks:

our origin story kind of goes back there.

Derik Sutton - AutoBooks:

they were, partnered up and they were working with a, with

Derik Sutton - AutoBooks:

another entrepreneur at the time.

Derik Sutton - AutoBooks:

they digitized sorority dues.

Derik Sutton - AutoBooks:

where, young women were needing to pay their sorority dues and really their

Derik Sutton - AutoBooks:

parents were needing to pay them.

Derik Sutton - AutoBooks:

But the parents were having an issue.

Derik Sutton - AutoBooks:

I give a check or cash to my daughter.

Derik Sutton - AutoBooks:

It gets lost, it gets forgotten.

Derik Sutton - AutoBooks:

It gets, you know, delayed all of a sudden she's behind on her sorority dues.

Derik Sutton - AutoBooks:

And then she can't attend this event.

Derik Sutton - AutoBooks:

Or, you know, there, there's some kind of unintended consequences just

Derik Sutton - AutoBooks:

because, Hey, like we're all in college.

Derik Sutton - AutoBooks:

And getting checks and paying sorority dues, maybe worth the

Derik Sutton - AutoBooks:

top priority at the time right?

Derik Sutton - AutoBooks:

Can't imagine.

Derik Sutton - AutoBooks:

and so they basically just figured out a way to start to digitize how do you do

Derik Sutton - AutoBooks:

all of the, rollups of all these local chapters into a national organization

Derik Sutton - AutoBooks:

and adhere to all the accounting needs and, you know, the reconciliations

Derik Sutton - AutoBooks:

of the payments and the returns and, all the GL entries required into that

Derik Sutton - AutoBooks:

and, and tracking of, outstanding receivables, et cetera, et cetera.

Derik Sutton - AutoBooks:

they built a very successful business that wasn't, venture backed, but

Derik Sutton - AutoBooks:

they just bootstrapped their way into this business over, 15 years

Derik Sutton - AutoBooks:

eventually First Data ended up acquiring it, which then Fiserv bought that

Derik Sutton - AutoBooks:

and then it kind of got rolled out.

Derik Sutton - AutoBooks:

So through all that, they always had this, understanding that small

Derik Sutton - AutoBooks:

businesses and businesses themselves could also take advantage of this.

Derik Sutton - AutoBooks:

because they were a small, that became a medium to larger business of it, in

Derik Sutton - AutoBooks:

a customer of a financial institution.

Derik Sutton - AutoBooks:

And many of the tools that they would've liked to have had as part of

Derik Sutton - AutoBooks:

their banking experience didn't exist.

Derik Sutton - AutoBooks:

they felt like they had some of the components, quite frankly, of that,

Derik Sutton - AutoBooks:

could be integrated inside of a bank.

Derik Sutton - AutoBooks:

And so they started some high level conversations with large.

Derik Sutton - AutoBooks:

Financial institutions at the beginning.

Derik Sutton - AutoBooks:

this is a, a tough, tough, tough world to kind of crack into

Derik Sutton - AutoBooks:

those ended up falling apart.

Derik Sutton - AutoBooks:

But what came out of that was the research or the understanding of like,

Derik Sutton - AutoBooks:

okay, like there's actually these companies that power, most of the

Derik Sutton - AutoBooks:

financial institutions in the country.

Derik Sutton - AutoBooks:

What if we decided instead to kind of go to the biggest financial institutions

Derik Sutton - AutoBooks:

first, but what if we partner.

Derik Sutton - AutoBooks:

With these other organizations and became really great partners and

Derik Sutton - AutoBooks:

said, Hey, we wanna just integrate our app and capabilities inside

Derik Sutton - AutoBooks:

your visual banking platform so that you can make it available to your

Derik Sutton - AutoBooks:

thousands of banks and credit unions.

Derik Sutton - AutoBooks:

that maybe a better distribution model and a faster way to get

Derik Sutton - AutoBooks:

to the small business customer.

Derik Sutton - AutoBooks:

So that's where we're at today.

Derik Sutton - AutoBooks:

We, lead with this partner first mentality.

Derik Sutton - AutoBooks:

We just wanna be embedded and integrated inside of, digital banking

Derik Sutton - AutoBooks:

so that we can reach as many micro and small businesses as we possibly can.

Tedd Huff - Host:

AutoBooks has partnered last count that I saw was

Tedd Huff - Host:

nearly a hundred financial institutions like credit unions and banks.

Tedd Huff - Host:

What does that number look like today?

Tedd Huff - Host:

And any big names you can drop?

Derik Sutton - AutoBooks:

Yeah, Tedd, we gotta get you some

Derik Sutton - AutoBooks:

updated data information here.

Derik Sutton - AutoBooks:

So that was the last press release we did was, um, actually in, in sometime

Derik Sutton - AutoBooks:

in 2020, we had a hundred customers.

Derik Sutton - AutoBooks:

It took us, you know, kind of 2017 to 2020 to get to a hundred customers.

Derik Sutton - AutoBooks:

One of those customers was TD bank.

Derik Sutton - AutoBooks:

So top 10 bank in the country, we've got a, a great partnership with them.

Derik Sutton - AutoBooks:

Through those first 100, what we found was, you know, we can continue

Derik Sutton - AutoBooks:

to go bank to bank or credit union to credit union and, and onboard them.

Derik Sutton - AutoBooks:

Or we could go to their technology partners like Jack Henry AQ2 and

Derik Sutton - AutoBooks:

CSI and alchemy and FIS and others and say, Hey, why don't we do more

Derik Sutton - AutoBooks:

of a, mass enablement, strategy?

Derik Sutton - AutoBooks:

So what would it look like?

Derik Sutton - AutoBooks:

Jack Henry or FIS, if we said, Hey, here's two compelling features

Derik Sutton - AutoBooks:

that we believe every micro, small business owner could benefit from.

Derik Sutton - AutoBooks:

Digital invoicing and online payment acceptance.

Derik Sutton - AutoBooks:

And if we are able to break those two features out of our platform and embed

Derik Sutton - AutoBooks:

those into your product experience, would you all be willing to enable

Derik Sutton - AutoBooks:

those for all of your customers?

Derik Sutton - AutoBooks:

So that now invoicing online payment acceptance becomes as ubiquitous as online

Derik Sutton - AutoBooks:

bill pay or mobile remote deposit capture.

Derik Sutton - AutoBooks:

the results were, yes, we would be willing to do that.

Derik Sutton - AutoBooks:

So now at this time, close to 500 financial institutions live on the

Derik Sutton - AutoBooks:

application and at the end of 2022, close to a thousand financial institutions live.

Derik Sutton - AutoBooks:

we'll be able to 10 X, our, implementation by really thinking

Derik Sutton - AutoBooks:

about it in this way, Tedd.

Derik Sutton - AutoBooks:

this is the one thing I wanna get across to FinTech vendors and

Derik Sutton - AutoBooks:

financial institutions is we have this opportunity now in the industry.

Derik Sutton - AutoBooks:

Where the digital banking providers are making it, more and more simple to

Derik Sutton - AutoBooks:

connect to their digital platforms through SDKs and APIs, to be able to, make your

Derik Sutton - AutoBooks:

products and solutions available to a wide market of financial institutions.

Derik Sutton - AutoBooks:

They really need these, product capabilities.

Derik Sutton - AutoBooks:

So find ways to offer value, give value, to the partner, give value

Derik Sutton - AutoBooks:

to the financial institution.

Derik Sutton - AutoBooks:

And in return, get access to more customers that need your,

Derik Sutton - AutoBooks:

your products and services.

Derik Sutton - AutoBooks:

If you can find that opportunity and then have ways that the customer themselves can

Derik Sutton - AutoBooks:

upgrade, make progress on the application and you can kind of like build out

Derik Sutton - AutoBooks:

a, a long term monetization strategy.

Derik Sutton - AutoBooks:

We think that that's probably the default, um, method and model of distribution

Derik Sutton - AutoBooks:

moving forward in, in financial tehnology.

Tedd Huff - Host:

That has been a huge shift in the distribution model, it

Tedd Huff - Host:

started, in the small business software, where they used to have a separate

Tedd Huff - Host:

piece of hardware for each type of thing that they wanted to do, whether it was

Tedd Huff - Host:

they would have the, nice terminal thing on the counter for their gift cards.

Tedd Huff - Host:

And they'd have another one for their credit cards and they'd have

Tedd Huff - Host:

another one for their food stamps or E electronic benefits transactions.

Tedd Huff - Host:

And they'd have another one for God who knows what else.

Tedd Huff - Host:

And so they had all of those different things, which made it

Tedd Huff - Host:

very confusing, very hard for them to reconcile, and then comes in the

Tedd Huff - Host:

software provider that starts to say,

Tedd Huff - Host:

I'm gonna consolidate a lot of this for you in the process of

Tedd Huff - Host:

your day to day environment and giving you a better experience.

Tedd Huff - Host:

And then now you've started to see that move not from, that level to the

Tedd Huff - Host:

providers that, those software vendors.

Tedd Huff - Host:

Worked with now expanding that out.

Tedd Huff - Host:

Then you've got even that next layer that you just talked about, where

Tedd Huff - Host:

the core systems have started to realize that they can continue to grow

Tedd Huff - Host:

their businesses by exposing, this.

Tedd Huff - Host:

Interface, whether it be through APIs or SDKs they don't always have to be

Tedd Huff - Host:

the one to build the user interface.

Tedd Huff - Host:

I think they've started to realize that the exponential growth that

Tedd Huff - Host:

can happen just like what you just mentioned from a hundred to a thousand

Tedd Huff - Host:

financial institutions, by opening that up now, keeping some very tight

Tedd Huff - Host:

controls in place, but still opening it up in order for that to happen.

Derik Sutton - AutoBooks:

When everybody came to the physical location and

Derik Sutton - AutoBooks:

technology was built around that, Tedd.

Derik Sutton - AutoBooks:

the pace of innovation and the pace of change wasn't as

Derik Sutton - AutoBooks:

heightened as it is today.

Derik Sutton - AutoBooks:

It's just taken our industry some time to kinda like work through

Derik Sutton - AutoBooks:

that because, that's a change in how things were built and.

Derik Sutton - AutoBooks:

Fast forward now we're fully digital and other companies, other entrepreneurs

Derik Sutton - AutoBooks:

realized there were gaps in the market, for, small business owners, whether

Derik Sutton - AutoBooks:

it be a physical retail location or somebody that's just out in their

Derik Sutton - AutoBooks:

truck, doing service work all day.

Derik Sutton - AutoBooks:

so you start to see all these point solutions spring up and be built out

Derik Sutton - AutoBooks:

because, financial institutions couldn't possibly provide everything that,

Derik Sutton - AutoBooks:

those, , micro and small businesses need.

Derik Sutton - AutoBooks:

The downside to that is now these point solution providers are

Derik Sutton - AutoBooks:

building more and more capabilities in their app, and they're starting

Derik Sutton - AutoBooks:

to embed banking services.

Derik Sutton - AutoBooks:

you got this whole banking as a service movement.

Derik Sutton - AutoBooks:

Well, that's good for some of the banks that are providing, those services,

Derik Sutton - AutoBooks:

but it's not good if you're a community financial institution that doesn't

Derik Sutton - AutoBooks:

have a banking as a service strategy.

Derik Sutton - AutoBooks:

And now all of a sudden a business owner can not only get paid through Square,

Derik Sutton - AutoBooks:

but they can bank through Square.

Derik Sutton - AutoBooks:

They can get a loan through that application.

Derik Sutton - AutoBooks:

There's all these banking products that can directly compete against

Derik Sutton - AutoBooks:

you as a financial institution.

Derik Sutton - AutoBooks:

What we have to do as an industry is figure out, okay, do we care

Derik Sutton - AutoBooks:

about micro and small businesses?

Derik Sutton - AutoBooks:

You can ask yourself with this of any vertical inside

Derik Sutton - AutoBooks:

of your financial institution.

Derik Sutton - AutoBooks:

What solutions do we need to offer through our digital and

Derik Sutton - AutoBooks:

in person banking channels, what services do we need to have?

Derik Sutton - AutoBooks:

And then how are we gonna pursue making those products and services

Derik Sutton - AutoBooks:

available to our customers and members.

Derik Sutton - AutoBooks:

hopefully as an industry, we're starting to now say, we do care about micro and

Derik Sutton - AutoBooks:

small businesses because we care they're shifting away from getting paid in

Derik Sutton - AutoBooks:

person via cash and check into digital via digital invoicing, online payment,

Derik Sutton - AutoBooks:

acceptance, and at payment acceptance.

Derik Sutton - AutoBooks:

What are we gonna do about that?

Derik Sutton - AutoBooks:

thankfully now , there's a solution to market for thousands

Derik Sutton - AutoBooks:

of financial institutions.

Derik Sutton - AutoBooks:

It's called AutoBooks and reach out to us or one of your digital banking providers.

Derik Sutton - AutoBooks:

And we'll be happy , to talk to you.

Derik Sutton - AutoBooks:

So that's the shameless plug there, Tedd

Tedd Huff - Host:

no worries, man.

Tedd Huff - Host:

No worries.

Tedd Huff - Host:

You brought up a lot of great points and I wanna break this down into

Tedd Huff - Host:

probably three separate questions just, to really dive into the details.

Tedd Huff - Host:

Why should FIs look at bringing embedded invoicing and payment

Tedd Huff - Host:

acceptance into their product offering?

Tedd Huff - Host:

Especially if they think, Hey, there's already products out in the

Tedd Huff - Host:

marketplace that can solve for this.

Derik Sutton - AutoBooks:

Why financial institutions should

Derik Sutton - AutoBooks:

care about digital invoicing online payment acceptance, right?

Derik Sutton - AutoBooks:

Why should you care about, small micro businesses using Square

Derik Sutton - AutoBooks:

PayPal, Venmo, even QuickBooks online, to process their payments.

Derik Sutton - AutoBooks:

it's very simple.

Derik Sutton - AutoBooks:

You need to lock in their deposit, how they get paid.

Derik Sutton - AutoBooks:

You want the direct deposit relationship because you become their PFI or primary

Derik Sutton - AutoBooks:

financial institution you get first access to their deposit, you then can, upsell

Derik Sutton - AutoBooks:

them additional products and services.

Derik Sutton - AutoBooks:

Your retention rates go up, attrition rates go down, et cetera, et cetera.

Derik Sutton - AutoBooks:

What's the digital version or what's the version of that for

Derik Sutton - AutoBooks:

small and micro businesses.

Derik Sutton - AutoBooks:

So in consumer it's direct deposit it's automated, right?

Derik Sutton - AutoBooks:

For a smaller micro business that used to get paid in cash and check.

Derik Sutton - AutoBooks:

You got the direct deposit because you were the only place in their

Derik Sutton - AutoBooks:

community where they could take those cash and checks, deposit them and

Derik Sutton - AutoBooks:

get access to working capital, to pay bills or to run their business.

Derik Sutton - AutoBooks:

Now that the world's moved digital and it's moved online.

Derik Sutton - AutoBooks:

If, as a business owner, they can use a third party app to get paid.

Derik Sutton - AutoBooks:

That app now has first crack at that deposit.

Derik Sutton - AutoBooks:

They've actually locked in the direct deposit relationship.

Derik Sutton - AutoBooks:

So if you're a financial institution and you're saying, well, I

Derik Sutton - AutoBooks:

don't know that I need digital invoicing on my payment acceptance.

Derik Sutton - AutoBooks:

What I would say is, do you wanna lock in that direct deposit relationship

Derik Sutton - AutoBooks:

for a smaller micro business?

Derik Sutton - AutoBooks:

Do you want, when they get paid that money to flow directly back to your

Derik Sutton - AutoBooks:

organization and not a third party?

Derik Sutton - AutoBooks:

If the answer is yes, then you need the tools and capabilities

Derik Sutton - AutoBooks:

that enable or power a business owner to do just that with you.

Tedd Huff - Host:

How does AutoBooks enable these FIs to deliver the results

Tedd Huff - Host:

of locking them in to their customers?

Tedd Huff - Host:

Like what, what kinds of things do you guys offer to really help them

Tedd Huff - Host:

move that forward quickly and easily?

Derik Sutton - AutoBooks:

Yeah.

Derik Sutton - AutoBooks:

So what we offer is digital invoicing online and in-app payment acceptance,

Derik Sutton - AutoBooks:

and then an upgrade capability for the business owner to upgrade their payment

Derik Sutton - AutoBooks:

experience to accounting and cash flow.

Derik Sutton - AutoBooks:

Um, so here's the way it works.

Derik Sutton - AutoBooks:

Business owners have an immediate pain point.

Derik Sutton - AutoBooks:

They want to get paid.

Derik Sutton - AutoBooks:

They need cash flow support.

Derik Sutton - AutoBooks:

Um, the traditional paper based invoicing process takes anywhere from

Derik Sutton - AutoBooks:

27 to 41 days as a business owner.

Derik Sutton - AutoBooks:

Okay.

Derik Sutton - AutoBooks:

The median number of days of cash reserve a business has,

Derik Sutton - AutoBooks:

is anywhere from 18 to 27 days.

Derik Sutton - AutoBooks:

So if you're a small business owner and you have limited

Derik Sutton - AutoBooks:

or depleting cash reserves.

Derik Sutton - AutoBooks:

You need to get paid as often, and as quickly as you, as you possibly

Derik Sutton - AutoBooks:

can to build up that cash buffer.

Derik Sutton - AutoBooks:

If a physical process takes you over and extends you over your cash

Derik Sutton - AutoBooks:

reserve time, then you're constantly behind the, the cash flow curve.

Derik Sutton - AutoBooks:

And you're now you're starting to have to dip into credit cards or lines of credit.

Derik Sutton - AutoBooks:

You're paying interest on that , and you're behind quite frankly.

Derik Sutton - AutoBooks:

What we do is we help businesses simplify the way they get paid from their customer.

Derik Sutton - AutoBooks:

95% of our invoices are paid within five business days.

Derik Sutton - AutoBooks:

That's a net benefit to a customer.

Derik Sutton - AutoBooks:

A small business owner can quickly and easily enable that

Derik Sutton - AutoBooks:

feature inside digital banking.

Derik Sutton - AutoBooks:

Be approved in minutes and start sending digital invoices and accepting

Derik Sutton - AutoBooks:

online payments from their customers.

Derik Sutton - AutoBooks:

Within minutes.

Derik Sutton - AutoBooks:

Powerful, powerful capability.

Derik Sutton - AutoBooks:

We had literally, we get,, reports and we get stories from business owners.

Derik Sutton - AutoBooks:

Every day yesterday, we had a business owner reach out to their financial

Derik Sutton - AutoBooks:

institution, almost in a panic of like I've got a customer that no

Derik Sutton - AutoBooks:

longer wants to pay me through check.

Derik Sutton - AutoBooks:

I used to just get paid through check.

Derik Sutton - AutoBooks:

They said it has to be on a card and it's a $30,000 invoice.

Derik Sutton - AutoBooks:

Can you help me?

Derik Sutton - AutoBooks:

Okay.

Derik Sutton - AutoBooks:

That business owner tried to go to a third party app, but good luck getting a $30,000

Derik Sutton - AutoBooks:

limit in minutes from a third party app.

Derik Sutton - AutoBooks:

Their risk, appetite and algorithms are just different.

Derik Sutton - AutoBooks:

They have to be set up in, in a completely different way to justify that.

Derik Sutton - AutoBooks:

Here's the advantage of bank house we're directly embedded

Derik Sutton - AutoBooks:

in their digital banking.

Derik Sutton - AutoBooks:

They can, instantly turn it on for their customers.

Derik Sutton - AutoBooks:

Customer can instantly enroll.

Derik Sutton - AutoBooks:

We have all their back core data history and access to

Derik Sutton - AutoBooks:

their entire account portfolio.

Derik Sutton - AutoBooks:

Powerful story, Tedd.

Derik Sutton - AutoBooks:

So that business owner only had $6,000 in their checking account

Derik Sutton - AutoBooks:

that they wanted to get paid in.

Derik Sutton - AutoBooks:

That's a bit of a red flag.

Derik Sutton - AutoBooks:

Okay.

Derik Sutton - AutoBooks:

They've only got $6,000.

Derik Sutton - AutoBooks:

To cover a $30,000 invoice, but yet their total relationship with the financial

Derik Sutton - AutoBooks:

institution was well over $250,000.

Derik Sutton - AutoBooks:

Not something that you can do outside of the banking market very easily.

Derik Sutton - AutoBooks:

That's the advantage financial institutions have you have

Derik Sutton - AutoBooks:

the total relationship?

Derik Sutton - AutoBooks:

You just need the technology.

Derik Sutton - AutoBooks:

You just need the ability to say, Hey, business owner, I got you.

Derik Sutton - AutoBooks:

It's available in digital banking.

Derik Sutton - AutoBooks:

You can do it in minutes on your own, but, and here's the big, but

Derik Sutton - AutoBooks:

if you also need, our handholding.

Derik Sutton - AutoBooks:

Our support, you need us to request a higher limit.

Derik Sutton - AutoBooks:

We can help, right?

Derik Sutton - AutoBooks:

That's the big win for financial institutions.

Derik Sutton - AutoBooks:

That's a differentiating, here's the tech, but also here's this, kinda

Derik Sutton - AutoBooks:

loving, warm blanket of support surrounding the tech, that we're used

Derik Sutton - AutoBooks:

to, to providing that differentiates from that third party application.

Tedd Huff - Host:

How does third party app competition like Square

Tedd Huff - Host:

PayPal, Venmo, QuickBooks, et cetera, building essentially a headless

Tedd Huff - Host:

banking impact the banks and credit unions small business banking.

Derik Sutton - AutoBooks:

it's starting to have a, a big impact, quite frankly.

Derik Sutton - AutoBooks:

as business owners have had a need to get paid digitally and there

Derik Sutton - AutoBooks:

hasn't been a solution from financial institutions naturally they have to

Derik Sutton - AutoBooks:

turn to a solution to help them out.

Derik Sutton - AutoBooks:

They've adopted Square PayPal, even Venmo and QuickBooks is integrated

Derik Sutton - AutoBooks:

merchant processing as well to get paid digitally from their customers.

Derik Sutton - AutoBooks:

Here's the challenge for financial institutions while on the surface, all of

Derik Sutton - AutoBooks:

that started not from a sense of having a, this direct line of competition,

Derik Sutton - AutoBooks:

financial institutions thought about like, wow, they're just providing a service, but

Derik Sutton - AutoBooks:

the money comes right back to our account.

Derik Sutton - AutoBooks:

Over time, each of those providers has started to eat into the solutions

Derik Sutton - AutoBooks:

and the capabilities offered by a traditional financial institution.

Derik Sutton - AutoBooks:

So it started with payment acceptance.

Derik Sutton - AutoBooks:

And then it was quickly like, Hey, leave your money on our virtual wallet.

Derik Sutton - AutoBooks:

When you leave money on your virtual wallet, we're gonna give you access to a

Derik Sutton - AutoBooks:

business, realtime business debit card.

Derik Sutton - AutoBooks:

You can spend directly from the merchant wallet.

Derik Sutton - AutoBooks:

And then the more business you do with us, we're going to automate the

Derik Sutton - AutoBooks:

ability to give you access to lines of credit or working capital loans.

Derik Sutton - AutoBooks:

And so now there was a silent report put out at the end of 2019,

Derik Sutton - AutoBooks:

beginning of 2020, by Alenka Grealish that basically stated Square.

Derik Sutton - AutoBooks:

Is directly going after 80% of the revenue opportunity for a financial institution

Derik Sutton - AutoBooks:

in the small business customer base.

Derik Sutton - AutoBooks:

And that continues to grow higher.

Derik Sutton - AutoBooks:

So as these entities now become banks like Square, you have to look at

Derik Sutton - AutoBooks:

them as your financial institution as a direct competitor to you.

Derik Sutton - AutoBooks:

So here's the fun thing.

Derik Sutton - AutoBooks:

Tedd ask a financial institution, go look at all of your data,

Derik Sutton - AutoBooks:

any micro or small business.

Derik Sutton - AutoBooks:

Getting paid through PayPal Square, Venmo, QuickBooks, look

Derik Sutton - AutoBooks:

at the number of transactions.

Derik Sutton - AutoBooks:

Look at the number of customers.

Derik Sutton - AutoBooks:

Look at the dollar volume amount.

Derik Sutton - AutoBooks:

I promise you because we've done this for hundreds of financial institutions.

Derik Sutton - AutoBooks:

Now all of those totals will scare you.

Derik Sutton - AutoBooks:

It really should.

Derik Sutton - AutoBooks:

All of those totals, are much higher than your in-house merchant

Derik Sutton - AutoBooks:

processing solution, easily.

Derik Sutton - AutoBooks:

Here's the challenge.

Derik Sutton - AutoBooks:

Every one of your customers, that's now using one of those third

Derik Sutton - AutoBooks:

parties is a flight risk to your organization because once they get

Derik Sutton - AutoBooks:

paid through that organization, they are being retargeted and remarketed

Derik Sutton - AutoBooks:

and cross sold and upsold products and services that directly compete

Derik Sutton - AutoBooks:

against your financial institution.

Derik Sutton - AutoBooks:

You can see a decline in deposits coming back to your organization from active

Derik Sutton - AutoBooks:

customers using those third parties.

Derik Sutton - AutoBooks:

And you're also gonna start to see a declining number of cross sold

Derik Sutton - AutoBooks:

products because they're getting solutions powered by somebody else.

Tedd Huff - Host:

Yeah.

Tedd Huff - Host:

It's been really interesting to watch, these exterior companies,

Tedd Huff - Host:

like we mentioned, Square became a.

Tedd Huff - Host:

Financial institution, I think two, maybe three years ago, Stripe, which is the

Tedd Huff - Host:

API version of Square and they just, they just bought a bank, in California in order

Tedd Huff - Host:

to get their commercial banking license, so I see that continuing to happen and

Tedd Huff - Host:

I think that the financial institutions, if they're not doing what you just said.

Tedd Huff - Host:

By looking and seeing where the deposits are coming from.

Tedd Huff - Host:

They're definitely doing themselves a disservice.

Tedd Huff - Host:

Now this kind of leads me into, a slightly different topic, but

Tedd Huff - Host:

it really talks more about the digitization that has happened, with.

Tedd Huff - Host:

Such market volatility, the great resignation and the acceleration of

Tedd Huff - Host:

a remote workforce versus in person.

Tedd Huff - Host:

How are your clients and their customers using that as a way to succeed in

Tedd Huff - Host:

the marketplace versus using it as, something, that's holding them back?

Tedd Huff - Host:

Yeah.

Tedd Huff - Host:

A

Derik Sutton - AutoBooks:

couple of things about, the great resignation, and,

Derik Sutton - AutoBooks:

people starting their own businesses.

Derik Sutton - AutoBooks:

For one there's 30.7 million small businesses in the us economy, according

Derik Sutton - AutoBooks:

to the SBA, Something like 80% of those have less than four employees.

Derik Sutton - AutoBooks:

So the reality , is most small businesses in the country are just

Derik Sutton - AutoBooks:

like, you know, it's just you Tedd, or it's just me, sole proprietor.

Derik Sutton - AutoBooks:

In addition to that, there's , a growing number of people basically starting their

Derik Sutton - AutoBooks:

own independent, working opportunities.

Derik Sutton - AutoBooks:

So NBO partners tracks what they call the independent workforce and they

Derik Sutton - AutoBooks:

peg that at like close to 41 million.

Derik Sutton - AutoBooks:

Individuals.

Derik Sutton - AutoBooks:

And so what you're seeing is , there's this, just this growing market of

Derik Sutton - AutoBooks:

individual entrepreneurs that have a certain trait, , capabilities,

Derik Sutton - AutoBooks:

service that they can offer that people are willing to pay for.

Derik Sutton - AutoBooks:

And in some cases that could be full-time work.

Derik Sutton - AutoBooks:

In some cases, it could be a side Hustle, or part-time work.

Derik Sutton - AutoBooks:

So the barrier of entry's never been lower.

Derik Sutton - AutoBooks:

All of these entrants into this market need tools that satisfy their

Derik Sutton - AutoBooks:

needs as a smaller micro business.

Derik Sutton - AutoBooks:

They need to get paid.

Derik Sutton - AutoBooks:

They need to have, some kind of like digital marketing

Derik Sutton - AutoBooks:

capabilities potentially.

Derik Sutton - AutoBooks:

And then they need the ability to, account.

Derik Sutton - AutoBooks:

Their payments, they need some accounting, some many year tax

Derik Sutton - AutoBooks:

preps, some cash flow capabilities.

Derik Sutton - AutoBooks:

They need the right documentation to go get access to working

Derik Sutton - AutoBooks:

capital and lines of credit.

Derik Sutton - AutoBooks:

So as they wanna build their business,

Derik Sutton - AutoBooks:

although their ducks are in a row, if you will.

Derik Sutton - AutoBooks:

And so what our financial institutions are recognizing and seeing, there's this

Derik Sutton - AutoBooks:

new wave of the way, small businesses wanna bank with us, the tools they

Derik Sutton - AutoBooks:

need, and , how we can help them basically grow their business over.

Derik Sutton - AutoBooks:

And so what we do is we just offer, that path, right?

Derik Sutton - AutoBooks:

That on ramp of start digital, start with getting paid, and then we've got this

Derik Sutton - AutoBooks:

progression of features and capabilities.

Derik Sutton - AutoBooks:

We can take a, business owner through.

Derik Sutton - AutoBooks:

In addition to that, what you're finding is, is a lot of these micro

Derik Sutton - AutoBooks:

businesses are actually in consumer or personal banking products.

Derik Sutton - AutoBooks:

because things naturally started out of that.

Derik Sutton - AutoBooks:

So my sister-in-law is a perfect example of she started a photography business

Derik Sutton - AutoBooks:

and it started in evolved out of her personal checking account and it's

Derik Sutton - AutoBooks:

never left and she does, a healthy amount of revenue every year now.

Derik Sutton - AutoBooks:

It's all through personal checking, but she needs small business banking

Derik Sutton - AutoBooks:

tools, however, her financial institution, cuz she's not segmented

Derik Sutton - AutoBooks:

in a small business checking account.

Derik Sutton - AutoBooks:

Has really no way without looking at the data to know one that

Derik Sutton - AutoBooks:

she exists as a small business owner or two what to offer her.

Derik Sutton - AutoBooks:

So all of the marketing she gets is related to consumer banking,

Derik Sutton - AutoBooks:

but yet she's a small business.

Derik Sutton - AutoBooks:

That's one of the biggest challenges we have as an industry, we've been so tight

Derik Sutton - AutoBooks:

and rigid with account segmentation, that it makes it difficult to target

Derik Sutton - AutoBooks:

this audience segment with the right products, the right services at the.

Tedd Huff - Host:

wow.

Tedd Huff - Host:

I, hadn't even thought about, the segmentation that goes on I look at

Tedd Huff - Host:

it, How it's been underwritten for merchant services, how is it written

Tedd Huff - Host:

underwritten for ACH services, you know, and, and asking for those

Tedd Huff - Host:

services individually versus looking at the overarching relationship.

Tedd Huff - Host:

I was just working with a financial institution earlier this week, it's

Tedd Huff - Host:

really interesting to see how, when a financial institution segments like

Tedd Huff - Host:

that, how information doesn't get shared.

Tedd Huff - Host:

So you may have given all the same documentation to the, loan officer

Tedd Huff - Host:

that the, the business banker needs.

Tedd Huff - Host:

But because they don't talk to each other, you have to go through

Tedd Huff - Host:

the whole process all over again.

Tedd Huff - Host:

that can be very, very frustrating for a lot of people.

Tedd Huff - Host:

And I think that's also why some of these other entrants have really

Tedd Huff - Host:

started to, to pick up is because they store it all in one place.

Tedd Huff - Host:

Everybody accesses the same thing, the data is pulled from the same places.

Tedd Huff - Host:

And there isn't as much segmentation as what you were just mentioning.

Derik Sutton - AutoBooks:

Yeah, that's the industry perspective, right?

Derik Sutton - AutoBooks:

That was really well articulated.

Derik Sutton - AutoBooks:

So.

Derik Sutton - AutoBooks:

If we're bankers, if we're compliance people, we're underwriters,

Derik Sutton - AutoBooks:

we're technology providers.

Derik Sutton - AutoBooks:

We can talk all day long about mids, TIS lids, ACH, wire, treasury,

Derik Sutton - AutoBooks:

positive, pay all this stuff.

Derik Sutton - AutoBooks:

We can talk about all the risk we have and all the underwriting

Derik Sutton - AutoBooks:

and how difficult it is.

Derik Sutton - AutoBooks:

And Hey, we need to just put, we could put everybody in these nice, tiny

Derik Sutton - AutoBooks:

little segments, and we can force people to go into these segments

Derik Sutton - AutoBooks:

so we can make it easy on us.

Derik Sutton - AutoBooks:

And you know what?

Derik Sutton - AutoBooks:

The customer doesn't care about, how easy it is for us.

Derik Sutton - AutoBooks:

You're my sister-in-law, you're thinking about into your tax time

Derik Sutton - AutoBooks:

and you're realizing man, like my business is becoming, big enough that

Derik Sutton - AutoBooks:

I don't want, my personal expenses commingled my business expenses

Derik Sutton - AutoBooks:

in income and my bookkeeper and accountant is asking me to break these

Derik Sutton - AutoBooks:

things out so that I can maximize my deductions and really understand.

Derik Sutton - AutoBooks:

What I made this year is a business.

Derik Sutton - AutoBooks:

That's her problem, right?

Derik Sutton - AutoBooks:

So she's in this moment of need in the middle of the night, she clicks on

Derik Sutton - AutoBooks:

digital banking and it says, add account.

Derik Sutton - AutoBooks:

And she adds an account.

Derik Sutton - AutoBooks:

That's how her relationship into this account to start her business started.

Derik Sutton - AutoBooks:

Okay.

Derik Sutton - AutoBooks:

Didn't start from the perspective of, oh wow.

Derik Sutton - AutoBooks:

I need to go to my bank's website.

Derik Sutton - AutoBooks:

Look at this cheesecake factory menu of products and services.

Derik Sutton - AutoBooks:

Try to find what positive pay means.

Derik Sutton - AutoBooks:

Do my own Google research to understand.

Derik Sutton - AutoBooks:

Does that apply to me or not?

Derik Sutton - AutoBooks:

That's not the way she's thinking.

Derik Sutton - AutoBooks:

That's not the way in customers are thinking.

Derik Sutton - AutoBooks:

So that goes back to the whole thing of go out and talk to customers and

Derik Sutton - AutoBooks:

find out what are their pains and needs design, something that meets your

Derik Sutton - AutoBooks:

compliance, underwriting, and risk, but is simple for the end customer

Derik Sutton - AutoBooks:

to understand and make progress on.

Derik Sutton - AutoBooks:

We can't think about segmentation and nice tidy, verticals from the bank

Derik Sutton - AutoBooks:

perspective, that's, what's called supply side thinking we're only

Derik Sutton - AutoBooks:

thinking about what we can supply.

Derik Sutton - AutoBooks:

We're not thinking about the customer demand.

Derik Sutton - AutoBooks:

We gotta think about the customer demand.

Tedd Huff - Host:

It's funny you bring up the cheesecake factory menu.

Tedd Huff - Host:

just last week I was working on strategy with a company and,

Tedd Huff - Host:

we're really walking through it.

Tedd Huff - Host:

And I, I brought up, do we wanna offer a cheesecake factory menu or.

Tedd Huff - Host:

I'm west coast.

Tedd Huff - Host:

I've lived in the west on the west coast for almost 11 years

Tedd Huff - Host:

now, actually over 11 years.

Tedd Huff - Host:

And so I'm like, or do, and most of the guys are west coast too.

Tedd Huff - Host:

And I'm like, or do we wanna do In-N-Out where it's just a handful of items

Tedd Huff - Host:

and, you can make some tweaks, but you can't get chicken nuggets at In-N-Out.

Derik Sutton - AutoBooks:

I was like, he's going in and out burger for sure here.

Derik Sutton - AutoBooks:

That's, I think that's gonna be one of the hardest questions for

Derik Sutton - AutoBooks:

financial institutions to answer soon.

Derik Sutton - AutoBooks:

So do we, because we were in a community and we had to service all the needs

Derik Sutton - AutoBooks:

of the community, because customers were, coming to us and there we were

Derik Sutton - AutoBooks:

the only one of two or three games in.

Derik Sutton - AutoBooks:

We kind of had to offer everything, right?

Derik Sutton - AutoBooks:

Like we kind of had to be , the cheesecake factory, if you will.

Derik Sutton - AutoBooks:

I think that's changing, and so as digital progresses and people can go find

Derik Sutton - AutoBooks:

point solutions that quite frankly are better at solving individual problems.

Derik Sutton - AutoBooks:

I think financial institutions, especially community are going to

Derik Sutton - AutoBooks:

have to answer, ask themselves, do we really need to service this wide range

Derik Sutton - AutoBooks:

of customers or do we need to focus?

Derik Sutton - AutoBooks:

And so if we look at and we peel back our, financial.

Derik Sutton - AutoBooks:

where's 80% of our revenue coming from, that's where we gotta focus and the other

Derik Sutton - AutoBooks:

things need to go away, maybe it's a hard, default on offering some of those things.

Derik Sutton - AutoBooks:

And you send out the hard letters to your customers and saying you're deprecating

Derik Sutton - AutoBooks:

the service or the feature, in 30 days, or it's something a little bit softer,

Derik Sutton - AutoBooks:

but either way, I think those hard questions have to be asked and answered.

Derik Sutton - AutoBooks:

I've got a, I've got a bit of a suggestion.

Derik Sutton - AutoBooks:

I could give you Tedd, if you want it on.

Derik Sutton - AutoBooks:

Maybe how to address that.

Derik Sutton - AutoBooks:

Okay.

Tedd Huff - Host:

So you're, you're leading right into the next question.

Tedd Huff - Host:

if you could only give banks and credit unions, one piece of advice.

Tedd Huff - Host:

What would it be?

Derik Sutton - AutoBooks:

Okay.

Derik Sutton - AutoBooks:

Here's my piece of advice I've been, I've kind of been on this,

Derik Sutton - AutoBooks:

this soapbox for a while now.

Tedd Huff - Host:

so the, so, okay, well we'll let, just stay up there.

Tedd Huff - Host:

Yeah.

Derik Sutton - AutoBooks:

:

The soapbox is this.

Derik Sutton - AutoBooks:

:

If I'm in a financial institution and I'm running strategy or digital

Derik Sutton - AutoBooks:

:

strategy, or I'm, an operator, I'm asking my team to do the following.

Derik Sutton - AutoBooks:

:

I'm first.

Derik Sutton - AutoBooks:

:

I'm going to my board and I'm telling my board, I need

Derik Sutton - AutoBooks:

:

everybody to go open up a digital.

Derik Sutton - AutoBooks:

:

At our financial institution.

Derik Sutton - AutoBooks:

:

I do not want you to talk to anybody in our organization.

Derik Sutton - AutoBooks:

:

And I want you to just do the process on your own.

Derik Sutton - AutoBooks:

:

Okay.

Derik Sutton - AutoBooks:

:

Just go through it and just take some notes.

Derik Sutton - AutoBooks:

:

After you open up an account, I want you to activate bill pay or mobile

Derik Sutton - AutoBooks:

:

remote deposit capture or feature.

Derik Sutton - AutoBooks:

:

Download the app, start to use the product.

Derik Sutton - AutoBooks:

:

Just make some.

Derik Sutton - AutoBooks:

:

I then want to come back at our next board meeting.

Derik Sutton - AutoBooks:

:

I'd like everybody to talk about their experience.

Derik Sutton - AutoBooks:

:

Was it simple?

Derik Sutton - AutoBooks:

:

Was it easy?

Derik Sutton - AutoBooks:

:

Was it intuitive?

Derik Sutton - AutoBooks:

:

What did you think about it?

Derik Sutton - AutoBooks:

:

Okay, so Tedd, the reason I say to start with that is because that starts

Derik Sutton - AutoBooks:

:

to put empathy and it starts to seed strategy at the, board level for a

Derik Sutton - AutoBooks:

:

group of individuals that quite frankly, just have to, don't have to go through

Derik Sutton - AutoBooks:

:

the traditional customer process.

Derik Sutton - AutoBooks:

:

They got a different set of rules.

Derik Sutton - AutoBooks:

:

Give them empathy for what the common customer goes through.

Derik Sutton - AutoBooks:

:

then you could probably ask, your executive team, your strategic

Derik Sutton - AutoBooks:

:

team to do a bit of the same.

Derik Sutton - AutoBooks:

:

I would also challenge them to maybe go open up an account at chime or somewhere

Derik Sutton - AutoBooks:

:

else or Square, and then start to have some comparison between the two.

Derik Sutton - AutoBooks:

:

I would then say, after we do that, we're then going to go for the next

Derik Sutton - AutoBooks:

:

30 days and I'm gonna go talk to.

Derik Sutton - AutoBooks:

:

long interviews with at least 10 of our customers and just ask them

Derik Sutton - AutoBooks:

:

how they do their banking or what progress they're trying to make.

Derik Sutton - AutoBooks:

:

Don't be simple with the questions and say, Hey, how are we doing?

Derik Sutton - AutoBooks:

:

What do you think about our service?

Derik Sutton - AutoBooks:

:

What do you think about that?

Derik Sutton - AutoBooks:

:

No, go talk to them about how they run and manage their business.

Derik Sutton - AutoBooks:

:

What are they struggling with?

Derik Sutton - AutoBooks:

:

There's an old Japanese proverb.

Derik Sutton - AutoBooks:

:

You have to ask why five times to get to the real answer.

Derik Sutton - AutoBooks:

:

When somebody gives you an answer, ask why, when they give you that answer,

Derik Sutton - AutoBooks:

:

ask why, when they give you that answer, ask why and just keep peeling it back.

Derik Sutton - AutoBooks:

:

Come up with their actual pain.

Derik Sutton - AutoBooks:

:

The reality is most people are very nice and they're gonna give

Derik Sutton - AutoBooks:

:

you nice answers at the beginning.

Derik Sutton - AutoBooks:

:

If you've taken time to go meet with them or call them on the

Derik Sutton - AutoBooks:

:

phone, you've gotta peel back and you've gotta get to the honesty.

Derik Sutton - AutoBooks:

:

Okay.

Derik Sutton - AutoBooks:

:

So then have your team go and do deep interviews with at least 10 customers.

Derik Sutton - AutoBooks:

:

Record those, play those back, make those available to the.

Derik Sutton - AutoBooks:

:

Then use that information and say, all right, we're gonna go hire a

Derik Sutton - AutoBooks:

:

local, design firm or product team to come in and just prototype and

Derik Sutton - AutoBooks:

:

experience to solve that, pain.

Derik Sutton - AutoBooks:

:

Those 10 customers had a common pain point.

Derik Sutton - AutoBooks:

:

We're just gonna go prototype a solution to solve that low fidelity,

Derik Sutton - AutoBooks:

:

not, high fidelity, don't go spin, hundreds of thousands of dollars.

Derik Sutton - AutoBooks:

:

Just get, go prototype something out and then take that back to your

Derik Sutton - AutoBooks:

:

team and say, this is an example.

Derik Sutton - AutoBooks:

:

Of a way that we should be solving customer pain.

Derik Sutton - AutoBooks:

:

And then the next time your digital banking contract comes up for renewal

Derik Sutton - AutoBooks:

:

or mobile banking or frontline teller, whatever the thing is that

Derik Sutton - AutoBooks:

:

you prototyped and did, don't take in the traditional consultant, RFP that

Derik Sutton - AutoBooks:

:

has hundreds of features that nobody uses and use that as your benchmark

Derik Sutton - AutoBooks:

:

for what your solution should look.

Derik Sutton - AutoBooks:

:

use your customer's pain and the prototype and the solution you

Derik Sutton - AutoBooks:

:

designed around solving that as the guiding light to where you should go.

Derik Sutton - AutoBooks:

:

Because if you solve the most important things, the other

Derik Sutton - AutoBooks:

:

things don't matter as much, you cannot possibly build the future.

Derik Sutton - AutoBooks:

:

If you're focused on rebuilding the past and RFPs are simply a

Derik Sutton - AutoBooks:

:

documentary history of past features that aren't necessarily necessary

Derik Sutton - AutoBooks:

:

or needed by most customers today.

Tedd Huff - Host:

Wow.

Tedd Huff - Host:

That was some deep insight, man.

Tedd Huff - Host:

That, is fabulous.

Tedd Huff - Host:

We've talked about so much today . Is there anything that I missed

Tedd Huff - Host:

that you wanted to make sure the audience knows about AutoBooks or

Tedd Huff - Host:

heck even some of the financial institutions that may be listening.

Derik Sutton - AutoBooks:

I would just say at AutoBooks, we really do care

Derik Sutton - AutoBooks:

about, helping small and micro businesses make progress in their day to day life.

Derik Sutton - AutoBooks:

ultimately we would prefer they partner with their financial

Derik Sutton - AutoBooks:

institution to do that.

Derik Sutton - AutoBooks:

We wanna be, a provider, a piece of that.

Derik Sutton - AutoBooks:

we kinda have this, phrase that came to us from a mentor named Bob Mesta.

Derik Sutton - AutoBooks:

And Steve, our CEO actually talked about this recently.

Derik Sutton - AutoBooks:

We don't pretend that we're the full sandwich that the

Derik Sutton - AutoBooks:

business owner's going to eat.

Derik Sutton - AutoBooks:

We're just the mustard.

Derik Sutton - AutoBooks:

And we're perfectly content being the mustard inside of your financial

Derik Sutton - AutoBooks:

institution sandwich offering.

Derik Sutton - AutoBooks:

You guys have, you know, much more of the capabilities, the service and the

Derik Sutton - AutoBooks:

things that a business owner needs.

Derik Sutton - AutoBooks:

We just wanna augment and supplement that.

Derik Sutton - AutoBooks:

So it taste as good as possible.

Derik Sutton - AutoBooks:

We think that we've come up with a clever way.

Derik Sutton - AutoBooks:

To, make our app and services available to financial institutions, pretty simply.

Derik Sutton - AutoBooks:

you can go turn these things on, but there's one very, very

Derik Sutton - AutoBooks:

important thing that I like to stress to financial institutions.

Derik Sutton - AutoBooks:

It's not just about the tech, it's about the people, but it's also about

Derik Sutton - AutoBooks:

the marketing and you gotta make sure people understand you have the right

Derik Sutton - AutoBooks:

thing for them at the right time.

Derik Sutton - AutoBooks:

if you don't lean into marketing Facebook, Square QuickBooks, Venmo, PayPal.

Derik Sutton - AutoBooks:

They all are.

Derik Sutton - AutoBooks:

And when they market, they do a really good job about it.

Derik Sutton - AutoBooks:

And once they hook somebody, they reel 'em in.

Derik Sutton - AutoBooks:

it's okay to send some emails.

Derik Sutton - AutoBooks:

It's okay to post some social Mo posts.

Derik Sutton - AutoBooks:

It's okay.

Derik Sutton - AutoBooks:

To throw something up on YouTube, to talk to your customers.

Derik Sutton - AutoBooks:

So lean into that marketing, let 'em know you've got a solution for 'em and then let

Derik Sutton - AutoBooks:

your service and product solution shine.

Tedd Huff - Host:

What is the best way for the audience to reach out to you or

Tedd Huff - Host:

to the AutoBooks team to get started by learning more about what AutoBooks could,

Tedd Huff - Host:

offer them or, help them solve a problem?

Derik Sutton - AutoBooks:

Sure.

Derik Sutton - AutoBooks:

You can find me on Twitter @Deriksutton D E R I K S UT T O N.

Derik Sutton - AutoBooks:

same thing on LinkedIn, D E R I K S UTT O N a much more active on

Derik Sutton - AutoBooks:

LinkedIn, but most importantly, just go to www.AutoBooks.co it's.

Derik Sutton - AutoBooks:

Dot CO not dot com.

Derik Sutton - AutoBooks:

and you can, engage with us there.

Derik Sutton - AutoBooks:

you can also send us an email to letstalk@autobook.co as well.

Tedd Huff - Host:

Derek.

Tedd Huff - Host:

I really appreciate your time today.

Tedd Huff - Host:

I'm gonna put all these in the show notes and the description.

Tedd Huff - Host:

So everybody will have access to all these different links.

Tedd Huff - Host:

If you wanna get ahold of Derek, you wanna get ahold of somebody

Tedd Huff - Host:

at AutoBooks to really figure out what's gonna work for you.

Tedd Huff - Host:

We'll go ahead and have those links so you can go straight over there.

Tedd Huff - Host:

And again, Derek.

Tedd Huff - Host:

Thank you for being on man.

Tedd Huff - Host:

This is, this has been a fabulous conversation.

Tedd Huff - Host:

I have a feeling you and I probably could have done this for another couple hours.

Derik Sutton - AutoBooks:

Thanks, Tedd.

Derik Sutton - AutoBooks:

Great to great to be on and thanks for having me

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