S4E2: Community Banking: New Era of Fintech and Personal Finance

S4E2: Community Banking: New Era of Fintech and Personal Finance


So many of the rules of personal finance seem to be written for a world that no longer exists. With new ways to save and invest - and new financial dangers to be aware of - does the same old advice still apply in the banking world? Gabe Krajicek, CEO of the FinTech neobank, Kasasa, joins us for today's episode on the power of local banking. What does the banking landscape look like in a world of less competition and more megabanks? How does our relationship with money affect our banking needs, and how does the concept of community banking fit into the post-pandemic world?



GABRIEL KRAJICEK has been the CEO of Kasasa since 2005. Kasasa is an award-winning financial technology and marketing services company that provides reward checking accounts consumers love, the first ever loan with take-back loans, and ongoing expert consulting services to community financial institutions. Gabriel has led Kasasa’s growth in the community banking and credit union fields through his passion of keeping local banking afloat by giving them the resources to compete with megabanks. 

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This episode was produced by Global Thinking Foundation USA and Hangar Studios.

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View Transcript

[00:00:00] Mary: Welcome to "Your World Your Money" podcast.

[00:00:06] Nolan: We'll be talking about personal finance issues in a genuine way, exploring how money touches every part of our lives.


[00:00:13] Laquita Ann: We aim to shift perspectives and change up the status quo through conversations, resources and questions, always exploring the intersection of financial wellbeing, life and timely issues that impact us every day.


[00:00:27] Mary: "Your World Your Money" is brought to you by Hangar Studios, a New York City based recording studio and Global Thinking Foundation USA, a global nonprofit striving to create a world free from economic abuses, and where financial empowerment and equality are realities to all.


[00:00:55] Mary: Hello, money people! Nolan and Mary back with you this week, here on "Your World, Your Money." We, of course, have a great guest joining us today, Gabe Krajicek, CEO of the financial services company, Kasasa.


[00:01:10] Nolan: That's right, Mary. So, before we introduce Kasasa, we'd love for you to think about your relationship to your local bank. What does your local bank look like to you in your imagination of local banking? What comes to your mind when you hear the term community banking? Kasasa is a company that provides community banks and credit unions with banking technology and marketing services, including their nationally branded products suite that includes a FinTech driven checking accounts and loans.


[00:01:36] Mary: We are going to talk to Gabe about the power of local banking and what the banking landscape looks like in a world of less competition and more megabanks. How does the concept of community banking fit into this post pandemic world? And how does our relationship with money affect our banking needs? We get into this and so much more.


[00:01:58] Mary: Gabe, we're so excited to have you here with us. We're excited to get the chat started and to dive into the conversation... to get our listeners on the same page with us and get them going into the conversation, tell us about Kasasa and tell us about who you serve, what you're up to.


[00:02:16] Mary: Tell us just a little bit about all of that.


[00:02:19] Gabe: Sure. Kasasa's been around for almost 20 years and we've had the same mission since we started. And that is to help community financial institutions win the war against the mega banks. And then it started off as mega banks and online banks, but now has become mega banks, fintechs, online banks, neobanks, every other buzzword crypto that you can think of.


[00:02:37] Gabe: We're trying to help those small institutions that are the backbone of main street continue to be viable by providing them with great products and great marketing. So, the consumers know that they're out there and they have a choice to bank with a local person that cares about their community as much as they do.


[00:02:51] Mary: Incredible. Within that, within the community space, what is the specific needs that you see Kasasa filling? Like where do you see yourself fitting in?


[00:03:01] Gabe: Well, this is a little bit philosophical, but as a, as a person that lives in America, as a consumer, I think it would be awesome if all of the financial power of this great nation was not held in the hands of five CEOs with multi-trillion dollar balance sheets that could control the whole worldwide economy.


[00:03:16] Gabe: I think that people's paychecks and their deposits that they put in their checking account represent their personal power. It's like, 'man, I worked my job. I did the best I could and I got this paycheck and now I put it into the bank.' And what does the bank do with it? If it's a too big to fail institution, who knows what they do with it? Track record shows that they're highly probable to cause a worldwide recession, get bailed out by the taxpayers and everything will be just great for them.


[00:03:38] Gabe: That same money could have been put into a community institution. And those community institutions, they make car loans for school teachers. They help people with mechanic shops buy a hydraulic lift so they can expand their business a little bit. And so, that money that represents people's power, their paychecks, their hard work, it can go to do the work of the too big to fail institutions or it can go do the work of the communities. And it just depends on, uh, who is doing that work. And the community financial institutions that we serve are reinvesting in communities at a rate that's very different than what the large institutions would do.


[00:04:11] Nolan: And to just be clear, Kasasa offers these products that then community institutions can offer to their customers, competitive interest rates, competitive loans, things like that. Things that customers might seem to think they can only get a big banks, but can in fact find at credit unions, their local community bank and things like that.


[00:04:28] Gabe: That's right. We started off as bank view and we had a product called reward checking, which was just a high interest checking account. And it was very, very successful. Consumers absolutely loved it. We liked to say that it paid everybody the way the bank across the street only pays their wealthiest customers.


[00:04:43] Gabe: And so it was a way to kind of democratize high interest and get it attached to not just having a really high balance, but things that anybody could do, like 'swipe your debit card 10 times. Take an e-statement. Cause that's cheaper than a paper statement. Use direct deposit because that makes your account stickier.'


[00:04:59] Gabe: And if the consumer would do those things, we would pay them a high interest rate. And the product exploded. By 2009, if all of our clients had been one institution, they would have been the seventh largest in the country and they were spending collectively $50 million advertising this checking account.


[00:05:13] Gabe: So, you know, we were looking back saying seventh largest branch network.... $50 million... in 2009, that was real money. And so, you know, why is it that even my friends who know what I do for a living, can't tell me the name of this checking account? And the reason why is because every institution was calling it whatever they wanted to call it.


[00:05:29] Gabe: 'ChaChing Checking, super rewards, checking ultimate green checking'... and to the consumers, it sounded like static noise. So, we got the idea - what if we could get all of these community financial institutions to join forces in one collective brand name and shout really loudly to the market that we provide great service, great products too.


[00:05:47] Gabe: So you don't have to make the trade-off between products and service. And we did some consumer research and found out - this is in 2009, when we were kicking off Kasasa... we did some consumer research that still is a hundred percent true today. The numbers have barely moved at all. Two thirds of consumers, if you ask them who the good guys are and you can ask them who provides better service? Who's going to get your back? Who's going to be a partner, all those different types of warm, fuzzy words. It's always two-thirds of consumers consider the community financial institutions to be the good guys and the mega banks and other big central kind of banking structures as the bad guys.


[00:06:21] Gabe: And this is ingrained into like the human psyche, because so many of us have all seen it's a wonderful life. And we remember George Bailey and how he tries to save the small town. And like that idea still exists. And it happens to actually be true. So, what's the reason that consumers don't bank at these small institutions?


[00:06:38] Gabe: They don't believe that they have good products. It's like, man, I know how the world works. I can see chase advertising it's cool new products. I see all these fintechs coming out, those little guys there just ain't no way. And so Kasasa was created to try to solve that problem. If we could build great products and we could aggregate some of the marketing scale of the small guys, then we could bring them to bear in the marketplace in a way that felt kind of like a mega bank except that there would still be local institutions that own all of the deposits and manage your relationship.


[00:07:04] Gabe: And we kicked that off in '09 with a website, kasasa.com where consumers could go in and put in their zip code and find an account and find a local institution. And in 2014, the FTIC made us shut it down because they said we were a deposit broker and we fought that law for seven years and turned it over.


[00:07:20] Gabe: And now we're able to bring kasasa.com back to the market, which is what we're doing this year. So, it's exciting because the world has changed a lot in the last seven, eight years. Now with the FinTech platforms, what we're going to be able to bring to market, and the way we'll be able to organize these community FI's will be different in kind than anything else that's out there.


[00:07:38] Nolan: That's pretty exciting. And so on that note, I'd love to ask you about the state of the economy, both from like an institutional level and the individual level. How do things look right now for community banks, credit unions? Are they thriving or is it a tough time?


[00:07:52] Gabe: Oh, it's horrible. It's an absolute punch to the face. COVID changed everything. You can hardly overstate the impact that COVID has had on account openings and where consumers are opening their banking products. If you look at credit unions, prior to the pandemic, they had 17% of the total market share. So, you know, 17 out of 100 accounts were being opened to credit unions. Today, that's down to eight.


[00:08:16] Gabe: So, I mean, that's like a 50% reduction. Community banks took it even harder. It went from 11% to two. 2%, two out of a hundred accounts go into the community banks. Meanwhile, the mega banks, which already had a lot of share. They've gone up from 36 to 51, but the real winners have been the Neo banks, the fintechs true, just digital only.


[00:08:38] Gabe: And they've gone from about 2% of account openings to 18% of account openings. So they now represent more than all the credit unions in the country represented before the pandemic started. And the reason this shift's occurring is obviously digital became the way that accounts were being opened. And a lot of community financial institutions lagged the market in their ability to provide the ability for consumers to open accounts online easily.


[00:09:02] Gabe: And they certainly lack the marketing budgets. You know, if you're a consumer and you're trying to go find an online bank. Google online bank and just see how well the local institutions, there's like 11,000 of them, how are they going to show up on that search result and compete with the people that have, you know, a hundred million plus dollar marketing budgets to find you?


[00:09:22] Nolan: Do you think Kasasa offers an opportunity to swap the marketing advantage there? Do you think there's an opportunity to kind of pool resources and draw people to community banks?


[00:09:33] Gabe: Well, I absolutely do. Back in 2014, before the FDIC shut us down, we had the kasasa.com website where a consumer would come put in their zip code and they would find an account at one of our local institutions. We would charge the institution $150 per consumer. We would take that money and use it for more PR and more marketing. So, the year before we were shut down, we had done the second annual - something we should probably do again in today's environment - national gas station takeover. And so, we had like 40 institutions, hundreds of bank executives wearing little capes because they were going to go out and save the day for consumers that couldn't afford gas.


[00:10:09] Gabe: And we'd go into these local markets, about 40 all across the country, and the bankers would get out there and buy gas for the first 200 cars that would show up. And inevitably you'd end up with traffic jam. I'm not proud of it, but some car accidents, police are out there, local coverage for the news. And then of course, if you have local coverage from 40 news stations across the country, you get national news.


[00:10:29] Gabe: And we had that two years in a row. So you ended up with one of our bankers talking to Neil Cavuto about how community financial institutions take their consumer's best interest to heart. We want you to know that there's an alternative to the mega banks, and you can go to kasasa.com to find us. And we would see millions of people hit the kasasa.com website.


[00:10:44] Gabe: Tons of accounts being opened up at local institutions, $150 a click. We could go and create more marketing. When we had to stop doing that because of the broker deposit rule in 2014, it was a big impact to our business. And we shifted and found other ways to serve our clients that were meaningful through big data and omni-channel MarTech solutions that leveraged our scale. But the national brand was the fun part, like that's where all the juice was. And so to be able to bring that website back and to do it with a FinTech style platform where we could go and bring a million accounts into our system relatively quickly.


[00:11:16] Gabe: That's not a, it's not a huge number. Uh, when you're spending a thousand accounts across a thousand institutions and they can all pay $150 per account. Cause that's about half with their normal client acquisition cost is. So imagine if you could bring the scale together, one banking operating system. All contemporary FinTech capabilities that serve the consumer beautifully. But instead of going to, SoFi, Chime or one of these other companies that offer those types of services, you could come to Kasasa and the key difference is we'll connect you with a local institution that will be your bank or credit union.


[00:11:46] Gabe: One neat thing that I think is cool about all of our clients is if you walk into any of them and you say, I want to talk to the CEO... you will actually talk to the CEO. That person, man or woman, is going to come down and talk to you and see what's going on. How can they help you? That's like a real thing. So we can provide those types of accesses, those types of touchpoints digitally in a way that feels just totally different. I mean like Jamie Diamond's never coming down to talk to you.


[00:12:08] Nolan: It's true.


[00:12:09] Gabe: But I can name a bunch of our clients that would love to. And so I think that that difference will be huge.


[00:12:14] Mary: I definitely have so many FinTech questions to follow up and ask you, but before jumping over into the FinTech space, cause we're going to be there for a minute and it's going to be a great time, but I want to ask a question around community so that it really hits how important this is.


[00:12:31] Mary: So, in the United States, there's only 144 minority owned, small banks. And that includes credit unions actually as well. And so talk a little bit about why this is so important for communities, especially for minority communities, and when you were talking about that 2%, that 2% being community banks, my immediate thought was, well, what about the minority ones?


[00:12:56] Mary: The ones that actually represent a big swathe of the United States? So share with me a couple of thoughts on that so that people can really understand the impact for them in this.


[00:13:06] Gabe: Well, it's, it's a huge impact for the underbanked in particular. I mean, if you look at, and this is something that COVID has really kind of exacerbated in an interesting way... when you look at access, I mean, let me back up a little bit, the way that banking is going is obvious to anyone who's paying attention. It's a digital exercise. Banking is becoming an app. It's no longer like, 'let's go down to the branch.' And I think that's what you see. COVID hit the pandemic hits. People can't go to the branch. Where, where do they go? You see these huge increases in the amount of online applications, people getting FinTech solutions for banking.


[00:13:44] Gabe: And that's a fantastic thing for a lot of people because it's, it gives a lot more access and it can solve a lot of those under-banked problems. Because if you know there aren't institutions in a market and there's no one serving that market, the consumers in the market end up at payday lenders and check cashing and a lot of other things that are super duper high expense compared to what a traditional banking relationship would be.


[00:14:05] Gabe: The challenge is that while more and more people have access to the internet, I mean, it's, it's, it's definitely a glass half full kind of story, because if you go back to like the two thousands and look at the percentage of underprivileged people that had access to the internet. It was like 25% or so. And now you're up to like 75 - somewhere in that range. So, it's a huge increase, you know, three quarters of people making less than $30,000 do have a smartphone that has internet access. So, there's a huge improvement in the ability to be able to meet the needs of those individuals.


[00:14:36] Gabe: And also if you're one of the one in four who don't have a smartphone. You just got left behind. Like there, there's not a place for you anymore. And so it's like both an optimistic and an alarming story, because the optimistic side is a lot more people are getting access to these great, you know, digital based banking tools that can serve the underbanked. And it can start closing that that banking problem that we have. The gap is if you don't have access to it, if you're not connected to the internet, it's like living in a different universe.


[00:15:07] Gabe: It's like, you're, you're not a part of the game anymore.


[00:15:09] Nolan: And it's not just access, right? I mean like a lot of like senior citizens do have a smartphone. Are they using that smartphone to access their banking app and move money around? Less likely.


[00:15:19] Gabe: Less likely for a senior citizen.


[00:15:21] Nolan: So, yeah. I mean, I don't know. I see a universe in which community banks still have that personal relationship aspect. You can go in, even if you don't know how to use the app, you can ask questions, you can get what you need done to your account. Whereas if you're dealing with the mega bank branch in your neighborhood, they might just tell you, 'yeah, you have to do this on the app. Sorry. We can't help you.' Do, do you see that actually playing out in practice?


[00:15:46] Gabe: Oh, it's why I love this industry. A hundred percent. I've seen this repeated dozens of times in visits to our clients and conversations with them. And if I asked them to raise their hand, if you have a story like this, a hundred percent of them raised their hand. But the first time I got what made community institutions different, I had only been in this business for about three months.


[00:16:05] Gabe: I was supposed to have a meeting with one of our first clients. They were in a little bitty town in Taylor, Texas. It was City National Bank in Taylor, Texas. I was in a meeting with James Marik, who was their COO and he was 45 minutes late for the meeting. And he was never late, which is weird. And he and I had a pretty good relationship.


[00:16:21] Gabe: So, when he wasn't having the meeting with me and coming out to greet me in the lobby, I went over to his office and I looked through the window in his office. And what I saw there was a lady who was clearly not very affluent. I'm not trying to judge, you know, you could tell she wasn't dressed in super nice things.


[00:16:35] Gabe: She was probably underbanked, underprivileged a little bit, and she had all of her bills laid out on James's table and that's all I could see. So I walked away and sat back down. Finally, she leaves, James gives her a hug. She walks out and I go and say, "James, that seemed like a weird meeting, what was going on in there?"


[00:16:51] Gabe: And he said, I don't remember the lady's name. I wish I could, but she said that's so, and so she overdrew her account about two months ago. And I've been having her come in every Friday with all of her bills and I tell her what she can afford to spend and what she can't so that we can get her back, you know, back on track.


[00:17:05] Gabe: That's the COO of the bank sitting down for 45 minutes, late for me in a meeting, because the most important thing in his world right then was that lady being able to pay her bills. And I don't know, that's kind of magical. I mean, that's just not normal. Like Bank of America, Wells Fargo would have closed that account, taken the loss in a heartbeat, and that lady would have been left to figure it out, 'go figure out the next thing, go to a payday lender. Maybe they can help you out...' but not on Jame's watch. And that's not a unique.


[00:17:33] Mary: It's not a unique story. And, uh, it made me smile, Gabe, when you said that, because Taylor, Texas is actually a 30 minute drive from where my mom lives and this entire comp- and this entire conversation, I kept thinking about her. And, Nolan, when you brought up the older population and our more mature population, my mom is just like this. She will literally call me and ask me for help. And I'm like, 'mom, I can't help you.' So she'll go into her local bank. When she's getting confused, I'll be like, 'okay, mom, give me their contact info.' And I call the number she gives me, and it's literally the president of the bank. And I'm like, 'oh, hi. I just want to help my mom. I'm so sorry.' So, I think it's, it's really incredible that you're talking about that. And I really appreciate that you're focusing on how it impacts the community, because I think that, especially for younger generations, that connection might not be there.


[00:18:22] Gabe: Yeah, definitely. I mean, they haven't in the same way... You know, my generation, I'm 43. So my first bank account was at a community bank and I kind of liked it. Like there was a cool feeling walking in there getting my first checkbook. I'm 13 years old and the guy introduces me to the bank and says, I can come in anytime. If I need help... that's a neat experience. If you grew up in a world where everything was completely digital and it's just an application and it's just an app... there's a different relationship that you have with the overall banking experience. And I, you know, I'm not for consumers making trade-offs, digital's the way it's gonna go.


[00:18:52] Gabe: It's gotta be great. When you've got to have easy, convenient access to everything that you need, it's gotta be on your smartphone. It's gotta be real time. And at the same time, Don't undervalue the fact that there's a James Marik that wants to talk to you if you need help. And the community's taking care of communities, people taking care of people.


[00:19:07] Gabe: It's the magic that, in my opinion, can never be replaced by AI or any kind of user interface that's slicker than the last one. It's like at some point people have to care, it's gotta be a human caring about another human, and I'm very big on creating those connections.


[00:19:21] Nolan: So I think these stories are compelling, right, about what you can get from a community bank, through your local bank, the credit union. I'm curious about your thoughts on, on how much that is filtering through and kind of our social consciousness. Because, from my vantage during COVID, there was this renewed interest in buying local, shopping local, supporting your local business, you know, the bar or restaurant you like - support them. Like we have a duty to keep them in business.


[00:19:44] Nolan: We like them in the community. I didn't see as much of - 'well, we have to bank local.' We have to make sure that these banks are staying in business too. I don't see that as being a large part of the conversation and maybe I'm missing it. So, I'm open to you pushing back on this, but if I am right, that that's not kind of in the same category of conversation. What needs to happen, such that we think about it that way, that this is a part of the community that we can do our part to keep here?


[00:20:14] Gabe: Well, obviously that's what Kasasa is trying to do. And, you know, having the law changed where we can actually advertise again as Kasasa and tell people about community FIS and come to us and, and find them... that helps us get the word out. But at a societal level, I just don't think that people understand banking at all.


[00:20:28] Gabe: Obviously. I mean like no one gets it. Like you put your money in a bank. Do people know that that turns into a loan and do they understand how that loan gets put out into the community or, or what other type of investment it makes? Um, I think people look at their banking relationship as just a utility, like electric service or internet service or anything else.


[00:20:46] Gabe: It's like,' I've got to have that.' And they don't realize that where they're banking is having a societal impact. They're just unaware. You know, it's like, what if you knew that where you banked could change the probability that your neighbor doesn't lose their job? Would it matter to you at all to think about making some changes, if you could go and make your community stronger?


[00:21:03] Gabe: And I think that that's kind of the message that we need to get out there is that there is a ton of consolidation and concentration of America's wealth. I mean, like when you, you look at it in the mid nineties, this is an amazing market, a little piece of information - in the mid-nineties, community banks and credit unions had 75% of the total market share.


[00:21:23] Gabe: And today it's down to around 22%, 20%, something like that, of total volumes of deposits. So I mean, an absolute sea change in where the power is held. Where that - I mean, because that money is not money. It's power. It's like the ability to go do big things and all of that ability to go do big things has been sucked out of local communities and put into big, big banks that make very different decisions about whether or not they're going to invest in a community.


[00:21:50] Gabe: And if that community is too poor to be profitable, they're out. But a credit union who serves the underserved, they're trying to figure out how to get into that community. Their whole goal is to be a part of that community. But they've got to be able to have the abilities to market themselves and have the products and be able to get out there and serve that community effectively, which is the challenge of being a small institution and fighting against these behemoths.


[00:22:12] Nolan: I know from my perspective, in the neighborhood, the big banks can afford like the flashy real estate and they can keep them there. And honestly, that, that real estate is taking up space that could go to otherwise, like, you know, a cool local park, a cool local business.


[00:22:27] Nolan: But it's the real estate. It's, it's the, I don't know... the actual finance, the actual money involved too. It's, it's not in the community.


[00:22:36] Gabe: It's a different thing. I mean, I, I got started in my first business, which was - prior to this one - and I needed a $50,000 loan. And I went into a local community bank to get the $50,000 loan. And he said, I'm going to need a personal guarantee. And I was really young and I got - I was - didn't really know exactly how that worked. I stood up and I shook, I stuck my hand out and said, "I personally guarantee you, I will pay back this loan." And he laughed and shook my hand. And somebody vouched for me, that was someone that he knew. And there was a little bit of like, 'I'll make you this loan.'


[00:23:05] Gabe: It was not a good loan. Like that was not a loan that really should have been made. But if that loan hadn't been made, I'm not talking to y'all right now. And I haven't been able to be an entrepreneur for the last 25 years. So that, that guy who shook my hand and said, and laughed and thought it was funny that I thought I could personally guarantee it like a promise and that he wouldn't tie up all my assets - which they did - which I didn't have much of.


[00:23:24] Gabe: But the point is that it was a, it was a local guy who took a chance. And I think that, that kind of. There's so much power in all the great new underwriting capabilities and AI and all the neat things you can do. And here's companies like cabbage, small business lender that's looking at social media scores and things like that to figure out how to make better loans.


[00:23:45] Gabe: I'm pro all that. It's really exciting. And also there's still, it helps a lot to have that guy that'll shake your hand and say, "I'm going to take this chance on you because there's something about it." I think that's, that's a magic that we're losing. And I think that we lose it at our peril and to not think that there was value in that to think that that all can be replaced by better scoring algorithms, I think is just folly.


[00:24:06] Mary: I think this is an incredible opportunity to dive into that folly a little bit. So, in the FinTech space, let's, let's come into this space a little bit and share with us from your perspective about these financial tools that are competing in this space with Kasasa. Let's get started there and then we can dive into some of the trends and where we think this is really going.


[00:24:31] Gabe: Well, I think that, you know, there's two, two primary sides of FinTech activity. There's lending and deposits, and a lot of the players are on both sides of it. But I think that you have to look at them distinctly. On the lending side, the primary innovation that we've seen is the disintermediation of the normal buying cycle so that the loan conversation gets injected at a different time than it would have prior to the new innovation.


[00:24:55] Gabe: So, simply put, back in the old days if you needed a car or something you might go down to the bank and say, 'I need to get pre-approved. I want to make sure that I've got this little piece of paper that says I can buy this car and I'm gonna go over to the dealership, or I find what I want to buy. And then I go to the bank and say, I need a loan.'


[00:25:09] Gabe: So, it's like, that's been the process. Now, through the buy now pay later streams and a million other different types of like, 'I'm going to take a little chunk out of this process. I'm going to make offer financing here instead of here.' What you're seeing is that about half of the loans, I think I mentioned earlier half of the loans that were written in America are currently getting written by fintechs. And that's a stunning statistic. Like I don't think the blockbuster Netflix significance of this moment cannot be understated. Half of the loans in America got originated at fintechs. So, the other half got originated at the heavyweight champions of the world. Like the best big banks in the world - Bank of America, Wells Fargo, Chase, like Citi...


[00:25:51] Gabe: They got put in their place by SoFi and a bunch of other people that were out there making just pure digital lending kind of plays. And so in that area where the real innovation is occurring is trying to get into the consumer buying funnel at different times. And there's some really amazing ways that companies are doing that.


[00:26:09] Gabe: On the deposit side, it's really been just straightforward about making it easy to open an account and having an account that's got low fees that provides the consumer with some unique little benefits. And not going to rattle off every cool feature and every FinTech out there, but it's things that you've seen before. Like something simple: get your paycheck two days early. Well, that sounds like a nice thing to do, and I can get that in a free checking account and I can open it up in five minutes. Well, 31% of consumers are changing checking accounts at any given time. That number is up due to the pandemic. It used to be a little more than half that I believe, but now today it's about 31% of consumers are looking for a new checking account.


[00:26:44] Gabe: If you've got that much churn in the marketplace, the way to win is just have the best net, like be the easiest way that the 31% can easily find an account and log on. And I don't have the updated stat - in 2019, 88% of the consumers went to the internet before they got any financial product. I'm quite certain that number is darn near a hundred today.


[00:27:05] Gabe: I mean, everybody goes to the internet before they get a financial product. And so, if you're not in that consideration set... if you're not a part of that list when people Google it, if you don't show up in the first page, top five, if you're not in a paid listing, you're not, you're not a part of the universe.


[00:27:18] Gabe: And so what these companies like Chime and others have done such a fantastic job of is having a huge marketing budget, being able to be right in front of the consumer and making it very, very easy for a consumer to sign up. But back to where I see the opportunity, two thirds of Americans, if you paused them right before they're opening that Chime account.


[00:27:37] Gabe: And you just said, 'if I could keep all things equal, you get all the same digital benefit of everything that you're getting right now. And also, if you want to walk over to that branch right across the street that you know about, and you want to walk in there and ask them, if you can talk to the CEO, you can, he will treat you like a customer.


[00:27:52] Gabe: And he'll be glad to look at your app and help you answer any questions you have. And if you never need to do that, you don't need to. But if you do need to it's there,' I think there's a huge chunk of America that say, I like that option better. And that's exactly what Kasasa is bringing to market over the course of the next year, as we prop up 830 community financial institutions in all 50 states in every market, all across the country... representing 500 billion. That's half a trillion dollars worth of balance sheet, which makes it about the fifth largest bank in the country. Let's prop that back up and launch a new what feels like a mega bank, but the message to America is you don't have to make a trade off.


[00:28:28] Gabe: You think you only get the good products that the fintechs and the Mega's, you can get the great products at the local guys, and they'll still be there for you whenever you need.


[00:28:36] Nolan: And you talk about that. If there's that moment where you're given the option, if you're prompted to think about banking, local people might take it. And I agree, but it's, it's the actual... Is there the avenue to give people that prompt? I mean, is there the opportunity to partner with the NerdWallet or Credit Karma's of the world such that local banks actually have the means to display their product in comparison to the big mega banks?


[00:29:01] Gabe: Well, they never can on their own. I mean, this is, and this is something where a lot of community FIS are facing a really tough decision for themselves because this is their blockbuster moment. And they can see the decline is coming. As you know, it's not faster than I thought, but it's probably faster than they thought. And there's around 10,000 community financial institutions.


[00:29:20] Gabe: They can't all be neobanks. They can't all say like, 'Hey, we're market generalists. And we have the same thing as everybody else, but we're local. And you can find us online' like that, that play doesn't work online. You can look at other industries to prove that it doesn't work. Like there's a reason there's an Amazon.


[00:29:38] Gabe: And that Amazon is an aggregator of all the other merchants, because it's easier to go to Amazon through one system that you get kind of familiar with, you know, and trust you understand the prime service model. And you're going to say, I like Amazon, but it's not that I like Amazon. I like all the other merchants that I can get at Amazon. That gives me these products that are good at a good price. And so I see community financial institutions in a very similar type of situation where they cannot easily bring their scale to bear to the marketplace as one and individually, they can't bring it at all. Like there's just no way for them to buy enough PPC ads, to be able to go make a bunch of 10,000 little institutions all be super successful.


[00:30:14] Gabe: It's not going to be what's going to happen. And so I see two paths forward. One is just massive consolidation. And essentially the death of the community, financial institution space. And that's the trajectory that we're on. Call me Don Quixote with my windmills, but I believe we're going to make a last stand here with Kasasa and the ideas let's team up.


[00:30:32] Gabe: We can't win this on our own. We're not going to win on our own, but there is a play for $500 billion worth of balance sheet power of community banks and credit unions teaming up and saying, with Kasasa representing us, we can then get the scale economies that you're talking about. Like Kasasa can approach credit karma.


[00:30:50] Gabe: Kasasa can approach large merchants that are riding billions of dollars worth of buy now pay later kind of loans and say we could finance that through all of our institutions, one loan, origination scorecard. That's got the underwriting information for every single community FI and our network, all on run loan, origination, scorecard, here's the app... apply at the app and we'll route it to the right institution across the nation.


[00:31:14] Gabe: That starts to feel like a scale based play where these community FIS would have an opportunity to go in and win. But it's going to take some consolidating force, something that allows their tremendous power to be brought to the market in an organized way, because individually it's just, it's herding cats.


[00:31:31] Mary: As I was listening to you, the very first thing that I thought of were the generational trends that came up for me. So, when you said that statement of having the FinTech options and also going into the bank and that local bank, boomer ones, Burma two's gen X, the answer would be hell yes. Let's go. For millennials, they might not make that connection. It might be it maybe, but why is this better? And so I want to follow up what you were saying there with how do you innovate. How do you identify trends? How do you find a way to speak to a younger audience that might not make those connections and innovate for them?


[00:32:08] Mary: Because they are going to be the group that's going to help bolster this, whether it's through marketing, whether it's through a movement. So how do you find their trends, their gaps, and then how do you jump into it and address them? Well, I mean, the academic answer to that is it's it's consumer research.


[00:32:26] Mary: I mean, we think of ourselves like a mega bank product department for community FIS that they can buy a timeshare in. So it's like, just like Bank of America would have that problem. How do we engage younger people where they'd go out and study younger people? How are they banking? Get all the surveys on it and understand what are the product features that you would need to present.


[00:32:43] Gabe: Things like crypto that we're working on, that we know are very important for that market segment. I also think that there's a, a very strong kind of psychographic connection to a lot of things that millennials already really care about. Nolan. You said it earlier, whenever you're talking about, like, after I've seen like the shop local eat local, all those kinds of ideas.


[00:33:05] Gabe: If millennials understood the power of banking local, it would become a cause for them. It's a cause worthy kind of thing. I mean, we're talking about the power of money. Like how big is the power of money? It's kind of like maybe the biggest thing. And I don't, I'm not proud of that, but that's kind of like a drives the world, right? Money makes the world go round. So where the money lives, who has the money, who gets to make the choices about where that money gets reinvested, it matters tremendously. And when you think about your, your paycheck is going to be reinvested in your community, like it's going to get doubled. Whenever you put that into an institution, they're going to lend it out again.


[00:33:40] Gabe: They're going to do something. What does your hard work do for the community once you give it to that? FI? And when you put it at a local institution, it's very easy to figure out what it does. It goes right back into your own town. And if it goes into a mega bank, it goes into risky derivative swaps.


[00:33:57] Nolan: So I want to keep up the FinTech conversation a little bit. So you just mentioned crypto and it's one of these spaces where, you know, obviously right now everyone and their grandmothers want to talk about crypto, but it's, it's not just crypto. I mean, the point I'm making is it seems like consumers are expecting a wider range of services from their financial apps, not just retail investing and some connection to their regular banking services. Consumers we're entering into this world where you can do a lot in one place. How do community banks credit unions respond to that? Are they going to have the ability to offer this kinds of services that consumers might come to expect from other banking institutes?


[00:34:44] Gabe: They absolutely have the ability. They've got a partner with the right vendors to be able to do it. A community financial institution can't easily do stuff like that on their own. They're not gonna have the software developers, but there are companies like us and a lot of others that are out there trying to bring them into the space.


[00:34:57] Gabe: I think that the key thing that it matters a lot on some of these big, big, new innovations, like crypto, you could lose your butt, trying to go out there and invest in crypto and act like you know what you're doing. And it's not a safe type of investment and, you know, fractional share. There's a lot of type of investing server.


[00:35:13] Gabe: You're seeing these things pop up in these apps and you're like, part of me says, hallelujah, this is fantastic. This is access. Now everybody can invest in the same way that wealthy people have enjoyed the ability to make themselves rich. So let's, let's give all that access to everybody so that everybody gets the same chance.


[00:35:30] Gabe: Right. But at the same time, if you don't know anything about investing and you go and get this. Crypto wallet. And you think like, I'm going to turn my last 200 bucks into a thousand and you lose your 200 bucks. That's a nightmare for that person. I mean, that, that was probably food for their kids. And so we're, I think that there's a unique place back to my James mark story for the community financial institutions to be there for their consumers is to be able to provide education on a lot of this stuff and guidance on when.


[00:35:57] Gabe: Services should and how they should be when they should be used and how they should be used so that it's done in a responsible way. Cause it is huge. I mean, I think that I'm a huge crypto fan. I think it's the future. I want everybody to have access, but I don't want people to lose, lose their butts.


[00:36:10] Nolan: It's a tension we've explored on this podcast before. Right. It's new opportunities. People can use their money in new ways. It's liberating in a way, but yeah, there's huge risk.


[00:36:20] Gabe: And I'm a huge, I mean, like, I don't think - the pace of innovation is not slowing. It's only going to get faster and faster. And if we try to solve problems by slowing innovation, I just think it's not harmonious with what's happening in the world. Like you can't pull the brakes on this, you're going to break your brake lever, trying to stop the world from innovating. And so I think that the kind of more natural way to lean into this is to say, okay, there's going to be tons of innovation. What are the risks? And how do we start thinking about risk mitigators as we move forward? I don't think of that as limiting access. I think that is increasing information and education.


[00:36:56] Nolan: Do you think banks can be doing more to have the right kind of educational interventions to limit risk in some of these new worlds? Like Crypto?


[00:37:06] Gabe: I think they can provide more education. For sure. I think that also they've had such a hard time going through the pandemic and with everything else that has occurred. I think that those types of priorities, financial literacy are pretty low on a lot of people's strategic objectives.


[00:37:21] Nolan: Sadly, it doesn't always bring a new customers, right? It's not flashy. You're not bringing new customers in by saying we're going to sit you through a 10 part course on how to think through managing your money.


[00:37:30] Gabe: No, nobody wants to do that. It's gotta be organic. It's gotta be like quick tips. It's gotta be things that are easy to communicate to the consumer, uh, through the app. And it's also, I think this is where I get back to the, like, there's no replacement for personal service. We're a long way. It'll probably happen in my lifetime, but we're a long way from an AI chat actually being able to care about how you're making good wise financial decisions. And I think that there is something to that where, you know, you could call up somebody in an institution and say, Hey, I'm thinking about doing X, Y, and Z. Can you help me think this through? And they would actually be like a real human says, Hey, I'll help you think that through.


[00:38:06] Gabe: And so I think that FIS can do more, but I think that they're already FIS doing more. They're just not the mega banks.


[00:38:13] Mary: So listening to all of this, about FinTech and communities and, and the value that it brings and bridging the connection and, and showing what that connection really is for people that might not be able to see that. What is one piece of parting advice that you would give to each of these major generations on how to navigate this new space, this new FinTech space? And you can come from the place of Kasasa. You can come from the FinTech space, but what would, what would that advice be?


[00:38:46] Gabe: My advice would be to remember that money is just money. It's a store of value and it matters how you spend it in any format that you're spending it, whether it's in cash crypto or a digital read out on your, on your app. I think that as money has become more digital, I've just seen it in my lifetime. Been a little bit older. I started off paying with cash and when I would buy my gasoline for $20 and I would hand them that $20 bill and it left my pocket and it went into their pocket.


[00:39:14] Gabe: I felt the physical pain of losing my $20. And I think that as money has become more and more digital, consumers have a tendency to make it in an obstruction. Like it's no longer this tangible thing that actually really, really matters and they should take it seriously. It's like it's math in a spreadsheet and it's not, at least you can think of it that way, but it's not the healthiest, most long-term successful, happy way to think about it. It really is real money. And I think that consumers need to focus on really basic block and tackle things. My advice would be. Spend less than you make, if you possibly can. Have a budget. I am passionate about a budgeting technique, which is very simple.


[00:39:52] Gabe: Take your total income, subtract your expenses and anything you want to save. Take the number that remains and divide by. It will come out to a daily amount of money you can spend. Let's say it's $50 on the first day. You have $50. If you spend nothing on the second day, you start with a hundred dollars.


[00:40:10] Gabe: If on that day you spend $125. You're over by 25. So the next day you start at 25, not 50. And just keep up with that. Rolling. You can do this, you know, in an app as well. There's other tools that do it, but the point is that people need to be really mindful of their daily spending and they don't need to get obsessed with budgeting categories because budgeting categories don't make any difference.


[00:40:30] Gabe: Like it doesn't matter if I spend my money on new pair of shoes or a movie that I didn't need to go see, it's still wasting money if I wasted money. So it's about watching total discretionary expenses and making course corrections on a daily basis so that you land the plane every month under your total spent.


[00:40:45] Gabe: And that method empowers people a lot more with control on what decisions they make a lot more than it would if they were like, oh, should I spend this 20 bucks on groceries? Or should I spend this 20 bucks on going out to eat? Who cares? You're not going to have 20 bucks at the end. So just make sure that you can get to the end of the month and don't spend more than that number, track it every single day.


[00:41:04] Gabe: And that kind of fits into my life. Money is real. It's a tangible thing. Think about it that way in a really block and tackle way. Don't get dazzled and seduced by it being a beautiful user interface with a chart and a bunch of like - it's dollars in your pocket, spend them wisely.


[00:41:21] Nolan: Money is real. Money is tangible in your pocket, but what needs to happen, such that we realize it's also money in the community's pocket. I know, I know you hit on this a lot in the, in the podcast, but it just seems like it's, it's this vague jump in like this should matter, but I don't see how we get to that point where it's, it's really deep in the, in the consciousness.


[00:41:42] Gabe: I don't know how to make it deep in the consciousness either. If I'm totally honest, that's what our marketing team and we are working on all the time. It's a tough lift because consumers don't think about money. And when they do think about money, if you say money or finance to the average consumer, what's the emotion that pops up immediately. Yep. Fear, shame, guilt, all kinds of negative emotions. There's nothing positive for most people about money. And so when you say this category, it's one that people experience with anxiety.


[00:42:11] Gabe: You say, eat local. Oh, what am I thinking? I'm thinking of a great local restaurant. Cool. Ambiance. You know, I should eat local. That is more fun than Applebee's right. Easy to understand, but you go and say bank local and you trigger a money fear. And it's like, oh, why? Why? Because I'm not doing a good enough now because I'm going to be poor.


[00:42:28] Gabe: Like all these other things. Pop up with money. And I think that that's part of what we need to de-stigmatize. People need to drop the shame and guilt and fear associations with money and start getting comfortable, seeing it as a tool that can change their life. And if you approach it as a tool and you don't approach it with fear, but you're educated and you know how to utilize it, then it's a lot easier to see how it could improve your life and why it's not something you have to approach with trepidation. You can approach it with some Gusto and say, I'm going to control this money. I'm going to find a way to make it grow. And there are ways to do that. And I think that's true for almost everybody out.


[00:43:02] Gabe: There's certainly people that may not be accessible, but for the most part it's for everybody. And I think that as that level of comfort increases, as people would be. More comfortable with the idea that money is just a tool, just like anything else. That's a part of my life. Then you could have less emotionally charged discussions about, well, if it is just a tool, how has that tool work?


[00:43:20] Gabe: The best it would work the best if it was also being supported by local people that were taking that money, taking that tool and tilling the soil of your local community to make it more.


[00:43:31] Nolan: I think that's right. I'll also say it's like you brought up, uh, it's a wonderful life earlier. Maybe, maybe we need a few remakes, a few reboots of that just to plug local banks. If we see some Kasasa product placement in, in a movie coming out next year, we know where that idea started, that all, you know,


[00:43:48] Mary: 20 22 Netflix film updated for it's a wonderful. Yeah, I like it. I'm ready for it.


[00:43:54] Gabe: Amen.


[00:43:55] Nolan: Well, Gabe, I think that's it. Thank you so much for coming on. We, we really appreciate all your insights on this.


[00:44:01] Gabe: My pleasure. I hope it turns out well.


[00:44:03] Mary: It will definitely turn out. Well, you sounded fantastic. Don't worry.

[00:44:07] Gabe: Awesome. Well, thank y'all so much. I appreciate the opportunity.


[00:44:10] Mary: Thanks so much for listening in to our conversation with Gabe. To learn more about Kasasa, feel free to visit their website at K-A-S-A-S-A dot com or look to their Instagram at ASKFORKASASA.

[00:44:27] Mary: If you haven't yet, also consider taking our first ever listener feedback survey available AT ywympodcast.com/survey. The first 30 participants will receive a $5 gift card as well as entry into a larger prize giveaway. We can't wait to hear your thoughts and learn more about what you love to listen. To stay safe, everyone and chat soon.

[00:44:53] Nolan: You've been listening in with Your World Your Money. You can find us at ywympodcast.com and stay updated on Instagram @GlobalThinkingFoundationUSA.

[00:45:04] Mary: Our podcast is produced by Amber Yang and Hangar Studios, and fact checked by Tb Bui.

[00:45:10] Laquita Ann: Be sure to rate and review us, and you can reach us with questions, feedback, and topics, suggestions at hi@ywympodcast.com.

[00:45:21] Mary: Many thanks again, to Hangar Studios and Global Thinking Foundation USA.

[00:45:25] Nolan: And thank you for joining us. We'll talk to you soon.