Strategy Before Structure: A Roadmap for Success

Nancy Ozawa (00:06): Well, hello and welcome to this episode of Banking Out Loud. I'm your host, Nancy Ozawa. And today, we're gonna be talking about the importance of putting strategy before structure, especially when launching new products, services, new processes, and other strategic initiatives. Community financial institutions are constantly innovating to keep up with their competition, such as bigger banks and fintechs and others. And all that pressure to innovate has only been magnified over the last two years with the pandemic and the need for digitized banking services. Given this, I think it's safe to say that most community financial institutions have worked to launch or enhance some sort of technology or service recently. So this conversation today will definitely apply. (01:00): But the question we want to talk about is, how did that go? Did it succeed? Hopefully. Or, did it fall flat? Did you get challenged by legacy architecture in your core or maybe some other issue? We were just reading that according to a recent survey of American Bankers Association, more than two in five US banks still run their core banking processes based on backend systems that were designed over 40 years ago, so you're not alone in these challenges (01:39): Now of course, things may not always go as we expected, and sometimes we actually learn from a number of those issues that come up. But it's not ideal, it's not time efficient nor cost effective. So, to preserve your budget and still enhance and innovate successfully, today we're gonna be talking about how to increase the odds of your strategic initiatives succeeding and that includes the process of putting strategy before structure. (01:44): To help us understand the importance of this, what that means, and how to carry out this process, we have invited Ryan Canin, the CEO and co-founder of DocFox, which is a leading provider of automated business account opening and ongoing account management for community banks and credit unions. Ryan previously co-founded a software engineering consultation firm, working with some of the largest banks in the world. And it's during that time that he noticed a need for improved processes for account opening. And so, 2016, he co-founded DocFox, and that's why we've invited Ryan here with us today to help discuss how to increase success of these various initiatives. (03:09): So welcome, Ryan. Ryan Canin (02:27): Thanks so much, Nancy. Really excited to be here. Nancy Ozawa (02:29): Absolutely. This is a very important topic. But before we delve in, let's first talk a little bit more about you. Why don't you share a little bit about your background and how you got started with our listeners today? Ryan Canin (02:40): Sure, yeah. Absolutely. So, the first question that often people wonder when they listen is, where on earth is that strange accent from? and so (laughs), I might as well start there. So I'm originally from South Africa, although now I live in Boston. And my background is actually engineering, biomedical and electrical engineering, and really, kind of loved software and always fell in love with it and, and just enjoyed the, that side of things. But at the same time, I always had an interest in the kind of business consulting side of things, and that's really what led me to start that software development firm, we ended up specializing in banking. And what we would do with banks is we would try and understand what were the challenges, was in fact software the right solution? And if it was, we would then go and actually build it out. (03:23): And, of course, the reality was, frankly, eight to nine times out of 10, software was not the solution to the problem (laughs) the financial institution had raised with us in the beginning. And I think because we told them that, we ended up building up really good relationships. But for the times when software was in fact the solution, and we'll talk about this, I think, a little bit today, right? For the times when software was the appropriate solution, we would end up going to build this out. And I think, we had a really wonderful opportunity and chance to get to understand the financial services space really from the inner workings and the inside out, 'cause we had the real privilege, I think, of going to, you know, these financial institutions where the problems that we were addressing and the problems that we were dealing with spanned the entire financial institution. And so, (04:04): you know, we got to really peek behind the curtain, and really get a sense of maybe what was going on. And then what was really exciting is we would run really rapid tests. So, this was at the time when Steve Blank had come out on the Harvard Business Review with the lean startup idea. Ryan Canin (04:21): And before then, you know, all tech companies would all be in stealth mode for, you know, five, six years and then reveal the product and really hope that it worked and was successful. And then, you know, when he came out with that concept, suddenly what we saw was bigger businesses and companies, saying, "Well, hey, we actually kinda like the idea of rapidly testing something before we invest in it." and so that was a lot of fun. We got to build out these rapid kind of prototypes, to test whether or not we were gonna be successful I think that's an interesting thing we can talk about today as well, which is, how to think about setting up tests and pilots, and, often the aversion that financial institutions also have towards that, right? Nancy Ozawa (04:52): Perfect. So, before we dive into kinda trying to increase, our odds and run these, rapid tests, let's kinda just step back and look at what's going on in the landscape in terms of why are banks trying to, innovate so quickly and experiencing so many issues. What do you see as some of the big, trends that are going on in the market that's fueling all of this? Ryan Canin (05:13): You know, I think it's probably helpful to kinda rewind, to what we've seen over the last few years. I remember, probably five years ago, I (laughs), in fact, I remember the banking conversation where I spoke to a bank who's actually pretty, pretty innovative, in the tech landscape. And I remember them saying, "Are you hosted in the cloud?" Like, that was the first question they asked me, right? and they said, "Because if you are, just know that that ends the conversation today. You know, we can only deal with anything on prem." You know, I remember that was the, that was the conversation and it's quite extraordinary to just reflect back then and, and fast-forward to now and see how, that's no longer even... Now it's, what cloud are you on, right (laughs)- Nancy Ozawa (05:52): Right. Ryan Canin (05:53): ... is the, is the conversation that the financial institution's asking. So, you know, I think that the, first major accelerator that we saw was, was really I think just before COVID, I think you already started to see some fintechs starting to move into the credit union and community bank space, where previously, I think for many years there'd been a handful of players that had been pretty dominant in the market. there were very few newcomers in terms of new technology folks, and I think that that got accelerated drastically when, COVID happened. Ryan Canin (06:26): And in particular, the entire fintech market suddenly said, the opportunity is not just to compete with actually all these financial institutions, which is I think where fintech started, is it said, "We want to be the new type of banking and the new type of financial services." But instead, where suddenly a whole bunch of providers and vendors said, "Actually, we want to be able to help modernize and empower and collaborate with, community-based financial institutions." And I think that during COVID, we saw this huge acceleration around, okay, we now have to be remote. You know, we can't be in branches. But I think the business imperative started with PPP. And so, um, suddenly it was, wow, okay, We, we've got to get PPP done, so that was the first wave, right? So everyone said, "Right, we gotta hustle to be able to figure out how to do that." (07:08): The next piece that then happened was financial institutions were now flush with cash. So now because of PPP and all the stimulus, and, you know, people just spending less, right, 'cause there, there are (laughs) less things to spend money on, you saw these institutions that were now, rich with deposits. And so the question now was about, how do we lend out? And so, we saw a huge wave within institutions looking at lending tech to say, what do they do to be able to automate and streamline the lending space? and I think with that, of course, many institutions saying, "All right, we've got to be able to digitize. We got to think through this." (07:39): Then what I think happened was last year we saw the second accelerator happen. And I think towards the end of the year when you saw, liquidity starting to dry up and financial institutions suddenly start to face, much more of a liquidity challenge, then with interest rates rising, we saw this compression in terms of margins that financial institutions were making. I think the two of those things then combined, meant that financial institutions are now saying, "We need to look to become more efficient, and how do we do that?" Right? And typically, two trends, you know, we see in that space is M&A activity, to which people say, "Well, if we combine, you know, we can pool resources and operate more efficiently." And then the other one is technology, which is to say, how do we leverage new technology and to think smartly about this to be able to operate, one, more efficiently, but two, to be able to be more aggressive in the market to actually grow? (08:30): and then I think the, the next accelerator that took place, was when we had, you know, th- the more recent kind of bank collapses, where I think that what that did was that, that heightened awareness around how to remain competitive and two, once again, just efficiency as an organization. How do we make sure that we can better control our costs? And so I think that, you know, for us, what we've been seeing is more and more openness both from banks themselves and then the concurrent development of the banking tech ecosystem. And so across these last few years, we've seen a lot of funds being created where banks are coming in as the LPs to actually invest in these funds. And those funds are in turn seeking and investing, you know, in new fintechs that are coming in. A lot of VC and, and other kind of investment funds have moved into the space. Um, and so I think it's created a, a pretty fertile and rich ecosystem, (09:22): So, so I'm pretty excited about the space 'cause I just think, that we're at a space where it is, it is certainly starting to mature a lot more and, the existing players are innovating as well… and frankly, you know, all of that really just results in the benefit for, the financial institutions' customers and members, because I think, I really believe that greater competition in that sort of space just results in better service. Nancy Ozawa (09:42): Right. Ryan Canin (09:43): So, I think that, I mean, that's how, that's how I've seen it. Nancy Ozawa (09:45): I would concur. we've had a lot of discussions with our own clients, and you're right, that is fueling more innovation, more excitement, more openness, but also more activity, into all of these different areas. And that's kind of where we started is, okay, there's the activity, but how do we do it correctly- Ryan Canin (10:02): Right. Nancy Ozawa (10:03): ... so that we're not wasting our time and wasting our dollars? Because as you said, we've gotta be more efficient. In this particular market space, efficiency has been coming up in a lot of our conversations lately. Nancy Ozawa (10:14): So, let's kind of set a little bit of a scenario to dig into this 'cause you've got a lot of insights in working behind that curtain with the clients, to figure out what really was the issue. And y- it intrigued me, software wasn't the, the solution, wasn't the really key of what was going on. So, if we set up a scenario where I think you and I were talking that, you know, the typical thing is the bank executive meets with a tech leader, they've got some really exciting offerings. The two of them talk. It seems like it's making a lot of sense. The tech leader meets with the tech team of the bank and they all are impressed. They do their due diligence. They get their reviews and they're all glowing. (10:54): And then they start moving forward, they're looking for that success. And after some time after the launch, they realize the product actually It's just fallen flat. They haven't got the adoption they wanted. They didn't get the success they were wanting. That's the scenario you and I were chatting about. So what went wrong, in your opinion? 'Cause you've seen this over and over. What was the thing that we did wrong? where did we miss the mark? Ryan Canin (11:20): I think it's, it's so interesting, right, because I think cases where we've spoken to banks and, they've come to us to say, "Look, you know, we failed with A, B, and C." and typically when we probe, to try and understand, you know, what was, underneath it, that caused it to maybe fail? I'll give you a great example, if we get to kinda speak about a use case. Nancy Ozawa (11:39): Sure. Ryan Canin (11:40): I think a common case that we, hear this happening is when it comes to online account opening, right? So everyone's trying to get deposits, and so there's this question of, if we open an online channel, we will then naturally get deposits. And so what happens is, the issue that we see happening is, and exactly your case a, you know, institution meets a fintech, let's say, does maybe, you know, provides them with an online channel. They go launch it, and it isn't a success. In fact, usually (laughs) what the case is is there’s, not only is there no success, but there's a ton of fraud (laughs). Nancy Ozawa (12:12): Oh, great. Ryan Canin (12:13): What it then opens up is this massive channel, you know, fraud that ends up coming in. And I think that often when we, look at that, there's a gap between the expectations of the financial institution with what they're getting and what the, fintech is actually delivering. And often, the scenario is where the fintech is delivering a set of capabilities, but those capabilities are just like putting down the railway tracks. So if you have a train (laughs), you can then drive down it, and those railways tracks can go in particular directions that you agree on. But unless you, unless you actually know that you have to have a train, railway tracks aren't going to do you a whole lot of good. Ryan Canin (12:54): I think one of the things that we often see when we have the conversation is we try and speak to folks and we say, "Well, look, it's all very well talking about the account opening technology you want. It's all very well talking about the customer experience you wish to deliver or to talk about, you know, the details, right, of the actual product itself, or often what we in our company call the structure, okay. But the bigger question is, what is the outcome you're seeking?" And I think that it's really important to start there. Because if the vendor relationship starts at the feature level and starts at what the technology itself does as opposed to starting at the strategy level or what is the, the financial institution actually seeking to try and achieve, I think that's often where it goes wrong. (13:40): So when we rewind that conversation and instead of starting with, "Oh, we wanna go do online account opening 'cause we wanna, you know, we want to use this online account opening tool 'cause we want to gain deposits." And we'd rather start that back and say, "All right, well, what is the objective?" "Well, the objective is we want to gain deposits." Okay, great. What is the strategy to now go and actually gain those deposits? what is the base from which you're gonna be doing it? what's the compelling value proposition?? what is the, opportunity that you specifically see, based on the strengths of your financial institution, based on maybe the niche in the market within which you operate? You know, what does that strategy look like? (14:16): And, that is the part where as technology partners, we can help ask the questions that might be helpful. But, but frankly, this is not our area of expertise, right? This is, this is precisely, in fact, the strength of, the banking team, right, and understanding, you know, what is the market or the membership that they're actually serving? and how is it that they can actually be helpful in that space? (14:35): Now, if we then start there where folks say, "Well, you know, we have one branch and we now wanna upgrade in 30 different states. And we're gonna be targeting ag, you know, in these particular sectors. This is the market we're going after. Here's how we're gonna be getting at them. You know, 'cause we're doing specialty finance, and the way that we're gonna be doing that is advertising in these and these and these different areas. And one of the barriers we've come up with is we're going to be launching this massive campaign, and we realized we wouldn't be able to handle our success. Because you know, if we have folks mailing in, you know, applications, we're just not gonna be successful in that. You know, the customer experience is gonna be poor, so how do we solve that?" (15:14): Oh boy, that is a client I would love to work with because then it is so crystal clear, right? It's like, it's like, here's the challenge we want to solve. Here's the broader strategy, and here's where you fit into it. and it's like, now I can say, "Okay, fantastic. Like, let's, let's get to work and let's now design out that piece in terms of how we can help you realize that particular goal." But if it's just we want to open up online account opening, you know, in hopes of being successful, it's almost like the, it's the build it and they will come, sort of scenario, which- Nancy Ozawa (14:42): That's what I was thinking of just now, yeah. Ryan Canin (14:43): Comes with areas of substantial risk, right? Um, and I think that usually the case where we've seen things that haven't worked out. In other words, where structure or the details precede, the strategy. Nancy Ozawa (15:54): Or basically, they need to be thinking about why they want to be doing this and what they want to do before they get too entranced with how we're gonna do it. Ryan Canin (16:03): Yep. Yep, I think that's, exactly right. And, and by the way, this is a conversation that we have in our business all the time because... and I, I have to challenge myself on it constantly, right, because you see a great new tool, a great new opportunity, whatever it may be, and when you identify it, the natural, almost like the natural human condition is to be able to say, "That looks great. I'm sure it'll solve my problem. let's give it a go. Let's try it out." but of course, the discipline that I think is, is needed that I always try and challenge myself to is, wait a second, , am I just finding the tool, picking it up, and going to start smashing things with it? or am I truly being thoughtful, about what I'm needing to do first? Ryan Canin (16:40): And then, understanding, hey, this is one option that I've seen. Great. It, it could certainly be the right option, but let me first do the work and the thinking and the effort before, before I just go and apply it. Nancy Ozawa (16:49): Right. It's like picking up a hammer and you're looking for a nail to go hammer it with, but you really need to think about it a little bit and then figure out, why would I wanna be using this? 'Cause I think sometimes when you do see new technology tools, you get excited about what some potential is. It's like a new idea that you hadn't thought of, but you're right, at that point you've got a new vision, but then you have to stop and really spend some time thinking about, what is the strategy? Do I want this strategy? Am I willing to commit resources to this strategy, before you come back to that tool and say, "Okay, that might be the right tool to implement." Ryan Canin (17:26): Yeah, I mean, so you, you raise a good point, you know. Nancy, there's tremendous value in, getting inspiration from these different things, right? Nancy Ozawa (17:31): Yeah. Ryan Canin (17:32): You know, and, one of the things that I'm always thoughtful about is, am I going out seeing something, getting excited by it, and then bringing it back to our team? is someone going to look at this and go, "Oh man, Ryan's just chasing a shiny object, and now he's bringing back something to distract us with," right? Nancy Ozawa (17:50): Mm-hmm. Ryan Canin (17:50): which of course, I would hate as a response, or is the response, "Wow, that makes so much sense 'cause we see how it ties directly into our strategy as a business. and we need to send Ryan to more of those things so that he can get inspired again." (laughs) And it's very hard, I think, to have the conversation with, our team and our company unless I can ground it and understand, hey, here is our strategy that we've spoken about. Or maybe there's a shift in the strategy. Hey, I had this new idea, I think we're missing something. I think our strategy should shift to this, and here's an idea of how we may go about implementing and executing. And then I'm putting up a straw man that people can then, you know, that I can test and people can then, you know, assess me on and quiz me on it- Nancy Ozawa (18:29): Right. And I think you mentioned this earlier, but, it's not just technology where we get focused on the how. You know, it's lots of other kinds of strategic initiatives where we get so excited about implementing and doing it that we really have to stop and say, why are we doing this? What is it we want to achieve? And once we have achieved it, what does that success look like? What's a metric? And if we can get all that decided, then we can go back to the how, whether that's a technology initiative or something else, but the discipline. Ryan Canin (19:00): But people, people is a big one. I see this with people all the time. I make this mistake all the time. So you know, you go meet a great person, and you think, "Wow, we should hire them." Okay, but that, that's structure before strategy (laughs). Nancy Ozawa (19:12): (laughs) Ryan Canin (19:12): What is it, you know... So, you're going out to hire this wonderful person, that's great, but what is in fact the role that they're fulfilling? Nancy Ozawa (19:18): Yeah. Ryan Canin (19:19): Right? you know, you think about promotions, you know, you have a feedback session with someone in the company. and they're saying they wanna move in the particular direction. That's great. And so, within the context, within the bounds of that conversation, it is so helpful to unpack, you know, w- what is on the person's career trajectory? How do they wanna grow as an individual, et cetera? But seeing that and going, "Wow, I want this person to grow? Great. So I'm just gonna then create this role. you would never do that. The first step is to say, well, wait a second, what is our strategy? Where do we wanna go? What are all the seats that exist, and then put people into those seats. Nancy Ozawa (19:52): Absolutely. Ryan Canin (19:52): and I think so for me, You know, one of our board members kinda raised this with me and, they really kind of, helped challenge me on this topic. And it's, and the moment I had that in my head around the strategy before structure, I see it everywhere (laughs). And I see it in all the different decisions that come up what is the sequence with which I'm thinking about doing things? I think... it's, it's a pretty powerful tool. Nancy Ozawa (20:13): It is. I mean, and I think we need people in our lives that, challenge us to make sure we have fully fleshed out the strategy before we get into the structure and the implementation piece of it, absolutely. (20:26): So, let's say we're in a technology initiative. So how do we choose, the right vendor? If we've got our strategy, as you had mentioned, the onboarding, I'm gonna do ag lending. I'm gonna do it for these particular folks. Now I wanna go find the how part, and the vendor. And you've gotta make sure it's the right vendor that still works with your strategy piece. So is there any tips that you might suggest on making sure that once you pick that vendor also, that we're running it most efficiently to get back tosuccess Ryan Canin (20:54): So, I think, I think the first piece is the more clarity as an institution we have, 'cause I mean, I, think about this not just in terms of how, how might a bank look for a vendor, I also think about how do we look for vendors, right? What is the process that we follow when looking to evaluate technology vendors? And I think that where we've been successful versus where we've, ended up spending a whole bunch of time spinning our wheels and, frankly, wasting, a potential vendor's time as well in speaking to them I think is where we have not had clarity in terms of what we need, what are the outcomes that it has to, satisfy in order to be successful, what our timelines are, what our budget is. The more of these questions that we can answer ahead of time, the better. To the extent we are not clear on these items, the more transparent we've been about that lack of clarity, um, has also helped the process tremendously. Ryan Canin (21:49): And so for me, it's about understanding, you know, I mean think, let's think about this just in terms of recruitment, right, when we go out to hire someone, because it's not, it's not too dissimilar. So, when we think about going out to hire someone, the first thing is we understand, we, we drop a JD and we say, "Cool, what is our expectations of the role? What is the person gonna need to be able to do to be successful?" usually that JD is super helpful to be able to align everybody in the business to say, okay, cool, what do we want, what do we need? (22:15): And so, I would say step one is create clarity in the organization on what is needed. step two then is to create alignment in the organization around what is needed. So, in the organization if everyone is aligned on the strategy and everyone is aligned then on what you need as an organization, oh boy, you've just smoothed out so much of that vendor selection process. If we're looking for the most streamlined path of how to, how to pick the best hire or how to find the best vendors, certainly that's gotta be the first piece out there, which is aligning on why are we doing this and aligning on the need, right? That's number one. You may not know how to do it. You may not know what the right vendor is, but certainly aligning on the fact that we have a need for something, we're open to doing that search, right? (22:56): I think the next piece then is once we've defined, what we're looking for, right, what are those criteria, what is it that we're looking to solve for, I think then it's about trying to go out and cast the net wide to understand what in fact is available out there. You know, and kind of doing that initial survey around understanding, where is everybody? what are they doing, what are they offering? And the most helpful thing that I would say is to try and create a scoring matrix, like an internal score card, let's say, for what you're looking for in this relationship. And I think you need to be open to the fact that that could change. Like, you may evolve that as you go through it. But I do think that the exercise of doing that so that everyone in your team that is speaking to these different tech partners is able to think through those same criteria I think is very helpful. They can score them. (23:42): And I think the, the one thing that I would say is that, you know, we've seen at this stage of the game, it does not need to be this robust 27-point checklist. In fact, I think that that's not helpful. I would say that the most useful thing at this stage of the game is what are the three to four most important priorities that, that you're looking for. I would list them in terms of simple block. Because remember, if I'm doing an interview, I should be able to have, keep those in my head so that as I'm having the conversation with the tech partner, I can be asking them questions to try and understand, can I understand what these criteria are? (24:11): I mean, as an example, I'm probably going to have some criteria around what kind of partner I want to work with, right, so the type of people I wanna be working with. I'm gonna probably have some questions around capabilities, like actual functionality. I might have some requirements around, stage of company, or ability or openness to customize, which I think, I think becomes interesting. And, so I think that's, you know, that's probably that next piece. I would go out and interview a whole bunch of folks and as many as we possibly can, and then be able to whittle down kind of who our top folks are. (24:42): And then once you're in the position where you're now clear and you've got a couple of vendors, for me, transparency is the most important thing. And I think one of the things, that we've seen being, we've seen banks be very successful is have open conversation with all these different partners around who you're looking at. Why is it such a secret? You know? So, one of the things I often challenge, financial institutions that we're talking to is I say, I say to them, "Look, why don't you just show us your cards, tell us who the vendors are that you're talking to. Tell us your concerns and your considerations and how you're weighing them out. And by the way, don't just tell us, go tell them too." in other words, you should play open cards with everybody and, get their feedback. (25:19): Now, to the extent that I give you different feedback to them or the third one, that's helpful. Because if you're getting mixed messages, that gives you something to then interrogate. To the extent that we're all saying the exact same thing, that too is a useful data point for you to be able to consider, right? there's a certain amount of scrutiny you can do, but some of the stuff at some stage, there's gonna be a relationship piece. And so, you know, I think that that then becomes really, really critical as that final piece. As you're kind of whittling this down, having that open relationship, that open level of conversation between everybody, we've found to be hugely helpful. Because frankly, Ryan Canin (25:54): this is not a one-way piece. And I think often, the dynamic that gets set up is one where it's a one-way decision where it's the bank saying, you know, "As a financial institution, who do we wanna work with? We'll go out and pick." And it's the vendors saying, "Please pick me." Ryan Canin (26:08): And I think that that's actually not the right dynamic. It's one where actually, as a vendor, and as a partner, I look at this and I go, "We're not simply a vendor. We're actually a partner who's going to be committing tremendous resources to this." So it's a business decision to say, do we want to work with you? Because if we do work with you, we're gonna be committing resources and, input and everything else, and I need to make sure that that makes good business sense for us. And when that's the relationship and that's the dynamic, then we engage in healthy conversation and healthy debate, to be able to understand what do we need. Nancy Ozawa (26:40): And I think, uh, at least in my negotiations and discussions with vendors, it comes over time. Like, I am not an open book at the very beginning of the conversation with the vendor. I find that I wanna provide them enough clarity to see if we're a match to continue so we're not wasting our time, but I don't put all my cards on the table yet 'cause I don't know that I yet trust them. But, so there's this balancing act of opening up as much as you can, but I know each time I talk to them, more and more I will divulge. Because at the end of the day when I make a decision, I realize they're gonna become a partner, or at less, that's what I want. But it's hard to do that from the very beginning. Ryan Canin (27:20): Well, so I'm curious, so as you think about, as you reflect on maybe those conversations that you have had- Nancy Ozawa (27:25): Yeah. Ryan Canin (27:25): ... what are the parts, as you think back to it, what are the parts that you are more protective over and what are the parts that you're more open with? Nancy Ozawa (27:32): I tend to be more protective when they wanna know things that I don't find is in the purview of this particular solution, where I feel they're gonna sell me more products than I need and where they're trying to figure out, what the budget is so they can price it higher than I wanna price it. There's little negotiation. I think those are my three. Ryan Canin (27:55): No, I think it's interesting because the challenge is, when I think about it, I wanna try and unpack is their budget, often the question is, are our price points a match. Nancy Ozawa (28:03): Yeah. Ryan Canin (28:04): You know? And so, it's an interesting question for me because, it's about saying, well, to the extent that there's immediate trust, let's imagine you had immediate trust, okay? Nancy Ozawa (28:13): Yeah. Ryan Canin (28:14): Then I think that in the ideal situation, you'd say, you know, "Our budget is $50,000. Um, by the way, I'm not looking to buy anything that you're trying to upsell me in this, this, this and this area. I only want this particular piece." Nancy Ozawa (28:26): Yeah. Ryan Canin (28:27): Unless you feel like you have a compelling reason that you think that I should look at doing, in which case, I'm open to hearing it, but you're gonna get a short leash to convince me. and we wanna make a decision in the next, you know, three months, so we need to know that you can truly deliver. Now, if you knew that they would come back and say, "Oh, your budget's 50, that's great 'cause our product's only 25." and they said, "Three months is too aggressive 'cause historically, we can only implement in four, so you let us know whether or not that's fine." Nancy Ozawa (28:51): Right. Ryan Canin (28:51): I think you'd share pretty quickly. Do you know what I mean? Nancy Ozawa (28:55): Agreed, yeah. Ryan Canin (28:56): So, so I don't- Nancy Ozawa (28:56): If there was maybe more openness on both sides. And part of it is you get into these discussions, sometimes you're not sure what that price point is. Ryan Canin (29:03): Sure. Ryan Canin (29:04): one of the things for me that I've found that if I demonstrate a certain level of vulnerability and openness, when I do that, it naturally gets mirrored back to me in a conversation. Nancy Ozawa (29:15): Mm-hmm. Ryan Canin (29:15): And so, I think that the advice that I give, to other people is often, demonstrate that openness, demonstrate that vulnerability. And often the conversation that I open up with is, "Look, you know, folks, I wanna make sure that this is a good use of time for you and us, here's the high level of what we do. What will you need to know in order to assess whether or not it's even worth having a conversation?" Nancy Ozawa (29:38): Right. Ryan Canin (29:38): Um, from our side, what we'll need to know is A, B, C, D, and E. Nancy Ozawa (29:42): Yeah. Ryan Canin (29:43): what do you need to know in order to get comfortable to give us that information? Nancy Ozawa (29:46): Right. Ryan Canin (29:47): And so, if it's looked at as actually just, we're having a conversation to see if we're a good fit, then I think that the dynamic is different. So, what I would say is on the opposite side of the table then, if, when it's the financial institution, how can you set up, that dynamic yourself to the extent that the vendor doesn't? Nancy Ozawa (30:06): Sure. Ryan Canin (30:07): Because it could be that you can try and relax the whole process so that you can distill, is this in fact the right solution or not? Ryan Canin (30:13): you don't need to put yourself into a precarious position, but where you can open up that conversation, in a such a way that you go... For example, there is no risk in my mind of sharing your buying process. Like, that for me seems like a low-stakes share. And so, I think, for example, if every financial institution got on and said, "We will only be looking to sign a contract in the next nine months, but it is unlikely we will sign a contract before nine months from now. We will then look to implement only in 16 months' time. Why? Here's how we think about our plan. Our budgets are decided on this date. In order for you to sell, you're gonna not need to only convince me, but after this, we're gonna need, these three people to sign off on this. And here's the process that we go through. Just so that you're aware, that's what we have on our side. Now tell me a little bit more about how you think about pricing these products, and Give me a range of how you look at them and how do you come up with that?" Nancy Ozawa (31:05): Love it. Ryan Canin (31:06): On the sales side of it, I'm going, "Wow, well, you've shared me... you shared with me all the six things I need to ask you in the first call." I'm very happy to divulge a whole lot more to give you insight, right? Yep. Nancy Ozawa (31:15): That's a, that's a great example, and some good tips. I think the other one I picked up that you mentioned is mirroring, which is something that we talk about in, psychotherapy all the time is when you mirror the customer, the customer starts to divulge more to you. The other thing that I find as the, the person who's looking is when the vendor will offer a trial or, some kind of a pilot just to see if this, what we're talking about, we actually experience. What do you think about those kind of, offers? Ryan Canin (31:43): Yeah, pilots are interesting. I mean, obviously, principally, a pilot's great, right? I mean, the, the, the chance to get to test something out or try before you buy is great. The challenge is a lot of the things, a lot of the tools that we would use in the banking space, in order to truly test them, usually requires some sort of integration. Nancy Ozawa (32:02): Yeah. Ryan Canin (32:02): and I think that's typically the limiting factor. So, to the extent that a product does not need to be integrated in order to see its value, for sure, I mean, assuming you have the time and, and this is in fact something that's worthwhile for the institution, then you should be willing to invest a little bit of time to be able to try it out and to be able to pilot it. (32:16): What I would say is that to the extent that one can pilot something and test it, even absent an integration, it is absolutely worthwhile doing because, it just gives you extra data points. And I would do it slightly later, obviously, in the process. but it certainly gives you a better ability to be able to, to actually use the product, get a sense of how it works, and to understand that if it were to integrate, this is, how it would be, you know, to almost run it (32:41): And then, of course, the question becomes, when we're testing that, are we getting the full experience? So, not to judge it in its deficiency, but to judge it to say, okay, great, let's imagine that connectivity was there, would this deliver what we need? Assuming that it does, then I think it's, it's clear to understand, what are we buying on faith and what are we buying 'cause we've tested it? And then I think a really interesting question is to understand, where are they on the adoption curve of technology with respect to this very specific piece of technology? Nancy Ozawa (33:12): Hmm. Ryan Canin (33:12): And, and I'll tell you what I mean by that. So, you know, there's a book, called Crossing the Chasm, which is a fantastic, marketing book in, in SaaS and technology., it defines a spectrum or a bell curve, of buyers in a market. And it starts off with the very smallest being the innovators, right? And so innovators, by definition, are folks that are excited about new technology. They don't mind that it's buggy. They don't mind that it, that it might break half the time. They typically don't want to spend money on it because, well, for them the pleasure is in getting exposure and early access to new technology for the sake of innovation. And so- Nancy Ozawa (33:47): So kinda more the beta group. Ryan Canin (33:49): Absolutely. Oh, this is probably more of an alpha group. Nancy Ozawa (33:51): Okay. Ryan Canin (33:52): It's like, you know, these are the folks that 10 years ago were using VR headsets. Nancy Ozawa (33:56): Okay. Ryan Canin (33:57): And so, they're not gonna pay a premium at all, um, but they're excited about being, being first, um, to test stuff and that, gives them the access to this new technology. The early adopters who are the next group, which are, according to the bell distribution, call it 12.5% of the market, the, the early adopters are folks that, are wanting a competitive advantage in the market from new technology. And if your technology will give them that competitive edge, they're happy to deal with the pains of being an early customer. Ryan Canin (34:27): So they will deal with the fact that it is a slightly newer technology. They'll, they'll, they're even happy to pay a premium, and that premium is sometimes either in dollars, or that premium is in dealing with and contending with new bugs, the fact that they'll be having to be the first customer they're gonna have to integrate, et cetera. (34:41): The next group is then the early majority. Now, the early majority, will typically require a whole bunch of other references who look like them. So they wanna know that the system is working fine and it's been done before. Um, and they don't mind paying fair value for a system that gives them additional gains in efficiency and a better way of operating. But it's different to the early adopters, they will not want a buggy system. They want something where that's all been refined out. and then the rest of curve is not, is not necessary for this conversation. So the reason I... or actually, the very last one, by the way, is the laggards, and those are folks that are still using BlackBerrys today, right? So the, so these- Nancy Ozawa (35:19): There's still a few (laughs). Ryan Canin (35:20): (laughs) There's still a few out there. Now, where you fit in that curve is helpful for you to know and me, right? Nancy Ozawa (35:29): Yeah. Ryan Canin (35:29): And by the way, it is not the same for every application, and I'll give you an example. So I, as Ryan running DocFox, am a laggard with respect to accounting software. In other words, our clients pay us once for the year coming upfront. It is not complex billing. Our accounting is fairly simple. It, like, there's nothing I'm less interested in than talking about accounting software, okay, for, like, our business. So, if a sales rep calls us and says they can do all these incredibly exciting new things, in terms of any kind of accounting software, like, i- it's just not worth my time Ryan Canin (36:04): at the same time, ... So in our company, depending on the application, I may be a laggard, a late adopter, an early adopter, an early majority, or an innovator. Now, the reason it's helpful to understand with a particular application where you fit is it will help you to understand what type of company you're gonna be looking for when you think about these type vendors. Because if, for example, with the particular application, this is so critical. Let's take that ag example where you're gonna be reaching out to a whole bunch of ag companies. And let's say you're on the cutting edge. And we know that you're trying to do something that is so novel, that is presently not done in the market, and you're wanting to truly disrupt this. And the strategy of the financial institution depends on it. You may say that we're an early adopter. (36:44): In other words, as long as we can get out and get out quick and fast, we're happy to pay a premium. Money's less of an issue. The more important thing is that the partner we work with will be happy and excited to iterate with us, take our feedback, build it in. Like, I want to be one of the few clients that this fintech's dependent on because I want, I want their attention. And so, for that kind of financial institution, that's great. Now you know who you're looking for. You don't want the vendor that's got hundreds and hundreds of customers. you want the fintech that says, "No, I... like, you're one of our first." Okay, great (37:19): Of course, on the other side of things, if you're looking for a loan origination system that is simply on your rollout path and it's just one of seven systems you have to implement in the next two years, maybe you're saying, hey, I just want the tried and tested sy- system. These are the criteria we want. Sure, it should have good functionality. but I definitely don't want cutting edge. Like, this is not the area that we want to innovate. Nancy Ozawa (37:38): Right. Ryan Canin (37:39): Very useful then, because then when the next AI, automated, lending solution comes to you and says, "Look how exciting this is." And you go, "Okay, cool. But how long have you been, been around?" And they say, "Two years, and we got four banks, but don't you wanna try?" You know whether or not that's a fit. And so I, I just think framing yourself of where you are in that, in that buying market- Nancy Ozawa (37:58): Yeah. Ryan Canin (37:58): ... can be super helpful. Nancy Ozawa (38:00): I think that's really good advice because not only is it what you communicate in these discussions, but it is also, makes you realize what your expectations are. So you're, like, in this conversation, and you can't figure out why you're not connecting with this vendor or why you're frustrated with something. Maybe it is 'cause you haven't asked yourself that question so you know what your expectations are so you can set your mind to it to then communicate it as well. I think that's an excellent, um, advice that we really haven't spent a lot of time on thinking about as well. (38:32): Well, we have been all over. I've got list of, all kinds of advice the mirroring piece asking ourselves where we are on the adoption, the scoring of the vendors and the RFP, feedback ahead of time. Is there any other piece of advice that you'd want to add and leave with our listeners before we have to close out today? Ryan Canin (38:52): You know, probably just people buy from people. the relationship's everything, you know? And so, I think for me, the biggest joy, the reason I love what I do and our business is 'cause I get to meet wonderful people and I get to really build wonderful relationships. and I think that's what I get excited about. Like, that, that's just what gives me tremendous amounts of energy. if I know that I can just pick up the phone, and we, you know, I know that we built a, a truly honest, sincere, connected relationship, I think that makes everything worthwhile. (39:19): And so, you know, I think that to the extent that we can break down that barrier, and really just engage, in a really kinda sincere, uh, sorta caring, transparent way, I think that like we spoke about earlier, the way that you show up and the energy one brings to the meeting will often be mirrored and reflected back at you. (39:36): And so, I think that as a financial institution be open-minded and I think often that energy will be mirrored and it, and it ends up in a, in a, just a much easier process. Nancy Ozawa (39:45): Absolutely. I think that was well said. This is definitely a people-person type industry, and, it's human-to-human interactions. It's not the technology. And you kinda said it at the very beginning, software wasn't the solution. Everything that we've talked about is really the human interactions and thinking about the strategy before structure and how we emulate that. - Ryan Canin (40:05): It's not that easy (laughs). Nancy Ozawa (40:05): It is not easy. That's why it's the hard part. The bots cannot replace us in that regards. So, thank you so much. I think, I've gotten a lot of, new ideas and new ways to think about, my business. And I just appreciate all the expertise and insights that you've shared today. It's a pleasure having you today. Ryan Canin (40:22): Yeah, I really enjoyed it. Thank you. Nancy Ozawa (40:23): One last question. If our, if listeners want to connect with you later, how do they connect with you? Ryan Canin (40:28): Best way is to just, um, you know, they can go to our website, which is docfox.io. Um, and, uh, and to get in touch with us there. yeah, always happy to chat. Nancy Ozawa (40:38): Perfect. Well, wonderful. We'll make sure to list that on our podcast episode description so listeners can reach out to you if they'd wish. Thank you, again, for joining us, Ryan. it was such a pleasure. And to our listeners, thank you for tuning in. Again, if you haven't already, make sure to check out our other episodes and also subscribe. That way, you're the first person to know when a new episode drops. We're always looking for new suggestions on what to cover, so if you have something in mind or would like to be a guest on our podcast, please let us know by emailing us at bankingoutloud@pcbb.com. Until next time, take care.