To avoid facing a similar fate as MapQuest, the banking industry must embrace new technologies. By doing so, they can effectively compete in the market and meet the ever-evolving demands of consumers. Bryan Peckinpaugh and David Catalano understand the importance of being at the forefront of innovation and explore the impact of technology on banking in this episode of Lending Made Easy.
The most significant challenge for banks when it comes to adopting new technologies is compliance with regulations. Banks must ensure that any new technology solutions they deploy comply with all applicable laws and regulations, which can be a complex and time-consuming process. Additionally, banks need to consider the cost of implementing these technologies, as well as the security measures needed to protect customer data. Adopting new technologies presents both challenges and opportunities for banks. Regulatory constraints can make implementation complex. Banks must ensure they comply with data privacy laws and security regulations. However, the benefits are substantial. New technologies can streamline operations, improve customer service, and open up new revenue streams.
Banks can leverage existing data to improve their services in numerous ways. By analyzing transaction data, banks can gain insights into customer behavior and preferences. This information can be used to personalize services, offer relevant products, and enhance overall customer experience. A tailored approach makes customers feel valued and more likely to stick with their current bank.
Personal technology adoption plays a significant role in driving changes in the banking industry. As more people become comfortable using smartphones and other technologies, they expect their banking experiences to be just as seamless and digitally-enabled. This pushes banks to innovate and offer advanced services like mobile banking, digital payments, and online account management.
Mitch Woods: Welcome back to Baker Hill's podcast. Lending Made Easy. Today we've got Bryan Peckinpaugh and David Catalano, and we've got a really fun topic to talk about. We're gonna be discussing what happened to MapQuest. So this all came about. I was thinking about, you know, my first job outta college. I traveled cross country four times by car, so I used MapQuest to navigate, to plan my route to get from Indianapolis to Los Angeles, to Seattle, to Cleveland, and back to Indianapolis. But inevitably, I got lost along the way. And, several times I had to phone a friend. I had to call my mom on my flip phone that I had at the time, you know, pause my, my burned CDs that I had in the car to listen to my music. Pull out the flip phone, call my mom and have her actually MapQuest directions and walk me over the phone step-by-step, how to make it back onto the right path. And so really it's about those technologies that were commonplace, day-to-day use in our lives. That now are a little bit more obsolete.
So thinking about MapQuest and those printed directions, even something as simple as CDs. That have been replaced by Spotify and Apple Music and even the flip phone right? Now you look around and most people have a smartphone, a computer that they're carrying around in their pocket as well.
So Bryan, David just wanted to throw that out to you. what were some of your favorite technologies that you used on a daily basis that now are maybe sitting in the closet under a pile of boxes of baseball cards and some like old letter jackets.
Bryan Peckinpaugh: I got a box of baseball cards right there. Funny you say that you know, not only like the favorite technology, Mitch, but I mean, remember when some of these things were like status symbols? you're talking about MapQuest, but I. Remember those early days of GPS, like people were clamoring over a TomTom or a Garmin or, and now nobody would be caught dead with one of those in their car, unless it's the one that's embedded in my dash right?
That came with car when I bought it. But, you know, it's crazy the rate of, you know, technology explosion, in the last, call it 25 years as we've gone through just. Cycles of iteration and improvement on these things, right? I mean, using your example of MapQuest in roughly 25 years, we went from driving around with atlas' in your car or maps in your car. I still have one of the city of Cleveland. I'm not sure it's in my office anymore, but I've got it somewhere, that you had to preplan your routes and then it switched to going to a MapQuest or something similar and plugging in your starting point and ending point and printing those directions to take in the car.
That flipped to the standalone GPS, that flipped to having those on our cell phones and now, more or less every car having it embedded in what you get. And that's a rapid evolution in 25 years of, you know, a lot of these really smart tech folks and really smart tech companies looking at these manual processes and saying, is that the way it needs to be?
And, Somebody improves and the next person improves. And next thing you know, we're walking around with what used to be military grade only GPSs in our pockets. And it is pretty crazy. And it's just one example. But I always come back to those GPSs cuz I remember a company I worked for gave those away is the, the year end Christmas gift to all the employees was a TomTom GPS to put in your car.
Yeah, you had to update, didn't you have to update those or buy a data package or something Exactly right. David, did, you and I every year.
David Catalano: Exactly. And the automobiles would've those as well. I mean, automobile GPS is just terrible, right? So now that you can link your apple phone through there makes it a whole lot better.
But that was bad. But what my favorite technology from back in the day was AAA, Triptik. Hardly technology, a lot of paper involved and some highlighting of my route and routing me around construction that had only AAA. Those wizards would know where the construction was located.
Now I've got GPS in my phone that tells me where the next radar trap is. That's ahead of me.
Bryan: True real time. Right?
David Catalano: Yeah, it's true. Real time, right? It's fed by the user. So a lot of changes. Remember encyclopedias, they used to be, awesome, right? Awesome. The source of the truth. You know, you get 26 books and they'd sit on your shelf and you'd, you know, you shouldn't plagiarize from those because, you know, you get caught from your social studies teacher, but, you know, then Microsoft put those on a disc.
And all the printing went away and then now it just Google whatever you wanna find. And there it is. So, leapfrogging technology is incredible. when we tie that back to banking, there are instances where that's been, well, banking technology's been leapfrogged, but if you think about the regulatory environment with which we operate, it's really hard to do some of the things we want to do. You know, just instantly opening up a business checking account
David Catalano: If you don't have a relationship with a bank is really challenging.
Bryan Peckinpaugh: Yeah, you're spot. Not only are we a regulated industry, but we rely on other regulated industries for some of that information. Right. So, piggybacking on what you're talking about, David, and doing account opening, the banking industry is reliant on the government to expose, the Secretary of State information in a easily consumable way, right? You can integrate to some of the states and some are better than others and, but even then, as something as simple as the comma being in the wrong place in the legal name can break that quote unquote integration, and all of a sudden it doesn't exactly match. And now my automated processes fail.
And that's just one example where there's many across, what's required to, to do something like, account opening for a quote unquote anonymous person to your financial institution. Because I have to understand who you are you who you say you are? If it's a business, Are you authorized to conduct business on behalf of the business? is that actually the person on the other side? There's just so many factors that have to come together and the kind of closed banking ecosystem of the United States combined with, as you said, the regulatory environment of financial services combined with the other entities we need to tie into to truly automate it, makes it really challenging.
We have seen some great innovation in our space. I don't think we've seen it maybe leapfrog quite to the extent that we see in our personal and maybe other business lives. But I'd certainly love to see more of it. Right? More of that open thinking and more of a drive towards that leapfrogging technology. Cuz it's certainly how we're gonna continue to improve as an industry.
David Catalano: Yeah, and understanding the material owners of a business. some people don't want their ownership publicly known. And you know, that's okay. It's a, they're prerogative, so it's gonna be challenging to get to where I think the consumer technology space is and where consumers feel like their bank should be.
I think there's gonna be a disconnect there. Probably indefinitely unless something material changes. I just don't see that catch up occurring anytime soon. I think there's a lot of trying on that front, but I don't see it actually occurring. and also if you think about the community banking and the idea of having a relationship with your borrower and driving by their business, I don't see that going away anytime soon.
I think there's a lot of advantages to that in the community bank space, and I just don't think it's a good for our country to have community banking disappear, and become anonymized. I don't think that makes a ton of sense. I think it's better for the end user. it's better for the risk profile of the bank to understand who is my borrower, what are they using it for, and did my money go to the collateral that I'm lending against?
And I can try buy that if I want, or go see that person if I want, or go talk to that person if I want. And I don't see technology changing that, but we'll, find out in time. It just won't be in our, it won't be during our careers. I just don't see that occurring.
Bryan Peckinpaugh: Yeah. that's interesting. I, God, I hope it is, cause I the pressure is gonna continue to mount right. David? I mean, I know we talked about it on prior podcasts that one of the material shifts that, that has happened in the last 25 years is our personal technology adoption, outpacing the business adoption.
I know we talked, before most people, if you talk to somebody in 2000 or maybe a little bit before their first cell phone was given to them by their work, and there was a very select few people that had a cell phone as opposed to my consumer behavior driving my business behavior.
Easy example of that is the iPad. If you ask the same people in 2010 ish or maybe a little bit earlier where they got their first iPad, it was absolutely the personal purchase .And then they followed in the work environment cuz people wanted tablets because of the ease of use of them and some of the things they could do.
You know, as we continue to push the envelope in our personal technology consumption, you're talking David, a lot about some of those privacy concerns. Talking about what information am I willing and open to share. So many of us in our personal lives give up all of that information.
We may not be directly cognizant of it, but I'll tell you one thing. Google knows more about me than I do. I use them as my personal email and for a lot of other things, there's no question they know everything there is to know about me. It's what and how they share to other institutions that. You know, might get scary if I looked into it in any real depth, but I'm willing to make the trade off for some of the efficiencies that it gives me in my personal life.
Similar things happen with social media, all kinds of other things we do on the internet. and I think eventually that's gonna break into the business owners, just because they get comfortable with what it gives them in their personal life. And they're gonna want some of those efficiencies as they conduct business.
You talked about only needing a million dollars every so often, but a lot of these businesses, Need, money in some way, shape or form or financial products in some way, shape or form on a much more frequent basis. And if there's some way for my bank to be proactive in giving them to me, if they can somehow see more of my behavior and come to me with timely offers that makes sense based on my business.
I think eventually people will see benefit in that and much more willingness to open up the protection of their privacy in their business world, that we kind of already have. For the most part in our personal world. So I'm hopeful, David, I hear you though. There's a lot of hurdles to overcome in making that happen, but I'm hopeful it, it can keep pace with some of the rest of the evolution that we see, and that we can start leapfrogging some of these things at the same time let's not forget we have done it in some areas, right? I think about remote deposit capture, as recently as even 10 years ago. If you got a check from somebody you were probably walking or some way, shape or form going to the branch. Maybe you were putting it in through the ATM, maybe you were walking in and depositing it. I don't know anybody that doesn't do remote deposit capture anymore, so that was a pretty rapid adoption of some FinTech,
Mitch Woods: Brian, I'd add to that though. When's the last time you've gotten a check from an individual and not a, like a P2P payment. Righ?. Taking that even a step further and that's even newer technology that might be, quote unquote leapfrogging a little bit, but I think that's coming, that's becoming more and more relevant and as you see that with person to person payments, but then also you start seeing some of that creep into the business world too with some of this buy now, pay later. We've talked about that on the podcast as well. Looking at the convenience of that from a consumer perspective and our businesses tapping into some of that technology to plug into their websites, to capture more, capture, more transactions.
And so I think that, you're onto something there, right? There are some areas where, you know, that is starting to take foot. And so it'd be interesting, you know, are there other areas that you think, outside of that payment space, maybe replacing those personal checks to individuals that you think could be next?
David Catalano: I think there's a lot of opportunity on the lending side to bring some of that to bear. The banks have the data, so if I have my checking account, my business account, my credit card accounts and my lending accounts with a bank, they have the data to understand behaviors, cash flows, the need of an expansion of a line of credit, or maybe I use the product wrong and need a term loan, or, I mean, they have the data today. The question is do they have a way to analyze it and to deliver it back to me in a way that I'll be okay with, you know, can that be automated? And I think there's an opportunity there to do that and to make those customers even stickier to the banks that they're working with if they have that technology and again, that technology can't be really expensive to the bank.
Bryan Peckinpaugh: Right. No, I think that's a great point. David, and there's so much we can do with what we already have in the banking sector. There is so much rich data in the systems that exist today. Whether that's your core, your origination systems, servicing systems, payment systems. There's a lot of behavioral data that can be gleaned from that, that if we just spend some time getting smarter on it or partnering with those in the industry who are smart on it, that there's an opportunity to start bringing some of those timely offers to our retail and commercial customers.
And I think the more we do that, the more we leverage what we have, the more people are gonna be willing to open up their lives a little bit more. Right. I come back to what I was talking about with my experience with Google, whether that's somebody else's experience with social media. I continue to leave those open because of what it brings back to me because there is value in what I get with targeted ads or, other pushes to me through my phone and other things that if we do the same thing, if I come to those businesses with a bridge loan when I know they need it based on their cash flow that's going through my financial institution, then there may be more willingness to open up other aspects to get similar higher value offers to them as a business or a person. So it's finding those starting points and starting to build on those so that we get, just more open in the banking ecosystem.
Mitch: David, any last thoughts there?
David Catalano: like Bryan. I do like my Google experience. I open up everything to them and they feed me lots of good stuff. I love it. I think the experience is awesome. I've never had an issue with sharing data.
Mitch Woods: Yeah. Well, I think this has been a really fun topic and to really dream about what could be next in banking, especially as we start thinking about. Bryan, like you were saying, that adoption of technology kind of reversing from workplace to home to now our personal lives, really driving technology adoption for the workplace.
So thanks, Bryan. Thanks David for your insights today. I think this was a fun topic to discuss and, brought back some nostalgia of, printed out directions and the Motorola Razor flip phone that I thought I had to have as well. So thank you guys for joining us today and thanks everyone out there for listening to today's episode of Lending Made Easy.