By John San Filippo
When your credit union finds itself in need of new technology, it has two options for identifying potential vendors. The first is to take the “leave it to the experts” approach and hire a consultant, relieving the credit union of a significant resource burden and leverages potentially decades of industry experience.
The second option is the “do it yourself” (DIY) approach, in which the credit union relies on its own internal resources. This can save money and also shorten the process. There is no “right” approach; each credit union’s needs and resources are unique. However, for those credit unions that choose the DIY approach, a new service called True Digital Group is available to help streamline the search process. Finopotamus spoke with True Digital Co-Founder and CEO Patrick Sells to learn more about this unique offering.
Leveraging Personal Experience
“When I was in college, I started a digital marketing technology consulting company,” Sells told Finopotamus. “What we focused on was helping companies launch a new product or revenue stream using technology. We worked in every industry, but banking.”
Sells explained that a chance introduction to the CEO of Quontic Bank, a $500 million community bank in Queens, N.Y., led to a strong friendship and a new business opportunity. “We thought, what if we took this little bank and we turned it into a digital bank? So I sold my business,” said Sells, “bought part of the bank, moved to New York, saw the mobile app, and said, ‘Okay, where are the coders?’ Then I learned we don't have engineers and there are things called core processors that financial institutions (FIs) have to work with. Then I met our chief compliance officer and learned there are policies and regulations. During our first two and a half years, we made a lot of progress, but it was brain damagingly hard in many ways.”
Among the bank’s successes, Sells said that Quontic was “the first bank in history to launch a retail Bitcoin product.” That came in the form of a Bitcoin rewards debit card, which was enabled by cryptocurrency leader NYDIG. Sells eventually went to work with NYDIG to evangelize this product to banks and credit unions across the country.
“During those couple years, I got speak to maybe a thousand banks and credit unions,” said Sells. “We did deals with all the cores and online banking providers, but what stood out to me when I left was that those challenges we had at Quontic weren't unique to Quontic. Most every bank or credit union in the country struggles when it comes to technology and technology vendors.”
That’s when the idea for True Digital Group was born. “I’ve been the chief innovation officer at a bank trying to buy tech, and I've been the chief innovation officer at fintech trying to sell tech,” recounted Sells. “I've seen both sides of it uniquely and so decided to do something that would help make it easier for banks and credit unions.”
The Premise
“There are a lot of tech vendors serving banks and credit unions, more so than there would be in almost any other industry,” said Sells. “Because of that, it means that anything you want to add or do is likely going to impact many other companies and many other decisions that you have. So how do you do that in the most efficient way and optimal way?” One way, he noted, is to begin the tech search at True Digital.
“An FI can come to our platform and say, I'm looking for one of 187 categories of vendors,” explained Sells. “It could be things like data governance. It could be things like online account opening. It could be peer-to-peer payments. Then I can see all of the vendors that are out there that other financial institutions are using.”
Sells added that instead of searching by category, FIs can search by desired outcome. “You can also say, look, I'm not sure what category I'm looking for, but I know we have a goal to increase our deposits,” he said. “We have about 60 different goals you can use to find vendors that can help accomplish that goal.”
How It Works
FIs subscribe to True Digital on an annual basis. There is no charge to the vendors. In fact, it’s the FI subscribers who add the information about the vendors they use. “There's no pay to play,” said Sells. “We don't sell data to vendors. We're a neutral platform for financial institutions.”
He continued, “The way it works is when a financial institution want’s to become a member and use our software, they upload the names of the vendors and products they use today. We don’t take information like pricing or anything confidential, just those two data points.” This approach goes beyond providing references for individual products. It allows FIs to find their exact counterpart because of the granularity of the data. This is helpful for any stage of a vendor relationship -- discovery, implementation, or ongoing issues.
Key to all of this is keeping the vendors organized so FIs can find what they’re looking for. “When a new company is added, we do human research,” said Sells. “What is this company? What is this product? Oftentimes we’ll go back to the bank or credit union and ask how exactly they’re using the product. We have about a thousand unique vendors in our database today, which we think is roughly 70-75% of the total population of vendors, not counting professional services.”
True Digital uses an asset-based pricing model for its subscriptions. Sells disclosed the following pricing:
· $10,000/year for FIs $2 billion or more in assets
· $5,000/year for FIs $1-$2 billion in assets
· $2,500/year for FIs under $1 billion in assets
Finopotamus asked Sells whether it’s possible for FIs to leave product reviews or ratings. “No, and there are two reasons for that,” he said. “One is there's the risk that someone could say something that breaks confidentiality or is considered slander or liable. The second reason is that this has the potential to create a lot of noise in the data. So someone in ops may have hated this vendor, but the CEO thought it was awesome.”
A Use Case
While Sells doesn’t have return on investment (ROI) data that can be measured in dollars and cents, he said the potential for cost savings is obvious. “Not too long ago we have a credit union subscriber that went through a couple of mergers,” Sells continued. “Because of that, they were struggling with multiple vendors and multiple vendor management systems. We took all their data and cleansed it and realized, hey, you actually have multiple redundant vendors for the same capability. That kind of the optimization that comes from vendor consolidation can be significant.”
Sells concluded, “By the design and how we went about this, we concluded the information that someone finds on here needs to be trusted, so sourced by another FI, and it needs to be someone who is also willing to participate. The benefit is tremendous.”