March 29, 2021 • 50 mins
In the first-ever episode of "B2B Cashflow Conversations", Ernest and guest David Peterson of CheckAlt talk about challenges and opportunities for banks as the need for efficient payments skyrocket amidst the global pandemic. Also discussed: The benefits of tailored payments solutions, the value in harvesting and nurturing ideas, and David shares a unique business case for faster payments.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
ernest rolfson (00:03):
Hey, this is Ernest Rolfson, the CEO and
Founder of Finexio. Welcome toB2B Cash Flow Conversations the
podcast dedicated to sharinginsights and innovations in
business to business payments,working capital and cash flow
management, and FinTechentrepreneurship. In each
episode, my guest and I tacklequestions in the ever evolving
world of FinTech and paymentsindustry that's rapidly evolving
(00:26):
and of great interest toinvestors and businesses alike.
Looking forward to having thisconversation.
David Peterson, he's anE-banking pioneer is well known
for his 30 years as anentrepreneur and content expert
on payments for financialservices stakeholders. He's the
president of US DataWorks, whichis now part of CheckAlt, a
(00:49):
leading provider of integratedreceivables. David's also a
podcast connoisseur and podcastdeveloper, he runs his own show
"Innovation Driven Growth" andhe it's clear that in listening
and getting to know him a bithere he's he has a passion for
(01:12):
getting businesses and peoplethinking more about how to spur
innovation and not only that,but have good decision making.
I'm excited to have you on onthe podcast and guest number
one. So David, great. Great tobe with you, man.
dave peterson (01:30):
It's a high honor Ernest. I, you know what, no one
will ever be able to say thatthey were the first podcast for
the next Oh, except for me.
Nobody so amazing.
ernest rolfson (01:39):
Hopefully not the first and last. We will
we'll see where this goes at allrides.
It all rides on this, thismomentous conversation.
dave peterson (01:51):
No pressure, no pressure.
ernest rolfson (01:53):
There's every day is the is the Super Bowl. So
you know, that's it laces out,laces out as they speak. And
looking forward to our chat.
That's Meet Me too. So So whydon't we start off by sharing
with the listeners what is youknow, US data works and check
(02:15):
all in what what do you guysactually do? What what's making
the sausage move there? And thencertainly, if there's a vision
or mission statement orsomething that's always
interesting, I gotten goodcoaching and advice on that over
the years. Love to hear.
absolutely,
dave peterson (02:31):
Absolutely, absolutely CheckAlt bills itself
as the largest independentpayment processor in the United
States. So most of the paymentsprocessors that are out there
providing payments to billers toorganizations who need to
acquire and post bills as wellas financial institutions who
are trying to acquire deposits.
Most of them are aligned withone of the big core providers
FiOS visor Jackanory et al.
(02:54):
CheckAlt is an independentpayments provider. So it gives
billers but more importantly,financial institutions who are
supporting billers, a completesuite of products and Shai
Stern, who is our CEO is a greatvisionary in our industry, he
likes to call CheckAlt the houseof payments. If there's if
there's something going on withpayments that a biller or bank
would need. Shai wants to makesure that we provide it either
(03:15):
directly or through the manyAPI's that we support, or
through the many third partyrelationships that we support.
So we try to be a one stop shopfor both traditional paper based
You know, there's still 15billion checks written every
years, there's still papercoming in with coupons and so
forth. But there's also thispush for electronic billing
checkout wants to wants tobasically be the independent
(03:37):
provider in that space.
ernest rolfson (03:39):
That Well, look, the more you do for
your customers and partners, themore valuable you are. Right. So
that is that strategy makesmakes a lot of sense. Yes. So
and leading with the software iskey. Absolutely.
dave peterson (03:56):
Yes, it is. Now, you also asked about US
DataWorks. So yeah. 1000, early,since early 2018. President US
DataWorks, just DataWorks has along history as well in
payments, but its primary focusis integrated receivables. And
not to dive into the minutiae ofthat. But if you think about a
traditional business, they nowhave many different ways that
payments come in. And it's youknow, old days, it was like
(04:18):
checking the coupon. So you hadall the payment information in
the check all the remittanceinformation in the coupon, it
was really easy to match thepost it to accounting now you
have many, many different waysthat payment can come in. And
you have many ways thatremittance information might be
so now you have to havesomething that we're putting out
always connected, right? They'renot, they're not right, so so
(04:40):
over time, companies havereduced the straight through
processing of being able to postdirectly to accounts receivable,
you know, from a high of youknow, 90% out of 7550. And in
some cases, companies are downunder 40%, meaning a lot of
manual effort has to be done tosay, Oh, this is David's payment
and it goes to this account, andthat's somebodydoing that, well,
that's a huge impact of grossmargin because that's cost
(05:03):
that's not helping the businessgrow. It's not doing anything to
improve the customer experience.
It's just dead dead costs. Sothat's what US DataWorks focused
on in the real differencebetween what CheckAlt does,
which also does integratedreceivables. And what us data
works is just data worksprovides an outsourced solution
for a financial institution or abiller to be able to do that on
their own through our hostedservice Checkalt has an
(05:26):
outsourced service, where theydo all of that on behalf of a
bank or a biller.
ernest rolfson (05:33):
Got it. It is He touched on one of the buzzwords
in this space set straightthrough processing. There is
that a kind of Holy Grail, wouldyou say for these Fi's and
billers?
dave peterson (05:48):
It absolutely is, and this is this is one of the
most frustrating things is thatthere's financial institutions
out there of large and small,who have companies that have
these kinds of integratedreceivables needs. But they
don't ever ask questions likethink about CEO of bank going to
visit CEO of Acme big business,right? So having a conversation,
(06:08):
where does that turn out to bethe fundamental fly on the wall?
in that conversation? What isthe banker ever say, Hey, what's
going on with your accountsreceivable? Are you are you
seeing that your straightthrough processing rates have
dropped below 40? Right, thatconversation never happens.
They're talking about loans allthe time about golf. Anyway, so
so this is this whole idea ofhow much assistance a financial
(06:34):
institution is in a position tobring to their business, but
never asks the questions thatyou have this rich supply of
information that the banker thencan say, Oh, well, we've got
these tools that will help youlower costs. And when, when
bankers lower the cost of doingbusiness for their business
customers, they become verystrategic partner so so CheckAlt
(06:54):
may become sticky checkout is inthe business of helping our
financial institutions becomestrategic to their business
customers.
ernest rolfson (07:02):
That's right.
That's right. Just not to go toomuch on a tangent here, but
because these banks are just sopoor at asking these deeper
strategic questions, and thenuts and bolts, do you see our
job here is FinTech companiesmore about taking the decision
making away right from the bank,and more of just what if the
what if the software and servicemade the decisions because it's
(07:25):
just ones and O's and robots.
And we know that you know, whatwe owe, there's an opportunity
for straight through processing,there's an opportunity for
electronic. So things are goingon?
dave peterson (07:37):
It is and let me separate the the functional
aspects of actually gettingthese associations of billing,
you know, payment and remittanceinformation together from the
ability of the financialinstitutions to connect to their
business customers who need thatservice. So what we've done at
CheckAlt is we've said, Look,every time we have to manually
make an exception repair, Idon't know what this account
(07:59):
number is, okay, I go through aseries of steps, and I associate
this account number with this,with this payment. Now, our
system learns you have machinelearning or artificial
intelligence, everyone say so.
So now start their meeting. Sochess services creeps back up to
90, you know, 94 95% here's theproblem, even though we can
technically do that, it stillrequires a banker, to go to
(08:22):
their business customer to askkey questions to have a what I
call a crucial conversation. Sothat they know and understand
that that business, that medicalcompany, that city, county
government, that utilitycompany, that property
management company, they have aneed that we can fulfill, we
just haven't been asking thequestion. So so the technology
is exactly as you represent it.
(08:46):
It's advancing and doing a lotof things automatically. But
bankers still aren't askingthose crucial questions that
ernest rolfson (08:52):
That's right.
Well, I think the data can canbe the way to serve the lead the
horse to water, to help them tohelp them do that. That's right,
I'll get putting that in theirhands. Right.
dave peterson (09:02):
And I'll just say that the outsourcing us data
works has a very robustplatform. To be honest with you,
we were not nearly as successfulprior to our acquisition by
CheckAlt heckout as was becauseCheckAlt is outsourcing. A lot
of banks now. And even billersare to the point where they're
just like, we don't we don'twant to touch we don't want the
mail to come into us. We don'twant to open envelopes. We don't
(09:25):
want to touch and so that theshutdown type for outsourcing is
huge. Now it come You know, comeinto February of 2020. And what
did we have a global pandemic?
So how did people feel even moreso at that point about
physically touching of livesright back in those early days,
they weren't really sure how thevirus was being transmitted. So
so the appetite for for peopleto come in and say, here's a
(09:47):
professional organization thathas operation sites all over the
United States, so that whereveryou are, we've got the ability
to take your physical mail,bring it in, process it and give
you five post to your bank andpost to your accounting system.
And then then further, let'stake all of the things that
you're getting in paper, and howcan we help you convert that to
(10:09):
electronic? How do we help youmake that transition? So that
instead of just being paperuntil the last check rolls
through the system in year 2073,or whatever, now we're actually
giving them the ability tomigrate that over to electronic,
which further reduces theirtheir costs improves their gross
margin.
ernest rolfson (10:29):
That's right.
That's right. Well, I mean, oneof the things in parallel, I
mean, right, my company Finexiois about helping companies make
and deliver payments. And asmuch pain as it is, for the
suppliers or pays or near worldthese billers write about, you
can't be sending people in theoffice right now to collect
checks. You can't do it. It'sgot to be electronic, it's not
(10:51):
safe. And we've seen I mean, I'dspent spent this last week with
three companies over 300 millionin revenue, sending people and
just to deal with checks. And onour side, they're sending people
into print and mail checks.
Right now. That's crazy. And soI think the pain is higher than
ever, on both the receiving endthe sending side. And, you know,
(11:13):
we've got a, you know, a robotbeing controlled with an iPhone,
and they're crawling around onthe moon.
dave peterson (11:20):
Right, right, right.
ernest rolfson (11:24):
I'm sorry, I forgot I thought I was in 1964.
For a minute. I I better takeanother sip of coffee. We're in
2001. We're on Mars. Now, how isit?
dave peterson (11:39):
How is it that we can see a beautiful High
Definition picture of thelandscape of Mars and yet the
landscape of payments for bothon the accounts receivable and
your world accounts payable sideis still in 1973? How does that
happen?
ernest rolfson (11:55):
Look, banks are not technology companies as we
now as we know. That's wherepeople nice people like me and
you come into play. We have tohappen.
dave peterson (12:07):
Let me just have to help me be very clear. Let me
be clear, I am not disparagingfinancial institutions at all
these these are folks who whoperform an incredibly valuable
service. And they're absolutelythey are is super important.
They are so important,especially to business
customers, where they're gettingcredit to expand their business,
you know, your ability to bringon new people and do all of
(12:28):
these payment things. What whatthey really haven't done when
you think about large banks, youknow, the Bank of America, Wells
Fargo city Chase. And so ifyou're young, you think of all
of these 1000s of smallcommunity banks everywhere. The
companies like CheckAlt arethere to provide that that
downstream, you know, 1000s and1000s of banks the ability to do
things that might otherwise bevery expensive for them to do.
(12:50):
Yeah. And we basically take on,don't have this. Yeah, we're not
saying that they're not capable.
We're not saying they're notpaying attention. We're saying
let us come alongside you, andprovide the pieces that are
missing so that you can offer anincredibly strategic service to
your customer. It will do allthe work.
ernest rolfson (13:08):
You're a known speaker and an influencer around
innovation and in financialservices. I mean, is it hard is
what is fundamentally in yourview with some of these banks
we're talking about and smartpeople good people. Is there a
barrier around innovation withinthese, these those four walls
(13:29):
that you think we should know?
Or talk about or tease out here?
Is there something real or whatwhy is this? There's this
explosion in FinTech, right? Imean, why banks? They have all
the business they have all themoney, they have all the
relationships why or what?
What's going on?
dave peterson (13:44):
Yeah, it's it's incredibly hard to be a bank. A
few years ago, the OCC opened upa FinTech charter and there was
worried that you know, dozens orhundreds of fintechs were going
to go be banks, I think maybeone wait for it to be it is
really hard to go through allthe process and be a bank. And
as somebody who started asoftware company years ago,
goldleaf technologies that was awholly owned subsidiary of a
(14:06):
bank, I know how difficult it isto actually operate as a FinTech
and be a part of a bank holdingcompany. There's just rules and
regulations that limit yourability to truly be innovative.
Right. So your initial questionwas, are Is there a barrier
right to banks being innovative?
banks are incredibly traditionbound, and incredibly
traditional. And in fact, I'mgoing to throw this out there.
(14:27):
And it's I don't know if this isgo crazy. You're crazy. But I
recall, I was working. I'm onthe board of payments, first
nonprofit payment Associationbased in Atlanta. We were
talking about the conference inSeptember conference, what kind
of speakers who I said, youknow, we need we need a funeral
home director to come give atalk. And they're like, what,
it's a great venue to talk to,you know, what do you tell is a
(14:48):
great, it's a great business.
That's a great, here's what'shappened. I have some friends
who have recession proof. And wewere sitting there talking about
business and innovation,whatever and in thinking about
another business besidesbanking, that's pretty tradition
bound. It's probably funerals.
All right. And so I was askingmy friend about it. He said,
David, he said, our customershave completely and totally
changed. I'm thinking, What areyou talking about dead people
(15:11):
are dead people. He goes, No,no, that that's not our
customers, those are ourproduct. Our product is services
for dead people, our customersare those that are left behind
making decisions about what'sgoing to happen with the dead
people. So So those now areyoung Gen x's, they're
millennials. And maybe even insome cases, some older, older
Gen Z's. So the way that theyhave to pitch their services,
(15:33):
the the model in which they talkabout all the business of
funeral homes has now completelychanged. Even a lot of the
things they're doing in funeralservices are changing. Based on
this changing demographic, theyunderstand that they cannot stay
Pat if their customers aregetting younger and moving so
much their marketing so muchtheir services. And so I think
(15:55):
this is the parallel that bankssee they are still focused on
those customers that make themthe most money, which are
primarily baby boomers, rightpeople of my generation. But
we're we're getting older andunfortunately dying at the rate
of 10,000 a day now babyboomers. So the future for
financial institutions are youngGen x's and millennials and
(16:16):
eventually Gen Z's. They're theones that are going to start
companies, they're the ones thatare going to have different
types of payment needs. And yetmost financial institutions
aren't sort of skating to thepuck to use a Wayne Gretzky
term. They're not they're notletting their innovation move
ever.
ernest rolfson (16:33):
We need to have at least one Wayne Gretzky
quote, in every episode. Thatwas it.
dave peterson (16:40):
Yep. That was it.
But a big part of the banksdon't want to be on the bleeding
edge, they don't want to bepioneers, because pioneers are
dead people with arrows in theirback facing west. So So there
has to be, has to be, that'swhat they think of. So there has
to be a way that if innovation,if they can start down a path of
innovation as these customers,right, they'll be an
(17:01):
intersection of any my 3dglasses right now to see that to
see the.
But some banks, some banks aregetting it, you're seeing some
financial institutions out therethat are being very proactive in
terms of working with fintechs,you're seeing a lot of banks
move towards this idea ofbanking as a service or payments
as a service instead of thetraditional way of banking. But
(17:23):
by and large banking reallyfundamentally has not changed
much, even in the face of agreat deal changing, especially
as it relates to faster paymentoptions.
Sure, well, they're gonna haveto figure out to do something
with these, these branchessitting there, they cannot turn
them into San Francisco coffeeshops, like our friends at cap
one, though, by the way, I haveI have a whole series of content
(17:46):
on branch transformation,perhaps for another time another
day.
ernest rolfson (17:50):
Okay. Okay. I know a thing or two about that.
But you probably know a lot morethan me. Well, I think the thing
you heard it here first, folks,is we're gonna soon be shopping
for Funeral Home Services, theInstagram influencers. That's
where things are going. That'swhat the kids are into these
days. But now Look, I mean, samething as same thing as a funeral
(18:12):
home needs to innovate andcommunicate to a new generation
f eyes need it, you know, theyneed to actually I think
distribute their services andproducts through software, which
is a way that you know, if youthink about the Office of the
CFO, the CFO suite, he or she isusing accounting packages,
they're using accounts payablesoftware, accounts receivable
(18:33):
software, they the financialservices need to be embedded
within the software. That's howpeople are making decisions.
Now. They're not just calling uptheir banker and saying, oh,
what product can you give me orwhatever they're like, they want
to use software to make theirbusiness go.
dave peterson (18:48):
In a really good example of that, which which I'm
sure relates to both ouraccounts receivable side your
accounts payable side is themore that we can automate it,
then then these things that arenormal, the things that work,
the way they're supposed to workare automated, nobody has to
look at them. Nobody has totouch them. In that instance,
when all of a sudden there'ssomething that's a little bit
awry when something goessideways, he exception, how can
(19:10):
how can somebody have a hightouch? Reality right? And so now
that's where you start thinkingabout chat, you start thinking
about, you know, other otherways of interactive video and
just like we're chatting hereand on video, you know, some
some financial institutions havegone to video tellers, but but
this idea of being able to getthe expert in the bank on a
(19:32):
little video chat who helps mewith a particular vaccine
problem, and, you know, Whydidn't my ACh file didn't do
this or some, you know, someparticular issue, the billing
file, you know, didn't go outlike it was supposed to, and now
I've got the ability toactually, you know, like, I've
got a whiteboard right here. Soif I was doing some kind of
support, I might be able to drawa diagram, whatever, there's,
there's I do it all day longaging. Right. So so that's
(19:56):
where, you know, we astechnology companies are in in
that mode. And so must I thinkthe financial institutions, then
say we can automate all of this,and then we'll offer a high
touch experience if you have avexing problem.
ernest rolfson (20:09):
Yeah, I mean, I think where I want to
go with that is like we it's,these technologies aren't even
the emerging technologies. Butthese are the technologies that
I think are are influencing theroadmap for financial services,
and, and are going to beembedded into the processes. But
(20:29):
we're only at the very infancystages of that, in my in my
opinion, I don't know if youhave a different idea, maybe,
maybe there's more investmentaround SMB right now. But like,
I live in upper middle market,I'm dealing with a couple 100
million dollar manufacturer, nobank is called there's no
innovation, it's all paper.
That's all paper. And now theSMB has more technology than the
(20:53):
company that's moving hundredsof millions of dollars. It's,
it's amazing.
dave peterson (20:57):
And it is it is exactly it is exactly the way
the way that you say it is it isa situation where as companies
move forward in a continuum oftheir growth, and especially
think about somebody who's 27years old, decides they want to
start a business and they go totheir hometown bank, maybe this
is where their dad andgrandfather bank type of thing.
(21:17):
And they go in there and theystart talking about things and I
say, well, we're going to betaking payments from Zell. And,
you know, eventually, we'regoing to need to send some
overseas ach with IATs. And theperson that they're talking to
is literally clueless, like theydon't understand these were what
what, what are these things ofwhich you speak, that's where
the person doesn't get, maybegive them another chance or
(21:39):
like, you know, right, this bankisn't, isn't forward thinking
enough to be to be up to speedon what these things are. And
now they go to some other largefinancial institution, because
they think that's the only placethey can get. So my important
point is this, it's not enoughfor banks and credit unions, to
have the technology and thepayment services that they need.
(22:00):
They have to be competent, anddelivering that story, they have
to be able to explain not onlythat they haven't, but why it's
important for you maybe to usethis to be in a consultative
mode on it. And so that'sanother big piece is you said
to, to really sort of sell youhave to be a good storyteller.
And and bankers traditionallyhave not been in the
storytelling business. Yeah. Andthat's another big factor as
(22:22):
well.
ernest rolfson (22:23):
You know, the way that I, I don't know that I
was taught this way I was I wastrained in solution selling
right formally, right. Andyou're selling ephemeral I was
at MasterCard, right. So what ifyou're a network? How do you
sell somebody in network? Youknow what I mean? It's, so it's
very ephemeral, very, like, Whatis your problem? Oh, you have a
pain point. Okay, well, what ifwe could do X, Y, and Z, and it
(22:46):
solves it? Oh, really, thatwould solve your pain point.
Turns out, we do that actually,we can string all this together,
and you kind of tell you leavethe horse to water. That part of
that is storytelling. But Ithink that, you know, the more
you can create that emotionalconnection with the companies
you're trying to help and paintthem a vision, the stronger and
(23:09):
more valuable the relationshipbecomes around what could in our
world look moving money, that'sa commodity, you can get ACH you
can get checked, you can getwires from any number of places,
right? And so it's a questionof, who do you work with, you
work with someone that'sknowledgeable, that's a trusted
adviser that has deep insightinto your business, but can make
(23:29):
that connection around what yourbusiness objectives are? And the
pain and the feelings you wantto have in the future about what
will it feel like using myproduct and working with me?
What kind of experience do youwant to have? And I've never,
I've never been delighted? howdelighted Have you been when you
(23:50):
walked into the bank branch orsomething like that? Right?
There's no, it's a lack ofdelight. It's a lack of Right.
dave peterson (23:56):
Right? That's, it is there is no question and I
will just use CheckAlt as anexample. If, if a financial
institution goes to a vendor andsays, Hey, this is what I want
to do, I need I need to offerlockbox for 24 of my best, most
profitable customers, I need tobe able to do some type of
electronic bill payment andpresentment. And I don't want
all that integrated together ina in a package. And a lot of
(24:17):
companies say yeah, we have thatand it's very structured and
standardized. This is the way itworks. We see at CheckAlt is
more along the lines of havingconversations with this
financial institution andlearning about some unique
things that some of thesecompanies are doing and then
using the tools that we have tobasically create something
that's standardized in terms ofour ability to run it on the
(24:38):
back end, but really getstailored to what any individual
customer needs. And I thinkthat's that's the same model
that because we do that we windup having longevity a lot of
companies that stayed with usfor years and years and years.
Just you know, maybe somebodyelse came along and said hey, we
can do this for you for a nickelcheaper, whatever else but they
they know what kind of servicethat CheckAlt represents and so
(25:01):
so that's the same thing we'relooking for is if I walk into a
bank and I say, Hey, I'm lookingfor a payroll account, I need to
be able to pay my folks. Andimmediately they open up the big
fanfare brochure that has all ofthe checks of how you can do,
right payroll checks, right?
Well, wait a second, I didn'tsay anything about checks. I
said, I needed a payrollaccount. So immediately, I
should be thinking, ACH, ACHcredit should be the way that
(25:23):
those goes. It's just thatdifference of thinking of
listening to what somebody says.
And then understanding more whatthey mean. They only know what
they know, we only the expertsto know what they need, and help
them come up with a solutionthat fits their needs.
ernest rolfson (25:41):
That's exactly right now, I mean, what you're
doing a CheckAlt around more ofa I don't want to say custom
solution, I want to say theright solution for the right
customer versus in the box.
tailored, that's exactly wordsolution, a Savile Row styles
solution.
dave peterson (25:59):
Bespoke bespoke payments
ernest rolfson (26:02):
Bespoke is now I mean, it's it's that's what gets
you in with the customers. And Ithink for payments, and we've
looked, we've seen this inMerchant Services merchant
acquiring, it's a commodity now,it's just a commodity. And you
can get credit card processingfrom 100 different places. And
you can always get it for anickel cheaper. You know, those
(26:22):
guys have had to learn a hardlesson. And the best players,
the stripes of the world, thebrain trees are realize that
they've got to go with customAPI integrations into software
platforms. And there's a uniquestickiness factor there's
something around helping managethe data flow it's so it can't
be about Can I just get it onenickel cheaper Can I get a few
(26:43):
more basis points is you've gotto work with people that know
and understand your business andare willing to invest in do
something unique. And that's themistake I see companies making
is thinking you know what, thisis just a commodity, I can just
I can call up 50 different banksand get virtual card better,
more more rev share, and it'slike 100% of zero is zero, you
(27:05):
got to work with people that aregonna help you enable the growth
here. It's just so he says, I'mpreaching to the choir.
dave peterson (27:13):
I'm chuckling because this is so real. For me
right now, one of the thingsthat I'm doing is really
focusing on our checklists, ourtraditional paper items, you
know, that come in dying. Insome people have just completely
written it off. And there'sstill about 15 billion checks
that get written every year. Andso you know, people are go well,
back in 97, it was 55 billionchecks. But you didn't know
(27:34):
that. And I just told you, therewere 15 billion checks, you go,
that's a big number of checks, alot of checks. So a lot of
people are abandoning thisbusiness, a lot of companies
that were traditionally inhouse, because of their volume
now are 65% of volume, or 40% ofaudio, or 70% of volume. So
there's more and more need forfocus on these checks. And
(27:54):
here's the big number. Two bignumbers 526, that's the average
amount in dollars of checks backin 1997 $526, average check 2020
it was right, I think actually2019 might be the last published
numbers over 20 $600. So what'shappened is is as those small
(28:15):
dollar payments have beeneliminated by you know, PayPal
and other forms of acth andother electronic PDF. This left
is a lot of b2b payments, whichare large and are very important
to quickly and accurately getposted to accounts receivable.
So that company has money to paypeople and buy supplies and grow
their business. So so that'sagain where CheckAlt comes in
(28:35):
and says, if you if your checkbusiness is such, where you
really would just like tooutsource it to somebody, and
let us take it on, and all we dois send a deposit to your bank,
and a file goes directly to youraccounts receivable to post then
that's, that's the model that wefeel there's a Renaissance
period now for these these paperitems. In some cases, you still
(28:57):
have coupons, you might havewhat like a stub, you get a full
tariff about on a remittance.
Yeah, we send all of that all ofthat stuff is still very, very
active. And even though chequesstill are declining, the rate of
decline has really slowed a lot.
So there's still many, manyyears left of active check
business and check out justwants, I don't know, what would
(29:20):
Shai say he just wants half ofit? He does. He's not a greedy
person. So seven and a halfbillion will take seven and a
half million checks. Sure, we'llbe fine. That's fine, that that
works. And we'll have signedothers, they send us your
checks. We'll pay you now.
ernest rolfson (29:34):
Well, you know, one of the things we would say
at MasterCard, you know, abillion here, a billion there,
and soon you're talking realmoney. You know, so it's, it's
fine. That's cool. So we're nownow that we now that we are
where we are aiming. There'sbeen a lot of acceleration due
(29:56):
to 2020 and the changes we'veseen in COVID. I mean, is this
going Continue here. Do you haveany kind of predictions about
this? Is this going to slowdown? Or? I mean, this is this
has undoubtedly been a help foryour business. I would imagine.
dave peterson (30:09):
It has no question. No question. Here's
what I would say. I would saythat we are not going to go back
to what things were in thefourth quarter of 2019. I don't
think there's any like, okay,everyone's vaccinated, or we got
herd immunity or whatever. Itgoes back. I think enough time
like people's behaviors change.
When your brain changes way,right? You're you reorient
(30:30):
towards that. So are we going tocontinue doing things in 2022?
like we did in 2020? No, but youknow, the phrase that you hear
is new normal. And so I dobelieve there'll be a new
normal, but the new normal hasreally spurred let's, let's call
it financial institutions, andbillers and organizations that
may not have been as forwardthinking relative to how they
(30:52):
view the future of payments andfaster payments and other forms
of payments. And because ofCOVID, we're sort of forced into
thinking about that. So they'renot going to go back. I think
there's, there's, there's stilla renaissance for those high
value checks. But theopportunities now to actually
capture new types of payments aswe go forward. And you see RTP
being advanced by the clearinghouse, and now the Federal
(31:14):
Reserve is got a pending fasterpayment called fed now, that
would be out in 2023, maybe2024, there's going to be other
third party payment providersout there doing things, there's,
there's an appetite now, for theability to to quickly and
securely capture and makepayments, let's just call it
(31:37):
push credits, I need to push acredit to Ernest and and there
are a number of use cases bothon the consumer side in the
business side, as well as theconsumer to business side, where
an instant payment with twoparties that don't know each
other. But that is not goingthrough the card networks could
be very valuable. And I thinkthat's where that's where you
know, really examining those usecases and then a banker going to
(31:59):
businesses they know we wouldfollow those use cases can now
tell a story.
ernest rolfson (32:07):
Understood since you touched on it faster
payments, I get asked thisquestion a lot actually.
Investors and folks are alwayslike is faster payments, gonna
kill virtual cards and eliminatethe card rails and all this
stuff and and I'm like work fromwhere I sit, I've been asked
exactly zero times by customers,CFOs big companies in the last
(32:30):
five years about fasterpayments. So I see zero customer
demand from where I sit. And youknow, I work with companies that
are like 100 million in revenue,2 billion in revenue. I like
we're plugged into largeprocurement software that have
1000s of customers, not a singleone is asked about faster
payments, but it comes up a lot.
Is this disrupting anything? Imean, is this just, we're just
(32:52):
going to charge people a littlebit more money to get an ACH a
little bit faster. Is thatreally just what we're talking
about here? Because that's myopinion, but I'm just one, you
know, one, payment slug, what doI know? Um, you know.
dave peterson (33:08):
So you hit it right on the head. So Finexio is
dominating this world ofautomated payments, right?
payables, right, how you'reautomating all of the tables,
right? So here's a company,here's a company, they want to
schedule and make theirpayments. And they may also have
certain things that they've tiedinto their accounting system, as
well as their financialinstitution for things like
(33:28):
Positive Pay, you know, fraudprevention, you know, a whole
bunch of stuff that they havebuilt around this idea that a
check with a check number, madeout to a specific payee with a
specific amount, you know, with,you know, all of that gets tied
into all of these other systems.
And then somebody comes along,says, Wait, why don't you just
send that through a fasterpayment. And it's like, you
(33:48):
know, just converting the checkitself to a faster payment is
really easy. What's not easy isnow making sure that all of
those other systems that you hadfor fraud prevention, for
management of accounts payables,for for the, for the way that
information is flowing betweenaccounts payable systems and the
ERP, the accounting system ofrecord, or the bank, that words
(34:11):
all of those things have to cometogether in order for you to
say, I'm going to replace thischeque as a outbound payment
from a business to another,probably to another business. So
So the way I would say it is, isthat if you went to the it's
like, Why Why is it any any CFOsasking Ernest about this is
because they've got a systemthat works, they know when and
(34:33):
how they're making theirpayments. And so what's the use
case? What's the business casefor somebody who's a
manufacturer to say, I have tosend money to somebody and I
have to do it right now. So Ihave one, I have one. I'm going
to share it with you bet youprobably don't have any.
ernest rolfson (34:50):
We got this old right here, folks, you're
hearing it first. Are you areyou from Texas?
dave peterson (35:00):
Are you not?
Oh yeah, I was born and raisedin Florida and I live in
Georgia. So a rancher from Texasrolls up the stock yard with a
big with a bunch of trailers,he's gonna buy 100 head of
cattle, he does not have aprevious relationship with the
stock yard, he picks out his 100head of cattle and he owes them
let's pick a number $250,000.
Now before he drives away with100 cows, the stockyard wants to
(35:22):
know that they have good fundsof $250,000, because he's gonna
leave with the cows, right? It'snot something he arranged ahead
of time, he didn't arrange forcredit ahead of time, he's going
there and saying, I'll buy thesecows and I need to do something
so that you can see that you'vegot $250,000 in your accounts as
good cash is king, as they say,that's it. So you obviously
(35:46):
don't have $250,000 in cash. Sothat ability for him not to have
a previous relationship withthis company, but still affect
the payment within a reasonableperiod of time. Sure, there are
similar examples on the consumerside, right, where a consumer
wants to buy something thatgarage sale and it's more money
they can get from the ATM, butthey're not going to take your
check. You're from California.
(36:08):
And you know, you happen to bevisiting your sister in Georgia,
whatever. I mean, there are alot of use cases where it would
be really helpful if I couldpush a credit to you and you
knew that you had the fundssecure. So going back to your
earlier question. A lot of thesemodels like the RTP model, the
Fed now faster payments modelrequire the financial
institutions to integrate withtheir core system to give those
(36:31):
systems access real time tosomebody available balance to
know whether or not they canfund those payments. And
similarly to credit somebody forthe receipt of those payments. I
think that there's a lot ofopportunity in the EFT POS
rails.
Well, using buy now pay laterideals, here's why I do that I
(36:53):
can, that I can push you acredit that without us having to
have a previous relationship oreven be on the same app that I
could push you a credit throughthe debit rails, and you would
see it because you would look atyour online banking for your
mobile and see that $750 hadshown up to your account from
David Peterson, that has legsand I think you're going to find
(37:13):
that for a lot of faster paymentscenarios. Whereas RTP i think
is going to be great as it rollsout and eventually replaces some
wires on the b2b side. If youthink wires are expensive, and
and it's it's a little bit moredifficult to see it as a day in
and day out sort of p2psolution. Right? Right. Right.
So really, if there is a loser,perhaps in real time it, it
(37:37):
would probably be the wires thatthat's the only way to get same
day today. But it's if you'recharging 20 bucks, 50 bucks.
Banks, banks, look at that, howmany wires they do and the wire
income and they think well, howmuch is it going to cost us to
go do something else like RTP?
If that's a you know, that's adecision point they have.
ernest rolfson (37:57):
Yeah, these are?
Turns out these are businesses.
And remember when Dodd Frank, Iguess right when they kind of
had the Durbin amendment to DoddFrank, and they reduced the
debit interchange downdramatically. And at the $10
billion issuer cap. Banksincreased all their small
business checking fees and ATMfees and more shocked, right,
(38:21):
these banks, they're evil,they're charging consumers, it's
like, well, there was just someregulation that took away
billions of dollars of theirrevenue.
dave peterson (38:29):
Yeah, and I've said this all the time, banks
are different than any otherkind of business, right? So So
to me, banks aren't anydifferent than the dry cleaners,
you go to the dry cleaners, youtake your suit, and they do a
valuable service and you getyour suit back, you pay him, you
know, 1250, and you're happyabout it. You give your bankers
your money, and they perform avaluable service. But if they
try to charge you $3 for it,it's all of a sudden, like, wow,
(38:53):
people are willing to now. Sopeople think about their money
differently than any otherproducts here. So banks and
credit unions really do have ittough, simply because people
don't look at the way that banksprovide service like they would
any other vendor. Hey, you knowwhat? Yeah, I mean, look, it is
not free to move money, it costsmoney to move money, as we know.
(39:14):
And these checks, these checksare costing, like $16 a check to
move, right? Somebody's got tomake, make a profit here, you
know. And, look, the more wemove to digital, the more money
we can save, and the more we canmake together and the better it
is for everybody. You know,everybody. Again, that's that's
why the strategy of checkoutisn't to say we're going to be
(39:34):
all electronic. Because to go toa business, it's an electronic,
it is in a realistic possible todo securely and safely process
your checks, and then workcollaboratively with you to move
those checks over two electronicpayments. That's the right
strategy.
ernest rolfson (39:50):
Hey, look, half of my business is we're checks.
We're printing and mailingchecks for companies but I can
send those checks with robots. Idon't have to have people
sending those checks. So I I'mhelping, you know, Amherst
College, or, you know, Morganand Morgan, the law firm where
they're printing and mailingchecks with people. And I'm
like, You know what? I can killhalf your checks, put those to
(40:11):
digital, the rest, I'll use arobot to print. Right?
Everyone's happy. Everyone'ssafe. Yeah, you know, there you
go. And as the checkol to theworlds and others come in and
help us further digitize thatlife will be good. Right? I
agree. It's one of those one ofthose things. So, back to your
example, real quick. I know wegot to wrap up here shortly
where those were those meat cowsor those leather cows? The guy
(40:35):
in Texas I wanted didn't thatdidn't come up. And it was at
10,250k. So those were thosewere meat cows.
dave peterson (40:43):
Those were Texas longhorns this is kind of like
the COBie like high end kobebeef. You know, a lot of
marbling.
ernest rolfson (40:50):
Marble, it's about the marbling, well, it's
not just the marbling, you haveto massage them as well with the
with the olive oil.
dave peterson (40:58):
it's the very first podcast, you're going to
be getting actually messages infor people in Texas, like wait a
second, the cows dont cost thatmuch.
ernest rolfson (41:05):
I want to know, we went my wife and I went to
New Zealand. And that's wherethe right there's more sheep
than people. And we said, it'dbe awesome to move here along
with Peter teal, and we have ourown sheep farm. So I started
doing research that on how muchit costs to buy these by the
sheep, and it's not that muchmoney, you can get a bunch of
sheep, but the harder part isthe land. So you got to get the
(41:28):
length. So So um, so I guess, Iguess two things here, as we're
as we're kind of before we go, Iguess, you know, look, you've
been in this space a whileyou've you've started companies,
you've been running companies,you've got to Innovation Driven
Growth podcasts. I mean, whatsome of the, you know, what,
some of the, I guess, if youhave a big interesting learning
(41:52):
over the past few years or overyour career, what is that been
around that it could be aboutthe space? It could be something
else? What What is somethingthat I've a follow up around
this, butanything impactful?
dave peterson (42:07):
Yeah. Yeah. It's, it's amazing, because I actually
work with some young people whoare starting companies. And,
and, you know, unfortunately,Millennials have been sort of
cast with a broad brush thatthey, you know, that they they
don't have, they never, they'venever had to experience any kind
of adversity there. They've beenhanded everything, everybody got
(42:28):
a trophy. And you know, that's,that's obviously a gross
exaggeration. But what I willsay is, is that there is there
is great learning and failure,there's a lot of people who want
to start out and do something,and don't really have an
appreciation for the value ofmistakes, value mistakes. So
when I talk about innovation,innovation comes from
creativity. But creativity isn'tinnovation, to get creative. You
(42:52):
got to come up with ideas.
Everyone's trying to think ofgood ideas. Maybe they're trying
to think of great ideas. Andit's a huge mistake, stop trying
to think of good ideas, justcome up with ideas. So somebody,
you know, I'm speaking at aconference, somebody comes up
afterwards and says, Hey, David,you know, I'm struggling, you
know, to come up with some goodideas, you know, what's the
(43:12):
what's the secret? And I say,Well, how many bad ideas have
you come up with this month?
Like, what are you talking aboutabout? I'm not trying to come up
with bad ideas. I said, exactly.
That's your problem. If you tryto come up with a good idea,
you're struggling, all you gotto do is come up with ideas.
Because what happens is, is badideas. Meaning that just not
feasible, or it doesn't, youknow, it doesn't work, whatever.
(43:33):
But bad ideas, spur more ideas.
And when I do groupbrainstorming, one person throws
out something. It's crazy, butnobody ridicules them. But
somebody in their head goes, Oh,that's a crazy idea. But you
know what wouldn't be crazy. Andthey think of something that
they now say that they wouldnever have thought of, but for
the quote, crazy idea, so wehave to stop stifling ideas, if
(43:57):
anyone ever in any companythrows out something, oh, that's
a crazy idea. That's a bad idea,whatever. They are literally
stifling innovation, keepingthat person from coming up with
other ideas. And so if somebodycomes up with an idea, and it's
nuts, and then their fifth ideasreally wacko in their 15th
ideas, just out of this world,you know, maybe their 25th idea
(44:17):
is something that all of asudden saves the company $2
million a year, we have got tostop this, this whole thing of
we're going to get around andthink of a good idea. Harvest
ideas, collect all ideas thatwork those massage, those might
be the seed of idea, give itsome, give it some good soil and
some water and some sun and letit blossom into the fruit of
innovation.
ernest rolfson (44:38):
Hey, I like the way that I started the next CEO
and created now like 50 jobs isbecause I was tired of having so
many great ideas at a bigcompany that we couldn't do
anything about. We couldn't acton them. Everyone's like, Oh,
that's, we were at a bigcompany. We said hey, why don't
we partner with Uber or Lyft andhelp trainport sick and elderly
(45:01):
people to their medicalproviders. And we're told now
that'll never work now thatthey've got healthcare divisions
now, at Uber and Lyft. Right. SoI was like, You know what,
let's, let's go, let's go dothis on our own. Let's go find
find a path on our own if Ican't get the ideas done here,
so I completely agree with you.
And I guess Lastly, I mean, thatwe call the show, really paying
(45:22):
it forward. It is a play onwords that were in the payment
space, but anything you wouldshare in terms of advice around,
you know, you being on the frontline and payments, maybe it's
someone maybe it's a fellowentrepreneur, or someone
starting their company, or maybeit's other players in the space,
what, what kind of advice wouldyou have, to some of our
(45:43):
listeners, it could be anythingin this in this area.
dave peterson (45:48):
Here's what I'd say, if you're a parent out
there, or an aunt, uncle, youknow, you have nieces and
nephews, children, and if youwant them to have the potential
for an entrepreneurial future,then I think there's two very
important things. Number one,let them be entrepreneurial
early, let them have, you know,yard sales, or sell lemonade or
paper route, or I don't evenknow if they have those anymore.
(46:11):
You know, go around and doanything they can do that's
entrepreneurial, as a youngperson is gold. And the second
thing is, is let them askquestions. Don't stop stifling
children from asking questions.
Yes, I know, it can be annoying,you know, and so forth. But you
have to allow them to questionthe world, and then provide
meaning that don't give him youknow, platitudes in, you know, a
pony. We call it unicorns andrainbows. Talk to him in reality
(46:37):
about some things that are toughis difficult, you know, talk to
him about experiences, butanswer and let them ask good
questions and into my friends inthe financial services industry.
If you work in a bank and creditunion, I would ask you to think
about this. There are literallymillions of potential customers
right now, who are coming intothe workplace who would never
(46:58):
ever, ever think that they needto have an account at a bank or
credit union. They don't evenconsider that you exist. They
don't, they don't have any need.
They don't. They don't theydon't feel like you exist for
any purpose. That's for them. SoSo don't sit there and think
that they're going to need youand then come into your
(47:19):
beautiful lobby to ask aboutaccounts, you are going to have
to proactively help themunderstand why having a
relationship with a primarybanker is really, really
important. A bunch ofmillennials had businesses that
they weren't doing anything withbanks, and then PPP loans came
out and guess who was deliveringPPP loans fintechs the bankers,
the bank? The bank accounts arenow that is true, how do you how
(47:46):
do you get a beat up? So we needto be able to tell those stories
and help them understand whyit's important for them to have
a primary banking relationship.
So that's my advice.
ernest rolfson (47:55):
You know what they do serve a purpose you need
someone to hold the money andthey're licensed and regulated
to do that safely and securelyand that's pretty important, you
know, so they're gonna they'regonna stay relevant for a while.
Well, look, this has been a lotof fun. We got some Gretzky
quotes. We did some timetraveling. We talked about beef
(48:16):
and leather calves, we got someparental advice thrown in for
good measure, a whirlwind tourde force, if you will, David,
where can we kind of where doyou lurk? Where can we find more
about you.
dave peterson (48:31):
If you would like to reach out to me I'm at david
dot Peterson P E T E R S O N atcheckalt.com C H E C K A L T dot
com. And if you want to knowmore about innovation driven
growth, you can actually go outto David Peterson dot COM And
there's a link on David Petersondot com that will get you to a
(48:53):
book that I've written and thepodcast, and a lot of other I
have a lot of information outthere on social media on
everywhere on social media,media, as DLPspeaks for the
exception of Facebook, which forsome reason I'm dpspeaks. So I
would welcome anybody who wantsto contact me and share
information or say, hey, you'recrazy about the cows or, you
(49:14):
know, let's talk about financialservices or innovation or
whatever's on your mind.
ernest rolfson (49:18):
Look, this has been a lot of fun, great
conversation and looking forwardto keep it in touch and keep
fighting the good fighttogether.
dave peterson (49:28):
Awesome, Ernest.
Thank you so much.
ernest rolfson (49:30):
Pleasure, man.
Take care.
Thanks for listening to B2B CashFlow Conversations. This is
Ernest Rolfson, the CEO andFounder of Finexio. I welcome
your questions and comments. Youcan reach me at
podcast@finexio.com. You canalso find us on Twitter at
(49:52):
Finexiopayments to subscribe,you can go to Finexio.com
forward slash podcast. Be sureto check out my new episodes on
Apple podcasts, Spotify orwherever else you listen to
podcasts. Thanks and talk withyou again soon.
Hey, this is Ernest Rolfson, the CEO and
Founder of Finexio. Welcome toB2B Cash Flow Conversations the
podcast dedicated to sharinginsights and innovations in
business to business payments,working capital and cash flow
management, and FinTechentrepreneurship. In each
episode, my guest and I tacklequestions in the ever evolving
world of FinTech and paymentsindustry that's rapidly evolving
(00:26):
and of great interest toinvestors and businesses alike.
Looking forward to having thisconversation.
David Peterson, he's anE-banking pioneer is well known
for his 30 years as anentrepreneur and content expert
on payments for financialservices stakeholders. He's the
president of US DataWorks, whichis now part of CheckAlt, a
(00:49):
leading provider of integratedreceivables. David's also a
podcast connoisseur and podcastdeveloper, he runs his own show
"Innovation Driven Growth" andhe it's clear that in listening
and getting to know him a bithere he's he has a passion for
(01:12):
getting businesses and peoplethinking more about how to spur
innovation and not only that,but have good decision making.
I'm excited to have you on onthe podcast and guest number
one. So David, great. Great tobe with you, man.
dave peterson (01:30):
It's a high honor Ernest. I, you know what, no one
will ever be able to say thatthey were the first podcast for
the next Oh, except for me.
Nobody so amazing.
ernest rolfson (01:39):
Hopefully not the first and last. We will
we'll see where this goes at allrides.
It all rides on this, thismomentous conversation.
dave peterson (01:51):
No pressure, no pressure.
ernest rolfson (01:53):
There's every day is the is the Super Bowl. So
you know, that's it laces out,laces out as they speak. And
looking forward to our chat.
That's Meet Me too. So So whydon't we start off by sharing
with the listeners what is youknow, US data works and check
(02:15):
all in what what do you guysactually do? What what's making
the sausage move there? And thencertainly, if there's a vision
or mission statement orsomething that's always
interesting, I gotten goodcoaching and advice on that over
the years. Love to hear.
absolutely,
dave peterson (02:31):
Absolutely, absolutely CheckAlt bills itself
as the largest independentpayment processor in the United
States. So most of the paymentsprocessors that are out there
providing payments to billers toorganizations who need to
acquire and post bills as wellas financial institutions who
are trying to acquire deposits.
Most of them are aligned withone of the big core providers
FiOS visor Jackanory et al.
(02:54):
CheckAlt is an independentpayments provider. So it gives
billers but more importantly,financial institutions who are
supporting billers, a completesuite of products and Shai
Stern, who is our CEO is a greatvisionary in our industry, he
likes to call CheckAlt the houseof payments. If there's if
there's something going on withpayments that a biller or bank
would need. Shai wants to makesure that we provide it either
(03:15):
directly or through the manyAPI's that we support, or
through the many third partyrelationships that we support.
So we try to be a one stop shopfor both traditional paper based
You know, there's still 15billion checks written every
years, there's still papercoming in with coupons and so
forth. But there's also thispush for electronic billing
checkout wants to wants tobasically be the independent
(03:37):
provider in that space.
ernest rolfson (03:39):
That Well, look, the more you do for
your customers and partners, themore valuable you are. Right. So
that is that strategy makesmakes a lot of sense. Yes. So
and leading with the software iskey. Absolutely.
dave peterson (03:56):
Yes, it is. Now, you also asked about US
DataWorks. So yeah. 1000, early,since early 2018. President US
DataWorks, just DataWorks has along history as well in
payments, but its primary focusis integrated receivables. And
not to dive into the minutiae ofthat. But if you think about a
traditional business, they nowhave many different ways that
payments come in. And it's youknow, old days, it was like
(04:18):
checking the coupon. So you hadall the payment information in
the check all the remittanceinformation in the coupon, it
was really easy to match thepost it to accounting now you
have many, many different waysthat payment can come in. And
you have many ways thatremittance information might be
so now you have to havesomething that we're putting out
always connected, right? They'renot, they're not right, so so
(04:40):
over time, companies havereduced the straight through
processing of being able to postdirectly to accounts receivable,
you know, from a high of youknow, 90% out of 7550. And in
some cases, companies are downunder 40%, meaning a lot of
manual effort has to be done tosay, Oh, this is David's payment
and it goes to this account, andthat's somebodydoing that, well,
that's a huge impact of grossmargin because that's cost
(05:03):
that's not helping the businessgrow. It's not doing anything to
improve the customer experience.
It's just dead dead costs. Sothat's what US DataWorks focused
on in the real differencebetween what CheckAlt does,
which also does integratedreceivables. And what us data
works is just data worksprovides an outsourced solution
for a financial institution or abiller to be able to do that on
their own through our hostedservice Checkalt has an
(05:26):
outsourced service, where theydo all of that on behalf of a
bank or a biller.
ernest rolfson (05:33):
Got it. It is He touched on one of the buzzwords
in this space set straightthrough processing. There is
that a kind of Holy Grail, wouldyou say for these Fi's and
billers?
dave peterson (05:48):
It absolutely is, and this is this is one of the
most frustrating things is thatthere's financial institutions
out there of large and small,who have companies that have
these kinds of integratedreceivables needs. But they
don't ever ask questions likethink about CEO of bank going to
visit CEO of Acme big business,right? So having a conversation,
(06:08):
where does that turn out to bethe fundamental fly on the wall?
in that conversation? What isthe banker ever say, Hey, what's
going on with your accountsreceivable? Are you are you
seeing that your straightthrough processing rates have
dropped below 40? Right, thatconversation never happens.
They're talking about loans allthe time about golf. Anyway, so
so this is this whole idea ofhow much assistance a financial
(06:34):
institution is in a position tobring to their business, but
never asks the questions thatyou have this rich supply of
information that the banker thencan say, Oh, well, we've got
these tools that will help youlower costs. And when, when
bankers lower the cost of doingbusiness for their business
customers, they become verystrategic partner so so CheckAlt
(06:54):
may become sticky checkout is inthe business of helping our
financial institutions becomestrategic to their business
customers.
ernest rolfson (07:02):
That's right.
That's right. Just not to go toomuch on a tangent here, but
because these banks are just sopoor at asking these deeper
strategic questions, and thenuts and bolts, do you see our
job here is FinTech companiesmore about taking the decision
making away right from the bank,and more of just what if the
what if the software and servicemade the decisions because it's
(07:25):
just ones and O's and robots.
And we know that you know, whatwe owe, there's an opportunity
for straight through processing,there's an opportunity for
electronic. So things are goingon?
dave peterson (07:37):
It is and let me separate the the functional
aspects of actually gettingthese associations of billing,
you know, payment and remittanceinformation together from the
ability of the financialinstitutions to connect to their
business customers who need thatservice. So what we've done at
CheckAlt is we've said, Look,every time we have to manually
make an exception repair, Idon't know what this account
(07:59):
number is, okay, I go through aseries of steps, and I associate
this account number with this,with this payment. Now, our
system learns you have machinelearning or artificial
intelligence, everyone say so.
So now start their meeting. Sochess services creeps back up to
90, you know, 94 95% here's theproblem, even though we can
technically do that, it stillrequires a banker, to go to
(08:22):
their business customer to askkey questions to have a what I
call a crucial conversation. Sothat they know and understand
that that business, that medicalcompany, that city, county
government, that utilitycompany, that property
management company, they have aneed that we can fulfill, we
just haven't been asking thequestion. So so the technology
is exactly as you represent it.
(08:46):
It's advancing and doing a lotof things automatically. But
bankers still aren't askingthose crucial questions that
ernest rolfson (08:52):
That's right.
Well, I think the data can canbe the way to serve the lead the
horse to water, to help them tohelp them do that. That's right,
I'll get putting that in theirhands. Right.
dave peterson (09:02):
And I'll just say that the outsourcing us data
works has a very robustplatform. To be honest with you,
we were not nearly as successfulprior to our acquisition by
CheckAlt heckout as was becauseCheckAlt is outsourcing. A lot
of banks now. And even billersare to the point where they're
just like, we don't we don'twant to touch we don't want the
mail to come into us. We don'twant to open envelopes. We don't
(09:25):
want to touch and so that theshutdown type for outsourcing is
huge. Now it come You know, comeinto February of 2020. And what
did we have a global pandemic?
So how did people feel even moreso at that point about
physically touching of livesright back in those early days,
they weren't really sure how thevirus was being transmitted. So
so the appetite for for peopleto come in and say, here's a
(09:47):
professional organization thathas operation sites all over the
United States, so that whereveryou are, we've got the ability
to take your physical mail,bring it in, process it and give
you five post to your bank andpost to your accounting system.
And then then further, let'stake all of the things that
you're getting in paper, and howcan we help you convert that to
(10:09):
electronic? How do we help youmake that transition? So that
instead of just being paperuntil the last check rolls
through the system in year 2073,or whatever, now we're actually
giving them the ability tomigrate that over to electronic,
which further reduces theirtheir costs improves their gross
margin.
ernest rolfson (10:29):
That's right.
That's right. Well, I mean, oneof the things in parallel, I
mean, right, my company Finexiois about helping companies make
and deliver payments. And asmuch pain as it is, for the
suppliers or pays or near worldthese billers write about, you
can't be sending people in theoffice right now to collect
checks. You can't do it. It'sgot to be electronic, it's not
(10:51):
safe. And we've seen I mean, I'dspent spent this last week with
three companies over 300 millionin revenue, sending people and
just to deal with checks. And onour side, they're sending people
into print and mail checks.
Right now. That's crazy. And soI think the pain is higher than
ever, on both the receiving endthe sending side. And, you know,
(11:13):
we've got a, you know, a robotbeing controlled with an iPhone,
and they're crawling around onthe moon.
dave peterson (11:20):
Right, right, right.
ernest rolfson (11:24):
I'm sorry, I forgot I thought I was in 1964.
For a minute. I I better takeanother sip of coffee. We're in
2001. We're on Mars. Now, how isit?
dave peterson (11:39):
How is it that we can see a beautiful High
Definition picture of thelandscape of Mars and yet the
landscape of payments for bothon the accounts receivable and
your world accounts payable sideis still in 1973? How does that
happen?
ernest rolfson (11:55):
Look, banks are not technology companies as we
now as we know. That's wherepeople nice people like me and
you come into play. We have tohappen.
dave peterson (12:07):
Let me just have to help me be very clear. Let me
be clear, I am not disparagingfinancial institutions at all
these these are folks who whoperform an incredibly valuable
service. And they're absolutelythey are is super important.
They are so important,especially to business
customers, where they're gettingcredit to expand their business,
you know, your ability to bringon new people and do all of
(12:28):
these payment things. What whatthey really haven't done when
you think about large banks, youknow, the Bank of America, Wells
Fargo city Chase. And so ifyou're young, you think of all
of these 1000s of smallcommunity banks everywhere. The
companies like CheckAlt arethere to provide that that
downstream, you know, 1000s and1000s of banks the ability to do
things that might otherwise bevery expensive for them to do.
(12:50):
Yeah. And we basically take on,don't have this. Yeah, we're not
saying that they're not capable.
We're not saying they're notpaying attention. We're saying
let us come alongside you, andprovide the pieces that are
missing so that you can offer anincredibly strategic service to
your customer. It will do allthe work.
ernest rolfson (13:08):
You're a known speaker and an influencer around
innovation and in financialservices. I mean, is it hard is
what is fundamentally in yourview with some of these banks
we're talking about and smartpeople good people. Is there a
barrier around innovation withinthese, these those four walls
(13:29):
that you think we should know?
Or talk about or tease out here?
Is there something real or whatwhy is this? There's this
explosion in FinTech, right? Imean, why banks? They have all
the business they have all themoney, they have all the
relationships why or what?
What's going on?
dave peterson (13:44):
Yeah, it's it's incredibly hard to be a bank. A
few years ago, the OCC opened upa FinTech charter and there was
worried that you know, dozens orhundreds of fintechs were going
to go be banks, I think maybeone wait for it to be it is
really hard to go through allthe process and be a bank. And
as somebody who started asoftware company years ago,
goldleaf technologies that was awholly owned subsidiary of a
(14:06):
bank, I know how difficult it isto actually operate as a FinTech
and be a part of a bank holdingcompany. There's just rules and
regulations that limit yourability to truly be innovative.
Right. So your initial questionwas, are Is there a barrier
right to banks being innovative?
banks are incredibly traditionbound, and incredibly
traditional. And in fact, I'mgoing to throw this out there.
(14:27):
And it's I don't know if this isgo crazy. You're crazy. But I
recall, I was working. I'm onthe board of payments, first
nonprofit payment Associationbased in Atlanta. We were
talking about the conference inSeptember conference, what kind
of speakers who I said, youknow, we need we need a funeral
home director to come give atalk. And they're like, what,
it's a great venue to talk to,you know, what do you tell is a
(14:48):
great, it's a great business.
That's a great, here's what'shappened. I have some friends
who have recession proof. And wewere sitting there talking about
business and innovation,whatever and in thinking about
another business besidesbanking, that's pretty tradition
bound. It's probably funerals.
All right. And so I was askingmy friend about it. He said,
David, he said, our customershave completely and totally
changed. I'm thinking, What areyou talking about dead people
(15:11):
are dead people. He goes, No,no, that that's not our
customers, those are ourproduct. Our product is services
for dead people, our customersare those that are left behind
making decisions about what'sgoing to happen with the dead
people. So So those now areyoung Gen x's, they're
millennials. And maybe even insome cases, some older, older
Gen Z's. So the way that theyhave to pitch their services,
(15:33):
the the model in which they talkabout all the business of
funeral homes has now completelychanged. Even a lot of the
things they're doing in funeralservices are changing. Based on
this changing demographic, theyunderstand that they cannot stay
Pat if their customers aregetting younger and moving so
much their marketing so muchtheir services. And so I think
(15:55):
this is the parallel that bankssee they are still focused on
those customers that make themthe most money, which are
primarily baby boomers, rightpeople of my generation. But
we're we're getting older andunfortunately dying at the rate
of 10,000 a day now babyboomers. So the future for
financial institutions are youngGen x's and millennials and
(16:16):
eventually Gen Z's. They're theones that are going to start
companies, they're the ones thatare going to have different
types of payment needs. And yetmost financial institutions
aren't sort of skating to thepuck to use a Wayne Gretzky
term. They're not they're notletting their innovation move
ever.
ernest rolfson (16:33):
We need to have at least one Wayne Gretzky
quote, in every episode. Thatwas it.
dave peterson (16:40):
Yep. That was it.
But a big part of the banksdon't want to be on the bleeding
edge, they don't want to bepioneers, because pioneers are
dead people with arrows in theirback facing west. So So there
has to be, has to be, that'swhat they think of. So there has
to be a way that if innovation,if they can start down a path of
innovation as these customers,right, they'll be an
(17:01):
intersection of any my 3dglasses right now to see that to
see the.
But some banks, some banks aregetting it, you're seeing some
financial institutions out therethat are being very proactive in
terms of working with fintechs,you're seeing a lot of banks
move towards this idea ofbanking as a service or payments
as a service instead of thetraditional way of banking. But
(17:23):
by and large banking reallyfundamentally has not changed
much, even in the face of agreat deal changing, especially
as it relates to faster paymentoptions.
Sure, well, they're gonna haveto figure out to do something
with these, these branchessitting there, they cannot turn
them into San Francisco coffeeshops, like our friends at cap
one, though, by the way, I haveI have a whole series of content
(17:46):
on branch transformation,perhaps for another time another
day.
ernest rolfson (17:50):
Okay. Okay. I know a thing or two about that.
But you probably know a lot morethan me. Well, I think the thing
you heard it here first, folks,is we're gonna soon be shopping
for Funeral Home Services, theInstagram influencers. That's
where things are going. That'swhat the kids are into these
days. But now Look, I mean, samething as same thing as a funeral
(18:12):
home needs to innovate andcommunicate to a new generation
f eyes need it, you know, theyneed to actually I think
distribute their services andproducts through software, which
is a way that you know, if youthink about the Office of the
CFO, the CFO suite, he or she isusing accounting packages,
they're using accounts payablesoftware, accounts receivable
(18:33):
software, they the financialservices need to be embedded
within the software. That's howpeople are making decisions.
Now. They're not just calling uptheir banker and saying, oh,
what product can you give me orwhatever they're like, they want
to use software to make theirbusiness go.
dave peterson (18:48):
In a really good example of that, which which I'm
sure relates to both ouraccounts receivable side your
accounts payable side is themore that we can automate it,
then then these things that arenormal, the things that work,
the way they're supposed to workare automated, nobody has to
look at them. Nobody has totouch them. In that instance,
when all of a sudden there'ssomething that's a little bit
awry when something goessideways, he exception, how can
(19:10):
how can somebody have a hightouch? Reality right? And so now
that's where you start thinkingabout chat, you start thinking
about, you know, other otherways of interactive video and
just like we're chatting hereand on video, you know, some
some financial institutions havegone to video tellers, but but
this idea of being able to getthe expert in the bank on a
(19:32):
little video chat who helps mewith a particular vaccine
problem, and, you know, Whydidn't my ACh file didn't do
this or some, you know, someparticular issue, the billing
file, you know, didn't go outlike it was supposed to, and now
I've got the ability toactually, you know, like, I've
got a whiteboard right here. Soif I was doing some kind of
support, I might be able to drawa diagram, whatever, there's,
there's I do it all day longaging. Right. So so that's
(19:56):
where, you know, we astechnology companies are in in
that mode. And so must I thinkthe financial institutions, then
say we can automate all of this,and then we'll offer a high
touch experience if you have avexing problem.
ernest rolfson (20:09):
Yeah, I mean, I think where I want to
go with that is like we it's,these technologies aren't even
the emerging technologies. Butthese are the technologies that
I think are are influencing theroadmap for financial services,
and, and are going to beembedded into the processes. But
(20:29):
we're only at the very infancystages of that, in my in my
opinion, I don't know if youhave a different idea, maybe,
maybe there's more investmentaround SMB right now. But like,
I live in upper middle market,I'm dealing with a couple 100
million dollar manufacturer, nobank is called there's no
innovation, it's all paper.
That's all paper. And now theSMB has more technology than the
(20:53):
company that's moving hundredsof millions of dollars. It's,
it's amazing.
dave peterson (20:57):
And it is it is exactly it is exactly the way
the way that you say it is it isa situation where as companies
move forward in a continuum oftheir growth, and especially
think about somebody who's 27years old, decides they want to
start a business and they go totheir hometown bank, maybe this
is where their dad andgrandfather bank type of thing.
(21:17):
And they go in there and theystart talking about things and I
say, well, we're going to betaking payments from Zell. And,
you know, eventually, we'regoing to need to send some
overseas ach with IATs. And theperson that they're talking to
is literally clueless, like theydon't understand these were what
what, what are these things ofwhich you speak, that's where
the person doesn't get, maybegive them another chance or
(21:39):
like, you know, right, this bankisn't, isn't forward thinking
enough to be to be up to speedon what these things are. And
now they go to some other largefinancial institution, because
they think that's the only placethey can get. So my important
point is this, it's not enoughfor banks and credit unions, to
have the technology and thepayment services that they need.
(22:00):
They have to be competent, anddelivering that story, they have
to be able to explain not onlythat they haven't, but why it's
important for you maybe to usethis to be in a consultative
mode on it. And so that'sanother big piece is you said
to, to really sort of sell youhave to be a good storyteller.
And and bankers traditionallyhave not been in the
storytelling business. Yeah. Andthat's another big factor as
(22:22):
well.
ernest rolfson (22:23):
You know, the way that I, I don't know that I
was taught this way I was I wastrained in solution selling
right formally, right. Andyou're selling ephemeral I was
at MasterCard, right. So what ifyou're a network? How do you
sell somebody in network? Youknow what I mean? It's, so it's
very ephemeral, very, like, Whatis your problem? Oh, you have a
pain point. Okay, well, what ifwe could do X, Y, and Z, and it
(22:46):
solves it? Oh, really, thatwould solve your pain point.
Turns out, we do that actually,we can string all this together,
and you kind of tell you leavethe horse to water. That part of
that is storytelling. But Ithink that, you know, the more
you can create that emotionalconnection with the companies
you're trying to help and paintthem a vision, the stronger and
(23:09):
more valuable the relationshipbecomes around what could in our
world look moving money, that'sa commodity, you can get ACH you
can get checked, you can getwires from any number of places,
right? And so it's a questionof, who do you work with, you
work with someone that'sknowledgeable, that's a trusted
adviser that has deep insightinto your business, but can make
(23:29):
that connection around what yourbusiness objectives are? And the
pain and the feelings you wantto have in the future about what
will it feel like using myproduct and working with me?
What kind of experience do youwant to have? And I've never,
I've never been delighted? howdelighted Have you been when you
(23:50):
walked into the bank branch orsomething like that? Right?
There's no, it's a lack ofdelight. It's a lack of Right.
dave peterson (23:56):
Right? That's, it is there is no question and I
will just use CheckAlt as anexample. If, if a financial
institution goes to a vendor andsays, Hey, this is what I want
to do, I need I need to offerlockbox for 24 of my best, most
profitable customers, I need tobe able to do some type of
electronic bill payment andpresentment. And I don't want
all that integrated together ina in a package. And a lot of
(24:17):
companies say yeah, we have thatand it's very structured and
standardized. This is the way itworks. We see at CheckAlt is
more along the lines of havingconversations with this
financial institution andlearning about some unique
things that some of thesecompanies are doing and then
using the tools that we have tobasically create something
that's standardized in terms ofour ability to run it on the
(24:38):
back end, but really getstailored to what any individual
customer needs. And I thinkthat's that's the same model
that because we do that we windup having longevity a lot of
companies that stayed with usfor years and years and years.
Just you know, maybe somebodyelse came along and said hey, we
can do this for you for a nickelcheaper, whatever else but they
they know what kind of servicethat CheckAlt represents and so
(25:01):
so that's the same thing we'relooking for is if I walk into a
bank and I say, Hey, I'm lookingfor a payroll account, I need to
be able to pay my folks. Andimmediately they open up the big
fanfare brochure that has all ofthe checks of how you can do,
right payroll checks, right?
Well, wait a second, I didn'tsay anything about checks. I
said, I needed a payrollaccount. So immediately, I
should be thinking, ACH, ACHcredit should be the way that
(25:23):
those goes. It's just thatdifference of thinking of
listening to what somebody says.
And then understanding more whatthey mean. They only know what
they know, we only the expertsto know what they need, and help
them come up with a solutionthat fits their needs.
ernest rolfson (25:41):
That's exactly right now, I mean, what you're
doing a CheckAlt around more ofa I don't want to say custom
solution, I want to say theright solution for the right
customer versus in the box.
tailored, that's exactly wordsolution, a Savile Row styles
solution.
dave peterson (25:59):
Bespoke bespoke payments
ernest rolfson (26:02):
Bespoke is now I mean, it's it's that's what gets
you in with the customers. And Ithink for payments, and we've
looked, we've seen this inMerchant Services merchant
acquiring, it's a commodity now,it's just a commodity. And you
can get credit card processingfrom 100 different places. And
you can always get it for anickel cheaper. You know, those
(26:22):
guys have had to learn a hardlesson. And the best players,
the stripes of the world, thebrain trees are realize that
they've got to go with customAPI integrations into software
platforms. And there's a uniquestickiness factor there's
something around helping managethe data flow it's so it can't
be about Can I just get it onenickel cheaper Can I get a few
(26:43):
more basis points is you've gotto work with people that know
and understand your business andare willing to invest in do
something unique. And that's themistake I see companies making
is thinking you know what, thisis just a commodity, I can just
I can call up 50 different banksand get virtual card better,
more more rev share, and it'slike 100% of zero is zero, you
(27:05):
got to work with people that aregonna help you enable the growth
here. It's just so he says, I'mpreaching to the choir.
dave peterson (27:13):
I'm chuckling because this is so real. For me
right now, one of the thingsthat I'm doing is really
focusing on our checklists, ourtraditional paper items, you
know, that come in dying. Insome people have just completely
written it off. And there'sstill about 15 billion checks
that get written every year. Andso you know, people are go well,
back in 97, it was 55 billionchecks. But you didn't know
(27:34):
that. And I just told you, therewere 15 billion checks, you go,
that's a big number of checks, alot of checks. So a lot of
people are abandoning thisbusiness, a lot of companies
that were traditionally inhouse, because of their volume
now are 65% of volume, or 40% ofaudio, or 70% of volume. So
there's more and more need forfocus on these checks. And
(27:54):
here's the big number. Two bignumbers 526, that's the average
amount in dollars of checks backin 1997 $526, average check 2020
it was right, I think actually2019 might be the last published
numbers over 20 $600. So what'shappened is is as those small
(28:15):
dollar payments have beeneliminated by you know, PayPal
and other forms of acth andother electronic PDF. This left
is a lot of b2b payments, whichare large and are very important
to quickly and accurately getposted to accounts receivable.
So that company has money to paypeople and buy supplies and grow
their business. So so that'sagain where CheckAlt comes in
(28:35):
and says, if you if your checkbusiness is such, where you
really would just like tooutsource it to somebody, and
let us take it on, and all we dois send a deposit to your bank,
and a file goes directly to youraccounts receivable to post then
that's, that's the model that wefeel there's a Renaissance
period now for these these paperitems. In some cases, you still
(28:57):
have coupons, you might havewhat like a stub, you get a full
tariff about on a remittance.
Yeah, we send all of that all ofthat stuff is still very, very
active. And even though chequesstill are declining, the rate of
decline has really slowed a lot.
So there's still many, manyyears left of active check
business and check out justwants, I don't know, what would
(29:20):
Shai say he just wants half ofit? He does. He's not a greedy
person. So seven and a halfbillion will take seven and a
half million checks. Sure, we'llbe fine. That's fine, that that
works. And we'll have signedothers, they send us your
checks. We'll pay you now.
ernest rolfson (29:34):
Well, you know, one of the things we would say
at MasterCard, you know, abillion here, a billion there,
and soon you're talking realmoney. You know, so it's, it's
fine. That's cool. So we're nownow that we now that we are
where we are aiming. There'sbeen a lot of acceleration due
(29:56):
to 2020 and the changes we'veseen in COVID. I mean, is this
going Continue here. Do you haveany kind of predictions about
this? Is this going to slowdown? Or? I mean, this is this
has undoubtedly been a help foryour business. I would imagine.
dave peterson (30:09):
It has no question. No question. Here's
what I would say. I would saythat we are not going to go back
to what things were in thefourth quarter of 2019. I don't
think there's any like, okay,everyone's vaccinated, or we got
herd immunity or whatever. Itgoes back. I think enough time
like people's behaviors change.
When your brain changes way,right? You're you reorient
(30:30):
towards that. So are we going tocontinue doing things in 2022?
like we did in 2020? No, but youknow, the phrase that you hear
is new normal. And so I dobelieve there'll be a new
normal, but the new normal hasreally spurred let's, let's call
it financial institutions, andbillers and organizations that
may not have been as forwardthinking relative to how they
(30:52):
view the future of payments andfaster payments and other forms
of payments. And because ofCOVID, we're sort of forced into
thinking about that. So they'renot going to go back. I think
there's, there's, there's stilla renaissance for those high
value checks. But theopportunities now to actually
capture new types of payments aswe go forward. And you see RTP
being advanced by the clearinghouse, and now the Federal
(31:14):
Reserve is got a pending fasterpayment called fed now, that
would be out in 2023, maybe2024, there's going to be other
third party payment providersout there doing things, there's,
there's an appetite now, for theability to to quickly and
securely capture and makepayments, let's just call it
(31:37):
push credits, I need to push acredit to Ernest and and there
are a number of use cases bothon the consumer side in the
business side, as well as theconsumer to business side, where
an instant payment with twoparties that don't know each
other. But that is not goingthrough the card networks could
be very valuable. And I thinkthat's where that's where you
know, really examining those usecases and then a banker going to
(31:59):
businesses they know we wouldfollow those use cases can now
tell a story.
ernest rolfson (32:07):
Understood since you touched on it faster
payments, I get asked thisquestion a lot actually.
Investors and folks are alwayslike is faster payments, gonna
kill virtual cards and eliminatethe card rails and all this
stuff and and I'm like work fromwhere I sit, I've been asked
exactly zero times by customers,CFOs big companies in the last
(32:30):
five years about fasterpayments. So I see zero customer
demand from where I sit. And youknow, I work with companies that
are like 100 million in revenue,2 billion in revenue. I like
we're plugged into largeprocurement software that have
1000s of customers, not a singleone is asked about faster
payments, but it comes up a lot.
Is this disrupting anything? Imean, is this just, we're just
(32:52):
going to charge people a littlebit more money to get an ACH a
little bit faster. Is thatreally just what we're talking
about here? Because that's myopinion, but I'm just one, you
know, one, payment slug, what doI know? Um, you know.
dave peterson (33:08):
So you hit it right on the head. So Finexio is
dominating this world ofautomated payments, right?
payables, right, how you'reautomating all of the tables,
right? So here's a company,here's a company, they want to
schedule and make theirpayments. And they may also have
certain things that they've tiedinto their accounting system, as
well as their financialinstitution for things like
(33:28):
Positive Pay, you know, fraudprevention, you know, a whole
bunch of stuff that they havebuilt around this idea that a
check with a check number, madeout to a specific payee with a
specific amount, you know, with,you know, all of that gets tied
into all of these other systems.
And then somebody comes along,says, Wait, why don't you just
send that through a fasterpayment. And it's like, you
(33:48):
know, just converting the checkitself to a faster payment is
really easy. What's not easy isnow making sure that all of
those other systems that you hadfor fraud prevention, for
management of accounts payables,for for the, for the way that
information is flowing betweenaccounts payable systems and the
ERP, the accounting system ofrecord, or the bank, that words
(34:11):
all of those things have to cometogether in order for you to
say, I'm going to replace thischeque as a outbound payment
from a business to another,probably to another business. So
So the way I would say it is, isthat if you went to the it's
like, Why Why is it any any CFOsasking Ernest about this is
because they've got a systemthat works, they know when and
(34:33):
how they're making theirpayments. And so what's the use
case? What's the business casefor somebody who's a
manufacturer to say, I have tosend money to somebody and I
have to do it right now. So Ihave one, I have one. I'm going
to share it with you bet youprobably don't have any.
ernest rolfson (34:50):
We got this old right here, folks, you're
hearing it first. Are you areyou from Texas?
dave peterson (35:00):
Are you not?
Oh yeah, I was born and raisedin Florida and I live in
Georgia. So a rancher from Texasrolls up the stock yard with a
big with a bunch of trailers,he's gonna buy 100 head of
cattle, he does not have aprevious relationship with the
stock yard, he picks out his 100head of cattle and he owes them
let's pick a number $250,000.
Now before he drives away with100 cows, the stockyard wants to
(35:22):
know that they have good fundsof $250,000, because he's gonna
leave with the cows, right? It'snot something he arranged ahead
of time, he didn't arrange forcredit ahead of time, he's going
there and saying, I'll buy thesecows and I need to do something
so that you can see that you'vegot $250,000 in your accounts as
good cash is king, as they say,that's it. So you obviously
(35:46):
don't have $250,000 in cash. Sothat ability for him not to have
a previous relationship withthis company, but still affect
the payment within a reasonableperiod of time. Sure, there are
similar examples on the consumerside, right, where a consumer
wants to buy something thatgarage sale and it's more money
they can get from the ATM, butthey're not going to take your
check. You're from California.
(36:08):
And you know, you happen to bevisiting your sister in Georgia,
whatever. I mean, there are alot of use cases where it would
be really helpful if I couldpush a credit to you and you
knew that you had the fundssecure. So going back to your
earlier question. A lot of thesemodels like the RTP model, the
Fed now faster payments modelrequire the financial
institutions to integrate withtheir core system to give those
(36:31):
systems access real time tosomebody available balance to
know whether or not they canfund those payments. And
similarly to credit somebody forthe receipt of those payments. I
think that there's a lot ofopportunity in the EFT POS
rails.
Well, using buy now pay laterideals, here's why I do that I
(36:53):
can, that I can push you acredit that without us having to
have a previous relationship oreven be on the same app that I
could push you a credit throughthe debit rails, and you would
see it because you would look atyour online banking for your
mobile and see that $750 hadshown up to your account from
David Peterson, that has legsand I think you're going to find
(37:13):
that for a lot of faster paymentscenarios. Whereas RTP i think
is going to be great as it rollsout and eventually replaces some
wires on the b2b side. If youthink wires are expensive, and
and it's it's a little bit moredifficult to see it as a day in
and day out sort of p2psolution. Right? Right. Right.
So really, if there is a loser,perhaps in real time it, it
(37:37):
would probably be the wires thatthat's the only way to get same
day today. But it's if you'recharging 20 bucks, 50 bucks.
Banks, banks, look at that, howmany wires they do and the wire
income and they think well, howmuch is it going to cost us to
go do something else like RTP?
If that's a you know, that's adecision point they have.
ernest rolfson (37:57):
Yeah, these are?
Turns out these are businesses.
And remember when Dodd Frank, Iguess right when they kind of
had the Durbin amendment to DoddFrank, and they reduced the
debit interchange downdramatically. And at the $10
billion issuer cap. Banksincreased all their small
business checking fees and ATMfees and more shocked, right,
(38:21):
these banks, they're evil,they're charging consumers, it's
like, well, there was just someregulation that took away
billions of dollars of theirrevenue.
dave peterson (38:29):
Yeah, and I've said this all the time, banks
are different than any otherkind of business, right? So So
to me, banks aren't anydifferent than the dry cleaners,
you go to the dry cleaners, youtake your suit, and they do a
valuable service and you getyour suit back, you pay him, you
know, 1250, and you're happyabout it. You give your bankers
your money, and they perform avaluable service. But if they
try to charge you $3 for it,it's all of a sudden, like, wow,
(38:53):
people are willing to now. Sopeople think about their money
differently than any otherproducts here. So banks and
credit unions really do have ittough, simply because people
don't look at the way that banksprovide service like they would
any other vendor. Hey, you knowwhat? Yeah, I mean, look, it is
not free to move money, it costsmoney to move money, as we know.
(39:14):
And these checks, these checksare costing, like $16 a check to
move, right? Somebody's got tomake, make a profit here, you
know. And, look, the more wemove to digital, the more money
we can save, and the more we canmake together and the better it
is for everybody. You know,everybody. Again, that's that's
why the strategy of checkoutisn't to say we're going to be
(39:34):
all electronic. Because to go toa business, it's an electronic,
it is in a realistic possible todo securely and safely process
your checks, and then workcollaboratively with you to move
those checks over two electronicpayments. That's the right
strategy.
ernest rolfson (39:50):
Hey, look, half of my business is we're checks.
We're printing and mailingchecks for companies but I can
send those checks with robots. Idon't have to have people
sending those checks. So I I'mhelping, you know, Amherst
College, or, you know, Morganand Morgan, the law firm where
they're printing and mailingchecks with people. And I'm
like, You know what? I can killhalf your checks, put those to
(40:11):
digital, the rest, I'll use arobot to print. Right?
Everyone's happy. Everyone'ssafe. Yeah, you know, there you
go. And as the checkol to theworlds and others come in and
help us further digitize thatlife will be good. Right? I
agree. It's one of those one ofthose things. So, back to your
example, real quick. I know wegot to wrap up here shortly
where those were those meat cowsor those leather cows? The guy
(40:35):
in Texas I wanted didn't thatdidn't come up. And it was at
10,250k. So those were thosewere meat cows.
dave peterson (40:43):
Those were Texas longhorns this is kind of like
the COBie like high end kobebeef. You know, a lot of
marbling.
ernest rolfson (40:50):
Marble, it's about the marbling, well, it's
not just the marbling, you haveto massage them as well with the
with the olive oil.
dave peterson (40:58):
it's the very first podcast, you're going to
be getting actually messages infor people in Texas, like wait a
second, the cows dont cost thatmuch.
ernest rolfson (41:05):
I want to know, we went my wife and I went to
New Zealand. And that's wherethe right there's more sheep
than people. And we said, it'dbe awesome to move here along
with Peter teal, and we have ourown sheep farm. So I started
doing research that on how muchit costs to buy these by the
sheep, and it's not that muchmoney, you can get a bunch of
sheep, but the harder part isthe land. So you got to get the
(41:28):
length. So So um, so I guess, Iguess two things here, as we're
as we're kind of before we go, Iguess, you know, look, you've
been in this space a whileyou've you've started companies,
you've been running companies,you've got to Innovation Driven
Growth podcasts. I mean, whatsome of the, you know, what,
some of the, I guess, if youhave a big interesting learning
(41:52):
over the past few years or overyour career, what is that been
around that it could be aboutthe space? It could be something
else? What What is somethingthat I've a follow up around
this, butanything impactful?
dave peterson (42:07):
Yeah. Yeah. It's, it's amazing, because I actually
work with some young people whoare starting companies. And,
and, you know, unfortunately,Millennials have been sort of
cast with a broad brush thatthey, you know, that they they
don't have, they never, they'venever had to experience any kind
of adversity there. They've beenhanded everything, everybody got
(42:28):
a trophy. And you know, that's,that's obviously a gross
exaggeration. But what I willsay is, is that there is there
is great learning and failure,there's a lot of people who want
to start out and do something,and don't really have an
appreciation for the value ofmistakes, value mistakes. So
when I talk about innovation,innovation comes from
creativity. But creativity isn'tinnovation, to get creative. You
(42:52):
got to come up with ideas.
Everyone's trying to think ofgood ideas. Maybe they're trying
to think of great ideas. Andit's a huge mistake, stop trying
to think of good ideas, justcome up with ideas. So somebody,
you know, I'm speaking at aconference, somebody comes up
afterwards and says, Hey, David,you know, I'm struggling, you
know, to come up with some goodideas, you know, what's the
(43:12):
what's the secret? And I say,Well, how many bad ideas have
you come up with this month?
Like, what are you talking aboutabout? I'm not trying to come up
with bad ideas. I said, exactly.
That's your problem. If you tryto come up with a good idea,
you're struggling, all you gotto do is come up with ideas.
Because what happens is, is badideas. Meaning that just not
feasible, or it doesn't, youknow, it doesn't work, whatever.
(43:33):
But bad ideas, spur more ideas.
And when I do groupbrainstorming, one person throws
out something. It's crazy, butnobody ridicules them. But
somebody in their head goes, Oh,that's a crazy idea. But you
know what wouldn't be crazy. Andthey think of something that
they now say that they wouldnever have thought of, but for
the quote, crazy idea, so wehave to stop stifling ideas, if
(43:57):
anyone ever in any companythrows out something, oh, that's
a crazy idea. That's a bad idea,whatever. They are literally
stifling innovation, keepingthat person from coming up with
other ideas. And so if somebodycomes up with an idea, and it's
nuts, and then their fifth ideasreally wacko in their 15th
ideas, just out of this world,you know, maybe their 25th idea
(44:17):
is something that all of asudden saves the company $2
million a year, we have got tostop this, this whole thing of
we're going to get around andthink of a good idea. Harvest
ideas, collect all ideas thatwork those massage, those might
be the seed of idea, give itsome, give it some good soil and
some water and some sun and letit blossom into the fruit of
innovation.
ernest rolfson (44:38):
Hey, I like the way that I started the next CEO
and created now like 50 jobs isbecause I was tired of having so
many great ideas at a bigcompany that we couldn't do
anything about. We couldn't acton them. Everyone's like, Oh,
that's, we were at a bigcompany. We said hey, why don't
we partner with Uber or Lyft andhelp trainport sick and elderly
(45:01):
people to their medicalproviders. And we're told now
that'll never work now thatthey've got healthcare divisions
now, at Uber and Lyft. Right. SoI was like, You know what,
let's, let's go, let's go dothis on our own. Let's go find
find a path on our own if Ican't get the ideas done here,
so I completely agree with you.
And I guess Lastly, I mean, thatwe call the show, really paying
(45:22):
it forward. It is a play onwords that were in the payment
space, but anything you wouldshare in terms of advice around,
you know, you being on the frontline and payments, maybe it's
someone maybe it's a fellowentrepreneur, or someone
starting their company, or maybeit's other players in the space,
what, what kind of advice wouldyou have, to some of our
(45:43):
listeners, it could be anythingin this in this area.
dave peterson (45:48):
Here's what I'd say, if you're a parent out
there, or an aunt, uncle, youknow, you have nieces and
nephews, children, and if youwant them to have the potential
for an entrepreneurial future,then I think there's two very
important things. Number one,let them be entrepreneurial
early, let them have, you know,yard sales, or sell lemonade or
paper route, or I don't evenknow if they have those anymore.
(46:11):
You know, go around and doanything they can do that's
entrepreneurial, as a youngperson is gold. And the second
thing is, is let them askquestions. Don't stop stifling
children from asking questions.
Yes, I know, it can be annoying,you know, and so forth. But you
have to allow them to questionthe world, and then provide
meaning that don't give him youknow, platitudes in, you know, a
pony. We call it unicorns andrainbows. Talk to him in reality
(46:37):
about some things that are toughis difficult, you know, talk to
him about experiences, butanswer and let them ask good
questions and into my friends inthe financial services industry.
If you work in a bank and creditunion, I would ask you to think
about this. There are literallymillions of potential customers
right now, who are coming intothe workplace who would never
(46:58):
ever, ever think that they needto have an account at a bank or
credit union. They don't evenconsider that you exist. They
don't, they don't have any need.
They don't. They don't theydon't feel like you exist for
any purpose. That's for them. SoSo don't sit there and think
that they're going to need youand then come into your
(47:19):
beautiful lobby to ask aboutaccounts, you are going to have
to proactively help themunderstand why having a
relationship with a primarybanker is really, really
important. A bunch ofmillennials had businesses that
they weren't doing anything withbanks, and then PPP loans came
out and guess who was deliveringPPP loans fintechs the bankers,
the bank? The bank accounts arenow that is true, how do you how
(47:46):
do you get a beat up? So we needto be able to tell those stories
and help them understand whyit's important for them to have
a primary banking relationship.
So that's my advice.
ernest rolfson (47:55):
You know what they do serve a purpose you need
someone to hold the money andthey're licensed and regulated
to do that safely and securelyand that's pretty important, you
know, so they're gonna they'regonna stay relevant for a while.
Well, look, this has been a lotof fun. We got some Gretzky
quotes. We did some timetraveling. We talked about beef
(48:16):
and leather calves, we got someparental advice thrown in for
good measure, a whirlwind tourde force, if you will, David,
where can we kind of where doyou lurk? Where can we find more
about you.
dave peterson (48:31):
If you would like to reach out to me I'm at david
dot Peterson P E T E R S O N atcheckalt.com C H E C K A L T dot
com. And if you want to knowmore about innovation driven
growth, you can actually go outto David Peterson dot COM And
there's a link on David Petersondot com that will get you to a
(48:53):
book that I've written and thepodcast, and a lot of other I
have a lot of information outthere on social media on
everywhere on social media,media, as DLPspeaks for the
exception of Facebook, which forsome reason I'm dpspeaks. So I
would welcome anybody who wantsto contact me and share
information or say, hey, you'recrazy about the cows or, you
(49:14):
know, let's talk about financialservices or innovation or
whatever's on your mind.
ernest rolfson (49:18):
Look, this has been a lot of fun, great
conversation and looking forwardto keep it in touch and keep
fighting the good fighttogether.
dave peterson (49:28):
Awesome, Ernest.
Thank you so much.
ernest rolfson (49:30):
Pleasure, man.
Take care.
Thanks for listening to B2B CashFlow Conversations. This is
Ernest Rolfson, the CEO andFounder of Finexio. I welcome
your questions and comments. Youcan reach me at
podcast@finexio.com. You canalso find us on Twitter at
(49:52):
Finexiopayments to subscribe,you can go to Finexio.com
forward slash podcast. Be sureto check out my new episodes on
Apple podcasts, Spotify orwherever else you listen to
podcasts. Thanks and talk withyou again soon.
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